The industry's drive to produce more renewable supply gives it a better understanding of what is needed to achieve the milestone, writes Matt Scotland
The European LPG industry has established a credible vision to transition to 100pc renewable supply by 2050 even if steep challenges remain, delegates heard at the European Liquid Gas Congress in Katowice, Poland, over 20-22 May.
Event organiser Liquid Gas Europe's provides a clear vision and plan for the LPG sector to meet all regional demand with RLGs in 25 years' time, panellists told the audience. "Yes, that brings challenges, especially in terms of policy, but we have the credibility now to make it happen," distributor SHV Energy subsidiary Futuria Fuels' chief commercial officer Erwan Chauvel said.
The report shows the industry has enough feedstock, access to it and the production pathways to deliver the renewable molecules needed, panellists said. RLG supply is currently restricted to mostly biopropane as a by-product at hydrotreated vegetable oil and increasingly sustainable aviation fuel (SAF) plants — and it is likely to remain this way in the short term. But the report establishes a viable future whereby a larger share of RLGs come in the form of renewable LPG and DME from on-purpose, direct production routes. "This is a big strategic shift for our industry — we will be able to rely on our own product, which gives us a better perspective on what to address going forward," Chauvel said.
The report also demonstrates enough RLGs will be there to supply customers in rural and off-grid areas, who do not have an alternative decarbonisation pathway, LPG association Gas Energy Australia's chief executive Jordan McCollum said. "RLGs are one of the few, if not the only, decarbonisation option for these customers. If we leave these regions behind, you will not create the political will to decarbonise."
But the report flags the high levels of uncertainty involved, signified through its three scenarios with wide-ranging forecasts. "We need to reduce uncertainty all along the value chain, from feedstock availability, technology neutrality and the need to innovate, and then on to the offtake. You need certainty… to secure investment," US biofuels company Vertimass' chief operating officer for Europe, Cedric Caudron, said. Vertimass is willing to invest at risk initially, but at some stage the market must support it "as we will not be able to finance everything", he said.
Policy levers such as mandates are one way of reducing uncertainty and spreading risk. Blending mandates similar to the UK's for SAF would convince investors that RLGs are not just an unwanted by-product, Caudron said. But they can equally place too much pressure on the industry, according to Chauvel. He argued carrots as well as sticks are needed — it is up to the industry to decide "what the size of the carrot needs to be".
The cost challenge often focuses on the price of the energy rather than the equipment as well, with heat pumps prohibitively expensive upfront, according to McCollum. The cost of RLGs should also not be compared with conventional LPG but rather other renewable forms of energy. "They are not the same product, they are achieving different ends. By comparing a renewable product with a renewable product, you can start chipping away at the enabling policies," McCollum said.
Bottoms up
Local policy-making rather than top-down EU or national-level approaches is also important, the Central European University's Michael LaBelle said. The LGE seems to agree. "One issue is that a lot of decisions come from the European Commission, while the European Committee of the Regions is often overlooked," senior policy officer Leonhard Woessner said. "There are mayors really pushing for a just transition… if member states have freedom to delegate control and power to regions and municipalities, it needs to be done." A crucial piece of legislation will emerge next year in the form of the EU's heating and cooling strategy. The industry must take part in shaping its contents. "We are already doing this," Woessner said.
