News
06/10/26
Q&A: DCC Energy urges support for BioLPG in RED IV
Q&A: DCC Energy urges support for BioLPG in RED IV
London, 6 October (Argus) — 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. By Evelina Lungu Send
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