Analysis

In California, could 2021 be propane’s year?

Industrial propane tanks. (Photo: RazorbackAlum, via Shutterstock)

Among the numerous advocates for a wider range of lower-carbon options in the U.S. is one group who’ve not received much attention: the propane industry.

Given the trends on propane usage and production, that may very well change in 2021. Propane advocates think that their fuel is not getting the kind of attention that it deserves from policy-makers, regulators, and environmental lobbyists.

During the Western Propane Gas Association’s recent “Path to Renewable Propane” conference, one of the key presenters was the President/CEO of Santa Rosa-based Blue Star Gas Corp. Jeff Stewart’s company is California’s leading propane marketer for renewable propane.

Jeff Stewart‘s customers in the U.S. are telling Blue Star that they want to “preserve the option to match the best low carbon energy to every use.”

Here was his takeaway from 2020: “Our customers think that greener propane will be an important component for California to address the challenges associated with the transition to cleaner energies.  It can dramatically accelerate carbon reduction and reduce the energy burden for businesses and residences in the state.”

Family-owned Blue Star was founded in 1938. Even with the pandemic slowing the state’s economy, Blue Star has seen a substantial spike in propane demand. That growth has been seen amongst traditional U.S. customers, and in new ones such as backup power needs driven by the fragility and unreliability of the electrical grid. (In recognition of Blue Star’s leading role within the national propane industry, Stewart was elected treasurer of the Board of the National Propane Gas Association, the trade organization that is based in Washington, D;.C.)

Stewart‘s U.S. customers are telling Blue Star that they want to “preserve the option to match the best low carbon energy to every use –– from equipment to appliances. They’ve concluded that “it’s absolutely achievable today, and should be a priority. Both renewable and traditional propane use enables us to dramatically accelerate carbon reduction.”

Some of the key California statewide propane stats are worth noting here:

–2019: 556.05M Gallons

–Projected 2020: 552.45M Gallons

–Projected 2021: 554.59M Gallons

California total propane production

–2019: 491.8M Gallons

–2020 estimated: 431.6M Gallons

–2021 projected: 438.1M Gallons

(This data is from the Stratas Group’s model, built for the Propane Education and Research Council (PERC), using both public and private data.)

The urban poor pay over 11% of their income for their utilities. And the rural poor pay nearly 9% of their income.

Those who argue that propane is a key ingredient in any greener energy system center their case around two attributes:

Affordability: Residential consumer propane prices today are the same as they were in 2005. Since it’s so inexpensive, propane helps address the “Heat vs. Eat” dilemma.

Accessibility: Since no new infrastructure is required (pipelines, T&D network; etc.) it’s more accessible to everyone; It’s safe for non-professionals to handle and use it.

 The case for propane is built around two core ideas.

One: smooth transition to a low-carbon future benefits everyone without creating energy inequity. Propane is a low carbon, non-greenhouse energy that can provide an affordable and accessible transition to a low-carbon future – and it is readily available today in all part of the US. The expensive shift from fossil fuels to renewables has created an energy equity gap. Nationally, the share of income which poorer households spent on electricity rose by one-third during the last decade.

ACEEE’s research report “How High Are Household Energy Burdens?” (published in September 2020) makes the case for fresh thinking about equitable energy futures. It cites data showing that 67% (25.8 million) of low-income households (≤ 200% of the federal poverty level) face a high energy burden. In fact, 60% (15.4 million) of low-income households with a high energy burden face a severe energy burden.

A notable report from Yale University tells that story in Atlanta. According to the non-profit  Partnership for Southern Equity the urban poor pay over 11% of their income for their utilities. And the rural poor pay nearly 9% of their income.

The inequities found in energy bills should be a primary concern for anyone thinking about the road to zero-carbon energy systems.

The Associated Press put the spotlight on a growing number of leaders who argue that California’s “blackouts are highlighting a divide in a region with growing income disparity where access to electricity is increasingly available to those who can afford to pay.”

“California power outages highlight economic disparity”, by Cathy Bussewitz, October 13, 2019).Involuntary utility blackouts do serve to highlight the fact that access to electricity is increasingly available to those who can afford to pay.

In his essay on “Heat or Eat? Finding Balance on the Path to Zero,”  Tucker Perkins argues that the inequities found in energy bills should be a primary concern for anyone thinking about the road to zero-carbon energy systems.

Perkins is the President and CEO of Propane Education and Research Council (PERC).

He goes on to cite an important conclusion that appears in a recent “Energy Efficiency for All” report: “The median urban household pays an estimated $1,812 – about $151 a month – or 3.1% of an annual income of $57,800 on energy bills. The median rural household, comparatively, has an income of $43,000 but spends $1,905 – $159 a month – on energy, or 4.4%. And while the rural poor pay less – $1,580, or $132 a month – energy bills make up nearly 9% of their median annual income of $17,952.”

Two: Low carbon future is best achieved via multiple paths. Big carbon reductions are occurring today thanks to the use of a broad range of clean energies, including low carbon fossil-fuel-based energy.

Large emissions reductions are achievable through a broad range of opportunities.

In order to reduce atmospheric CO2, it’s better to use low carbon energy sources today even if they are not renewable energy sources.

Today’s electric grid is powered mostly by burning fossil fuels, and more than 60% of the energy used to generate power is wasted. Preserving the option to match the best low carbon energy to every use –– from equipment to appliances –– is absolutely achievable today and should be a priority.

Science is successfully turning fossil fuels into new low carbon, low polluting energy that enables us to dramatically accelerate carbon reduction.

 The U.S. Department of Energy’s NREL says  “Large emissions reductions are achievable through a broad range of opportunities, including…substitution of traditional fossil-fuel-based industrial feedstocks with low- or zero-carbon alternatives.”

“Near Zero” (as opposed to “Net-Zero”) is working today, with a 17% renewable grid. In 2019, the U.S. achieved the most significant CO2 reductions in the world, as measured on a country-wide basis. In 2019, 83% of the grid was energized by non-renewables; and more so when hydro is excluded from that calculation.

California is looking for ways to accomplish three goals: improving air quality, lowering the carbon footprint and providing affordable energy.

More than 60% of energy used for electricity generation is lost in conversion. In 2019, U.S. utility-scale facilities consumed 38 quad BTU’s of energy to provide 14 quads of electricity.

In the transportation sector, the California Air Resources Board has identified renewable propane’s carbon-intensity at 45 grams of carbon dioxide equivalent per megajoule, or 45 gCO2e/MJ (feedstock being fats/oil/greases) and 65 gCO2eq/MJ (feedstock derived from plant oil).

Renewable propane producers are identifying additional pathways that will potentially yield carbon intensity values as low as 22 gco2e/MJ. These values are on par, or even lower than, electric vehicles.

The current role that propane plays: the arrival of renewable propane; the emergence of innovative propane technologies – these could become more important as the state government looks for ways to accomplish three goals: improving air quality, lowering the carbon footprint, providing affordable energy, all while avoiding power disruption.

According to the Western Propane Gas Association, the industry is even looking at ways to use renewable propane for customers to generate renewable electricity back to the grid.

The Association’s President/CEO, Joy Alafia says that “the good news from our state association is a commitment to drive innovation with renewable propane.  We have already achieved 10% of our transportation and forklift market and expect dramatic growth of the sustainable fuel in the next few years. The picture for propane is evolving, contributing toward the state’s effort of decarbonization.”

Editor’s Note: Gordon Feller is a board member of the Alliance for Innovation.

 


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