Biorefineries Can Increase Financial Returns with Renewable Propane

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renewable propane (Credit: NREL)

Biorefineries can increase their financial returns by selling renewable propane instead of using it as a processing fuel or as a hydrogen feedstock, shows a new study by the US Department of Energy's National Renewable Energy Laboratory (NREL). 

"Our models show that capital expenditure investments have the potential to be returned in as little as two months for large biorefineries or up to 14 months under the worst-case scenario," said Bob Baldwin, NREL principal scientist and lead author of the study. Baldwin along with NREL researchers Mark Nimlos and Yimin Zhang spent six months studying the economic feasibility of recovering renewable propane from HEFA biorefineries. HEFA stands for Hydroprocessed Esters and Fatty Acids and refers to vegetable oils and fats used to produce renewable fuels.

The NREL study considered several alternate uses for renewable propane at biorefineries, including using it as a process gas, using it to produce renewable/green hydrogen, or selling it to a propane marketer or retailer. The study concluded that when sold as a fuel, biorefineries would receive the most revenue by leveraging renewable fuel credits even without a premium on the price of wholesale propane.

Biorefineries around the US are being retrofitted to use feedstocks like soybean oil, camelina seed oil, field crop stover, animal tallow, and used cooking oil to produce renewable fuels. In 2021, Renewable Energy Group (REG) opened a new facility to increase production of renewable diesel from 90 million gallons per year to 340 million gallons. This translates to 30-34 million gallons per year of renewable propane, and similar expansions are taking place in other HEFA biorefineries that could easily quadruple this number.

The World LP Gas Association estimates renewable propane could meet half of the world's propane demand by 2050. Today's US biorefineries have the potential to produce 40 to 50 million gallons of renewable propane annually.

A study published last year analyzes the carbon footprint of medium-duty and heavy-duty (MD-HD) engine vehicles powered by propane and electricity. The analysis, Decarbonization of MD-HD Vehicles with Propane,  found that propane-fueled MD-HD internal combustion engine vehicles provide a lower carbon footprint solution in 38 US states and Washington, DC, when compared to MD-HD electric vehicles (EVs) charged using the electrical grid.

To combat this, the analysis showed that the US should aggressively pursue immediately available decarbonization efforts using alternative fuels such as propane and dimethyl ether (DME) rather than wait on grid infrastructure improvements that are decades away from realization.

"NREL's study shows the financial upside of renewable propane for refiners, but the carbon footprint story is even more exciting," said Tucker Perkins, president and CEO of the Propane Education and Research Council (PERC). "When you realize the carbon intensity of renewable propane is significantly lower than grid electricity and other fuels, it is a clean energy breakthrough."

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