propane factsA lot is happening in the renewable propane industry these days, with development, production and usage all ramping up. This is excellent news for home comfort providers and customers alike.

If you’re not fully versed, you might be confused by what renewable propane is and how it’s used. Here are ten essential facts you should know.

1. Most Renewable Propane Comes from the Same Process as Biofuel

Just as conventional propane is a coproduct of crude oil and natural gas extraction, most renewable propane can be considered a coproduct of biofuel creation. Many of the same feedstocks that go into creating biofuel — animal oils, vegetable oils, biomass — are used to create renewable propane.

2. Renewable Propane is a Gallon-for-Gallon Substitute for Conventional Propane

Conventional propane and renewable propane are molecularly identical. They can coexist in the same equipment without modification. And all the efficiency of conventional propane is present in renewable propane. It’s over 90 percent efficient in modern heating equipment and produces 43 percent fewer emissions than an equivalent amount of grid-produced electricity.

3. Renewable Propane Reduces Landfill Waste

Production of renewable propane diverts used cooking oil and meat fats from languishing in landfills. In 2018, in conjunction with biofuel production, renewable propane production used the following as feedstocks:

That’s a lot of waste being put to good use!

4. Soybean Farming Benefits from Growth in Renewable Propane

Soybean oil is one of the most common feedstocks for both biofuel and renewable propane. It comprised 57 percent of all feedstocks in 2019! This presents enormous opportunities for soybean growers in the United States.

5. The U.S. Produces 200,000 Tons of Renewable Propane per Year

The 200,000 tons of American renewable propane currently made is only 0.1 percent of total propane production. There’s tremendous potential for growth as more resources are dedicated to renewable propane production. Also, since renewable propane is often a coproduct of biofuel, they will scale up together.

6. Renewable Propane Is Already in Homes and on the Road

Unlike many renewable products and technologies, renewable propane is not theoretical or planned for the future. It’s here today! Even back in 2019, 7.6 million gallons of renewable propane were in circulation in the U.S., heating homes, powering appliances and fueling vehicles.

7. For Carbon Intensity, Renewable Propane is Incredibly Low

Renewable propane’s carbon intensity ranges from 20.5 to 43.5 grams per megajoule. That places it well below grid-based electricity, diesel and gasoline. It’s also one-half to one-quarter the carbon intensity of conventional propane.

carbon emissions of energy sources

In fact, renewable propane is carbon neutral at the point of combustion. A recent study determined that if one million European homes that currently exist beyond the gas grid used renewable propane, this would eradicate up to 5 million tons of carbon dioxide emissions!

8. Renewable Propane Helps Us Breathe Easier

Carbon dioxide emissions reduction is just one of renewable propane’s environmental benefits. When burned in vehicle engines, it produces far less nitrogen oxide than gasoline. Nitrogen oxide is a contributor to acid rain and respiratory issues.

9. Renewable Propane Could Soon Have Negative Carbon Intensity

Research happening right now could bring us to a place where renewable propane produces net-negative carbon emissions. One of the most promising tools for reaching this goal is dimethyl ether (DME). Researchers can now synthesize this biogas from animal waste. This prevents the release of methane and carbon dioxide into the atmosphere, and the product can be blended with propane.

10. Businesses and Governments Recognize the Value of Renewable Propane

There’s almost infinite potential with renewable propane, and both the public and private sectors seem to recognize this. Their investment in its future is vital.

Recently, we’ve been happy to see California’s Innovative Renewable Energy for Buildings Act, which will create incentives for renewable propane producers to create fuel for state buildings.

We’ve also seen major corporations like U-Haul, Suburban Propane Partners and UGI acquire and invest in renewable propane technologies, development and production. Hopefully, this investment will lead to continued evolution and growth for this vital, innovative fuel source!

Is there a topic you want us to explore? Drop us a line!

Conventional Propane Accelerates Decarbonization — Renewable Propane is Even Better!

propane vs electricityTo hear some pundits and public officials tell it, the only way to achieve a net-zero energy future is to electrify everything. That means dramatically altering how Americans heat their homes, cook their food and drive their cars.

Unfortunately, advocates of “electrify everything” are often more interested in producing good headlines than good environmental policy. Electricity has many important uses but also many drawbacks. Putting all our eggs in the electrification basket is short-sighted, reckless and not especially effective in helping the planet.

Right now, we have an eco-friendly, domestically-produced energy source in propane. Propane is more efficient than electricity for heating homes and powering appliances; its carbon intensity is far lower than typical grid-sourced electricity.

And propane is becoming cleaner by the day.

Conventional Propane Leaves Grid-Based Electricity in the Dust

Across the country, electrification advocates are pushing mandates for electric heat pumps, vehicles, water heaters, clothes dryers, cooking ranges, etc. The argument is that forcing these electric conversions will reduce people’s carbon emissions. But this logic is flawed.

Our electric grid is far from clean or energy-efficient. Today, nearly 25 percent of grid power comes from burning coal. One-quarter of all U.S. greenhouse gas emissions came from electricity production in 2020. Meanwhile, we lose 60 percent of all energy used in electricity generation during conversion. It takes 3.03 units of electricity to deliver a single unit of energy to an American home.

Let’s compare this to conventional propane:

What’s true in the home is also true on the road. This year, the comparative analysis showed that propane-fueled medium- and heavy-duty vehicles across 38 states and Washington DC produced a smaller carbon footprint than the same number of electric vehicles charged from the grid.

Renewable Propane Promises Still Greater Carbon Reductions

Renewable propane — molecularly identical to conventional propane but produced using renewable sources — offers an even brighter energy future. It further outpaces electricity for carbon reduction.

Renewable propane, compared to conventional propane, is a fungible product, meaning that no special equipment is needed to transport, store or use renewable propane. It has the same characteristics, including energy efficiency and low carbon intensity.

These products differ primarily in how they are made. Whereas conventional propane is a concurrent fuel product of extracting natural gas and oil, renewable propane comes from organic products commonly used in biodiesel creation: animal oils, vegetable oils, biomass, and other triglycerides.

The feedstock for renewable propane is inexpensive and plentiful, and its conversion process has an extremely low carbon intensity. In fact, renewable propane is carbon neutral at the point of combustion — there is no new carbon added to the atmosphere.

There’s still greater potential for decarbonization with renewable propane that incorporates dimethyl ether (DME), a naturally-occurring carbon gas that can be stored as a liquid under pressure and mixed with conventional propane. DME has exceptional carbon reduction capability, potentially leading to negative carbon output in the future.

The decarbonization value for both conventional and renewable propane is outstanding. They are reliable, sustainable energy sources available today. While we wait for the electric grid to transition to more renewable sources, propane remains this country’s energy solution.

If there’s a topic in the world of propane that you want us to cover, feel free to reach out.

While It’s Extracted Like Natural Gas — Propane is Greener and More Versatile

propane vs natural gasMany people don’t know the difference between propane and natural gas. This is true even of those that use propane in their homes. After all, propane and natural gas look similar when burned in heating systems and appliances. People may also wonder if the propane in their tank is as efficient, safe and eco-friendly as the alternative their local gas utility offers.

While propane and natural gas are extracted through the same process, they have significant differences in composition and sustainability.

Is Propane a Natural Gas?

Simply put, propane is a natural gas liquid. It’s primarily extracted from the same wells as natural gas (also called methane). Fracturing rock basins to extract methane also frees natural liquid fuels. These liquids include ethane, butane, isobutane and pentane, but propane is the most plentiful natural gas liquid.

Significantly, since natural gas liquids are a part of the methane stream coming from the well, extracting propane does not require additional drilling.

And the United States produces a lot of it! With recent advances in extraction, we have become a net exporter of propane. Indeed, we export more than we use!

This means that the propane that American homes and businesses use for heat, hot water, cooking, drying clothes, and recreation is domestically produced. In a time of spiking oil prices, that’s crucial. Even as some propane originates with crude oil production, propane prices are still somewhat insulated from the effects of overseas conflict.

The Difference Between Natural Gas and Propane

At its most basic, the physical difference between methane and propane is density. Methane is lighter than air, and propane is heavier. That’s why natural gas rises and propane settles.

Propane travels as a liquid in tanks. Unlike natural gas, it isn’t dependent on utility lines. This makes it a more versatile on-site energy storage system for homes and businesses, giving consumers energy security.

Propane is Green and Becoming Greener Every Day

Methane is a greenhouse gas. So, while burning natural gas might not release as much carbon dioxide into the atmosphere as burning coal, it’s far from green. When released in raw form, methane acts as a greenhouse gas that’s 25 times more potent than CO2 at trapping heat in the atmosphere.

In contrast, propane is energy-efficient and clean-burning. It can reach over 90 percent efficiency in use, meaning very little heat energy is lost into the atmosphere. It’s also much cleaner than other energy forms. Propane releases less CO2 than any of the major fuels besides natural gas, but it’s also not a source of greenhouse gas. Propane contains virtually no particulate matter — a known carcinogen — and is wholly non-toxic. Even in the event of a leak, it won’t harm the air, water or soil.

And this is just the beginning of propane’s role in a green future. Today, facilities in multiple states are producing renewable propane. Renewable propane is molecularly identical to fossil propane, but it’s made using organic material like animal oils, vegetable oils, biomass, and plant matter. This feedstock is abundant, inexpensive, and requires low energy to convert. The resulting renewable fuel can have one-half to one-quarter the carbon intensity of conventional propane.

One particularly useful component of some renewable propane is Dimethyl Ether (DME). Captured from carbon in the atmosphere, DME can combine with conventional propane to form a more renewable and less carbon-intense fuel. Over time, you can expect to see 100% renewal propane used in homes, businesses, farms and vehicles.

Lawmakers, regulators, utilities and other stakeholders across this country are currently setting clean energy benchmarks aiming to get us to a net-zero-carbon future. Yet the timelines to achieve this are long. Conventional and renewable propane, however, are here today and only getting more plentiful. They are integral to any balanced green energy plan.

Want to know more about advances in renewable propane? Drop us a line for more information.

Learn more about the benefits of renewable propane

renewable energy optionsRenewable propane is at the forefront of a worldwide quest for cleaner energy sources with a smaller carbon impact.

Residential propane demand is on the rise, accelerated by the current real estate and construction booms. When it comes to residential construction, adding propane appliances to homes has become a popular practice. Propane gas is becoming increasingly popular among homebuyers for its energy efficiency and the amenities it provides such as gas cooking and fireplaces. In homes, propane is being used in the place of electricity or oil for home heating.

The demand for propane in the United States is predicted to reach more than 10 billion gallons every year by 2025.

Renewable propane can not only help meet that demand, but it also gives us a dependable, secure domestically made energy source. It reduces our reliance on imports from other countries as well as aging, poorly maintained, fragile utility infrastructures.

Propane is already environmentally beneficial since it’s produced in the United States and burns cleanly with negligible greenhouse gas emissions. Renewable propane takes our effort to become more sustainable one step further.

What is renewable propane?

Renewable propane is a by-product of the renewable biodiesel process. Propane has been extracted from renewable resources like biomass, animal fat, vegetable oil, and other triglycerides in projects in both Europe and the United States.

This method of producing propane is as safe, cost-effective, and dependable as that for propane generated from natural gas. When compared to electricity, renewable propane has a considerably smaller carbon footprint.

How renewable propane can create a greener tomorrow

Homes and businesses all over the U.S. will be able to easily use renewable propane. It is molecularly identical to propane, so there will be no need to replace or alter existing propane appliances and equipment. As usage of renewable propane increases, it will reduce our greenhouse gas emissions nationwide, helping fight the effects of climate change.

Commercial uses for renewable propane will create a big, positive impact both in terms of the environment and business success.

Advanced technologies are now available for ultra-low-nitrogen-oxide engines. These and other improvements will bring about significant environmental and public-health benefits, particularly in the areas of transportation and stationary engines utilized in transportation and equipment used in all kinds of industries.

Renewable propane can also be blended with propane and utilized in existing propane-powered equipment and vehicles, as well as cars run on propane autogas, because renewable propane is chemically identical to propane. This will reduce air pollution and diesel particulate matter substantially. Cleaner burning renewable propane can also help engines and equipment to run more effectively, resulting in longer life with less upkeep and fewer repairs. Businesses may benefit from tax credits at both the federal and state levels.

Renewable propane is an exciting prospect for a cleaner, greener future for energy. Contact us to learn more about the Renewable Propane Alliance.

Get to know the Innovative Renewable Energy for Buildings Act of 2021 and why it’s so important.

renewable propane california

As awareness of renewable propane ramps up around the country, California remains at the front of the pack. A great example of how the state is maintaining its position as a leader in this space is the Innovative Renewable Energy Buildings Act (AB 1559), which addresses several important—and pressing issues—including the clean energy gap between renewable electricity customers and those who are off the grid (as well as many people in between).

The Innovative Renewable Energy for Buildings Act of 2021 would require the California Energy Commission to establish and implement a program to provide financial incentives for the production of renewable propane, including blends with renewable hydrogen or dimethyl ether, which is used as an energy source for buildings in the state.

Joy Alafia, president of the Western Propane Gas Association, walked us through the bill. She offered insight about the strongest points of the bill as well as many of the ways propane offers an “accelerated and equitable path to carbon neutrality.”

The Focus of the Bill

This is a bill to provide clean energy equity to communities that currently are not being served with a renewable solution.
A Closer Look: This focus begs the question, Why are some communities NOT being served with a renewable solution? A few factors provide the main reasons. Some communities are off the grid in more remote locations, or they may be in areas where other renewable solutions are just not feasible, according to Alafia, who emphasized the value of providing a renewable energy source to populations whose needs are currently not met. California has taken the steps to provide electricity generated from renewable natural gas. Still, Alafia points out that more needs to be done for those communities that do not get their electricity from the grid. This bill solves that problem.

It will be part of the solution in reducing greenhouse gas emissions.
A Closer Look: Having renewable propane helps to decarbonize our building energy, and, again, provide a clean energy solution for consumers. California has a goal to provide 100% renewable propane in California, for all markets by 2050. That would have the impact of averting 2.2 6 million tons of CO2 emissions, which is the equivalent of taking about 537,000 cars off the road every year.

The strain on the grid is very real. We need a portfolio of clean energy solutions, and renewable propane is part of that mix.
A Closer Look: It’s problematic for vulnerable communities that rely on electricity in order to operate. It poses a challenge for businesses. “I’ve experienced a few power shutoffs during the business day,” said Alafia. “That affects our productivity, which I’m sure will be tied to our GDP…I’ve gone to city council meetings where small business owners have expressed frustration on the impact to small shops having to shut down because of power outages and the like. It’s a real problem.”

Current Situation

For those who are on the grid, there’s still the need for supplemental clean energy solutions.
A Closer Look: “I’m really excited about the opportunity to have integrated clean energy solutions working comprehensively to satisfy consumers’ power needs,” said Alafia. Right now, consumers in California and elsewhere are being asked to conserve their electricity consumption due to strain on the current grid.

Electricity costs are on the rise.
A Closer Look: “We do have both an energy crisis and housing crisis in California,” said Alafia. “This is why it’s really important to provide affordable, clean energy solutions in our state. Right now, the average home in California is $814,000. And unfortunately, electricity costs in many areas are increasing by high single and/or double digits. So that’s another reason to provide other, more affordable energy options, and propane has historically not seen such a steep increase in costs to consumers so they’re better able to manage their energy costs.”

Looking Ahead

The renewable propane industry offers a logical way to transition our workforce to green jobs.
A Closer Look: The United States seeks to transition to a green economy. This is a fantastic way to convert blue-collar jobs to green-collar jobs. There’s no new skill set required for distribution and propane workers—it’s the same molecule.

Households will feel the difference.
A Closer Look: About 70% of the homes in California were built before 1980. That’s important because a lot of building regulations in our state that deal with energy efficiency were not introduced until after 1980. So these homes are going to be some of the toughest to decarbonize, or make more efficient. And renewable propane provides, again, an option, part of the solution for how to reduce greenhouse gas emissions for the existing homes.

A Promising Future

“We have the capacity, right now, to potentially produce enough renewable propane to satisfy our entire building market by the year 2025, but it’s not going to happen without this legislation,” said Alafia. “What renewable propane can do that no other renewable solution can do is, kind of, a cost effectiveness for carbon reductions. We could do it quickly and cheaply. It’s one of many investments that we need to make.”

What topics in the world of renewable propane would you like to see us cover? Let us know!

propane supplierOne of the primary missions of the Renewable Propane Alliance is to establish a supply chain for renewable propane by linking together Renewable Propane Producers > Wholesalers > Retailers > Consumers. That supply chain has missing links in most parts of the country and the opportunity to purchase renewable propane is not reaching potential consumers. As we work to reverse this, the industry needs to see an uptick in the three A’s: awareness, advocacy and adjustment.

Tom Jaenicke, vice president of propane marketing for Warm Thoughts Communications, and a founding member of the Renewable Propane Alliance, weighed in on these important issues.

Awareness

We’ve identified four major areas where the first A, awareness, can really make a difference.

  1. Ramping up consumer education. Propane Education & Research Council (PERC) can increase consumer awareness of the increasing availability of renewable propane and its features and benefits to users and to the environment.
  2. Increasing outreach to lawmakers and regulators. The National Propane Gas Association (NPGA) as well as state propane associations can ensure that policy makers understand the features and benefits of renewable propane.
  3. Getting renewable propane onto environmentally conscious consumers’ radars. This consumer group will seek out sources of renewable propane as it becomes available.
  4. Educating suppliers. Propane retailers need to lean in on their traditional suppliers of traditional propane to seek renewable propane supply sources.

Advocacy

Advocacy is a key component of awareness, and it’s up to us within the propane industry to move the effort forward. A real need for subsidies and benefits exists and advocacy is the way to make that happen. Establish lobbying efforts for renewable propane to get similar subsidies and benefits that other forms of renewable energy have.

Adjustment

Producers of renewable fuels, such as biodiesel, Bioheat® fuel and ethanol need to adjust their production facilities and business plans to include the production of renewable propane as demand increases. This needs to happen in many more geographic areas of the country. 

Let’s establish renewable propane as part of the broader renewable fuel conversation going forward.

Only a few producers of renewable fuels are willing to gear up production on renewable propane. The propane retailers who find those sources will have more success in selling to end-users. The trouble is, a few obstacles stand between renewable propane and potential end-users.

At this point the cost of production of renewable propane is higher than that of conventional propane production. This price disparity is a sales barrier to some. Potential solutions include the following:

As these factors improve, consumer demand and price will no longer be a barrier.

Keep-dry contracts: what they are and how they can make a difference

Simply put, a keep-dry contract is a guarantee from the propane retailer to the renewable fuels producer that the propane retailer or other purchaser will buy all the renewable propane being produced over a certain time frame, such as a year. This agreement gives assurance to the producer that they can set up and go into production of renewable propane with a guaranteed sale at an agreed upon price of all that is produced.

Getting propane wholesalers involved in working with multiple renewable propane producers to aggregate production for sales and trades to retailers will open up more of the marketplace, especially to smaller retailers.

What will the upsides—both big and small—look like when the marketplace does open?

With awareness comes favorability. Then comes demand. At that point the expanding market for renewable propane will be a challenge for producers and wholesalers to keep production in sync with demand. Most likely we will continue to see a price differential between renewable propane and conventional propane but the favorability factor of renewable propane will overcome a moderately higher price.

Learn more about renewable propane and the Renewable Propane Alliance today! Check out the rest of the website and contact us with questions anytime.

renewable propane solutionWe recently interviewed Joy Alafia, president and CEO of the Western Propane Gas Association (WPGA); Leslie Anderson, president and CEO of the Propane Gas Association of New England; and Tom Jaenicke, vice president of propane marketing, Warm Thoughts Communications, who are among the founding members of the Renewable Propane Alliance.

They offered helpful context around renewable propane as a general term, what the Renewable Propane Alliance is all about, why it’s important and who is involved.

“Renewable propane is quite simply propane that is derived from sustainable sources,” says Alafia. “Currently the most popular and viable way today, is generating renewable and sustainable propane from things like animal fat and vegetable oil.”

The importance of this cleaner, greener fuel for the near—and not so near—future is certain. Anderson said, “It can be used to offset another energy source, which reduces our overall greenhouse gas emissions.”

“Conventional propane already plays a significant role in reducing carbon emissions when replacing more carbon intensive fuels and as the availability of renewable propane increases, it brings with it the potential for net-zero carbon emissions from a sustainable energy source,” says Jaenicke.

Supply is another important issue. “Of the 10 billion gallons of propane sold in the U.S., only four to five million gallons last year was renewable propane,” Jaenicke states. “The purpose of the Renewable Propane Alliance is to work with producers, wholesalers and retailers to identify the demand and increase the supply of renewable propane, no matter where you’d like to market it across the country.”

Renewable Propane Education Is Key.

Alafia adds, “Another key role for the Renewable Propane Alliance is to educate consumers on the evolution of the propane industry. Many companies are looking for ways to reduce their carbon footprint, and renewable propane provides them with that avenue to achieve their own sustainability targets.”

Ultimately, at this point in time, the first goal of the Alliance is raising awareness about renewable propane. Anderson says, “It’s important that we educate people about renewable propane, because they don’t know it’s out there and it’s really part of the solution as we move forward.”

She explains that the Alliance includes “all the great thinkers within the industry today, the people that are looking down the road at where our industry is going to be—five years, 10 years, 20 years from now.”

Contact us anytime and follow the Renewable Propane Alliance on Facebook. The bulk of these interviews can also be viewed in the new video on our home page.

Plenty Of Room To Grow

future green energyIn our last blog article, we talked about what we have and what we need in the way of demand for renewable propane. We covered, among other topics, propane vs. electric incentives as well as potential growth in demand for autogas. We’ll continue this discussion here, for Part 2.

Research And Innovation

The Department of Energy (DOE) and others offer renewables research and development grants through its National Labs. The work is carried out by academic institutions and private companies. The availability of these programs depends on annual appropriations from the U.S. Congress.

The propane industry has started to make some progress in this space. PERC and NPGA recently re-engaged with the Vehicles Technologies Office (VTO) and the propane industry was part of a pledged 55 projects for $139 million to advance innovative vehicle technology. The propane share of that pledge totaled over $9 million. This is a good example of the propane industry’s focus on propane engine technology. Now we need to convert that type of success into the renewable propane market for the residential and commercial uses of renewable propane.

Tax Credits: Expanding Beyond Propane Autogas

Currently there is a Federal Fuel Tax Credit in the form of the Alternative Fuel Tax Credit for propane autogas that amounts to approximately 37 cents per gallon. This is another incentive that is directed at engine fuel rather than the residential and commercial markets. Let’s be frank here: the autogas market for propane is a small percentage of the overall propane market. More effort needs to be put on gaining incentives for the use of renewable propane in other market sectors.

For example, dsireusa.org catalogs incentives for renewables and efficiency by state. In Michigan, for example, 73 programs encourage the use of renewables and the installation of high efficiency energy equipment. While very few of these programs apply to renewable propane, the stage is set for increased awareness, increased demand and an increase in credits and incentives programs across the industry and across the country.

Feed-in Tariffs (FITs)

Several states and individual electric utilities in the United States have established special rates for purchasing electricity from certain types of renewable energy systems. These rates, sometimes known as feed-in tariffs (FITs), are generally higher than electricity rates otherwise available to the generator. FITs are intended to encourage new projects of specific types of renewable energy technologies.

Green Power Purchasing

Consumers in nearly every state can purchase green power, which represents electricity generated from specific types of renewable energy resources. Most of these voluntary programs generally involve the physical or contractual delivery of the electricity generation resource to the customer or utility.

Ethanol and Other Renewable Motor Fuels

Several federal and state requirements and incentives are in effect for the production, sale and use of ethanol, biodiesel and other fuels made from biomass. The federal Energy Independence and Security Act of 2007 requires that 36 billion gallons of biofuels be used in the United States per year by 2022.

Several states have their own renewable fuel standards or requirements. Other federal programs provide financial support and incentives for ethanol and other biofuels producers. Many states have their own programs that support or promote the use of biofuels. The DOE’s Alternative Fuel Data Center is a source of information on these types of programs.

Corresponding with the National Propane Gas Association (NPGA) and the Propane Education & Research Council (PERC) can help place emphasis on the importance of accelerating—and creating—more in the way of incentives and parity where renewable propane is concerned.

We’d love it if you would share your thoughts with us as well! Contact us anytime and follow the Renewable Propane Alliance on Facebook.

What We Have And What We Need

renewable energyIn discussions of renewable propane being America’s future energy solution, one of the challenges that this new kid on the renewable block faces is getting recognized for consideration in the long chain of government financial incentives being offered by both federal and state sources for subsidizing renewable energy technology, project and equipment installations, and the actual cost of the renewable energy being produced.

The first step in making this happen will be increased, consistent demand for renewable propane for residential and commercial use. While this includes propane autogas, it also extends beyond the autogas space. In this article, we’ll explore existing incentives as well as areas we’ve identified as leaving quite a bit of room for growth.

Propane Vs. Electric Incentives

On the renewable front in general, several federal incentives exist. But when we look at propane versus electric incentives, the level playing field is missing. Federal incentives for renewables include the Renewable Electricity Production Tax Credit (PTC), the Investment Tax Credit (ITC), the Residential Energy Credit, and the Modified Accelerated Cost-Recovery System (MACRS).

Grant and loan programs are available from several government agencies including the U.S. Department of Agriculture, the U.S. Department of Energy (DOE), and the U.S. Department of the Interior. There is currently not enough recognition of renewable propane in any of these programs. Most of these federal incentives go toward the production of renewable electricity.

Where Autogas Fits In

On the brighter side, renewable propane used for over-the-road autogas is recognized by the U.S. EPA for RINs credits under the Federal Renewable Fuel Standards Program (RFS). RINs credits are recognition of individual batches of renewable fuel, such as ethanol, renewable diesel and renewable propane. These credits are used by the producer or the retailer to offset the higher production cost of the renewable fuel, especially in the earlier stages of the renewable’s demand curve.

If a credit similar to RINs for autogas were also available for the residential and commercial use of renewable propane it would certainly jumpstart the use of renewable propane in those market segments by offering a way to bring the cost of renewable propane within reach of the plentiful conventional propane popular in those markets now.

Propane Storage And Delivery

One of the advantages of renewable propane is its fungibility or interchangeability with conventional propane when considering important factors like storage and delivery. In other words, the storage vessels, delivery trucks, and other approaches to storage and transportation can be used in the same manner with renewable propane as they are with its older sister, conventional propane.

At some point a propane marketer may want to add equipment for storage and mixing purposes of renewable propane but that is probably not a mandatory requirement in the early stages of the demand curve.

Starting Points

A real kickstart for renewable propane would be a system set up like the Renewable Portfolio Standard (RPS) that allows electric utilities to trade Renewable Energy Certificates (RECs) that facilitate purchase of renewable energy production without moving the electricity onto the purchaser’s grid. In the propane world we call that type of transaction an exchange. This type of exchange has not yet been used for purchasing renewable propane without having to actually move the product into the purchaser’s storage.

All of this conversation about increasing government incentives for renewable propane comes with a big note of caution. It is certain that the propane industry does not want to head down the road of over-regulation like the oligopoly public utilities are enduring under government regulation overreach. The key will be finding a balance that gives renewable propane a strong position on several new radars: primarily demand in the residential and commercial markets.

The two energy industry organizations best prepared to accelerate overall incentive improvements and parity for renewable propane use in the residential, commercial and other energy market sectors are the National Propane Gas Association (NPGA) and the Propane Education & Research Council (PERC). Your communication with these two organizations can help them focus on the future of renewable propane.

clean fuel propaneAs the conversation about renewable propane gas intensifies across the industry, the demand angle—and all that comes with it—must be taken into consideration. At this point in time, the production capacity for renewable propane far exceeds the fuel’s actual output. Demand hasn’t caught up to make renewable propane gas a profitable product, especially in the residential and commercial market sectors…YET.

Here’s a look at key milestones the industry needs to achieve as we forge ahead in the world of renewable propane.

Awareness

Overall, public awareness around renewable propane is quite limited. Producers of other renewable fuels, such as biodiesel, have the capacity to produce renewable propane as part of their refining process, but right now they have no reason to do so because propane retailers aren’t asking about availability or trying to order it.

Propane retailers and wholesalers alike aren’t buying—or even demanding—renewable propane. Their unanswered questions include:

Meanwhile, consumers seeking a renewable energy source also don’t know that renewable propane is an available energy option for residential as well as commercial needs. The Renewable Propane Alliance strives to help build that awareness and connect interested parties. As this goal is achieved, the renewable propane gas that is now flowing at a trickle can begin to flood the market.

Timing

The question of “when” is a big one. And the answer depends on how well industry stakeholders will work together to raise awareness about renewable propane. It is likely that a year or two from now, renewable propane will be in a much stronger market position than it is now.

Advocacy And Industry Support

Government agencies and lawmakers have a considerable amount of lobbying work to do in order to ensure that renewable propane has parity with other renewables such as wind, solar and biodiesel. This is particularly important when it comes to subsidies, grants and other funding sources to help offset higher production costs. 

Benefits of Increased Demand

Ultimately, the question we need to answer is, What are the benefits of increased demand? 
It’s clear that increased demand makes renewable propane affordable for all markets that want to transition to renewable energy sources. Renewable propane doesn’t need to be less costly than traditional propane, however, the price spread can’t be unaffordable.

As each of these factors gains the attention it deserves, overall demand for renewable propane as America’s Future Energy Solution will gain the momentum it needs to position this safe, clean and green fuel among the other major players in the industry.

We’d love to hear from you! Contact us with your questions or comments about renewable propane!