US LPG distributor Suburban Propane was the first company to sell a propane-renewable DME (rDME) blend in California in 2022. The company has also pioneered sales of biopropane in the US and has since expanded into renewable natural gas (RNG) — also called biomethane — and hydrogen. Argus spoke with Suburban's vice-president of renewable energy, Douglas Dagan, about the push into renewables and the challenges ahead:
Could you provide an update on Suburban's renewable DME sales?
We continue to have a strategic partnership with Oberon Fuels, which produces rDME in the US. We are the only commercial seller of a propane-rDME blend — right now we sell to all of our forklift truck and autogas customers from our Anaheim, California, location. The product is a true drop-in replacement that can be used in all propane applications. The blend ratio is currently small, but we are testing higher percentages to determine the maximum drop-in blend level. We received an exemption from the California Air Resources Board [CARB] to run a pilot testing higher blend levels in vehicles.
What is the current blend ratio and what is the maximum you are looking at?
Our commercial blend is 4pc rDME. This ensures no issues as a drop-in replacement. We want to get to a 10pc maximum, but we've done a lot of testing and are delivering at 4pc in the Anaheim market. We are confident there are no issues on the customer side when a 4pc blend is used in an engine. Now we're looking to assess higher blend percentages. Getting CARB pilot approval was the first step.
Why has the maximum fallen from previous estimates of 20pc and then 12pc?
RDME has a lot of potential, but it's more challenging than anticipated. We started testing before the World Liquid Gas Association [WLGA] did. The belief was you could blend up to 20pc and everything would work. It turns out it's more like 10pc — lower than hoped — which means environmental benefits don't scale as fast. You have to ensure no issues arise from the oxygen content in DME, such as seal degradation causing leaks. There must be a high degree of confidence. On the supply side, different blend ratios require dedicated tanks and infrastructure — you can't switch between 4pc and 20pc easily — so it's very costly to have more than one blend.
What are the latest in terms of your renewable propane sales?
We are rapidly scaling — we've sold over 1mn USG [1,900t] of renewable propane in California, where we primarily offer renewable propane. Several programmes support renewable propane, but California credits are the most lucrative. We will sell outside California and are exploring expansion. The biggest challenge is availability. Many producers don't yet see value in separating renewable propane from the stream — it's a by-product, from renewable diesel or sustainable aviation fuel (SAF) production. We're building relationships to say: we have demand, and we'll pay. We just need more of it.
How does Donald Trump's presidency and the resulting pressures on the regulatory environment for the energy transition affect Suburban's renewable plans?
I think the Trump administration is supportive of what we're doing. It has different priorities from the Biden administration, but we still see support at both state and federal levels for our traditional product. On the renewable side, we're developing drop-in renewable propane, as well as RNG and clean hydrogen. There's support for all three. A Trump priority is domestic industry, and our plans are heavily domestic. Every administration brings new challenges. Lack of certainty is the biggest — knowing future policies is hard. Luckily we have a traditional product and a renewable platform that have support from both parties and we think the outlook for the future is good regardless of which party is in control.
Can you explain why the carbon intensity (CI) metric could be an important tool for policy makers?
It's a critical metric, though a bit technical. Policy makers deal with many issues — energy is just one. But the more people understand CI, the better the decisions. The CI scale, developed by Argonne National Lab, is a full life-cycle emissions calculation, covering production and use. Electric vehicles [EVs] are often seen as cleanest, but not always. CI reveals this — the lower the better. For example, if the electricity grid is dirtier than gasoline, switching to EVs worsens emissions. In most US states, the grid is dirtier than traditional propane. Gasoline and diesel score about 100, traditional propane around 80, and renewable propane 20-40.
Suburban is moving into hydrogen and RNG. Is this a diversification strategy or do they somehow complement the core LPG business?
We have a large RNG facility in Arizona using dairy manure and co-feed from organic waste. We can produce 1,000–1,500mn Btu/d of RNG sent via pipeline to California for engine fuel. Its CI score is a little better than minus 350 — phenomenally clean. We're building a new facility in upstate New York, and upgrading one in Columbus, Ohio, that uses food and organic waste. We're also evaluating other RNG opportunities. But we're also growing our LPG business. RNG is a great product — and part of a strategic platform. Digesters make biogas, which becomes RNG. But raw biogas can also be used to make rDME and renewable propane. And RNG can make clean hydrogen — or rDME/renewable propane that can be transported and reformed into clean hydrogen on site. These are all interconnected.
Will the company retain its core focus as a propane supplier?
Yes. Propane is a unique energy source that will remain critical. Many customers are in areas where large-scale grid decarbonisation isn't feasible, so propane as distributed energy is vital. [And] more extreme weather events take down grids. Propane is resilient — useful for heating, cooking and generating electrons to power EVs where the grid can't meet demand. If emergency EVs run on electricity and the grid fails, you need another way to generate electrons. [So, propane has a lasting role.]
Have Suburban's traditional propane sales been pressured by warmer winters?
Winter 2024–25 was much colder than the record-warm winter a year earlier, which had lowered demand. This winter, heating demand climbed and sales increased. But our strategy doesn't rely on cold weather. We're growing non-weather-related demand via traditional and renewable platforms — especially for engines and back-up power. Our goal is to grow both platforms and deploy capital for the greatest returns.
What are your hopes for the rest of this year for the renewables business?
We plan to keep growing RNG production. Output is rising at our Stanfield [Arizona] facility and the other two mentioned. We're also exploring hydrogen opportunities and expect that segment to grow. For renewable propane and DME, we've seen tremendous recent growth — especially in renewable propane. We're pursuing more supply and new markets outside California. Reaching 1mn USG in sales was a big milestone — and we want to keep building on that this year.
