Both ethanol and methanol may be used as substitute for or blended with gasoline (may also be used in diesel engines provided required modifications are being made). Ethanol is the most commonly used of the two.

Methanol, methyl alcohol, wood alcohol, wood naphtha, methyl hydrate, or wood spirits, has the formula CH₃OH. Methanol may be produced from destructive distillation of wood, therefore the name “wood spirits”. Methanol production normally occurs in a catalytic industrial process directly from carbon monoxide, carbon dioxide, and hydrogen.

Methanol is the simplest alcohol, and is a light, volatile, colorless, flammable liquid with a distinctive odor very similar to that of ethanol. Methanol is a highly toxic liquid, used as an antifreeze solvent, fuel, and as a denaturant for ethanol. It is also used for producing biodiesel via transesterification reaction.

Methanol is present in small amounts in the environment. Therefore there is a small fraction of methanol vapor in the atmosphere..

Methanol burns in oxygen, including open air, forming carbon dioxide and water. Chemical reaction: CH₃OH + 1,5 O₂ → CO₂ + 2 H₂O

CO₂ emission:
Burning 1 kg Methanol (mol weigth – 32 g/mol) generates 1,4 kg Carbon dioxide (CO₂) (mol weight – 44 g/mol) which is far less than by burning most hydrocarbons.

Methanol is used, however on a limited basis, to fuel internal combustion engines in particular for various motorsports. Methanol is also used in various mixtures such as nitrous oxide and gasoline to increase the power generation.

One of the potential drawbacks of using alcohols in fuel is the corrosivity to some metals, particularly to aluminium.

Therefore methanol can only be used in standard vehicles with the use of proper cosolvents and corrosion inhibitors.

Direct-methanol fuel cells are unique in their low temperature, atmospheric pressure operation. However in fuel cells methanol molecules can sometimes pass through the polymer membrane, which separates the anode catalyst from the cathode catalyst. The methanol molecules are then oxidized into CO₂ and H₂O, but without producing any useful electrical current. This crossover oxidation results in a reduction in the amount of useful energy obtainable from a given amount of methanol fuel.

Production of methanol
From synthesis gas – Carbon monoxide and hydrogen react over a catalyst to produce methanol. The most widely used catalyst is a mixture of copper, zinc oxide and alumina.

Chemical reaction: CO + 2 H₂ → CH₃OH

Feedstocks – Production of synthesis gas, primarily from methane but also from coal.

1. At moderate pressures of 4 MPa and high temperatures (around 850 °C), methane reacts with steam on a nickel catalyst to produce synthesis gas. Chemical reaction: CH₄ + H₂O → CO + 3 H This reaction, commonly called steam-methane reforming, is endothermic and the heat transfer limitations place limits on the size of and pressure in the catalytic reactors used.

2. Methane can also undergo partial oxidation with molecular oxygen at atmospheric pressure to produce synyhesis gas.Chemical reaction: 2 CH₄ + O₂ → 2 CO + 4 H This reaction is exothermic, and the heat given off can be used in-situ to drive the steam-methane reforming reaction.

3. Stoichiometry adjustment requires a ratio of H₂/CO to equal 2. The partial oxidation process yields a ratio of 2, and the steam reforming process yields a ratio of 3. The H₂/CO ratio can be lowered to some extent by the reverse water-gas shift reaction: CO₂ + H₂ → CO + H₂O,to provide the appropriate stoichiometry for methanol synthesis.

Other feedstock materials – Steam reformed coal is used as a feedstock for methanol production and biomass gasification for methanol production.

Biomass from wood may be gasified to a hydrogen-rich syngas (watter gas) by introducing steam in a blast furnace.

From methane – A process still subjet to research is direct catalytic conversion of methane to methanol using Cu-zeolites or other catalysts. however there are challenges.

From carbon dioxide – Methanol may be generated directly from carbon dioxide in a solution using copper oxide (CuO) nanorods coated by cuprous oxide (Cu₂O) and energy from sunlight or other light.