China's Geely invests in Iceland methanol factory

Chinese group Geely, the owner of Swedish carmaker Volvo, said Friday it had become a major shareholder in an Icelandic company that operates the world's first renewable methanol fuel plant.

Geely said it would invest $45.5 million (41 million euros) over three years in Carbon Recycling International (CRI) and become a "major shareholder", but did not specify how much of the company it would hold.

The aim is to "collaborate on the deployment of renewable methanol fuel production technology in China and explore the development and deployment of 100 percent methanol-fuelled vehicles in China, Iceland and other countries," the two companies said in a joint statement.

Geely sees methanol as a replacement for petrol in its automobiles.

Geely chairman Li Shufu, in Reykjavik for Friday's announcement, reiterated that his group has a "long-term goal of zero emissions."

In March 2013, Geely began piloting methanol-fuelled vehicles, and in 2014 it became the first company in China to achieve mass production of methanol-fuelled vehicles.

CRI was founded in 2006 in Reykjavik and is a world leader in developing technology to produce renewable methanol fuel from clean energy and recycled CO2 emissions.

CRI has an annual production capacity of 4,000 tonnes of renewable methanol, marketed under the name Vulcanol in Europe where it is blended with gasoline and used for the production of biofuel.

CRI's plant is linked to the Svartsengi geothermal station in southwestern Iceland, whose surplus mineral-rich water fills up the Blue Lagoon, one of Iceland's most popular tourist attractions.

The plant emits very little carbon dioxide but what is emitted is in very concentrated form, which makes the transformation of CO2 into methanol financially viable, as opposed to a coal plant for example where the separation of CO2 and nitrogen is costly.

Iceland sees China as a key trading partner, becoming the first European country to sign a free trade agreement with Beijing in 2013.