May 2023: Renewable propane market conditions

May 16, 2023 By    
Source: Propane Education & Research Council

Source: Propane Education & Research Council

Commentary: A panel discussion at the 2023 Southeastern Convention & International Propane Expo addressed the question: Can the propane industry achieve a billion gallon market for renewable fuels? Government incentives will play a key role in market growth. Two incentives currently drive the market: the U.S. Environmental Protection Agency’s (EPA) Renewable Fuel Standard (RFS) and California Air Resources Board’s Low Carbon Fuel Standard (LCFS). Several more states have passed or proposed standards similar to California’s.

Compliance under the RFS is achieved by blending renewable fuels into transportation fuel or by obtaining credits, called RINs, to meet an EPA-specified carbon reduction threshold. Currently, renewable propane can earn a $1.98 credit under this standard as long as its carbon intensity (CI) is below that threshold.

Under California’s LCFS, the lower the CI, the higher the credit. For example, renewable propane with a CI of 45 gCO2eq/MJ currently earns a $0.26 credit under the LCFS, whereas renewable propane with a CI of 20 gCO2eq/MJ earns a $0.40 credit.

EPA and LCFS credits are limited to renewable propane used in the transportation market, meaning autogas gallons and, in California, forklift gallons qualify.

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