According to our experts, the modern bioLPG market consists of up to 200 thousand tons and constitutes a part of the LPG market with a total size of 320 million tons (2020). By 2025, the annual supply of bioLPG is expected to double every year in view of the demand of energy companies as a result of satisfying the requirements for the use of biofuels and reducing CO2 emissions. By 2030, the global LPG market (potential bioLPG market) may grow up to 350 million tons, and the size of the bioLPG market will reach 1.4 million tons per year. The peer review covers only the market sectors of hydrotreated vegetable oil (HVO) and sustainable aviation fuel (SAF) and does not take into account the possibility of expanding other production technologies.
Figure 1. Growing global demand for LPG and forecast of bioLPG production
These volumes of product are mainly consumed at the European market and are created due to the intensification of the process of modernization of refineries and the launch of new projects for the production of biofuels. The key players in this market are leading energy companies, including the British-Dutch Shell, Italian Eni, French Total Energies, Finnish Neste, Swedish Preem. The largest of these is the Neste plant in Rotterdam, the Netherlands, which can produce up to 40,000 tonnes of bioLPG per year. The European market also receives significant volumes of product from a number of other bio-refineries, including the Ekobenz catalytic bioethanol plant (22.5 thousand tons / year) in Poland. Outside Europe, bioLPG production facilities in Singapore and demonstration projects in Japan offer the potential to build Asian supply chains.
There are the following promising bioLPG projects that are at different stages of implementation:
– expansion of the SAF market by the Italian company Sky NRG and the Turkish Tupras;
– biofuel plants from Preem, Brazilian ECB Group, Shell, Pertamina;
– development of a new coolLPG process from the Chicago GTI together with the UN-affiliated non-profit international organization Global LPG Partnership (New York) and its subsidiary BioLPG LLC;
– commissioning of a demonstration plant for Shell IH2 technology;
– development by Japanese companies of Power-to-X technology, as well as research into the transformation of Fischer-Tropsch into bioLPG.
– expansion of rDME biofuel markets by a joint venture of the Dutch energy holding SHV Energy and the American UGI Corporation.
The key issue facing the bioLPG market is to determine the most efficient way to produce fuel. When making an investment decision, market participants take into account the following factors: the availability of raw materials for the technological process, the amount of investment required at the stage of research and development, time required to enter the market, the effectiveness of commercialized technology.
At present, commercial volumes of bioLPG are obtained as a by-product of HVO and SAF during hydroprocessing (Fig. 2), with the yield of LPG by-product usually being 3-10%.
Figure. 2. Scheme of technological processes of bioLPG production
According to the experts, the properties of raw materials (bio oil, biogas, cellulose waste, municipal solid waste, “green” hydrogen and carbon dioxide) are crucial in the production of commercial volumes of bioLPG, which determine the profitability of the process and the possibility of return on infrastructure investment.
Incentives for the development of the bioLPG market in Europe are: the need to achieve the target share of renewable fuels at 40% in the structure of final consumption in accordance with the requirements of the European Commission’s Fit for 55 program; the prospect of extending the European ETS to the housing sector by 2025.
In the United States, renewable fuel standards (RFS) are in the process of adaptation and recognize the compliance of biofuels with renewable identification numbers (RIN). President Biden’s USD 1.2 billion infrastructure investment program is also contributing to bioLPG projects (including Diamond Green Diesel in Louisiana), which is primarily used as a fuel for refining, as well as the transportation and housing sectors. The effectiveness of US government policy has been proven by Oberon Fuels development of renewable dimethyl ether (rDME) and the commissioning in 2021 of the country’s first commercial rDME plant.
Due to growing population needs and the expansion of the petrochemical sector, Asia remains the main regional consumer of LNG. In these conditions, a number of countries in the region are involved in the development of the renewable gas market, in particular:
– in South Korea, as a part of the national ETS, which covers petrochemical companies, LG Chem has started using biofuels in Yeosu refinery processes;
– in the short term, the Chinese ETS is expected to expand to the industrial sector (currently only applicable to electricity generation);
– In India and Indonesia, whose populations traditionally consume large amounts of household LPG, the use of bioLPG is envisaged during the decarbonisation of the sector, subject to infrastructure upgrades.
We estimate that rising carbon prices and global taxation in global liquefied gas markets will improve the competitiveness of biofuels, primarily bioLPG, which can decarbonise the petrochemical, industrial and domestic heating sectors.
