Five Italian LPG companies — AGN Energia, Beyfin, Gruppo Cavagna, Gruppo Socogas and Veroniki Holding/Butangas — in July announced the establishment of a bio-LPG joint venture to help decarbonise the country's 3.5mn t/yr industry. The new company, Green LG Energy, will use Cool LPG technology developed by the US-based Gas Technology Institute (GTI) to produce bio-LPG from biogas. They hope to reach 10,000-20,000 t/yr of output from a pilot plant within two years. Argus' Waldemar Jaszczyk spoke with the firm's chief executive Francesco Franchi about the venture:
How did Green LG Energy come about?
Green LG Energy is a start-up that was born during a meeting of the Italian Liquid Gas Association, when the LPG industry realised that without a biofuel component to use, promote and develop LPG in the next few years, we would have problems. AGN Energia, Beyfin, Gruppo Cavagna, Gruppo Socogas and Veroniki Holding/Butangas decided to support a study to develop technology to produce bio-LPG using biogas in co-operation with US-based companies BioLPG LCC and the GTI.
Why were you chosen to lead the company?
I worked for Eni for more than 37 years. For the past three years, I was president of the bio-refinery in Gela, where we produced bio-LPG. I was president of Liquid Gas Europe for three years, and I ran the Italian Liquid Gas Association for six years before that. I am currently out of the market, so I present no competition.
Which pathway will Green LG Energy pursue in developing bio-LPG?
We support the GTI's study into developing Cool LPG technology, which converts biogas into renewable liquid fuels for cooking, heating and transportation. We are the first company to support this kind of research, but I think in the next month there will be some big companies worldwide to invest in the same activity. We want to register a trademark in Italy and maybe in Europe. We aim to develop a pilot that can use locally sourced biogas to have a small production of bio-LPG.
Why have you chosen this particular pathway?
The first studies of the bio-LPG that we have in production in the US are 50pc propane and 50pc butane. That will be of excellent quality for [use as a cooking and automotive fuel]. This technology can expand the use of biomethane and biogas because biomethane cannot be used in the automotive sector.
Biogas can be used to produce electricity but without a profit margin compared with bio-LPG production. We think that this old technology with new feedstock — biomethane biogas — can produce bio-LPG of very high quality in a significant quantity. In theory, the price of our bio-LPG can be competitive with the traditional LPG in the future.
Where will you secure the necessary feedstock?
We hope to secure the feedstock from farms, and we will need about 10,000t.
How much LPG is currently sold on the Italian market?
Until now, industrial production only comes from Eni's biorefinery. They produce about 50,000 t/yr, but I think they use it mainly for their internal consumption.
What quantity of bio-LPG do you plan to produce?
We have a two-year pilot programme to produce 10,000-20,000 t/yr of bio-LPG. The pilot plant will be located in central Italy. If everything goes well, later on, we will reach out to bigger oil companies to ask to produce bio-LPG for the Italian LPG industry using this technology.
How much does the company plan to invest?
In the first phase, the joint venture partners will invest about €3mn-5mn in research support. For the second phase, €15mn-25mn in funding will be provided.
Do you expect to receive governmental support?
We hope to receive support from the Italian government and the EU. In Italy, there are more than 2.4mn cars that can use LPG. So, from a fiscal and strategic point, it should be very important for the authorities that our LPG can have a 20-30pc biofuel component. Our technology can be used to replace it up to 100pc.
Which sector will Green LG Energy initially target?
We must first focus on the automotive sector because cooking and heating do not attract the same attention in terms of CO2 and air pollution. The Italian market uses about 4mn t/yr of LPG. I hope in 5-10 years to produce more than 1mn-2mn t. Then we can expand to all sectors. Big industry players in Italy are considering switching to LPG because it is less expensive. We are not sure that the logistics can support this rise in demand, and we think our bio-LPG can be a solution.
Will distribution be restricted to the members of the joint venture?
When we start to produce bio-LPG, we will sell it to everyone. If someone wants to join the venture, that is also possible. The partners only benefit from not paying royalty to the company that sells the product.
