The direct hydrogenation of CO2 into methanol is crucial for providing a means of CO2 fixation and a way to store cleanly produced hydrogen in a more energy-dense and transportable form. Here we have prepared two series of Pd/ZnO catalysts, both by immobilisation of PVA-protected Pd colloids and by Pd impregnation of PdCl2 to investigate structure activity relationships for direct CO2 hydrogenation. Very different performances were found for the different preparation methods, and the Pd loading and pre-reduction of the catalysts were shown to be important factors for optimising methanol yield. The crucial factor for high methanol yield is the formation of a Pd-Zn alloy, either during the reaction itself, or better by high temperature pre-reduction. The formation of the alloy greatly reduces CO production by the reverse water gas shift reaction. The catalysts prepared by sol-immobilisation were relatively stable to thermal treatment. In contrast, the impregnated catalysts were much less thermally stable, due to the presence of remnant chloride on the surface of the catalyst, which was absent for the case of sol immobilisation preparation. The results illustrate the importance of controlling the PdZn particle size and its surface structure for the catalysts to achieve high methanol selectivity (60%, the rest being CO) and conversion (11%) at 250 degrees C and 20 bar. Selectivity for sol-immobilised catalysts decreases from 60% at 3 nm average diameter, to 20% at 7 nm. (C) 2016 The Authors. Published by Elsevier Inc.