Sustainable fuels are an important opportunity for the propane industry, and they are developing rapidly. The right customer proposition, policy incentives and innovative thinking are key to accelerating this journey.
Sustainable fuels help energy users de-fossilize and, with that, lower their carbon footprint. Sustainable fuels are produced from renewable feedstocks, such as vegetable oils and other types of waste and residues. Renewable propane is one type of sustainable fuel that is already produced today, a drop-in solution for our customers and the future of our industry. The strength of renewable propane is that customers can switch overnight from conventional propane to a more sustainable solution (renewable propane) without making any modifications or investments on their infrastructure.
Other kinds of sustainable fuels include renewable dimethyl ether (rDME), bio-liquid natural gas (LNG), green hydrogen, ammonia and methanol. These fuels all have opportunities to contribute to the de-fossilization of our industry, which must be our mandate if we wish to play our part in reducing greenhouse gases that contribute to global warming.
Depending on the type of feedstock, renewable propane can reduce CO2 emissions by up to 80% and is identical in use and performance to conventional propane. Because it is identical, it provides our customers with the simplest way to start their sustainable journey. rDME also helps customers de-fossilize; it is produced from renewable and recycled carbon feedstock and is chemically similar to propane. It can be blended with propane or renewable propane and used in existing propane appliances or as 100% blend in heavy vehicle transport.
Partnership & Collaboration Are Key to Accelerating Adoption & Success
The key to success for all renewable propane marketers is robust supply combined with robust demand. The propane industry must come together and support the development of a business case for fuel producers to produce and supply renewable propane alongside their other fuels.
The economics are there and proven by a recent study spearheaded by the Propane Education & Research Council (PERC), the results of which were presented on a recent PERC webinar by Dr. Gokul Vishwanathan, PERC director of research and sustainability.
PERC recently partnered with the National Renewable Energy Laboratory to evaluate the value proposition for the recovery of renewable propane from existing and planned hydro-processed esters and fatty acids (HEFA) biorefineries as a byproduct of renewable diesel and sustainable aviation fuel production.
The key takeaways paint a very positive picture for biorefineries to profit from the additional value stream of renewable propane. Even in the worst-case scenario of the study, payback would not exceed 2.5 years. Renewable propane is a drop-in replacement to conventional propane with a four-times or higher carbon intensity possibility.
According to the analysis by PERC, the industry may soon be in a position to replace a sizable portion of the 10 billion gallons of propane produced from fossil fuels annually if the momentum for the development of renewable propane production by biorefineries, carbon capture technologies and other innovations remains strong. To make it happen, however, we must keep pushing, looking for supply partners and boosting fuel demand.
Winds of Change
The focus on sustainable energy is growing more intense each year. Through the Renewable Fuel Standard and California’s Low Carbon Fuel Standard, the federal government and, even more so, state governments — particularly those led by California — are incentivizing and mandating clean energy. Since most of these solutions do not use fossil fuels, the market for sustainable fuels and renewable fuels are developing rapidly, and it is up to us to seize the opportunity.
Propane marketers must partner with innovative players to help make sustainable fuel advances possible and accelerate the momentum. As an example, SHV Energy (Pinnacle Propane’s parent company) works with partners to develop dedicated pathways to purposely produce futuria propane and other sustainable fuels with high yields made from feedstocks that are widely available, affordable and sustainable.
In March this year, SHV Energy announced its investment in and collaboration with LanzaTech, a synthetic biology carbon capture utilization technology company. SHV Energy also collaborated with leading universities, where it is exploring the option of power to gas (renewable propane from CO2 and hydrogen).
Create Simple & Flexible Sustainable Solutions
It is important for propane marketers to have a strong vision and mission and set goals that guide their way forward. Pinnacle Propane’s goal is for 30% of the fuels it provides to its customers to be sustainably sourced by 2030. Propane marketers need to acknowledge the importance of adding value to their customers, taking responsibility as a company and making customers’ switch to a low carbon future as simple and easy as possible.
For customers, sustainability is a complex topic, and when developing a program, marketers need to provide simple solutions so customers can start with a flexible product that allows them to start at a pace that works for them. It is great to reduce your CO2 emissions overnight by 80%, but for some customers, reducing by 20% tomorrow is already a great first step.
Renewable propane is a drop-in solution, and rDME is close to a drop-in solution, which means that the customer can switch to a low-carbon fuel overnight without having to make any modifications or with only minor changes to their infrastructure. SHV Energy offers flexibility in its program by offering sustainable fuels to customers in three different blends of renewable propane with conventional propane.
If propane marketers start this transition now, it will help them stay on top of the existing needs of their customers and help anticipate future customer needs.
Leveraging Experience in the Sustainable Fuels Market
By being part of a global company like SHV Energy, Pinnacle Propane can learn from what SHV Energy did in other countries that started the sustainable fuels journey earlier and take that knowledge into account when launching sustainable fuels in the U.S. SHV Energy launched renewable propane in Europe in 2018 and is now selling it in 12 countries. SHV Energy also recently announced its commitment to accelerate the development of rDME in partnership with UGI International.
The company developed one sustainability platform to promote its sustainable fuels. In all business units that operate under SHV Energy, sustainable fuels will be positioned under a platform called Futuria. Futuria will enable customers to identify and select the sustainable fuels that are right for them. This platform is already launched in Europe, where renewable propane is now called futuria propane and offered in three different blends to provide the right flexibility to customers.
This approach gives customers the opportunity to start with a 20% blend, then gradually increase to 50% and finally to 100% renewable propane when more renewable propane becomes available on the market.
Wherever your company is on its sustainability journey, now is the time to take steps to shape the future by partnering, collaborating and innovating. We will get there together.
