Dimeta’s vision for DME in the propane market

December 15, 2023 By LP Gas

LP Gas reached out to Dimeta, a leader in the development of renewable and recycled carbon DME, to learn more about how the Netherlands-based company views its role in the U.S. propane market. Sophia Haywood, head of advocacy and communications, shared these responses.

Haywood

What is Dimeta’s vision for the role of DME and rDME in the U.S. propane market?

Our vision for the U.S. and across the world is that renewable and recycled carbon DME can play a key role in supporting the propane sector in offering defossilized solutions in the future as part of a suite of sustainable alternatives. With on-demand production able to happen in the short to medium term, DME can be an accelerator to decarbonization and complement the development of renewable propane production in the coming years and decades.

What markets or applications for DME are you targeting first in the U.S.?

It will be up to the offtakers from our production plants where they target specific markets or applications with renewable and recycled carbon DME. We will not be selling any product directly to consumers – only to the propane sector. However, through advocacy, standardization and testing work, we are keeping the opportunity open for all sectors to benefit from DME. For example, through our relationship with Rinnai, we are exploring opportunities for the use of drop-in blended DME and propane, as well as dedicated 100 percent DME-compatible equipment.

Tell me more about the production plant you’re planning in the Gulf Coast. What production process will be used? Where will you source feedstock? How will you manage the offtake agreements? We’ve heard that 20 percent of production will be available to the broader U.S. propane industry. Is this accurate to date? Will the other 80 percent go to SHV’s subsidiary Pinnacle Propane?

In July 2023, we announced that we are exploring a 165,000-ton renewable and recycled carbon DME plant on the Gulf Coast with Canadian ethanol and methanol producer Enerkem and a plant in Northwest Europe.

Enerkem has developed a proprietary thermochemical gasification process for converting non-recyclable, non-compostable waste into renewable and recycled carbon fuels such as DME. This feedstock is broken down into syngas in the gasifier, which is rich in hydrogen and carbon monoxide. The syngas is then cleaned and converted into methanol with the help of a catalyst before being synthesized into DME. Enerkem’s process can accept various types of non-recyclable and non-compostable waste as feedstock, derived from municipal, commercial and industrial waste sources and from agricultural and woody wastes.

Both parties selected the Gulf Coast as a key area of interest due to its advantageous characteristics. The region also has benefits when considering integrating the entire complex supply chain, including low-carbon electricity supply and feedstock supply. We are operating a stage-gated project development process, which is typical in the development of large capital projects. This involves reviewing the technical and economic feasibility, sustainability, costs and timeline of plant development at each stage. Within this process, it typically takes between two and four years to get from the early stages of development to the final investment decision on a plant. We recently completed the pre-feasibility of the plant on the Gulf Coast and are in the process of undergoing feasibility – this includes site-specific activities such as negotiating feedstock supply.

How do you see your role in making DME/rDME available to the wider propane industry?

When Dimeta was established, it was critical that the joint venture would support the wider propane industry, not just its shareholders. At least 20 percent of offtake from Dimeta’s production facilities is being made available to the wider propane market. Marketers, big or small, are welcome to speak to our team about the opportunities for renewable and recycled carbon DME offtake in the future.

What are you doing to ensure the effectiveness and safety of DME and propane blends? What technical and regulatory challenges have you faced? What progress have you made?

Safety is of critical importance to Dimeta, which is why we’ve been working with stakeholders across the industry, such as national associations and global equipment suppliers, on addressing risks through testing of materials, evaporation rates and appliances, mainly through the World LPG Association’s workstreams on DME and propane blends. This global work concluded a 12 percent blend limit, and a paper has been submitted to the United Nations to concur with the results.

We’ve also been carrying out our own activities as Dimeta, for example, by partnering with world-renowned testing institutions, such as the British Standards Institute (BSI), to create independent analysis or through our memorandum of understanding with leading gas appliance provider Rinnai, where we’re exploring the opportunities for DME and propane blending and 100 percent DME appliances.

We’ve heard that DME could be used to produce hydrogen. Is hydrogen a part of your long-term business plan in the U.S.? What role do you see hydrogen playing in the U.S. renewable fuels market versus DME?

DME is certainly a very good hydrogen carrier; in fact, there is more hydrogen in a liter of DME than there is in a liter of hydrogen. I wouldn’t, however, say that DME is competing with hydrogen for that reason. I think there is a role for all of these sustainable solutions in the U.S. We’re currently focusing on DME and propane as a drop-in solution or opportunities for 100 percent DME in our advocacy and technical work, but similar to my response on markets – it’s up to the offtakers as to how they utilize the molecule.

In propane circles, we’re hearing about an “all-of-the-above approach” to decarbonization (i.e., using DME, hydrogen, whatever else is available in addition to propane to decarbonize the sector.) What are the advantages of pursuing this all-of-the-above approach versus, say, just renewable propane?

It’s been commented many times at events recently that when it comes to sustainable solutions, “we need more of everything … yesterday.” Just like the propane industry advocates for a mix of solutions for consumers regarding decarbonization policies, I believe the same goes for when we look for routes to get there. This could be renewable propane, DME and propane blends, or hybrid heating systems combining heat pumps and propane, not to mention all of the other stuff we don’t even know about yet. Having a handful of strategic routes, such as renewable propane and DME, can help the sector make the most of what can be on offer and also do what it does best – innovate and bring the best solutions to its off-grid customers.

A skeptic might wonder if this “all-of-the-above” approach is really “hedging your bets” in a way that could deprioritize the propane molecule. What role(s) do you see propane playing in the renewable economy of the future? Can you name specific markets or applications where it would still be a strong player?

Propane is a critical energy source and will continue to play a vital role over the coming years. We genuinely believe that DME, alongside renewable propane, can support the longevity of the propane molecule for many decades – albeit being made from more sustainable sources in the future. Drop-in propane and DME blends mean we can continue to retain propane infrastructure, and 100 percent DME can also bring opportunities for the sector. Perhaps that’s for converting commercial or industrial oil users looking to be more sustainable – therefore growing the propane market as a whole.

How do you envision smaller propane companies benefiting from the all-of-the-above approach you’re pursuing?

Taking a mixed technology approach can certainly give more agility and flexibility to companies of all sizes that are considering what works for them, what are the demands from their customers and what could be a growth opportunity. However, just as we say it should be a “just transition” for propane customers, it’s vital that any transition to renewable fuels is also a “just transition” for the propane sector. I’m particularly passionate about this, having worked for the U.K. propane association before joining Dimeta. This transition is for companies big and small – but it needs to be proportionate and phased in a fair way to smaller companies, who may not have the ability to be early adopters.

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