There's an option in Terminal.app -> Preferences -> Settings -> Keyboard but it allows me only to set both option keys as meta keys. iTerm.app has such an option but don't like that application.
I have built a solution myself and it doesn't require abandoning Terminal.app in favour of iTerm 2.
It is a simple status bar app that runs in the background and rewrites all left Alt +
$KEY key events to two key events in rapid succession, Esc, then
$KEY; however, it only does this if Terminal.app is in focus.
You can find the source for the app here. You'll need Xcode to build it.