Abstract: Methanol is produced by reacting a CO-rich synthesis gas in the presence of a powdered methanol synthesis catalyst suspended in an inert liquid in a liquid phase reactor system. Unreacted CO-rich synthesis gas is recycled to the reactor, thus increasing methanol production and reducing specific power compared with once-through operation without recycle or compared with recycle of hydrogen-rich gas recovered from unreacted synthesis gas. The process preferably is integrated with a coal gasification electric power generation system in which a portion of the unreacted synthesis gas is used as power generation fuel and a portion of the methanol product is used as additional power generation fuel during periods of peak power demand.