Renewable liquid gases such as bioLPG could play a greater role in decarbonising heating and industry, particularly in sectors where electrification is difficult or costly, but stronger demand signals and long-term policy certainty are needed to support investment and production growth, according to Dublin-based LPG distributor DCC Energy. Argus' Evelina Lungu spoke with Emmanuel Mannooretonil, director of sustainable gas at DCC Energy and a board member of Liquid Gas Europe, about bioLPG supply growth, renewable heating policy and the outlook for renewable liquid gases in Europe. Edited highlights follow.
To what extent does the current Renewable Energy Directive (RED) framework support investment in renewable liquid gases, and where are the remaining gaps?
RED III sets clear and ambitious targets for renewable energy in transport fuels, which have facilitated significant investment in production over recent years. However its provisions for renewable liquid and gaseous fuels in buildings and industry are framed more as indicative targets for member states.
The challenge has been to translate these targets into predictable market signals, ideally at European level, while giving member states sufficient flexibility to deploy the solutions best suited to their national circumstances, including renewable liquid and gaseous fuels. Greater long-term certainty around the role of these fuels would help support investment in large-scale production projects.
As well as demand-side policy, supply-side incentives — such as the UK's Revenue Certainty Mechanism being designed for sustainable aviation fuel (SAF) producers — will also be necessary in order to de-risk investment for producers. This is especially true when considering production growth from technologies not yet available at commercial scale.
How do you see BioLPG fitting into the EU's broader decarbonisation strategy for heating and industry, particularly alongside the strong policy push towards electrification?
We strongly believe that electrification will be a key pathway for decarbonisation of heating, and indeed DCC Energy is rapidly growing its presence in this segment, including through our solar offer for commercial and industrial customers in multiple European markets.
However there are LPG market segments, such as heating for buildings off the gas grid and industries requiring high temperature process heat, where electrification may not be the most practical or cost-effective decarbonisation solution.
In these cases bioLPG is an alternative to electrification which can be deployed rapidly, with no changes required to existing equipment and distribution infrastructure. It can deliver greenhouse gas reductions of 80pc or more compared to fossil LPG, and recent research by Frontier Economics found that this can come at a Total Cost of Ownership which is comparable to or even better than electrification. In parallel bioLPG, when produced from locally sourced feedstocks, will contribute to reducing Europe's dependence on imported fossil fuels.
European policy should therefore not fall into the trap of focusing on electrification alone as it risks making decarbonisation less accessible for many of the millions of households and thousands of businesses in Europe who rely on LPG today for heating, cooking and hot water.
Supply is often cited as a constraint for BioLPG — what progress have you seen in scaling production, and how quickly can volumes realistically grow?
Currently most bioLPG is produced as a byproduct of hydrotreated vegetable oil (HVO) and SAF production, and so as production of these grows in response to RED III and ReFuelEU Aviation mandates, production of bioLPG will also grow.
We however see that, in the absence of firm demand signals for bioLPG, refiners may see stronger incentives to consume bioLPG internally rather than releasing to market, which can limit availability for consumers.
Liquid Gas Europe's 2025 analysis finds that supply of renewable liquid gases in Europe could reach between 2mn t and 7mn t by 2040, all derived from locally available feedstocks. These could substitute up to 50pc of current LPG consumption, but reaching these levels is highly dependent on the level of policy support available.
Ireland's experience with biomethane policy highlights some of the challenges around EU rules — what lessons should governments take when designing national support schemes?
DCC Energy fully supports policy design centred around technology neutrality and equal access for producers of renewable fuels to markets across the EU. However a ‘one size fits all' approach may not be the right solution for all markets, especially those at early stages of development.
For example, it is currently uncertain whether biomethane imported into Ireland via the connected UK gas grid will be recognised as counting towards the forthcoming Renewable Heat Obligation (RHO). This means that domestically produced biomethane may be the only eligible substitute for natural gas under the RHO. In this case, the proposed certificate multiplier for domestically produced biomethane would have been a significant factor in the rapid scale up of Ireland's nascent local production to achieve the RHO's objectives.
We would urge national governments and the EU to take full account of specific local circumstances in policy design and seek creative and pragmatic solutions which can remove roadblocks to scaling renewable fuels while respecting the principles of technology neutrality and the integrity of the single market.
The recently leaked RED IV impact assessment appears to move away from post-2030 heating and cooling sub-targets in favour of technology-specific indicators for heat pumps, geothermal and solar thermal, while a broader heating fuel obligation was discarded. How does DCC Energy view this direction of travel?
We see the lack of firm demand signals as the most significant factor holding back investment in and growth of renewable liquid gas production. We recognise that the impact assessment does not necessarily present a final legislative proposal, and believe that there remains a strong case for the commission to revisit the role that renewable liquid and gaseous fuels can play in heating beyond 2030 to complement those technologies named in the leaked impact assessment. Renewable Heating Obligations remain a key part of our recommended approach, whether set at EU level or by national governments — such as are already under development in Ireland and Germany — but we would welcome other measures which create credible demand for renewable liquid and gaseous fuels in applications where electrification is difficult or disproportionately costly.
Demand-side measures will also need to be complemented by enabling measures, such as targeted production cost support. Updates to mass-balance and chain-of-custody rules would also be required to recognise the highly decentralised nature of liquid gas supply chains and facilitate the scaling of renewable fuels across the single market — while maintaining robust tracking and certification of sustainability credentials.
Providing this combination of long-term demand certainty, national flexibility and robust market rules through RED IV and related policy instruments will be important if Europe is to realise the potential of renewable liquid gases to contribute to its 2040 decarbonisation objectives.
Are there specific technologies — such as bioLPG, DME, or waste-to-energy — that you are prioritising with capital allocation, and why?
DCC Energy is not an energy producer, but together with SHV Energy we have been collaborating with multiple technology providers and developers to identify production pathways for renewable liquid gases which have the potential to be deployed at scale and made available for long-term offtake by distributors. These might include renewable DME via gasification of biogenic wastes and bioLPG via alcohol-to-fuel processes. We believe that a few different pathways will be required to achieve the industry's growth potential, building on the availability of bioLPG via HVO and SAF production.
