Navigating the Market for Renewable Propane

If the propane industry can learn one lesson from how other alternative fuel industries are navigating the demand for increasingly clean energy, it is that an alternative energy source needs to be affordable. Specifically, the energy source needs to be cost-effective, with or without government funding or grants. Many industries have failed because their solutions weren’t cost-effective once additional funding ran out.

That is one of the most significant benefits of propane autogas: Propane autogas offers the lowest total cost of ownership, and fleet owners will appreciate the quick return on their investment. The cost of propane is much lower than the cost of diesel. The propane industry should discuss these benefits with fleet owners and demonstrate the value propane autogas can bring.

When it comes to the overlap between propane autogas initiatives and renewable energy initiatives — renewable propane, in particular — we are seeing that as fleets replace diesel with propane autogas, they are cleaning up the life cycle emissions of their vehicles while taking advantage of the fuel’s lowest total cost of ownership. It’s important for the industry to understand that propane autogas vehicles are cleaner in most states than their electric counterparts when comparing the electric grid’s life cycle carbon emissions to those of the propane autogas vehicle.

This is because more than 60% of the electric grid is still powered by coal and natural gas. As more renewable feedstocks become available, our industry will be able to blend renewable propane with conventional propane to meet the net carbon reduction goals of any fleet.

Infrastructure & Marketability

Understanding the differences of the infrastructure and marketability of renewable natural gas (RNG) or other renewable energy methods and renewable propane fueling options is important because one of the biggest advantages of propane autogas is the affordable and easily scalable refueling infrastructure. Renewable propane and conventional propane have the same chemical structure, and as a result, fleet owners don’t need to install any special or new refueling equipment to use renewable propane.

When compared with RNG, propane autogas infrastructure costs less than half that of an RNG system. For a moderately sized fleet, propane autogas infrastructure can cost between $50,000 and $200,000. RNG infrastructure for that same fleet would cost more than $1 million to build.

Propane marketers can capitalize on propane’s competitive infrastructure costs by offering fleet owners a low- to no-cost lease in exchange for a fuel contract, which locks in a set price per gallon. It’s a win-win for the fleet owner and the supplier.

Fleet owners who adopt conventional propane autogas today are already cleaner than the electric grid in most states. And as renewable pathways become more available, they’ll already have the infrastructure in place to seamlessly incorporate renewable propane into the fleet to further reduce their emissions.

Envisioning a Path Forward

The biggest obstacle to renewable propane, as with most renewable energy sources, is the supply. There are currently more than 4.5 million gallons of renewable propane produced every year, and those numbers are growing to meet increasing demand.

Renewable propane can be made from a variety of feedstocks. The most common form of renewable propane today is a byproduct of renewable diesel and sustainable aviation fuel (SAF) made primarily from plant and vegetable oils, animal fats or used cooking oil. As the demand for those energy sources grows, the production of renewable propane will also increase.

One of the newer production methods is to use the oil from camelina seeds. Because camelina is not a food crop, the production of camelina as a renewable feedstock is highly scalable, allowing for production to ramp up quickly as demand increases. Recent studies also show renewable propane can be made by breaking down plastics, such as polyethylene and polypropylene, and by converting captured carbon dioxide into renewable propane. Read more about some of the new research in the release “Pioneering Research Uses CO₂ to Produce Renewable Propane” at propane.com/newsroom/press-releases.

These pathways have the potential to produce negative carbon intensities, which will provide the ability to blend renewable propane with conventional propane, providing a clear path to zero carbon emissions for the future.

Within the next few years, approximately 100 million gallons of renewable propane are projected to be available, with a total potential of 300 million gallons in the next decade. In fact, by 2050, renewable propane could meet half the world’s demand for conventional propane, according to the World Liquid Gas Association.

Readers can visit propane.com/renewable-propane to learn more about renewable propane production.