Oberon’s vision for DME in the propane market

December 18, 2023 By LP Gas

LP Gas reached out to Oberon, a leader in the development of DME and renewable DME, to learn more about how the California-based company views its role in the U.S. propane market. CEO Rebecca Boudreaux shared these responses.

Boudreaux

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

No doubt, propane is a great solution for a wide range of applications, and the industry takes pride in producing a cleaner fuel than many fossil-based alternatives. However, we believe the propane industry can’t simply rest on those laurels. All industries must continue to innovate as regulations, customer demand, the macroenvironment and technology change. That’s where Oberon’s renewable DME fuel comes in.

Collectively, we consume 85 million tons of propane per year that results in an estimated 327 million tons of CO₂e emissions in the U.S. alone. We look at this situation as not just a challenge but also an opportunity for Oberon to help decarbonize the U.S. propane industry.

Blending propane with renewable DME offers the industry a way to reduce its carbon footprint. Renewable DME can be blended with propane at up to 20 percent by weight without major infrastructure changes. Such renewable DME can be made from a range of feedstocks – wood and food and agriculture wastes – creating more production opportunities.

The potential reduction in the carbon intensity (CI) of (renewable DME-blended) propane is about 60 percent. This is a huge leap forward as the propane industry pushes toward carbon neutrality. Further reductions are possible if renewably sourced propane is blended in. These two parallel approaches to achieving industrywide carbon neutrality [offer] a third option: propane + renewable propane + renewable DME.

Rarely does an incumbent industry like the propane industry have an opportunity to evolve in substantive ways to stay ahead of competitors, regulations or innovation. But the LPG industry can address all three by working with Oberon to further embrace renewable DME.

Also, because DME is loaded with hydrogen – as we like to say, “DME is a better hydrogen carrier than hydrogen itself” – and it can be moved and stored like propane, DME offers propane companies a turnkey opportunity to play a major role in unlocking the fast-expanding hydrogen economy. So, as the propane industry embraces renewable DME to reduce emissions, it also is paving the way to enabling the safe, efficient and cost-effective distribution of hydrogen – helping chart a path to growing the value and impact of the industry for many years to come.

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

Oberon’s renewable DME is being blended with propane today and sold for on-road and off-road transportation applications. Presently, Suburban Propane is distributing this blended product to more than 450 companies in Southern California to power forklifts and on-road vehicles.

Do you have plans to increase production capacity in the U.S.? What stage of planning are you in? What locations and feedstocks are you exploring?

Oberon built and currently operates the world’s first commercial-scale production plant for renewable DME in Brawley, California, with a capacity of 1.5 million gallons per year. This plant, which we call “Maverick,” started making renewable DME fuel in May 2021, which is being sold today by Suburban Propane and used by additional partners on three more continents.

Our next production facility “Titania” will be based on the U.S. Gulf Coast and will produce the world’s first carbon-negative, renewable DME. We will be announcing partners in this exciting project soon. More to come.

With numerous projects under development, we currently estimate production of over 200 million gallons per year by 2030 through a combination of large-scale and small-scale production facilities.

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

While most production plants are built on a large scale, Oberon has engineered modular renewable DME production plants so we can match the facility to the size of renewable feedstock sources nearby, enabling both local production and large-scale projects to integrate with global markets. By opening large-scale and small-scale production facilities worldwide, Oberon is making renewable DME more readily available to the entire propane industry.

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

Regulations are not written for innovative fuels like DME. They are written for the here and now. When Oberon started our journey over 13 years ago, there were no regulations in place for DME as a fuel. In fact, when we approached the State of California about how to legally sell DME, they said they hadn’t certified a new fuel since the early 1990s, and that fuel was propane. However, we partnered with California and began the work to create the regulatory framework for DME as a fuel.

Since then, Oberon has diligently worked with regulatory agencies at the state and federal levels to obtain all certifications and accreditations necessary to sell DME in commercial markets. This has taken an extraordinary investment in governmental affairs and regulatory expertise.

In 2012, Oberon initiated work at ASTM International to publish a consensus standard for DME. This fuel-grade DME standard was first passed and published in 2014 as ASTM D7901 and continues to be modified as new information is available. Oberon currently holds the chair for the ASTM DME task force and the Canadian Standards Association’s DME task force.
In 2014, Oberon received the very first biogas-based fuel EPA Renewable Fuel Standard pathway and is the only DME pathway.
In 2015, Oberon successfully advocated with the State of California to change the Code of Regulations to allow the legal sale of DME.
In 2018, CARB determined that if you converted dairy manure (CI -150) to DME by the Oberon process that carbon intensity would be -278 gCO2e/MJ.
In 2020, Oberon successfully lobbied for California AB 2663 to change state law to facilitate retail sale and dispensing of DME and set appropriate use fuel tax rates. This was one of seven bills signed that were characterized by Governor Newsom as “legislation that further advances California’s climate leadership and transition away from fossil fuels.”
In 2021, Oberon worked with the California Air Resources Board for a test program exemption and the California Department of Food and Agriculture for a developmental fuel variance to create structures for using DME/propane blends in vehicles in California.

What role do you see hydrogen playing in the U.S. renewable fuels market versus DME/renewable DME and renewable propane?

We believe that hydrogen, renewable DME and renewable propane all have roles to play in the U.S. renewable fuels market. Each is well suited for different applications based on changing market dynamics, infrastructure and availability.

In the U.S., hydrogen continues to gain attention as a potential fuel for a variety of applications, including transportation, industrial processes and power generation. In the transportation sector, hydrogen fuel cells are being used in heavy-duty fuel-cell electric trucks and municipal buses. Major vehicle manufacturers like Hyundai, Toyota, Kenworth, Hyzon, Nikola, Ford and others have already introduced hydrogen fuel cell vehicles to the market or have plans to do so soon. Hydrogen vehicles emit only water and air as byproducts, so they offer a great pathway to zero tailpipe emission requirements.

Renewable propane is more environmentally friendly than conventional propane, and unlike hydrogen, it’s used for more traditional propane applications like heating and cooking, as well as transportation. One of the benefits of renewable propane is that it is the exact same molecule as propane, a fuel that has been reliable for more than 100 years.

At Oberon, we see renewable DME’s primary role as a highly efficient, convenient and cost-effective way to make and move both renewable hydrogen and low-CI LPG. In this way, we’re effectively providing diverse fuel options to meet the unique needs of more homes and businesses, not just in the U.S. but globally. These diversified fuel options can help us achieve a more resilient and cost-effective energy supply chain that doesn’t sacrifice convenience and reliability. Renewable DME and propane blends can be transported and stored using existing propane infrastructure, which will help propane distributors maintain market share in an increasingly competitive environment. These factors make it more likely for these alternative fuels to be adopted by more industries for a greater overall positive impact on our environment.

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?

The “all-of-the-above” approach creates opportunities for the propane industry to generate additional revenue streams while leveraging its existing assets. While the propane industry identifies itself based on one molecule, we think the industry – with its knowledge, extensive infrastructure and workforce – can leverage its ability to move molecules safely and efficiently. The propane industry is ready and capable of moving other molecules such as renewable DME. By broadening its self-perception, the propane industry could generate revenue from propane, renewable propane, renewable DME and hydrogen, primarily using existing infrastructure.

In addition, this approach recognizes that different solutions may be suitable for different applications or contexts, and we feel it maximizes the flexibility necessary to achieve decarbonization goals. During the transition to a low-carbon or zero-carbon future, having multiple options allows for a smoother and more gradual shift. This is especially important in industries where rapid transitions might be challenging due to existing infrastructure and operational considerations.

Using multiple energy sources also provides a hedge against uncertainties and fluctuations in the availability and cost of specific fuels. This diversification can contribute to a more resilient and reliable energy supply chain. Industries can make choices based on economic factors, considering the cost-effectiveness of each solution and the overall economic viability of the decarbonization strategy.

Furthermore, different energy sources may be more suitable for specific applications. For example, hydrogen might be well-suited for certain industrial processes, while low-CI propane could be more appropriate for others. An all-of-the-above approach allows for tailoring solutions to each application’s unique requirements.

While renewable propane is a positive step toward reducing carbon emissions, incorporating other alternative fuels like hydrogen and renewable DME further reduces dependency on traditional fossil fuels while also creating new revenue opportunities for the propane industry. This helps in achieving the world’s broader sustainability and environmental goals while ensuring the long-term viability of today’s propane companies.

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 highly portable molecule and will continue to be used in rural, off-grid communities. By continuing to embrace innovation, the propane industry has the opportunity to offer new propane products with lower carbon footprints as well as create new revenue streams for its companies.

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

As we continue opening more modular plants in various locations, renewable DME will become more widely available, not just for large propane companies but for all propane companies. Those who choose to work with us to provide multiple lower-emission fuel options to their customers can differentiate themselves from nearby competitors. They can help improve our environment while also giving themselves a new marketing angle to capture more customers and positive word of mouth. We believe that consumers, industries and individual businesses will continue to feel the push toward greater sustainability – as they should. And by providing more environmentally friendly fuel options, propane companies can continue to be part of the solution rather than part of the problem.

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Featured homepage photo courtesy of Oberon Fuels