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The Multiple Pathways to Fossil-Free BioLPG

The LPG sector is exploring almost a dozen different pathways to usher in a decarbonized “bioLPG” future, however, commercial and technical hurdles have yet to be overcome to bring volumes to scale, delegates heard at this year’s World LPG Association (WLPGA) “e-LPG Week.”

Produced from renewable and organic feedstock, bioLPG has an identical chemical structure to conventional LPG, though its carbon footprint is up to 80% lower, according to Liquid Gas Europe, the European LPG sector body.

Already available in a number of European countries, in small but steadily growing volumes, bioLPG can be blended as drop-in fuel and used in existing infrastructure and appliances, without a change or upgrade of equipment.

Current bioLPG output amounts to about 180,000 tons worldwide, according to George Webb, the CEO of Liquid Gas UK, who expects “another 100,000 tons” to be added over the next few years. About half of volumes are used as process fuel.

A Plethora of Pathways

BioLPG can be produced in numerous ways, typically as by-product, using different feedstocks and processes.

Current processes use about 60% waste and residue materials as feedstock and 40% renewable vegetable oils (such as jatropha, algae, rapeseed, palm, soy), with a plethora of production pathways being pursued. Waste includes residues from food processing.

Organic feedstocks have to meet sustainability criteria, and first-generation crop-based feedstocks will be phased out over time, to be replaced by waste and residue materials, according to Liquid Gas Europe. The European Union’s current 7% cap on crop-based biofuels is to be lowered in increments to 3.8% by 2030.

Biorefining has the highest “technology readiness level” and hence already operates at commercial scale. It involves the hydrogenation or hydrotreating of “lipids” — i.e. organic compounds that are fatty acids or their derivatives, such as vegetable oils, biomass-derived oils or animal fats.

Hydrotreated vegetable oil (HVO) or hydrotreated esters and fatty acids (HEFA) are used to produce renewable diesel or sustainable aviation fuel. Waste ‘off-gases’ containing propane occur as by-product. Every ton of renewable diesel/kerosene yields about 50 to 80 kilograms (5-8%) of bioLPG from this purified off-gas stream.

Other advanced options are gasification through the “Fischer-Tropsch” process, which converts carbon monoxide and hydrogen into liquid fuels; gasification to methanol and subsequent methanol-to-gasoline conversion; pyrolysis of biomass; and the methanation of syngas from biomass gasification.

Processes that have yet to make progress are fermentation-to-LPG, alcohol-to-jet, the conversion of biogas/biomethane (oligomerization), glycerin-to-propane, power-to-x and bio-synthesis. The bioLPG cut varies by process, with a few – oligomerization, glycerin-to-propane, biosynthesis – yielding 100% of propane.

“We are probably going to need all of them, at various different places in the world, at various different times, depending on the feedstock, to be able to meet our full potential as an LPG industry,” said Rebecca Groen, sustainable fuels director at family-owned SHV Energy, who outlined the various options.

A Drop-in Solution

SHV Energy also sees an opportunity in converting biogas and industrial waste streams into fuel-grade renewable dimethyl ether (rDME).

“It is the closest drop-in solution to LPG that is available today,” according to SHV Energy’s Mrs Groen, who also represents the International DME Association. “Whilst we do focus on the alternative routes to bioLPG, we need also some opportunities right now to show that pathway. And rDME is one of those very easily achievable, with production technologies available today.”

rDME can be produced from manure, municipal solid waste, biomass and intermediates (biogas/renewable methanol). It is very similar but not identical to LPG, hence can be used blended or pure, with limited modifications to existing LPG infrastructure and similar environmental benefits. “It’s really the easiest and closest solution and one we think it’s really worth exploring together as an industry,” Mrs Groen said.

Rise in Refineries going Green

A number of refineries are observed adding renewable fuel units, such as HVO, pyrolysis, electrolysis, waste gasification, while the conversion of biogas and unconventional lipids (jatropha, algae or even sewage sludge) also draws interest.

Refineries fully switching to renewables tend to be small, uncompetitive or unviable, “usually with a serious handful of government money to do that,” according to Eric Johnson, managing director at Swiss Atlantic Consulting.

“Progress is being made, but it is bumpier than the headlines suggest, and there are considerable risks,” he said. “But the risks of doing nothing are even greater.”

Not all process technologies offering carbon savings are new – some are “resurrected,” and the odd project firm is being “revived” that had gone bust in the past.

Focus on Efficiency, Alongside Carbon Footprint

Mr Johnson’s view that the path to carbon neutrality “isn’t just about renewables, it is also about efficiency” resounded in the words of Chris Smith, managing director at start-up G-volution.

The firm’s dual-fuel technology allows clean fuel types to combust in diesel engines, including bioLPG, which he sees as “very cost-effective, it’s very green, but most of all it can be applied in lots of places.” He mentioned solid-oxide fuel cells run on bioLPG as another option.

“I feel this combination of a clean fuel and an efficient conversion into electricity has tremendous value in a world that is slightly focused on something which is so expensive and impractical as hydrogen, in the medium term,” Mr Smith said. “A lot of people talk about hydrogen. It has got everybody’s attention, but those of us who know the physics of it understand the challenges.”

Assessing the Economics

Walt Hart, vice president and chief strategist for global NGLs at IHS Markit, the parent company of OPIS, was weighing bioLPG economics. “So, at the moment, the prospects of bioLPG depend on the prospects for renewable diesel,” he said at the e-LPG Week event. “There are other processes that could technically make it, but the economics aren’t necessarily supportive.”

“If you did go through the trouble to put up a process that would convert some cheap bio-feed to something else, it’s likely that you would make other liquids – maybe chemicals, maybe other fuels, rather than making bioLPG,” according to Mr Hart.

Faster decarbonization efforts in Europe could pressure prices if LPG from traditional sources is pushed onto the global market. “If you have a lot of LPG going into the market very quickly, it’s more expedient to build petrochemical processes than to build all the infrastructure for residential or commercial markets,” Mr Hart said.

However, he also considered that lower oil product demand in the 2030-40s could reduce supplies of naphtha, on which about 40% of global ethylene output depends at present. “If your naphtha availability starts to get a little bit tight, then you’re looking for other feedstocks, and LPG could really fit the bill on that,” Mr Hart said.

“It seems the world has to keep one foot on the accelerator (r[enewable]LPG) and one foot on the brake (LPG),” WLPGA director David Tyler concluded. “Isn’t there an argument then to channel fossil LPG into developing countries, to displace wood as a cooking fuel, while the developed world goes down the rLPG route?”

Hard Brexit Would Shrivel Gasoline Flows Between UK and Europe

Time is ticking away to sign a Brexit deal, and the European gasoline market is bracing itself in case it has to reshuffle trade flows between the continent and the UK.

If the fishing rights of trawlermen, among other issues, does scupper a free trade agreement, sizeable volumes of gasoline that trades across the English Channel every year will need to find new homes.

The odds on a no deal Brexit have increased to 45%, according to trade credit insurers Euler Hermes. Unless Brussels and Westminster can break the deadlock in negotiations, the UK will fall out of the customs union, whereby EU countries agree not to charge tariffs on each other’s goods.

Many oil products, such as crude and diesel, are already zero-rated for customs duties regardless of origin. But the EU Common External Tariff (CET) for road fuel gasoline, which is termed motor spirit, is set at 4.7%.

In May, the UK’s revised import tariff scheme, known as Global Tariff (UKGT) set a 4% duty on gasoline imports from January 1, 2021.

Both the UK and the EU produces more gasoline than they need domestically, and if there is no trade deal, the motorist should not see any significant bottlenecks or shortages that could impact the pump price, said Philip Jones-Lux, an analyst at Austrian-based analysts JBC Energy. But he does expect to see the current gasoline trade drying up.

“The UK is net-long gasoline, with just under half of gasoline exports heading to destinations in the EU,” said Jones-Lux. “Much of the other half (around 55,000 b/d on average in recent years) goes to the US, with these volumes coming from US-owned refineries in Humber (P66) and Pembroke (Valero). As such, in terms of the impact on UK refiners, it will be highly dependent on where those refineries tend to export their gasoline to.”

Gasoline flows from the Antwerp, Rotterdam and Amsterdam (ARA) trading hub fill the gap in local deficiencies in the UK in terms of volume or quality in London and the south east of the country, Jones-Lux added.

In the other direction, the ARA hub provides a useful outlet for the Stanlow and Humber refineries to sell excess gasoline blending components into.

The UK exported 9.46 million metric tons (78.8 million barrels) of gasoline last year, and just over half headed into the EU, although some of these barrels are stored in bonded warehouses for export to other parts of the world. The Netherlands was the top destination with 3.56 million mt of exports, followed by the US with 2.95 million mt, and third was Belgium with 1.02 million mt.

Meanwhile, European countries exported 2.9 million metric tons of gasoline to the UK in 2019. Some 955,000 mt came from the Netherlands, 460,000 mt came from Finland, 340,000 mt from Norway, and 310,000 mt from Denmark, according to the digest of UK Energy Statistics (Dukes). Although not a member of the EU, Norway is part of the customs union.

Hedi Grati, head of European/CIS refining research at IHS Markit, expects two outcomes in a no deal scenario.

“First, UK refiners that produce UK-spec product will do everything they can to maximize UK sales, backing out imports, for instance those that still hit the Thames Valley [in the UK], Secondly, flows that end up in ARA today, usually non-UK spec product anyway, are more likely to flow directly to export markets.”

While most other main oil products are already zero rated for import duties, the British may notice their heating oil bills rising next year.

The UK has a huge deficit in middle distillate oil products, with its six refineries producing far less diesel, jet and kerosene than it needs domestically.

Last year, the UK consumed 3.4 million mt of kerosene-type burning oil, but the UK’s six refineries only produced 2 million mt of the product, according to data from the UK Department for Business, Energy and Industrial Strategy. The UK imported 425,000 mt of the burning oil from the Netherlands.

“Our imports of it (kerosene) will be subject to a 4% tariff under the UK General Tariffs,” noted Jamie Baker, director of external relations at the UK Petroleum Industry Association.

“Kerosene is a middle distillate whereas gasoline comes from the lighter end of the barrel so one into the other is unlikely to be all that easy, perhaps as shown by the current large export volumes of gasoline versus large imports of middle distillates (diesel, aviation and domestic kerosene),” Baker said.

Trade talks between the UK and the EU have stalled with less than two months to go until the end of the Brexit transition period, but the negotiations are ongoing and will likely go down to the wire.

Euler Hermes still expects a free trade deal will be signed in mid-November because the two sides have too much to lose, especially amid the Covid-19 impact.

The UK would see a 5% drop in gross domestic product, a jump in import prices fueling inflation, and a 15% drop in annual exports, the credit insurer forecasts.

But they calculate that Germany could lose as much as €8.2 billion of its exports to the UK in value, the Netherlands will lose €4.8 billion, and France would lose €3.6 billion, Belgium would lose €3.15 billion, Italy would lose €2.6 billion, Norway and Spain would lose around €2.1 billion each, Ireland would lose €1.4 billion, Poland would lose €1.35 billion, Sweden would lose €800 million, Denmark would lose €740 million, and the Czech Republic would lose €700 million.

35607809 - an extreme close up of a drop of oil creating ripples on an isolated black background
35607809 - an extreme close up of a drop of oil creating ripples on an isolated black background

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