Written on: April 29, 2021
One 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.
We’ve identified four major areas where the first A, awareness, can really make a difference.
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.
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.
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.
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.
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.