Europe LPG industry must fight to save gas boiler

  • Market: LPG
  • 05/07/22

The LPG sector will first have to persuade EU policy makers that the ‘heating source of the future' will be powered by renewable gas, writes Matt Scotland

The European LPG industry must ensure the EU and national governments do not pursue plans to hastily phase out or ban gas boilers if it is to survive over the long term, delegates heard at the European LPG Congress in Barcelona on 29-30 June.

The European Commission proposed amendments to the energy performance of buildings directive (EPBD) in December 2021, which while falling short of proposing an EU-level ban on gas boilers, would require new buildings and renovations to ensure 100pc of on-site heating comes from renewables by 2030. EU states must also plan for a complete phase-out of fossil fuel use in buildings by 2040. EU energy ministers and officials as well as members of the European Parliament are still discussing the texts, with votes expected later this year.

The parliament's chief negotiator on the proposals, green MEP Ciaran Cuffe, is understood to want to ban "LPG and other fossil fuel heating systems with immediate effect in all new or renovated buildings by 2035", former MEP Chris Davies told attendees of European LPG association Liquid Gas Europe's congress. The LPG and natural gas industries argue that such a position neglects the opportunity to heat buildings with renewable gases using current boiler and heating systems. The proposed alternatives, largely electric heat pumps, are expensive and unsuitable for certain buildings — including older and poorly insulated homes, many of which are found in rural, off-grid areas.

"The gas boiler is our livelihood — if it gets banned, we have a real problem," distributor DCC's LPG president Henry Cubbon says. "We are doing a lot of work with regulators to see if we can position the gas boiler as a heating source of the future, powered by renewable gas." UK LPG association Liquid Gas UK says it is making progress in convincing prime minister Boris Johnson to reverse a policy to prohibit the sale of gas boilers and target installing 600,000 heat pumps by 2028. "[Johnson] is waking up to the fact that it will be impossible. The government is now turning to us and saying, ‘fine, but where is the renewable gas?' So we reply, ‘it is coming, it is coming'. It has got to come somehow," Cubbon says.

It all boils down to lobbying

The challenge for the LPG sector is to get its message to EU policy makers at the same time as working on establishing building currently negligible volumes of renewable LPG. Electrification of heating will not be enough to achieve the EU's climate policy objectives, while off-grid homes must not be neglected. Teaming up with the biogas and natural gas associations, previously competitors, is one way to ensure the LPG sector is heard in Brussels, distributor SHV Energy chief executive Bram Graber says. The policy landscape will play a critical role in the industry's future from 2030. "If gas boilers are banned too early, we will not have a chance [to decarbonise], that is why advocacy work is so important," Spanish oil firm Repsol industrial transformation and technological director Adriana Orejas Nunez says.


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18/06/24

Q&A: LGE calls for more EU backing as Congress begins

Q&A: LGE calls for more EU backing as Congress begins

Brussels, 18 June (Argus) — The European Parliament election on 6-9 June is expected to result in centre-right Ursula von der Leyen remaining as president of the European Commission despite an increase in support for far-right groups. The election came just before European LPG association Liquid Gas Europe's (LGE) 2024 Congress in Lyon, France, over 18-20 June. Argus' EU correspondent Dafydd ab Iago spoke with the LGE's general manager, Ewa Abramiuk-Lete, about the election and the EU's climate and energy policies on the eve of the conference: What do you want from the newly constituted parliament and commission? A positive overarching framework from Brussels is needed to drive demand for renewable gases such as bioLPG and renewable and recycled carbon DME in heating and transport. For instance, retrofitting diesel or gasoline engines after 2035 is a potential solution for legacy fleets. But this goal is currently missing at the EU level. Energy taxation is another critical issue, with the current directive unchanged for more than 20 years. It's crucial that revenue from energy taxation is re-invested into the production of renewable fuels to avoid a vicious cycle. Do you expect parliament to push for a clearer future for renewable liquid gas fuels despite plans to phase out ICE [internal combustion engine] vehicles? There's obviously a trend towards electrification. And as set out in the current legislation, the European Commission will come forward with definitions of CO2-neutral fuels. But member states have woken up to the gravity of the ban on ICE vehicles. Legislative solutions need to come really fast. We don't want to wait two more years until the effect of the new CO2 standards for cars fully kicks in. Can a new parliament tweak existing legislation on the EU's 2030 climate and energy goals? The ICE phase-out has intensified scrutiny of the Green Deal, at the member state level and in the European Parliament. But significant changes to the 2030 goals are unlikely as the targets are set for 2030. And Europe remains committed to achieving climate neutrality by 2050. Considerations to be examined include the role of liquid gases, especially in rural areas that account for about 3pc of EU energy demand. They rely on LPG as an off-grid solution. Does the EU need to rethink the 2040 goals? The suggested 2040 strategy set out by the outgoing commission still has to translate into legal proposals for parliament and member states to decide upon. The major question is where the industry will get to in 2040. Achieving 90pc net greenhouse gas savings by 2040, and then climate neutrality by 2050, will require significant investment. We expect an increase in the production of renewable gases by 2030, and a further scale-up towards 2040. But the industry also needs investor security. Some countries such as Italy, the Czech Republic and Spain have mentioned renewable LPG in their national energy and climate plans. That provides some degree of investor security. Will LPG still be part of the EU's heating and transport picture as we move towards 2030 and 2035? Yes, particularly for industrial use as Russian gas is being phased out. Major industries such as steel and ceramics need high heat that was previously supplied by natural gas, which cannot be replaced everywhere with electricity. There is significant interest from energy-intensive industries. For heating and boilers, the commission is developing guidance documents defining fossil boilers, which must outline a future pathway for boilers, especially important for off-grid areas. Those guidance documents need to recognise that boilers can run on both fossil fuels and renewable blends. Is an extension of the ETS [emissions trading system] to transport and heating proceeding smoothly for the LPG sector? The expansion of the ETS is new for many in the sector, requiring firms to establish trading for ETS allowances. While some companies were already under the ETS, the EU-wide extension now includes medium and small-sized firms, which face crucial upcoming deadlines. Companies must estimate their emissions and purchase allowances, adding costs for consumers. And implementation has been challenging for some member states, particularly in identifying relevant companies falling under the ETS, making the process more difficult than anticipated. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Q&A: DCC Energy eyes further LPG and low-carbon growth


18/06/24
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18/06/24

Q&A: DCC Energy eyes further LPG and low-carbon growth

London, 18 June (Argus) — Dublin-based DCC Energy continues to expand and diversify, completing 15 acquisitions over the past year that included two in the LPG sector. The company, which owns several LPG retail subsidiaries in Europe, the US and Hong Kong, bought Germany's Progas and the US' San Isabel Services Propane at the same time as it increasingly moves into low-carbon energy markets such as solar, biofuels and energy management services. Argus' Oliver Binks spoke with DCC Energy chief executive Fabian Ziegler about the company's 2023-24 results and its future plans: DCC Energy has been moving into new markets as part of the energy transition. What share of the company does LPG represent? We launched our Cleaner Energy in Your Power strategy last year, aiming to double our profit [and halve carbon emissions] by 2030. We think backwards from the customer, helping them through the energy trilemma, and provide energy solutions consisting of molecules — increasingly green — and often self-generated renewable electrons. We are ahead of schedule. LPG is about half of our profits but only 15pc of our carbon emissions. We believe in LPG's longevity. It is a societally very useful fuel. Like the World LPG Association renaming itself to World Liquid Gas Association, we now move our own definitions from LPG to LG — liquid gas. DCC Energy has said it plans to grow its LPG offering by 50pc by 2030. Which areas geographically and sectorally is the company targeting? Our LG journey took us from Ireland to [the UK], to Europe and to the US. We have just strengthened our position in Germany with the acquisition of Progas. A key growth region is the US. We made a small acquisition there last year. We are currently focused on making our business operationally excellent, namely around serving our customers. For now, the strategy places more emphasis on strengthening in each market rather than expansion into new territory. We like our residential businesses, but we are targeting more growth in the commercial sector, where the case for multi-energy packages is greater. Overall, we aim to grow our LG business, but we need to create more sustainable credibility for LG. We are scaling up biopropane sales across Europe and trialling rDME [renewable DME] in the UK and Sweden, particularly with commercial and industrial customers, to enhance LG's relevance as a long-term low-carbon solution for Europe. DCC Energy's profit rose strongly in the 2023-24 fiscal year ending in March, but overall sales volumes dropped slightly. How much did the LPG segment fare? LG is often a mature market in Europe, however our LG sales volumes increased modestly in the year and we believe they can keep growing. We continue to drive the move from oil to gas for commercial and industrial customers. Many customers really appreciate the ability to make affordable CO2 reductions and having their own energy in a tank reliably supplied by DCC companies. LPG sales in the UK and Ireland came under pressure from a warm winter but still grew on expanding commercial and industrial deliveries. What drove this? Our businesses in Ireland and the UK continue to grow owing to diverse customer segments that are not all weather dependent. Under our Cleaner Energy in Your Power strategy, we act as an energy transition partner. Customers recognise the fiscal and carbon benefits of LG over heavier forms of fuel, driving growth in the transition. And some customers are investing in new off-grid facilities and choosing LG as their fuel sources. And it helps that we can provide broader energy packages entailing electron solutions. We also aim to increase our supply resilience with storage access at Teesside and our Avonmouth terminal project. DCC Energy also reported strong profit growth in Scandinavia driven by LPG. What are your plans in this region? We saw significant LG sales growth [in Scandinavia] last year when natural gas prices skyrocketed and customers wanted security of supply. Our Scandinavian business aims to lead the energy transition, with a focus on understanding our customers' needs and helping them reduce their carbon emissions. We aim to support large-scale production of rDME in Sweden and Norway and to see 50pc of sales coming from a wide range of renewable products by 2030. We have successfully run pilot tests in Sweden with rDME-LG blends at customers' sites, we invested in a rDME-LG blending facility, aiming for first customer deliveries in 2024, and received government funding for replacing LG with 100pc rDME at Bjorneborg Steel. DCC has acquired Germany's Progas and the US' San Isabel Services Propane over the past year. Do you have plans for further takeovers in the LPG sector? We have been one of the most active global buyers of LG businesses for several decades and will continue to pursue attractive acquisitions that strengthen our existing businesses, expand our markets and bring other important capabilities. We see a lot of potential in the US, where our DCC Propane business has achieved significant growth through many acquisitions since we entered that market in 2018. We continue to see many interesting opportunities in the US, which is far more fragmented than most European markets, with the top 20 propane retailers accounting for 40pc of the market and over 4,000 independent [firms accounting for 60pc]. Progas owns the Brunsbuttel and Duisburg LPG terminals in Germany. Given Poland faces a looming supply deficit when EU imports from Russia are banned from December, is DCC Energy looking at supplying Poland from these sites? The Brunsbuttel and Duisburg terminals were welcomed into DCC's portfolio in northwest Europe, where their primary role remains unchanged — to provide supply security to our customers. Spare capacity might be used to support the Polish market. We see the capacity of our existing infrastructure in Germany to be sufficient to support our business there. Earlier this year, we created a central supply and trading team out of Amsterdam, called DCC LPG Procurement, which will look at more infrastructure plays. But we are not in the supply business for the sake of it. Our strategy focuses on our customers and providing them with sustainable solutions. Germany is a good example. Our priority in Germany is a seamless integration of Progas and Tega, [acquired in 2018], that is good for customers and our employees. And building out a leading energy management services business. Flogas recently commissioned the Teesside LPG terminal near to Dimeta's upcoming rDME plant. Does Flogas plan to distribute DME or other renewable gases from the site? Being at an energy hub clearly opens possibilities for sourcing low-carbon energy sources such as rDME that can be unlocked for our customers. With the likelihood that rDME will need to be blended with propane to achieve supply without changing infrastructure and equipment, it will be important for rDME sources to be logistically close to sources of propane. Teesside is well placed to offer this solution. At what stage is the Avonmouth terminal project at? The first 17,000t tank is fully refurbished and two truck racks have been put in place such that Avonmouth terminal now already plays an important role in providing supply security to our customers in southwest England. A further 17,000t tank will be refurbished and a connection will be made to the Bristol port to enable midsize LPG carrier imports. We expect first imports in 2026-27. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US Fed signals one rate cut this year


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12/06/24

US Fed signals one rate cut this year

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US inflation eases to 3.3pc in May as Fed meets


12/06/24
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12/06/24

US inflation eases to 3.3pc in May as Fed meets

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Brazil LPG usage review due in Nov


07/06/24
News
07/06/24

Brazil LPG usage review due in Nov

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