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In terms of saving fossil fuel, methanol is a promising chemical compound not only as a hydrogen carrier but also as a heat carrier because it can decompose into carbon monoxide and hydrogen with rather large enthalpy change (90.7kJ/mol). In this research we proved the performance of the decomposition reaction to be improved by using a palladium membrane reactor (PMR), which includes a hydrogen permeable membrane of Pd alloy for removing the produced hydrogen from the reaction region. It was also found that the amounts of by-products such as dimethyl ether, methyl formate and carbon dioxide were influenced by hydrogen separation. Further, the dynamics occurring in the membrane reactor was simulated by developing and solving a mathematical model.