Shanghai Electric Launches Taonan Phase II Green Hydrogen, Methanol and SAF Project

TAONAN, China — Shanghai Electric has officially commenced construction of the second phase of its Taonan integrated green-fuel project in Jilin Province, Northeast China, expanding the site’s green methanol production and adding sustainable aviation fuel (SAF) to its product portfolio.

Construction of the Taonan Phase II project began on August 20, with full completion and commissioning scheduled for 2028. Once operational, the project is expected to produce 200,000 tonnes of green methanol and 10,000 tonnes of SAF annually.

The project has a total planned investment of approximately RMB 2.865 billion ($399 million), according to its official filing. The second phase will include biomass gasification units, water-electrolysis hydrogen production facilities, shift-reaction and low-temperature methanol-wash units, methanol synthesis and distillation facilities, and SAF production units.

The project will also deploy a new process for producing SAF in a single step. By avoiding the conventional methanol-to-jet-fuel route, the process is designed to simplify the production pathway and broaden the application of green fuels from maritime transportation to aviation.

Scaling Up Green Methanol Production

The first phase of the Taonan project entered operation in July 2025. It includes 67.2 MW of wind power capacity and an electrolyzer system combining alkaline and PEM technologies, with hydrogen production capacity of 8,200 Nm³/h.

Coupled with biomass gasification, Phase I has an annual green methanol production capacity of 50,000 tonnes. Shanghai Electric has described the project as China’s first large-scale commercial demonstration project integrating wind-powered hydrogen production with biomass gasification for green methanol production.

The expansion will significantly increase the site's green methanol output while introducing SAF production, creating an integrated green-fuel platform serving both maritime and aviation applications.

In January 2026, the National Green Development Fund led a RMB 495 million ($69 million) investment in Shanghai Electric’s subsidiary, Shanghai Lvchuang Jiyuan Technology Co., Ltd., providing financial support for the Phase II development.

Expanding Applications for Green Hydrogen

The Taonan Phase II project is designed to integrate green hydrogen production with biomass conversion and downstream green-fuel manufacturing.

The project will use renewable energy and biomass resources to produce hydrogen and carbon-containing synthesis gas, which will then be converted into green methanol and SAF. The integrated configuration is intended to improve the utilization of renewable resources while creating additional downstream applications for green hydrogen.

Shanghai Electric has been developing the Taonan project as part of its broader green-fuel strategy. The company’s Taonan green methanol project has already supplied fuel for large-scale marine applications. On August 17, Shanghai Electric partnered with Shanghai International Port Group and CMA CGM Group in an 8,000-tonne biomethanol bunkering operation at Yangshan Port in Shanghai, described as the largest single biomethanol bunkering operation on record. The biomethanol used in the operation was supplied primarily by the Taonan project.

With Phase II, Shanghai Electric aims to extend the Taonan project's downstream applications from marine fuels to aviation fuels, while further building its capacity to supply low-carbon fuels at commercial scale.

The project is expected to strengthen the integration of green hydrogen, biomass utilization and green-fuel production, while supporting the development of lower-carbon fuel supply chains for the maritime and aviation sectors.