The industry's 100pc renewables target is on track, but its significance will be tested by results of the government's biomass strategy, writes Waldemar Jaszczyk
The UK LPG industry remains confident in delivering its target to transition to 100pc renewable sales by 2040 after a survey published last month showed higher turnover and record investment in 2021. But much will still rest on whether the government includes renewable gases in its upcoming biomass strategy.
The survey, published by industry body Liquid Gas UK (LGUK), portrayed a sector in rude health despite the challenges posed by public policy, rising inflation and Brexit. The industry generated a turnover of £1.1bn ($1.3bn) in 2021, up from £1bn in 2019. It is also on track to attract about £600mn of investment during 2020-25. Of this, £260mn up to May 2023 is earmarked for producing or acquiring bio-LPG, as the industry seeks to play a role in decarbonising heating in off-grid homes.
The UK energy ministry's plans for decarbonising heating is focused on electrification, with a target to end all gas-fired boilers, including LPG, for large firms and industrial facilities by 2024, and for houses and small firms by 2026. About 40pc of LGUK members would like more clarity on the role renewable LPG and other renewable gases play in the route to net zero emissions, the survey finds.
LGUK in 2019 unveiled its target to transition all non-petrochemical LPG sales in the UK to bio-LPG by 2040. Since then, the association has made sustained efforts to mollify policy makers' concerns that the sector will be able to deliver enough renewable supply — domestic demand excluding petrochemical use stood at about 1.1mn t in 2021, Argus data show. These include optimistic forecasts for renewable LPG output by 2040, and the availability of necessary feedstock in competition from other sectors. It also organised a government visit to renewable DME start-up Dimeta's demonstration plant in Wednesbury, Birmingham, ahead of the company opening its first 50,000 t/yr plant in Teesside, UK, in 2024.
These efforts are starting to bear fruit, panellists at LGUK's conference in Edinburgh said on 10 November. The economic challenge of decarbonising off-grid homes has begun to alter the government's perception of the LPG industry, consultancy Gemserv's head of analysis Robert Honeyman told attendees. Electricity prices doubled in the UK in April-October, and roughly half of rural households can afford the upfront cost of heating electrification — as the UK enters a potentially lengthy recession. Including bio-LPG in the heating strategy could save the UK as much as £7bn as no additional infrastructure would be needed, LGUK says.
The government's engagement with the LPG industry was lacking prior to 2021, but it now sees the opportunity for other technologies to help decarbonise heating in off-grid areas, LGUK chief executive George Webb told the conference. The significance of this will be tested by the upcoming biomass strategy, which is expected to outline the role biofuels can play in the UK's net zero future. The industry needs the security of being named in this strategy to accelerate it and propel investment in the next decade, according to the panellists. "The doors are ajar now, but we cannot take our foot off the pedal," they said.
