Listen to Dimeta's head of advocacy and communications, Sophia Haywood and Argus' LPG market reporter, Oliver Binks as they discuss recent developments in the renewable liquids market and the role of Renewable and Recycled Carbon DME in the energy transition.


Oliver: Hi everyone and welcome to another episode of "Global LPG Conversations." My name is Oliver Binks, market reporter for Argus LPG and today I'm joined with Sophia Haywood, head of Advocacy and Communication at Dimeta. Hello Sophia, great to have you with us and thank you for joining.

Sophia: My pleasure. No, thanks for having me.

Oliver: Today we'll be talking about renewable liquid fuels, in particular, renewable dimethyl ether or RDME, as well as Dimeta's goals in this space and policy developments. So, Sophia, first of all, do you mind telling us who Dimeta is?

Sophia: So Dimeta is a joint venture between SHV Energy and UGI International. We were brought together as a joint venture in February 2022, and we have two prongs to our activity. So firstly, we're very, very interested in the production of renewable and recycled carbon DMEs. So we have a number of different projects all focused on bringing production of DME to the market. And then secondly, we're also very focused on the downstream, you know, bringing the molecule to the market on the downstream side of things. So that is working both at an advocacy level and also on standards and regulation when it comes to bringing DME to the marketplace.

Oliver: Thank you very much, Sophia. So let's kickstart it with simply what is RDME and how is it produced?

Sophia: It's a simple question, but an absolutely critical question. So I think it's a great one to start with. I mean, renewable and recycled carbon DME is a single molecule that could be made from a wide range of renewable feedstocks such as waste, biomass, it could be made from power-to-X processes, which can help provide a pathway to net zero for off-grid communities and for the LPG industry. It is chemically similar to LPG. It's not identical to LPG like biopropane is, but it's very, very similar. And what that means, it can be used in a blended form, with LPG, or it could be used on its own as a 100% solution. And DME actually has been used for decades in the industrial and chemical sector. What is quite interesting about talking about what is DME at the moment is that we're actually putting DME into a newer application with the LPG industry. So actually, it's been around in things like aerosols for many years. But now we're talking about it in a slightly new way.

Oliver: I mean, it sounds very interesting with a lot of potential. But following on from that, what feedstocks are used to produce RDME and where will Dimeta source them?

Sophia: Yeah, very good question. I mean, to make renewable and recycled carbon DME, there are, as I say, there are lots of different ways that you can make it via, you know, different processes. And there's lots of different feedstocks as well. So we actually, as Dimeta, we are feedstock agnostic when it comes to looking at what we can make renewable and recycled carbon DME from. But we are particularly interested in waste. And the reason that we're particularly interested in waste is that globally over 2 billion tons of municipal solid waste are generated each year. And at least 33% of that needs to be managed, you know, a lot more safely. And global waste is expected to grow to 3.4 billion tons by 2050. And that's more than double population growth over the same period. But if we actually look at how much of that waste that we're actually, you know, reusing, you know, only 7.2% of those materials are actually being cycled back into our economies after use. So with that, we see, you know, a significant opportunity with waste to use it as a resource and try and reframe the thinking of it about using it as a resource rather than as a waste. And what we can do is we can take that waste, you can take it from a local area and we can use that in a localized DME production plant to produce sustainable molecules. So it can really be beneficial from both a waste management perspective, but also from a circular economy perspective when we're thinking about the decarbonization trajectory. Feedstocks, you know, for all types of renewable fuels will be a challenge. But as I say, because we see waste as one of these areas that is only going to continue to grow at the moment as a challenge, we see it as something that we can definitely manage from a feedstock availability perspective.

Oliver: And following on from that, we know that policymakers in this case, they often cite concern over a lack of feedstocks for such fuels. Would RDME be able to compete with other renewable fuels and biofuels to secure the feedstock it needs to scale up adequately?

Sophia: I think that there's, you know, particularly when we look at some routes for renewable and recycled carbon DME production, you know, it becomes very, very competitive to make molecules like DME compared to potentially other competing technologies. So, you know, what you were saying around competition, I think, is absolutely key. With the right factors in place, making molecules like DME or bio-LPG can become very, very competitive. You know, if I just take one example on the interest of feedstock, you know, we, through our subsidiary Circular Fuels Limited, have a memorandum of understanding with Suez in the UK, who are a leading waste management company. So I think, you know, the fact that we see interest in projects like ours from companies like Suez showcases that, you know, turning, you know, feedstock such as waste into very valuable and impactful molecules like DME, I think that really showcases what we can do and there's a lot of stakeholders involved in that. When it comes to the policy perspective and policymakers, I think there's still a huge amount of work that is going to be done by policymakers across Europe and indeed, I think, at a national level around feedstocks. And it's really, really important that that work is happening sooner rather than later, because there's a huge amount of potential with broader biofuel production. And I think it would be a shame if the ambition to grow in this space was constrained by policy not being able to catch up with it.

Oliver: Indeed. And looking forward, what are Dimeta's targets for 2024? And as well as that, what challenges do you expect to face?

Sophia: In terms of our targets for 2024, and I think a little bit more kind of looking ahead a little bit further than that as well, thinking of where we've come from, you know, we've announced our project in Teesside. This is going to be a first of a kind waste DME production. This is going to be producing over 50,000 tons of renewable and recycled carbon DME per year, the equivalent of 25% of the UK LPG domestic heating market. We've also announced our work with Enerkem, where we're exploring two projects, both looking at making 165,000 tons of renewable and recycled carbon DME in Northwest Europe and Gulf Coast states. And then lastly, you know, our other major development that we updated at the LPG week in Rome back in November last year, which was our developments with NextChem and MyRechemical, where we announced that we are going into the pre-feasibility stage for looking at DME production from waste in multiple sites in Europe. This is building upon our announcements that we had made earlier in the year, where we can make DME from innovative MyRechemical technologies that convert municipal solid waste into methanol and then into DME.

So I think that, you know, those three projects are, you know, absolutely critical to us and are at the forefront of everything that we're doing at the moment. But the other thing that I would say in terms of priority for us is that value chain piece. So we have a MOU with a leading gas appliance manufacturer called Rinnai. We're working with them on the downstream application of the fuel. So this is looking at the opportunities for blending within appliances, but also, you know, the opportunity for the development of 100% appliances. We saw in the UK last year they were able to demonstrate, you know, a prototype DME appliance at a show called the Installer Show in the UK, which is geared up for heating engineers that fit LPG appliances, you know, across the UK and indeed obviously elsewhere, you know, on a daily basis. So I think building upon both the upstream from a production aspect, but also the downstream work is absolutely forefront in what we're doing at the moment. And in terms of challenges, I think it goes back to what I was saying around policy is that there's clearly a huge amount of appetite and push for renewable solutions across all parts of our economy and all types of technologies. But one of the challenge that, you know, I think that we see across a number of key markets at the moment is that delay in policy getting to know, getting up to date and also, you know, being developed in a way that is technology agnostic. I think that's going to be a continuing challenge. I don't think that's just for us. I think that's for the whole sector as we look to, you know, get to where we need to be in not just 2050, but also 2025, 2030, you know, etc.

Oliver: And with these plans in place, as well as the challenges you're facing, in your opinion, is Dimeta on track to reach its goal to produce the 300,000 tons per year that has been publicized by 2027?

Sophia: Well, if we just take our two projects with Enerkem, for example, those two projects alone exceed that target. And then we obviously, have our existing announcements in the UK and obviously, the developments we have since updated with NextChem and MyRechemical. So I think that, you know, answers that question for itself that we' know, we have a huge high level of ambition, not just in the short to medium term, but also really looking towards looking towards the long term.

Oliver: And in your opinion, do you see growing legislative support for the use of renewable liquid fuels in non-transport applications? And is there any difference in the regulatory or legislative approach in Europe or the UK or the U.S.?

Sophia: There definitely is more of a focus on non-transport applications that we see developing in a public policy space now across a number of markets. Historically, there has been a focus on transport for a number of reasons, but mainly because it's been quite mandate and incentive led in the transport sector. But now we see policymakers recognizing that it can't just be the transport sector that they're targeting. They need to tackle things like heat and heat is complicated and heat is difficult. As we look at how we decarbonize that, not just from our perspective in rural off-grid areas, but also more broadly, whether that's home heating, commercial heating and hot water, industrial process heat, the list goes on and on. And it is a really, really complex area.

So I think that to date, generally, a lot of the focus has been in that transport application with a good degree of success that we can see. We can see, for example, advanced biofuels starting to make really significant headways as a result of those transport orientated goals. But what we really need to do now to really go further is to start seeing not just kind of the legislative support in non-transport applications such as heating, but also things like incentives and things like obligations, for example, that can help drive and create a market in those market segments. You know, we see, for example, in the UK, there was something called the biomass strategy which outlined the role that renewable liquid gases can play. But also it went on to allude to the fact that there could be obligation schemes, for example, being put in place in the UK and those provisions were made available. I think we will begin to see similar conversations like that start to happen, if not already, and they are certainly happening already in other European countries, but other markets as well. I think it's just a matter of timing and different timing. Thinking about maybe less market policy and more about, you know, kind of, I would say, a more strategic approach, the Inflation Reduction Act in the U.S. is an absolute prime example of, you know, something sending really, really strong market signals. And then what we actually see is the follow up in Europe and the UK is, you know, cannot necessarily meet that level of ambition, proportionate to its market size. So, you know, as it will be interesting to see over the next 12 months, how this positioning kind of develops, and whether we actually see some more, not just ambitious policy, but I would say, you know, tangible incentives, obligations, orientated policy coming out from certain markets in the coming months.

Oliver: After this though, from what you see, which markets have the highest potential demand for renewable liquid fuels like bioLPG and RDME?

Sophia: I think it depends. And, you know, for us as Dimeta, you know, we will offtake the DME that we produce and we will sell that direct to gas suppliers. So we per se don't have know, we're not going to be dealing with the end markets where this will be going. That's totally up to the offtakers as to where they would decide to put that product. But if I think about it a little bit more in the round, you know, I think depending on the country, there are different market segments that potentially have supports in place or more ambitious targets in place. If we take the UK as one example, they've just delayed some of the original deadlines they were going to have for phasing out fossil LPG boilers. So, you know, but at the same time, there's increasing pressure on the kind of commercial non-domestic side of things. So, you know, I think it really does depend on the country and the particular set of circumstances that we have there. It could also be that we see businesses and industries, even if the policy isn't there, we might see more non-domestic sector companies seeing the demand for this kind of fuel because they want to be able to sell then green services or products to their customers. We could probably see that growing as a likelihood, even if policy isn't quite there yet, because as we're all aware, climate change is fully on the agenda and broadly businesses are responding to that. So, yeah, I think that could be led by policy, it could be led by the market, but also be led by other factors such as that.

Oliver: And lastly, I want to ask, you mentioned previously that RDME can be used as a blendstock for different fuels. Do you envisage RDME being a blendstock for LPG and bioLPG or more so in the future as a standalone fuel?

Sophia: Yeah, so I think that renewable and recycled carbon DME, both as a blend, but also as a standalone fuel, both have a really critical role to play. I think that the blend is really important because, you know, we often speak about drop-in solutions. So whether that's LPG and DME as a blend to be able to, you know, reduce the carbon intensity of the product, whether that's DME blended in with bioLPG to create a fully renewable product. Or also, as I said, you know, 100% DME being a solution on its own. And that might make sense for where there are users using, you know, oil or even solid fuels, that being able to offer them in the future an opportunity to transition to 100% DME, you know, such as large commercial players or industrial players, then, you know, that's a really significant market opportunity for the LPG sector.

Oliver: And may I ask again what blending ratio will be allowed?

Sophia: So as per the WLPGA paper that has been submitted to the UN and also for ADR, that is up to 12%.

Oliver: Well, wonderful. In that case, we have to stop it here for today. But thank you so much, Sophia. It's been really interesting. And I look forward to following the market's development.

Sophia: Brilliant. No, thank you so much for having me. I've really enjoyed it.

Oliver: Great. Well, thank you for listening to this podcast and stay tuned for the next episode of Argus "Global LPG Conversations."