The LPG industry is awash with hype around the molecule dimethyl ether (DME) and its potential to make conventional LPG cleaner or even replace it entirely. The International DME Association's (IDA) annual conference had a distinctive LPG bent last year, as a long-talked-about alternative fuel appeared to finally be emerging from the margins. Argus spoke with IDA executive director Christopher Kidder on the progress made since last year's event and upcoming developments to look out for:
What progress has been made in the DME sector since last year's conference?
Our industry has seen important progress. Early this year, [DCC Energy subsidiary] Flogas Scandinavia delivered its first renewable DME to customer Bjorneborg Steel, while Flogas' plans for a storage and blending facility will enable it to scale up the supply of LPG-DME blends to customers. In Asia, DME producer Bio Friends' second plant — a 10,000 t/yr facility near its first plant in Boeun, South Korea — is on target for completion this quarter. The facility will produce renewable DME using CO2 captured from cement industry emissions for blending with LPG.
In the Americas, Oberon Fuels has continued to produce and sell renewable DME blended into propane to more than 450 customers in California alongside Suburban Propane, and is progressing with a testing programme alongside [Chilean LPG supplier] Lipigas. It is also partnering with Sunvapor and the US Department of Energy on a new solar steam and battery technology to power its production.
The launch of a new DME fuel injector by manufacturer Stanadyne at last year's Detroit Motor Show marked the first of what we expect to be a series of vehicle components and appliances certified to use DME and LPG-DME blends by OEMs. Engine manufacturers are increasingly developing DME applications for off-road, heavy duty and autogas vehicles. We have also seen numerous new partnerships and projects, including one between NextChem, MyRechemical and Dimeta for waste-to-DME production, a major partnership between DCC Energy and Oberon Fuels to develop renewable DME production sites in Europe, and an agreement between North American LPG distributor Superior Plus and InEnTec for the supply of renewable DME to customers in the US.
European policy makers appear to be becoming more accommodating to renewable gaseous fuels. Is the tide turning for fuels such as renewable DME?
The EU remains extremely supportive of renewable DME. One example of this is the emissions trading system (ETS II) bringing all transportation and building energy use under the EU's cap and trade umbrella, helping drive policy and market signals for decarbonisation without disruption. Over the past year, the IDA has joined with other industry associations to support advocacy efforts and conducted a series of briefings with European Commission experts. We are pleased to see an increasing willingness of policy makers to consider, allow and enable renewable fuels with a demonstrable role to play, rather than exclude them from legislation. There is always more work to do, but the short and long-term signals are very encouraging.
Indonesia appears to be dropping plans to switch to coal-derived DME from LPG owing to the high cost of production. Are costs still a major hurdle?
Of the numerous production routes, the conversion of coal to DME has always been one that carried a higher cost, despite the feedstock's low cost and abundance. Technology pathways for renewable DME are numerous and the product's cost will of course depend on the feedstock and the volumes produced. Our industry is confident that demand for significant volumes of renewable DME, and the benefits of the product that addresses global issues such as waste disposal, vehicle emissions and CO2 reductions, will ensure the product remains competitive.
What are the main developments in the DME space to look out for over the rest of this year and in 2024?
There is unprecedented commercial activity around renewable DME adoption. We are likely to see a scale-up of renewable DME production, a wider roll-out of blended product to customers, and a significant expansion of engagement with application stakeholders including OEMs. The IDA, the WLPGA, Liquid Gas Europe and other associations are working to ensure regulations, standards and operational guidance are in place to include renewable DME in the LPG supply. Additionally, there are active projects to showcase renewable DME as a renewable hydrogen carrier, and we expect to see new projects on this front in 2024. Oberon will deploy the world's first renewable DME to hydrogen reformer in California this quarter, which will produce around 1 t/d of hydrogen.
Renewable DME producers around the world will announce new projects. We look forward to seeing Dimeta's progress with [Canadian methanol producer] Enerkem in developing large-scale renewable DME plants, and the opening of the first waste-to-DME plant in the UK. We also look forward to seeing the progress of Flogas Sweden's, Bio Friend's, and Oberon and Sunvapor's renewable DME plans.
How much renewable DME is currently being consumed?
Oberon's Maverick Innovation Center has a renewable DME production capacity of 4,500 USG/d, which the company expects to rise to over 200mn USG/d by 2030. Suburban Propane is currently selling the majority of this to California's forklift and on-road vehicle market through its renewable DME and propane blend.
Do you think a particular country might take the lead on renewable DME?
Looking at existing production and the project pipeline, the US, South Korea and several countries in Europe are clearly leading the way. As the availability of renewable DME increases and global stakeholders take delivery of the product, however, we are likely to see countries that may not necessarily be producers become leading sources of uptake in areas including off-grid heating, industrial processes and autogas. Renewable DME demand is still in its early stages, but as blend percentages are agreed upon by groups such as the WLPGA, we are confident that the carbon footprint reduction potential will drive demand in any country that is offering incentives for low-carbon fuels.
Is the LPG industry doing enough to support the sector?
Our members say their experience with LPG companies has been positive and supportive, and that the value renewable DME offers them is well understood. LPG companies have demonstrated a clear commitment to the development of renewable DME, through the partnerships, agreements and strategic investments already mentioned. This is underscored by an extensiveLPG industry participation in the WLPGA's working groups necessary to facilitate blending renewable DME with LPG.
What plans does the IDA have for the rest of this year?
Over the next six months, the IDA and its members are taking advantage of a steep increase in invitations to speak at international and regional events covering a wide spectrum of topics including renewable liquid gases, the transition to sustainable and low-carbon energy, technology pathways to renewable and recycled carbon fuels, project development and DME applications. The IDA is also working closely with the likes of the WLPGA to keep industry members up to date on various initiatives. This year's 35th World LPG Forum and European Liquid Gas Congress in Rome is an excellent example of such co-operation, with the IDA hosting a lunch briefing on the first day of LPG Week on 14 November.
