Advanced BioFuels USA

Steven Slome, Joshua C. Velson and Tom Fox  (NextantECA)  Like many chemicals and fuels, propane is at a crossroads.  As is happening for other fuels and chemicals currently, the propane industry is exploring options for increasing the sustainability of their product.  There are several technically feasible options for producing on-purpose bio-propane at a likely reduced carbon footprint to current production, however the competitiveness of many of these routes is unlikely for a number of reasons.  The fate of bio-propane much like conventional propane, is driven by its position as a byproduct; however, there may be some pragmatic approaches for reducing propane’s carbon intensity.

Background: A Shifting Landscape to Low Carbon Intensity

The focus of sustainability has shifted in the past decade to a carbon intensity based model, based upon the emissions resulting from the production of the product.  Carbon Intensity, a new concept to many in the petrochemical industry, is the measure of how much carbon dioxide equivalent emissions are released per unit of product (ton, MJ, or MWh, depending on if it is a chemical, fuel, or electric power).  This puts emissions from each process on the same basis and makes sustainability efforts difficult to greenwash.  Increasingly, many major market players including most international energy companies, chemical companies, and logistics and shipping companies have stated intentions of reducing their carbon intensity.   Many players have stated ambitions of “net zero” based upon their Scope 1 and Scope 2 combined emissions (also referred to as production emissions) as defined by the global standard of the Greenhouse Gas Protocol.  The different types of emissions are defined and illustrated in the figure below:

NexantECA On-Purpose Bio-Propane

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Conventional Fossil-Based Propane: Byproduct of Natural Gas and Oil Refining

As well as bringing the heat to backyard barbecues, propane has been a vehicle fuel for decades.  As a chemical feedstock, it is used to produce propylene an important olefin and part of the backbone of the chemical industry. 

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A lot of this comes from the way fossil-based propane is produced–conventional fossil-based propane is a byproduct of conventional natural gas processing and oil refining. 

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Heating, power generation, and vehicle applications of propane face the same substitution threats with renewable power and alternative technologies that conventional fuels such as diesel and gasoline face— exceedingly low carbon intensity to compete with.  The application that has a much higher hurdle to supply in this fashion would be propylene—however not impossible as e-methanol is produced from CO2 and renewable power in Iceland (by CRI International), and this could be used as feedstock for a methanol to olefins and/or propylene process (of which there are multiple to choose from—mostly in China).

Byproduct Bio-Propane: Along for the Ride with SAF and Renewable Diesel

Similarly, to conventional fossil-based propane, many of the most competitive routes to bio-propane will be byproduct in nature.  

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NexantECA – Byproduct Bio-Propane

However, this is not necessarily as much of a boon for bio-propane as it could be as the low value of the fuel has led some to maximize value in other ways: minimizing the carbon intensity of the higher-value fractions at the expense of the LPG fraction.  As hydrogen has the highest carbon intensity of any of the consumables in HVO process, some developers of new projects are focusing on the LPG and naphtha fractions as feedstocks for the hydrogen production.  This minimization of the carbon intensity allows the maximum value to be obtained for the renewable diesel and SAF fractions and their resulting LCFS credits which make up the bulk of the produced fuels.   Other emerging technologies that may produce byproduct LPG include ATJ (alcohol to jet) technologies and FT liquids (Fischer Tropsch) production.   The current high focus on SAF and renewable diesel production means that significant quantities of bio-propane should become available in the future—however this is still a small fraction of the overall propane market.   

Bio-Propane Intermediates: If You Can Make Them, Stop There

The main stumbling block before many of the on-purpose routes is that the intermediate required to be converted to propane is generally of significantly higher value than the propane. 

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NexantECA Bio Propane

In all expected indicative cases the values required for price parity (on a raw materials basis alone) were in excess of $200 per ton of carbon.  For the $50 per ton level, tens of tons of CO2 would have to be reduced for every ton of propane produced—an unlikely scenario.  

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While the obvious answer is to go to lower value feedstocks, the problem remains that most routes from lower value feedstocks (such as biomass) will still likely have these intermediates as part of the pathway—and there will be more money to be made in selling the intermediates in the near term.  For now, despite the demand for bio-propane, it is clear that there remains a gap between the price that the fuel can command and available supplies.  The future, however, may hold a few different scenarios:

• Rising Tides Lift All Boats: As low carbon chemicals and fuels markets mature, the demand pull for low carbon propane may raise prices enough to cause some on-purpose production to be viable.  

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• A Hail Mary: New and/or unforeseen technology or technologies could help to leapfrog existing restrictions and ensure propane continued use in the future as a low carbon fuel.  

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• The More Things Change, The More They Stay the Same: It may be that nothing much happens for some time and the propane industry continues as-is, more or less unaffected by the current sustainable chemicals and fuels push.  Propane is relatively low on the list of offenders when compared to more pressing issues such as air travel and electrical power.  

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• Another One Bites the Dust: It may well be that propane’s many consumer and industrial users may largely shift to another low carbon fuel source or technology such as electrification if insufficient competitive supply sources come online in time to achieve carbon neutrality targets.  This could be a very long process if it requires new downstream equipment as consumers may be reticent to change—unless outside market factors such as shortages of available propane force the issue. 

The reality is most likely to be some combination of these outcomes in the short and medium term, however ultimately in the long term many propane applications will likely fall to electrification and other changes in technology—the real question will be how long until this happens and what do we do until we get there.

The Current Path Forward With rDME

Suburban Propane is one propane industry player that has viewed the options and bet on rDME. Suburban Propane has both invested in Oberon (a bio-DME producer) and as of April 2022 is offering a blend of rDME and propane (with rDME from Oberon) in California that they claim reduces carbon footprint by 60 percent.  From the values shown in this analysis, DME is the most reasonable on-purpose propane substitute from an economic standpoint—however it does have one key drawback: it’s not propane.  DME is blended with propane—which means that you still need propane.  While this can reduce emissions and the amount of fossil-based propane consumed, it is not a complete solution for net zero emissions on its own.  Much like ethanol in gasoline, it is a step in the right direction and a bridge to the future, but not a panacea—but an important distinction to the renewable space is that these technologies are not competing with each other, but together competing against higher carbon intensity fossil-based products.  Radical changes to the conventional industry, rDME, byproduct biopropane, and electrification will all be required to get to net zero by 2050.      READ MORE