The Role of LPG in Shaping The Energy Transition 2018

The role of LPG in shaping
the energy transition

2018 Edition
Disclaimer
All contents of this paper have been compiled with the greatest possible care and attention. The authors of this report
assume no guarantee for the topicality, correctness, completeness or quality of the information made available. The
authors shall not be liable for any damages, whether of a material or immaterial nature, that are directly or indirectly
caused by the usage or non-usage of the infomation provided, as long as they cannot be proven to have acted with
wilful intent or gross negligence.
Copyright Acknowledgements
© 2018 World LPG Association. World LPG Association (WLPGA)
All rights reserved. Neither this The WLPGA was established in 1987 in Dublin and
publication nor any part of it may be unites the broad interests of the vast worldwide
reproduced, stored in any retrieval LPG industry in one organisation. It was granted
system or transmitted in any form or Category II Consultative Status with the United
by any means, electronic, mechanical, Nations Economic and Social Council in 1989.
photocopying, recording
or otherwise, without the prior The WLPGA promotes the use of LPG to foster
permission of the publishers. a safer, cleaner, healthier and more prosperous
world.
All information in this report is verified
to the best of the authors’ and This report was prepared in close cooperation
publishers’ ability. They do not with the Propane Education and Research Council
guarantee the accuracy of the data (PERC) and we thank them for their valuable
contained in the report and accept contributions and support.
no responsibility for any consequence
of their use. This report was prepared with analysis and input
from Ecuity Consulting LLP, a firm of energy policy
experts based in the United Kingdom.
We would also like to thank Liquid Gas Europe for

their valuable contributions and support.
Contents
Foreword by James Rockall 4

Introduction 6
Drivers shaping the global energy transition 7
The role of LPG in shaping the transition 10
The regional context 14
C1. LPG use for heavy and medium duty road transport in the United States 17
C2. LPG use for on-site back-up power across the United States 27
C3. American industrial and commercial application switch to LPG 32
C4. Rural heating shift for European households 43
Foreword by James Rockall
A vibrant global LPG (also known as propane, butane or Autogas) supply chain allows those consumers
not connected to the gas grid to benefit from clean, versatile and efficient gas. The role of LPG is
important and diverse. In mature markets LPG offers solutions as a cleaner alternative to high-carbon
fossil fuels for heating and transport that is also versatile and cost effective. In emerging markets, LPG
fundamentally improves life quality for instance by serving as an available alternative to hazardous
traditional cooking fuels such as wood or charcoal. The opportunities are endless.
The role for this versatile fuel is not time limited. The LPG supply chain is bursting with innovation
which makes investment in it a long-term strategic choice not an interim compromise. Today LPG is
the optimal and cleanest option amongst fossil fuels. Soon a range of innovations will render use of
LPG smarter and more efficient as gas technology breakthroughs available on the grid gain scale off
the gas grid as well.
Delivering the global energy and environmental objectives requires scalable low carbon solutions for
transport, power and heat. Recent progress on electrification of these energy needs has provided a
comfort blanket to policymakers and the public, however it is obvious to many that challenges will
emerge as scale is attempted.
Take California which just passed a clean-energy bill targeting carbon-free electricity by 2045.
Clean Air Task Force, an environmental think tank, estimates that such a target will require 36 million
MWhs of energy storage capacity. Current capacity stands at 150K MWhs1.Quickly scaling
infrastructure to meet this future need will be challenging and costly. However, MIT researchers
estimate that an energy system based on low emissions gas and nuclear power could reduce these
future costs by as much as 62% through decarbonisation2.
Add to this that there are some energy uses which cannot switch easily to electricity (e.g. industrial
chemical processing, high powered heating, etc) it is clearly not feasible to meet 100% of future
energy needs through electrification.
For example, the array of gas transition technologies such as micro-combined heat and power, hybrid
heat pumps or gas absorption heat pumps render the use of LPG much more efficient and unlock
exciting opportunities in a smart home setting. Hybrid applications of LPG power generators, trucks
even tankers create more cost effective, secure and versatile solutions across the economy sectors
and world regions. Increased supply of BioLPG can eventually reduce substantially the carbon footprint
of the supply chain in line with global climate efforts.
1
MIT technology review (2018) The $2.5 trillion reason we can’t rely on batteries to clean up the grid
4 2
Supulveda, N et al (2018) The Role of Firm Low-Carbon Electricity Resources in Deep Decarbonization of Power Generation.
Therefore, the strategic role of LPG should be considered not only over a time span of five to ten years,
but until 2030 and beyond. To drive this debate, the WLPGA is launching this paper which explores
the role and benefits of the LPG supply chain in key markets and sectors, exploring interesting questions
using data-based evidence. We are launching this paper at the 31st World LPG Forum with a focus on
opportunities in the US and EU markets. The world of LPG is very broad and very deep and future
iterations will address other sectors and regions of the world.
The timing has never been better to do so:
The EU is establishing a new climate & energy framework towards 2030 with many EU member states
exploring options to reduce heating emissions by condensing the share of high carbon fossil fuels,
such as heating oil and coal, off the gas grid. What are the opportunities that this development is
opening for LPG particularly with the emergence of gas transition technologies and BioLPG?
The US now stands as the number one LPG producer and exporter in the world. One of the outcomes
of the rise in production has been increased exports without an equivalent increase in the use of LPG
in the domestic market. As the global LPG industry is facing a period of increased supply, what would
be the benefits of diverting more LPG use into the internal US market in the HGV, power generation
and commercial/industrial sectors to replace emission intensive fuels such as diesel and oil?
The outcomes of our research are telling:
•• In the US, diesel overwhelmingly dominates the heavy-duty truck sector. If 50% of new
diesel trucks are replaced by LPG, then by 2030, the carbon and air quality benefit would
be equal to $12 billion and $11 billion respectively. The cost benefit for vehicle owners of
converting diesel trucks to LPG would be just over $29,000 over their useful life.
•• It is estimated that about 30GW of on-site diesel generators will have been installed in the
US by the end of 2018. The carbon and air quality benefit of displacing 50% diesel fuel
with LPG would be $2.5 million and $21 million respectively by 2040.
•• In the US market the industrial and commercial sectors are dominated by coal and oil for
heating. Higher penetration of LPG and eventually BioLPG by 2040 would reduce carbon
emissions by 62MtC02. This equates to a social benefit of $11 billion.
•• In the EU rural heating market, a mixed technology approach to decarbonisation - including

BioLPG and gas-transition technologies - is a third of the cost of a 100% electrification
route, whilst delivering substantial emission savings against heating oil and coal.
I hope you will enjoy this paper and that it will be a useful discussion for all those interested in the
exciting transition that heat, energy and transport sectors are going through.
James Rockall
CEO and Managing Director
WLPGA
5
Contents Foreword
Introduction Drivers shaping the global energy transition The role of LPG in shaping the transition The regional context
C1 – US Autogas C2 – US back-up power C3 – US industrial & commercial C4 – EU heating
Introduction
Globally, energy is undergoing a period of significant transition. Facing complicated challenges ahead
policymakers and industry are having to start to make decisions over what the future of the energy
system will look like and how climate mitigation targets can be met whilst ensuring that an incredibly
rich and diverse tapestry of energy needs are met.
Recognising that energy can be key to economic prosperity and is the linchpin to effective international
development, it is clear that a holistic approach is required, whereby energy sources are considered in
relation to a range of factors, be they environmental or social. Given its centrality to economic growth,
prosperity and health outcomes, the importance of a reliable, lower carbon, affordable energy source
should not be underestimated.
In recognition of these factors, WLPGA has prepared this paper to explore the role and benefits of the
LPG supply chain in key markets and sectors. Our intention is to explore interesting questions using
data-based evidence.
Focussing on greenhouse gas emissions and air pollution this paper provides an analysis of the
monetised environmental benefits which may be delivered by LPG in the following areas:
Replacing 50% of diesel trucks with LPG trucks by 2030.
Displacing up to of 50% of diesel fuel used for backup power across the US.
Substituting existing LPG boilers across Europe to new low carbon LPG technologies such as Hybrid
Heat Pumps and BioLPG fuel.
Switching industrial and commercial premises across the US away from oil to LPG.
One guarantee with predictions of this nature is that they are bound to be wrong however our
aspiration for the review is to start a conversation. In light of the global energy transition, this report
articulates a call for policy makers worldwide to support LPG usage through policy mechanisms and
initiatives, and for business and individual users to consider the merits of this energy source. In a world
that is transitioning away from more traditional fossil fuels, there is very much a place for LPG in the
future energy mix, and, ultimately, LPG has a key role to play in tackling the challenges outlined above.
We look forward to the discussion.
6
Contents Foreword
Drivers shaping the global energy

transition
Air Pollution
One of the most pressing public health concerns of the 21st century, poor air quality is a significant
driver of energy policy. The increased focus on air pollution seen in recent years can be attributed to
heighted awareness and greater public pressure on political bodies to tackle this urgent, fatal issue.
Media attention and ‘airpocalyptic’ images filling our screens coupled with accounts detailing the very
human impacts of air pollution have bought the issue to the forefront of the public psyche, and the
proliferation of campaign groups, public petitions and protests seeking to urge governments to act is
indicative of the fact that this is no longer a marginal political issue. In the UK, a series of successful
legal challenges against the Government by the non-governmental organisation, Client Earth
demonstrated that inaction on air quality was not an option and an ambitious policy trajectory was
required, imminently. Further, in recent years Germany, France and the UK have been sent to the
European Court of Justice (ECJ) for breaching legally binding EU standards for nitrogen dioxide limits.
Additionally, Italy, Hungary and Romania faced similar ECJ trials over their breaching of particulate
matter standards. The message here is clear; countries can no longer get away with flouting
environmental regulations, especially when the quality of the very air we breathe is at stake.
Meanwhile in the US, citizens are utilising a variety of methods to exert political influence vis a vis air
quality. In June, Californian residents voted on, and subsequently passed, Proposition (Prop) 68 which
sought to ameliorate air quality by authorising $4 billion in general obligation bonds for parks and
environmental protection projects. Further, in upwind states such as Delaware (where 90% of air
pollution comes from other states) citizens are petitioning against the Environmental Protection
Agency (EPA) and have held public hearings and meetings on the issue. Further, increased use of social
media as a tool for activism means that the level of scrutiny on policymakers with regards to air quality
is only set to heighten. In 2014, lawmakers in Poland banned the burning of coal as a domestic
heating source after being faced down by a Facebook campaign with over 20,000 followers. Whilst it
is often hard to quantify the impact of social media on political outcomes, it is clear that such platforms
are making people, across the world, far more aware of issues such as air pollution.
The increased focus on air quality and mounting pressure on governments to act is largely due to a
growing body of evidence clearly demonstrating the catastrophic mortality and morbidity rates caused
by breathing polluted air.
Last year, World Health Organization (WHO) statistics revealed that not only are 90% of the world’s
population breathing air containing high levels of pollution, but an estimated seven million deaths a
year can be attributed to said pollution. Of these deaths, around 90% occur in low- and middle-
income countries, therefore certain demographics are more at risk that others - this is clearly not just
an environmental or health issue but a social justice one too. The sheer global scale of the profound
and pervasive threat posed by air quality means that it is at the forefront of contemporary policy
making.
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Contents Foreword
To illustrate the physiological impacts of dirty air further - in essence, particle pollution found within
the air can become embedded in people’s lungs when they breathe. Leading to, or exacerbating, a
myriad of health conditions including lung cancer, heart disease, stroke, asthma and chronic obstructive
pulmonary disorder (COPD).
Despite the scale of the challenge, and the fact that pollution levels remain high across much of the
world, a number of countries have started to take decisive action to curb emissions. In 2017, the
Netherlands faced warnings from the ECJ over its failure to comply with EU emissions targets but has
since been told it is doing enough to limit emissions. For some, the threat or process of legal action is
the catalyst required to tackle the issue head on. Further, there are many policies (both proposed and
realised) that would mitigate, and ultimately, reverse the issue of highly polluted air. With the right
mechanisms and initiatives in place, progress can be made.
Inhalable particles are released from a range of mobile and stationary sources, with the main
contributors being road transport, combustible heating fuels and heavy industrial processes. Question
1 explores the role that LPG can play in transforming the transportation sector (especially with regards
to Heavy and Medium Goods Vehicles).
Given that Particulate Matter (PM) and Nitrogen Oxide (NOx) emissions (the two forms of pollutants
most attributed to premature mortality) can be reduced through a switch to LPG, encouraging wider
use of LPG for transportation, domestic heating and industrial processes should become a policy
priority. Ultimately, LPG can serve as a solution to the toxic air that so many of us currently breathe.
Poverty and Wellbeing
A further driver for energy transition is the increasing recognition of the global energy divide. In certain
parts of the world access to energy remains poor – this intersects with, and impacts on, every aspect
of people’s lives from health, to employment. Ultimately, access to energy lies at the heart of
development. Given that, globally, a billion people still live without electricity, and millions more have
unreliable or unaffordable power sources, emerging economies are having their growth stunted.
Furthermore, it is fair to state that, in some regions, poverty cannot be reduced, nor eradicated,
without access to electricity or gas. The reality of this is epitomised by Goal 7 of the 17 agreed
Sustainable Development Goals, which were agreed in 2016 and which seek to advance development
in various social and economic development issues. Goal 7 specifically addresses the lack of reliable
energy sources in much of the world and seeks to ensure all have access to affordable, reliable,
sustainable and modern energy by 2030. Meeting this target will not be without its challenges given
that many of those who face energy access issues find themselves ‘off grid’ and there is simply not the
financial support or infrastructural means to facilitate them using certain energy types. Nevertheless,
the suitability of LPG for decentralised applications renders it the ideal energy source for off grid, hard
to reach areas, such as those which currently find themselves without reliable energy.
As a result of its flexibility and abundance, LPG can help increase the accessibility to affordable energy
and is a tool for energy development. A modern, sustainable energy source, it can go some way to
reducing the number of people without access to energy. Further, it is safer than many other fuel types.
As many as one billion people cook with traditional fuels or unsafe biomass stoves worldwide. By
facilitating conversion to LPG, the world’s most vulnerable can be safeguarded from the ill effects of
household air pollution (and their associated mortality rate).
8
Contents Foreword
Climate Change
The environment is changing; anthropocentric actions are impacting on every aspect of the world
around us, and ever-shifting energy needs coupled with increasing environmental concerns mean
solutions are required. At the heart of the move to a sustainable future is the transition of our energy
systems towards lower carbon fuel sources. Across a range of sectors, policy has served as a catalyst
for change, seeking to solve pressing environmental issues (such as pollution, air quality and climate
change) by transforming energy systems.
As a result of the issues mentioned, as well as a number of global negotiated agreements, many
countries have a combination of international and national targets to meet in terms of reducing both
greenhouse gas and carbon emissions. Fast approaching and ambitious goals render policymakers
reliant on a clear trajectory and, subsequently, energy policy serves to continue to drive forward energy
system change.
Environmental policy has, and will, continue to drive rapid energy system change. Climate mitigation
and decarbonisation targets outlined by policy makers mean that, in some instances, new energy
sources are required. With a carbon intensity that is lower than coal, LPG releases 30% less CO2 per
unit of energy than coal or oil and consequently serves as an enabler of decarbonisation across the
domestic heating, industrial and transportation sectors.
Increased usage of this lower carbon fuel has already proven to reduce total hydrocarbon emissions by
29% (EPA study, Federal Clean Air Standards). Further, LPG emits 57% less nitrogen oxide than the
standard fuels in use, something which is explored further in the body of the report. Given that LPG is
a lower carbon energy source than traditional fossil fuels, it can serve to aid the decarbonisation
agenda. What’s more, industry is innovating further by producing even greener, cleaner fuels, such as
BioLPG, a fuel source which can be created from wastes and agricultural residues.
Nevertheless, there is more to the story of the energy transition than simply greenhouse gases and
climate change. Energy is an environmental, economic and social justice issue, and the choice of
future energy mix needs to address what can, at times, appear to be conflicting requirements.
9
Contents Foreword
The role of LPG in shaping the transition
With change comes a wealth of opportunities to do things differently and for policymakers and
businesses alike to explore new fuel sources. One such option is LPG. Put simply, LPG is defined as a
fuel type consisting of hydrocarbon gases in liquid form. Sometimes referred to as propane or butane,
LPG has a wide variety of uses, and there is a plethora of ways in which it is ideal for meeting the
world’s increasingly varied energy needs. The compelling economic, social and environmental
arguments behind increasing LPG’s uptake as part of the global energy transition are outlined below
and explored more extensively in the body of this report.
Transportation
In the realm of transport, vehicular pollutants pose a real threat to both the quality and length of
people’s lives. The disproportionate impact of transportation on air quality means that utilising
alternative fuel types is paramount to improving the air we breathe. Multiple studies show the extensive
morbidity and mortality associated with poor air quality. As populations and car usage grow this is
only going to be exacerbated – the busier towns and cities become, irrespective of infrastructural
changes and road building, congestion will worsen. Sjodin et al. (1998) showed up to 4-, 3- and 2-fold
increases in CO, HC and NOx emissions, respectively, with congestion (average speed of 13 miles per
hour, mph; 1 mph =1.61 km per hour) compared to uncongested conditions (average speed, 38–44
mph). Whilst many countries are pursuing an electrification pathway for domestic/consumer vehicles
the infrastructural support required and battery restrictions associated with EVs render them largely
inappropriate for heavy and medium goods vehicles. LPG offers a lower NOx and GHG alternative to
diesel that is well suited to such vehicle types and elicits both environmental and financial benefits.
Heating Homes
As well as being essential to the effective decarbonisation of transportation fleets, LPG can also play a
role within the domestic sphere, offering a lower carbon fuel for household heating and cooking. This
is particularly true of off-grid households which may be reliant on costly electrical heating or highly
polluting oil boilers. Moreover, demand on the electricity grid will increase exponentially if it is used to
displace higher-carbon fossil fuels in other sectors. The bitterly cold winters and unusually hot summers
experienced in many parts of the world in 2018 further place a strain on the grid, reducing its reliability.
As a result, it is anticipated that power outages will become increasingly common. Proposals to manage
demand have been explored but ultimately their reliance on behavioural change renders them unlikely
to be successful, hence it is better to diversify the heating sources households use.
The aforementioned need for reliability highlights how important it is that, worldwide, there are
dependable, storable sources of energy. Renewable energy sources such as solar and wind are less
predictable, and can fail to supply, hence we need reserves of other energy sources (such as LPG). After
all, we cannot rely on the wind to blow, nor the sun to shine.
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Contents Foreword
Industry and LPG
Another area of opportunity lies in industry, where there is an urgent need to decarbonise. In 2017,
the industrial and commercial sectors accounted for 44% of total energy consumption in the US and
produced over 5,000 million metric tons of CO2 (MtC02). Tackling the emissions produced by these
sectors would make substantial inroads in reducing emissions and, without a shift in the types of fuels
industry and commerce are utilising, it is unlikely that any carbon or GHG reduction targets will be
met. The fact that nearly 50% of the industrial sector in the US uses coal means a significant opportunity
exists to switch fuel type to LPG here.
Energy Security
The increasing abundance of certain energy sources serves as another marker of the global energy
transition. With concerns about the scarcity of some energy sources, LPG bucks the trend given its
natural, and increasing, abundance, especially in the US, where, in 2016, 66 million tonnes of it were
produced.
What’s more, globally, as of 2017, LPG production exceeded consumption by around 6 million metric
tonnes, demonstrating its potential and also the fact that it is, at present, an underutilised resource.
In an economic climate where countries are searching for diverse emerging market opportunities, the
LPG industry offers substantial economic growth. Furthermore, at a time of political instability and
global volatility, security of supply is safeguarded due to its natural abundance. There are a wide range
of sources of LPG both inside and outside of Europe. The US is the world’s largest producer of LPG and
has seen domestic production increase by nearly 70% in a decade. In 2017, over half of all US LPG
production (67Mt) was exported. Further, export utilisation averaged only 59% in 2016, meaning
that, in terms of exporting LPG, the US is not meeting its full capacity. Whilst it is anticipated that this
figure will reach 70% by 2020, and there is a projected growth of the global LPG market of 2.75% by
2024, a push (be it political or industrial will) is required in order to stimulate the global LPG market
and allow it to meet its full potential. Consumer LPG sales are anticipated to grow by around three
million metric tonnes (800 million gallons) between 2014 and 2025 (ICF), clear this is a market that,
with the right support mechanisms in place, has a huge amount of potential. LPG is an incredibly
abundant fuel source, an abundance which, up until this point has not been truly capitalised on. Given
that the US currently exports 51% of the LPG it produces, and the shale gas revolution has pushed
down the price of LPG, demand can certainly increase in order to match the heightened supply.
The compelling economic arguments for increased LPG usage and the financial savings it can elicit for
both consumers and businesses are explored further in the body of the report.
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Contents Foreword
Flexibility
The transition towards decentralised energy systems, and the consumer empowerment and autonomy
that accompanies this shift means that flexible power sources are required to meet households
individualised energy needs. Such systems require a flexible energy solution – LPG is a flexible solution
which can serve to satisfy the energy needs of even the most remote communities, with little centralised
infrastructure required. The flexibility of this source is epitomised by recent proposals to use LPG as a
fuel source in Qatar to enable them to meet the increased power demand anticipated during the 2020
world cup when there will be a near 50% temporary increase in population. Ultimately, LPG can be
accessible to everyone everywhere without major infrastructural investment given that there are ample
reserves which can be easily transported using sea, rail or road.
Low Emission
LPG is a very low particulate-matter, NOx and sulphur emitting fuel, meaning that it’s consumption can
improve air quality when displacing highly-polluting fuels such as diesel. Ambient air pollution kills
millions of people prematurely each year and is increasingly understood to be associated with several
serious physical and psychological ailments. Energy, transport and environmental policy cannot be said
to be succeeding if it does not reduce harm to health.
In addition to its potential positive impact on air quality, switching away from high-carbon fossil fuels
– such as oil and coal – to LPG will immediately lower GHG emissions, thereby reducing our impact on
climate change. Indeed, the carbon footprint of LPG is 20% lower than that of heating oil, and 50%
lower than coal.3 Consuming this fuel in highly-efficient gas-transition technologies such as LPG-
hybrid heat pumps or LPG gas-absorption heat pumps, can lower emissions even further.
In addition to this product innovation, the industry is starting to deliver a low emission fuel – bioLPG
– which can be consumed in existing LPG heating appliances without any modifications needed.
BioLPG is already being produced and supplied in small volumes, but the production routes and
opportunities to scale are growing, providing an exiting chance to support even lower emission
vehicles, heating systems, and generators.
3
WLPGA (2017) The LPG Charter of Benefits.
12
Contents Foreword
Information box: BioLPG – production, emissions and potential
BioLPG production has been growing rapidly over recent years. The fuel is currently predominantly
produced from hydrotreated bio-oils in refineries. However, BioLPG can be produced in several
ways and numerous processes, such as gasification and pyrolysis - which are already proven
technologies, and from various feedstocks including agricultural residues and municipal waste.
The varied routes of production and feedstocks available means that the carbon footprint of
BioLPG can vary. This report will assume a central carbon intensity of 20 gCO2e/MJ (informed by
source below) – which can provide an 80%-90% reduction against diesel, oil and coal.
Whilst future production volumes are uncertain and the product of policy decisions and industry
development, the analysis in this report is informed by current production potential estimates
(see reference below). In our scenario modelling we assume that BioLPG is preferred to
conventional LPG as a lower-emission fuel, and production and consumption gradually increases
over time (see figure below).
This report’s analysis should not be understood as a projection of the take up of BioLPG – which
is highly uncertain at this early stage – but more as a scenario analysis considering what if
policymakers and industry support its growing development.
World
160000
Europe
Thousand tonnes produced per year
US
EU LPG consumption
projection
US LPG consumption
80000 projection
0
2018 2022 2026 2030 2034 2038 2042 2046 2050
Atlantic Consulting (2018) BioLPG: A survey of markets, feedstocks, process technologies, projects and
environmental impacts. Commissioned by Liquid Gas Europe/WLPGA
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Contents Foreword
The regional context
2018 has been marked by extreme weather events4. In Europe, and around the world, extremes of
both hot and cold, precipitation and high winds have impacted people, business, communities, energy,
transport, health and public safety. Although individual extreme weather events are hard to pin down
as a symptom of global warming, they can have the effect of galvanising political action towards
tackling the causes of climate change.
United States
The trajectory of US national environmental policy recently represents a marked shift from the policies
enacted and priorities upheld in the past. Previous administrations, prioritised carbon emissions
reduction whereas, today we are seeing attempts to increase fossil fuel use, and denouncements of
environmental policy as an impediment to business.
Recently, fourteen state governors outwardly vowed to uphold previously national agreements on
climate, and, recently, substantial efforts have been made by individual states to influence federal
climate policy. Whilst not every legislative attempt in this realm has been successful, this marks a
significant shift in the way in which environmental policy is devised and implemented in the US.
Currently, a range of initiatives are in play to support federal efforts to mitigate climate change. At
present, twenty states, plus the District of Columbia, have individualised greenhouse gas emissions
targets, and the Regional Greenhouse Gas Initiative (RGGI), established in 2005, uses a cap and trade
program to help states reduce their power sector C02 emissions. The nine RGGI states have set a goal
of reducing emissions to 45% below their 2005 level by 2020.
Under previous administration, fourteen states bandied together to form The Climate Alliance, who
have been predominantly focused on cleaning up electricity grids. The result of this is that emissions
from electricity in alliance states are expected to drop to half of their 2005 levels by 2025.
Further, in the state of New York, the formation of a green bank which seeks to garner $1 billion in
private sector investment for cleaner energy serves as a mechanism to support the Governor’s 50%
renewable energy by 2050 goal. Capital availability not only aids in decarbonisation and climate
change mitigation but also demonstrates the potential profitability of the ‘green’ sector.
As the second largest polluter in the world, it is vital that the US adopts policies and initiatives to
harness cleaner energy, even if they have to be at a state-based level for the time being.
4
World Meteorological Organisation (2018) Start of 2018 marked by extreme weather.
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Contents Foreword
Europe
Across the EU and its Member States there are strong drivers to accelerate the transition towards
cleaner technologies and energy sources, and improved security of supply and infrastructure. Three
key targets5 for 2030 have been set:
1. At least 40% cuts in greenhouse gas emissions (from 1990 levels)
2. At least 27% share for renewable energy
3. At least 27% improvement in energy efficiency
More than 90% of European Union territory is rural and 52% is predominantly rural. Over half of the
EU population (57.4%) live in rural areas and around 22% in predominantly rural areas. In addition,
there are approximately 40.7 million homes with no access to the natural gas grid due to their remote
rural location.
Any transition to cleaner heating fuels must clearly consider the needs of rural consumers who may
also be those facing highest heating costs. There is some evidence that the pace of change is
accelerating:
Firstly, in France where there has been a carbon tax on transport and heating fuels since 2014. The
Government’s most recent 2018 Finance Bill confirmed an increase in the price of carbon from 30.5
Euros per ton (2017) to 44.6 Euros, a rise of 46% in a single year, with further increases projected for
2019 (55 Euros) and beyond. The carbon tax is paid directly by consumers and is no doubt having an
impact on consumption patterns and heating system choice.
Meanwhile, German energy and climate policy has been a central issue within the general election
and subsequent difficulties in forming a coalition. Electoral politics and the growth of the far right in
key industrial areas presents serious challenges to more ambitious climate policy, however a Commission
for Growth, Structural Change and Employment was formed at the beginning of June. The Commission
will publish a timeline by the end of 2018 with a concrete date for the end of coal power generation
alongside plans to mitigate the impact on employment in mining regions of the country.
Turning to off-grid heating, a number of countries have signalled their intent to tackle high fossil fuel
heating with proposals for a ban on sale of oil boilers. The federal government in Belgium has
established its “Energy Pact” collective of short, medium and long-term energy policy objectives and
a set of concrete policies which support these aims. The Pact sets 2035 as the end-date for the sale of
new oil boilers.
Finally, in 2018 a coalition in the Netherlands (including boiler manufacturers) proposed that the
country should phase out new sales of 100% gas boilers by 2021 leaving hybrids, heat pumps, and
district heating as the options available when replacing or installing a new heating system.
5
EU Commission (2014) 2030 climate & energy framework.
15
Chapters
1-4
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Contents Foreword
C1. LPG use for heavy and medium duty

road transport in the United States
Diesel overwhelmingly dominates the heavy-duty truck sector in
the US and is also the number-one power source for medium-duty
vehicles. What are the monetised environmental benefits that
could be accrued through a transition to LPG?
Executive Summary
Medium and heavy duty trucks almost entirely use diesel for fuel. The negative impact this has on air
quality is well-documented.
LPG can play a significant role in reducing the adverse impact on air quality.
Replacing new diesel trucks with LPG could save the US economy $11 billion in abated NOx emissions
and $12 billion abated C02 emissions by 2030.
Poor Air Quality: a public health crisis
Poor air quality in the US poses a profound, persistent threat which cannot be ignored by policy-
makers and industry.
The morbidity and mortality rates associated with air pollution are appalling; globally pollution kills
more people than war, Malaria and HIV/Aids combined. In the US, it is estimated that around 200,000
people a year die from pollution related causes. Of these, at least 53,000 premature deaths a year are
attributable to emissions from road transportation alone. This means that, each year, vehicular
pollutants kill more people than other leading causes of death such as road traffic accidents, kidney
disease and septicaemia.
Further physiological impacts of air pollution include the induction of acute exacerbation of both
COPD (the third leading cause of death worldwide6) and asthma. High levels of air pollution can
increase the likelihood of acute asthma episodes amongst those with moderate to severe asthma, and,
even short-term exposure to poor quality air can increase the likelihood of needing to visit the
emergency department for asthma treatment.7
6
Lopez-Campos, JL et al (2016) Global burden of COPD.
7
Jaffe, DH et al (2003) Air pollution and emergency department visits for asthma among Ohio Medicaid recipients
1991-1996.
17
Contents Foreword
In addition to the physical impacts, being exposed to high levels of airborne particulate pollution has
psychological effects and can cause or worsen, a myriad of mental health issues. There is increasing
epidemiological evidence to suggest an association between air pollution and depression, anxiety,
dementia and cognitive development. As well as potential links to a reduction in intelligence and
cognitive performance8.
Whilst ambient air pollution is derived from a range of fuel combusting sources (including industrial
processes and domestic heating), the most significant contributor is vehicular pollutants. NOx emissions
from the transport sector account for 59% of total US NOx emissions and, at the heart of this issue lies
diesel usage.
Despite the bleak picture painted above, the air quality crisis is rectifiable and, in fact, reversable. With
the right policy mechanisms in place, the harm caused by vehicular pollutants can be reduced
exponentially and the ideal starting point is with Heavy and Medium Goods Vehicles (HGVS and
MGVS), vehicle types which not only contribute disproportionately to air pollution but which,
encouragingly, can be easily, and cost effectively, adapted to using LPG as a fuel.
The Contribution of the Transport Sector
The EPA targets six “criteria air pollutants” which are known to be particularly harmful to human
health and are most persistent in the US. These six are - ground-level ozone, particulate matter
pollution, carbon monoxide, lead, sulphur dioxide and nitrogen oxide (NOx). NOx emissions are
primarily produced from the combustion of fossil fuels – and are associated with transport activity. NOx
– and in particular NO2 emissions – are known to cause a variety of respiratory illnesses, which have
real-life social and personal health impacts.
Figure 1 provides an overview of the state of NOx emissions in the US. The graphic shows that despite
a gradually improving picture of technology improvements over time, transportation remain the most
significant source (59%) of NOx emissions.
301
1282
2839
6355
Stationary fuel combustion Transportation

Industrial and other processes Other
Figure 19- US NOx emissions by sector (thousand tons) (EPA, 2017)
8
Zhang, X et al (2018) The impact of exposure to air pollution on cognitive performance.
9
EPA (2018) Air pollutant emissions trends data.
18
Contents Foreword
It is clear that transport emissions must be tackled if NOx is to be reduced to safe levels.
Within the transport sector, the combustion of diesel is recognised as a key contributor to localised air
quality issues. According to EIA data - in 2017 total diesel fuel use by the transport sector stood at 168
million tonnes of oil equivalent. The medium and heavy-duty truck sector accounted for 75% of this
(126 Mtoe). Given that diesel as a fuel is harmful to the environment and medium and heavy-duty
trucks account for 75% of its consumption, policies to tackle this segment should be considered.
Diesel powertrains dominate the MGV and HGV market (see figure 2). Without supportive policy
frameworks to encourage the development and deployment of alternative fuels, this dominance will
not change over time. Add to this an expectation that the annual sales of trucks will rise over the
coming decades (figure 3), and it is clear that policymakers and industry need to urgently consider the
ways in which vehicular emissions can be reduced, else face a worsening air quality crisis.
Ga s oline, 10%
CNG/LNG, 1%
Di esel, 90%
Figure 2 - % fuel use of MGVs and HGVs in the US (EIA, 2017)
300
250
Annual sales (thousands)
200
150
100
50
0
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Medium-duty trucks Heavy-duty trucks
Figure 3 - projection of new medium and heavy-duty trucks in the US (EIA)
19
Contents Foreword
Pollution Reduction Challenges: how to tackle emissions from new

and existing trucks?
This chapter considers how the US can immediately tackle diesel MGV and HGV emissions – both in
terms of air pollutants (NOx) and GHGs. We consider that policy solutions will be needed for new OEM
vehicles – which must be low emission, and practical in terms of operation, cost and range.
For new trucks - whilst electrification proves problematic for very large vehicles – the challenge is to
support low emission standards. The energy density of batteries means that EV trucks would either
need to be re-charged often, or large and impractical batteries would need to be installed to provide
the required range. For this reason, low emission, non-electrical alternatives need to be found in the
near-term.
Playing its Part: an increased role for LPG
LPG (also known as Autogas) can play a role in lowering emissions from both the OEM-new vehicle
and existing aftermarket retrofit segments.
Figure 3 shows increasing annual sales of new-trucks projected out over the coming decades. Here,
LPG OEM trucks can replace some of the growth in new diesel sales.
As of 2016, according to the WLPGA, there were around 155,00010 LPG vehicles in the US, with
13,045 new LPG vehicles and fuel systems sold in 2017 alone, 40% of which were medium/heavy duty
trucks.
The environmental benefits are clear - LPG is a lower NOx and GHG alternative to diesel. NOx savings
have been found to vary from 96%11 to 5%12 depending on vehicle-type examined and study (see
figure 4). In addition, GHG emissions are typically lower in LPG vehicles (see figure 5).
Figure 4 - automotive pollutant emissions by fuel type3
10
WLPGA (2017) Statistical Review of Global LPG 2017.
11
Atlantic Consulting (2009) LPG and Local Air Quality.
12
PERC (2017) GHG and Criteria Pollutant Emissions.
20
Contents Foreword
NOx total (g/mmBtu)

80 105,000
GHG (g/mmBtu)
GHG well-to-wheel emissions (purple marker)

70
NOx vehicle emissions (blue bar)
100,000
60
50
95,000
40
90,000
30
20
85,000
10
0 80,000
Gasoline Diesel LPG
Figure 5 - US vehicle NOx and GHG emissions by fuel type (GREET, 2017)
Significant cost savings can be achieved from switching diesel trucks to LPG trucks. We consider three
lifetime costs - maintenance, operational and fuel. The total lifetime undiscounted cost of a diesel
truck comes to $299,266 while the cost for an LPG truck comes to $270,700. This yields a cost saving
of $28,566 (refer to appendix for a full breakdown of assumptions).
Figure 6 below shows LPG trucks have lower fuel and maintenance costs compared with diesel trucks.
The capital costs, however, are slightly higher as this is due to converting the truck to use LPG as a
primary fuel.
LPG truck
137,000 130,000 3,700
(converted)
Diesel truck 125,000 149,016 25,250
0 50,000 100,000 150,000 200,000 250,000 300,000
Total capital cost, $ Total fuel cost, $ Total maintenance cost, $
Ecuity Economics
Figure 6 - diesel vs LPG truck lifetime cost comparison (see appendix at end of chapter for assumptions)
21
Contents Foreword
Converting all school buses to LPG could pay salaries for over 23,000
extra teachers.
Take school buses for instance; Blue Bird have recently delivered 12,000 LPG buses to schools
across the US with great success. Given the health risks conventional diesel buses pose, having
LPG buses picking up children reduces their exposure to harmful air pollution, as well as offering
environmental benefits to their communities. Improving health outcomes for children and young
people in turn improves their ability to succeed in education, a study by Rondeau et al reported
a link between long-term exposure to ambient levels of particulate matter and NOx and illness-
related school absenteeism. Additionally, LPG school buses are quieter, reducing noise pollution
and also better equipping drivers to focus on the road ahead.
Not only do LPG buses increase levels of student comfort and safety, they have also been proven
to save school administrations money. In the state of Nevada, the 48 LPG buses in operation
transport 18,400 students daily and save the state around $80,000 a year (in comparison to
their diesel counterparts). This saving demonstrates the potential of LPG vehicles to save
significant amounts of money. There are currently 15,600 LPG school buses in operation across
the US; if the remaining 458,594 (according to SBF the 2018 total bus population is 474,194)
school buses which are currently fuelled by diesel are converted to LPG then – based on this
saving achieved in Nevada - $1.37 billion dollars (per year) could be saved. Using the median
salary of a US school teacher ($58,950) as a measure, this saving could provide the funds to hire
an extra 23,338 teachers. Reflecting on the impact that an extra 23,338 teachers would have
on young people’s education and wellbeing, it is only logical to move to a more cost-effective
fuel. The external savings, from abated NOx emissions, total $1.4 billion.
There are numerous reasons why LPG can be a lower overall cost option than diesel on a total
cost of ownership basis - including federal and state incentives which make the fuel cost very
competitive, lower maintenance costs, and a lower likelihood of downtime for repairs given the
absence of complex after-treatment systems required with all diesel engines.
In the Alvin ISD school district, a large suburban area located just outside of Houston, which
operates more than 100 LPG auto gas school buses, drivers reported a strong preference for
using LPG buses, stating improved performance and reduced maintenance times as key factors.
In this district, where LPG buses comprise half of the school bus fleet and cover nearly a million
miles each year, 50% is saved on fuel costs each year, refuelling time has been halved and
extended oil changes only occur every 10,000 miles as opposed to every 6,000 miles (as seen
with diesel fuelled buses).
Sources:
Rondeau et al (2004) A
three-level model for binary
time-series data: the effects of
air pollution on school absenc-
es in the Southern California
children’s health study.
The Propane Education and

Research Council (2015) Pro-
pane autogas proves a perfect
fueling solution for Texas
school district
22
Contents Foreword
Scenario Analysis: a shift to new LPG OEM trucks
Between 2018 and 2030, this analysis considers the emission reduction potential from supporting:
•• Over the period, 50% of new diesel truck market share is addressed by LPG OEM
alternatives. This is equivalent to 2.5 million new LPG trucks replacing diesel trucks.
New vehicle emission standards have become more stringent - to match improvements to technology
and increased environmental pressures. NOx emissions of medium and heavy-duty trucks have fallen
from 19 grams/mile between 1998 to 2002 to 1.4 for new diesel trucks built after 201313.
The US government could encourage switching to new LPG trucks by offering financial grants to truck
fleet owners. The benefits of switching to LPG could also be communicated with a particular focus on
lifetime cost comparisons to diesel trucks. A range of policy options could be executed to encourage
fleet owners to switch from diesel to LPG trucks.
450
425
400
New sales, 000s
375
350
325
300
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Figure 7 - new diesel truck sales between 2018 and 2030 (EIA)
The EIA14 predict that new sales of new diesel medium and heavy-duty trucks will rise from 343,000
in 2018 to 413,000 by 2030, an increase of 20%.
If 50% of these trucks were replaced with OEM LPG trucks then over 0.5 million tonnes of NOx and
265 million tonnes of CO2 would be abated.
13
The current emission standard for heavy-duty trucks is 0.2 g/bhp-hr of NOx (equivalent to 1.4 g/mile of NOx). Taken from EPA
(2016) Heavy-Duty Highway Compression-Ignition Engines and Urban Buses.
14
EIA (2018) Transportation Sector Key Indicators and Consumption.
23
Contents Foreword
300 600
NOx emissions savings, Kt

C02 emission savings, MtC02
250 500
200 400
150 300
100 200
50 100
0 0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
C02 emissions NOx emissions
Ecuity Economics
Figure 8 - cumulative CO2 and NOx savings from displacing new diesel trucks with LPG trucks (truck replace-
ment scenario)
When monetised using the social cost of carbon15, the US economy could save $12 billion worth of
carbon emissions by supporting LPG trucks over diesel. The dollar figure represents the benefit of a
CO2 reduction.
Additionally, the social and health impact of air pollution is substantial. Our scenario saves the US
economy $11 billion from abated NOx emissions - utilising the EPA and Lepeule et al’s (2012)16
assessment of the dollar value of one ton of emissions from on-road vehicles. This table sums the
expected impact of air pollution on morbidity and mortality rates and provides a best estimate of the
harmful effects of NOx pollution on the populous.
Savings from replacing 50% of diesel trucks to LPG NOx CO2

Cumulative savings (2018-2030), $ billion 10.7 12.0
Table 1 – cumulative saving between 2018 and 2030 from replacing 50% of new diesel trucks with LPG trucks.
In our analysis, we assume 2.5 million pure-LPG trucks displace diesel trucks. A key question to ask is
whether the existing US LPG production can satisfy this increase in LPG use?
The US produced 67Mt of LPG in 2017 and exported 51% (34Mt) of this. Our modelling shows that
an increase in 2.5 million LPG trucks will require 50Mt of LPG by 2030, equivalent to 3.8Mt per year.
This annual level of LPG is equal to 6% of current production levels and 11% of current export levels
- so appears to be feasible.
15
EPA (2017) The Social Cost of Carbon.
16
EPA (2018) Technical supporting document – estimating the Benefit per Ton of Reducing PM2.5.
24
Contents Foreword
What would be the environmental and monetary benefits of

converting existing diesel trucks to run on LPG?
In the US, there are a myriad of ways that existing vehicles can be modified to use alternative
fuels such as LPG.
These include:
•• Conversion - a vehicle makes use of a conversion kit which enables it to run on a

fuel source that is different from the one if was originally designed to operate on.
For example, a diesel truck is converted to use LPG
•• Bi-fuel – vehicle makes use of two fuel sources i.e. diesel and LPG. Fuel use
is independent and can be changed by a flick of a switch
•• Dual-fuel – vehicles make use of two fuel sources simultaneously. For
example, a heavy-duty diesel truck is converted to use LPG but requires a
small amount of diesel for ignition assistance
•• Fumigation – alternative fuel source (LPG) is injected into the intake air stream of a
compressed ignited engine
•• Retrofits – Hardware options that can be added to further reduce emissions from
certified diesel engines i.e. Diesel Particulate Filter (DPF).
Below we model the environmental and monetary from converting a cohort of existing medium
and heavy duty diesel trucks. Trucks built between 2004-09 emit over ten times more NOx (per
mile) then trucks built after 2013. These trucks are likely to be operating well after their useful
life of 10 years - according to the EPA’s Motor Vehicle Emissions Simulator (MOVES), the survival
rate of medium and heavy duty trucks up to 30 years old is 89%. Tackling these trucks will
enable GHG-emission reduction.
According to the EIA, two million diesel trucks were built between 2004 and 2009. We assume
a bi-fuel conversion to LPG is undertaken. The cost to convert these trucks is expensive (c.$10-
11k) however, this upfront cost can be offset by relatively lower operating and maintenance
costs over the truck’s lifetime.
We assume a five year ‘scrappage scheme’ is employed effective from 2020. Between years zero
to four, 10% of these trucks are converted and, the remaining number of trucks are converted
in the final year.
378Mt of CO2 and 965Kt of NOx could be saved if these two million trucks built between 2004
and 2009 were converted to use LPG. When monetised, this would save the US economy just
under $20 billion in abated carbon emissions and over $18 billion in abated NOx emissions.
Savings from converting 2 million diesel trucks to LPG NOx CO2

Cumulative savings (2018-2030), $ billion 18.4 19.4
25
Contents Foreword
Appendix: Assumptions for LPG vs diesel truck lifetime cost comparison
Variable/input Diesel LPG truck Source

truck (converted)
Upfront cost, $ 125,000 125,000 https://www.ccjdigital.com/what-does-
a-class-8-truck-really-cost/
Conversion cost, $ - 12,000 PERC
Average MPG 6.1 5.7 US Energy & Information Administra-

tion (EIA) https://www.eia.gov/out-
looks/aeo/data/browser/#/?id=7-AE-
O2018&cases=ref2018&sourcekey=0
Fuel cost/ gallon, $ 3.03 2.83 AFDC https://www.afdc.energy.gov/fu-

els/prices.html
Federal incentives, $ 0 0.36 PERC Autogas Calculator https://www.

LPGcouncil.org/Products-with-Options/
LPG-Autogas-Cost-Calculator/
Lifetime preventative costs*, $ 14,000 2,700 PERC Autogas Calculator https://www.
Other lifetime costs**, $ 11,250 1,000 PERC Autogas Calculator https://www.

Average heavy-duty truck miles 30,000 30,000 EIA/Ecuity assumption

travelled, miles
Lifetime, years 10 10 EPA
*Includes assumed costs for oil and oil filter changes; numbers are based on industry averages. $100 per visit
and 27 lifetime service visits for LPG; $350 per visit and 40 lifetime service visits for diesel.
**Includes assumed additional costs for air and fuel filters for LPG ($1,000) and air and fuel filters ($2,500), DPF
cleaning cost ($7,500), and DEF fluid ($1,250) for diesel. Numbers are based on industry averages.
26
Contents Foreword
C2. LPG use for on-site back-up power

across the United States
Around 30 GW of cumulative on-site diesel generator capacity is
currently installed in the US. What are the monetised
environmental benefits of displacing up to 50% of diesel fuel with
LPG by 2040?
Executive Summary
•• Power interruptions in the US costs the economy $80 billion per year. The costs largely fall
to the industrial and commercial sectors.
•• Compared to diesel, LPG has a lower nitrogen and carbon intensity.

•• Displacing 50% of diesel fuel with LPG can save the US economy $21 million in abated
NOx emissions by 2040.
Context
Weather-related incidents are the leading cause of power interruptions and outages in the US. Between
2003 and 2012, 679 major power outages occurred due to bad weather17. These outages impact
households, businesses and critical services. Research has shown that the total cost to the US of power
interruptions is $80 billion per year18. Of this, 71% is attributed to the commercial sector. For many
commercial and industrial customers, the key determinant of cost is not necessarily the number of
interruptions, but the length of the “down-time” resulting from a loss of power.
Loss of electrical grid power can also be caused by high power demand and electrical grid failures.
Many healthcare, industrial and commercial establishments require continuous and uninterrupted
power to maintain critical services or avoid cost prohibitive issues such as stock spoilage.
17
US DOE (2013) Economic Benefits of Increasing Electric Grid Resilience to Weather Outages.
18
Berkley Lab Research News (2005) Berkeley Lab Study Estimates $80 Billion Annual Cost of Power Interruptions.
27
Contents Foreword
Res idential, 1.5, 2% Other, 1.5, 2%
Industrial, 20, 25%
Commerci al, 57, 71%
Figure 9 - cost of US power interruptions by sector ($bn), (Berkeley Lab Study Estimate, 2005)
Dell Children’s Medical Centre of

Central Texas utilises black-start
services
A distributed generated system is an integral part
of a children’s hospital at the site of Austin’s
former Robert Mueller Municipal Airport site. The
system has been designed to provide electricity,
hot water, chilled water and black-start capabilities
to the hospital.
In the US, there are more than 12 million distributed generated units, which is about one-sixth of the
capacity of the nation’s existing centralised power plants19. Emergency and backup applications
account for around 79% of distributed power capacity, while providing just 2% of the total power
produced20. Small commercial and industrial diesel generators (20kW – 3.5MW) dominate this market
however their market share is declining in favour of natural gas generators. According to Frost &
Sullivan and Generac, the market share of diesel generators was 63% in 201321. This has fallen to 48%
in 2018, most likely due to stringent emission standards for diesel-powered generators and lower
operating costs for alternative fuelled gensets.
19
EPA (2018) Distributed Generation of Electricity and its Environmental Impacts.
20
Brookings Institution (2011) Assessing the Role of Distributed Power Systems in the U.S. Power Sector.
21
Generac (2015) Generac Investor Presentation.
28
Contents Foreword
70
60
50
% market share
40
30
20
10
0
Diesel Natural gas
Fuel source
2013 2018
Figure 10 - % market share (North America) of generators by fuel type (Generac Investor Presentation)
Of course, access to a natural gas supply is essential for any shift from diesel to natural gas and this is
not possible in many rural and coastal areas. With the broader market shifting away from diesel-
fuelled generators, there is a pertinent case to consider LPG as a realistic alternative – especially where
natural gas is not available. Diesel fuel releases 15% more CO2 (per British Thermal Unit) than LPG22.
Natural gas produces, per unit, 46% more NOx (nitrogen oxide) then LPG. LPG also has a longer life
then diesel fuel.
The US is the largest producer and exporter of LPG. In 2017 production reached 67 million tonnes23 -
more than the combined output from China and Saudi Arabia. Exports accounted for 51% of
production - more than the combined output from Europe & Eurasia.
Tackling the Emissions from Existing Diesel Generation Capacity
The EIA forecast electricity generation from diesel generators to increase 1% per year on average
between 2018 and 2040. This would raise the current level of electricity generation from 6,000GWh
to 7,388GWh. As a result, carbon and nitrogen dioxide emissions would rise cumulatively by 195 and
5 kilo-tonnes respectively.
We consider the environmental impact of displacing diesel generation with LPG. Between 2018 and
2040, this could occur through a range of measures such as natural replacement, conversions where
possible and making use of fumigation technology where LPG is injected into the diesel generator.
We assume that between 2018 and 2040, 50% of diesel fuel-use is gradually displaced by LPG and
BioLPG.
22
PERC (2014) A Comparative Analysis of Greenhouse Gas Emission from Propane and Competing Energy Options.
23
WLPGA (2017) Statistical Review of Global LPG 2017.
29
Contents Foreword
8,000
7,000
Electricity generation, GWh
6,000
5,000
4,000
3,000
2,000
1,000
0
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Diesel LPG Bio-LPG
Ecuity Economics
Figure 11 - electricity generation from distributed generators by fuel source
Between 2018 and 2040, electricity generation from generators using LPG increases from 0 to
3,964GWh. By 2040, this level of generation displaces 50% of existing diesel-fueled generation. The
potential for BioLPG is also modelled. Over this period, a proportion of BioLPG is added so that by
2040, BioLPG accounts for 57% of total LPG use (2,123GWh).
The net effect of displacing 50% of diesel fuel with LPG is an overall reduction in carbon emissions of
3,007 tonnes. This reduction increases by 30% if diesel fuel is displaced by BioLPG.
9000
8000
7000
Carbon emissions, tonnes
6000
5000
4000
3000
2000
1000
0
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Diesel LPG Bio-LPG
Ecuity Economics
Figure 12 - carbon emissions from displacing a proportion of the diesel fuel used in emergency power genera-
tion (fuel displacement scenario)
30
Contents Foreword
When monetised using the social cost of carbon24, the total savings, from displacing a proportion of
diesel fuel for LPG, between 2018 and 2040 is $1.6 million. The savings increase to $2.6 million if
BioLPG is utilised.
Switching from diesel to LPG also has an impact on air quality.
Figure 13 shows that by displacing 50% of diesel fuel reduces NOx emissions by 38% to 131 tonnes.
This displacement of diesel is replaced with LPG which causes NOx emissions to rise from 0 to 22
tonnes. The net effect of this is an overall reduction of 109 tonnes of NOx.
When monetised this could save the US economy $21 million by 2040, this is over 13 times the carbon
savings.
250
200
NOx emissions, tonnes
150
100
50
Diesel LPG
Ecuity Economics
Figure 13 - NOx emissions from displacing a proportion of the diesel fuel used in distributed power generation
(displacement scenario)
LPG BioLPG
Social benefit from abated CO2 emissions (2018-2040), $ million 1.6 2.6
Social benefit from abated NOx emissions (2018-2040), $ million 21 -
Table 2 - Cumulative saving from displacing diesel fuel with LPG and BioLPG
24
EPA (2017) The Social Cost of Carbon.
31
Contents Foreword
C3. American industrial and commercial

application switch to LPG
Coal and heating oil make up 49% of fossil fuel energy
consumption in the US industrial sector whilst the figure is 20%
for commercial applications. How substantial is the potential
impact of introducing BioLPG in the industrial and commercial
segments?
Executive Summary
•• Coal and heating oil account for a significant proportion of fossil fuel energy consumption.
•• The current potential for industrial and commercial operators to switch to LPG and BioLPG
is modest and can be accelerated through replacements and other incentives.
•• Switching to LPG could save the US economy $4 billion in abated carbon emissions and
62MtCO2 by 2040. Commercialising BioLPG could see this increase to $10 billion and
178MtCO2.
Context
Between June 2017 and August 2018, over 3,000 leaders from American business, politics and civil
society signed the We Are Still In pledge to support action on climate change. Together the group’s
signatories are said to represent over half of all Americans and preside over more than $6 trillion worth
of the economy25. This group of influential leaders from across American major institutions recognise
the need to act on reducing dangerous greenhouse gas (GHG) emissions.
The US has made a pledge to reduce economy-wide emissions by 26-28% below 2005 levels by
202526. The US National Determined Contributions (NDCs) to the Paris Agreement found that this
reduction in emissions by 2025 is consistent with a linear emissions reduction of 80% or more below
2005 levels by 205027.
25
We Are Still In (2018) About.
26
NRDC (2017) The Road From Paris.
27
The White House (2016) United States Mid-Century Strategy.
32
Contents Foreword
Whilst the US has for now exited the Paris Agreement, there is a clear global trend away from highly
polluting fossil fuels – such as coal and oil – towards lower carbon gaseous fuels and renewable
energy. Coal consumption is down by 40% in a decade, whilst consumption of lower carbon
alternatives such as gas and renewable energy has risen. Crucially this trend has wide support from
citizens28 and political leaders29 in the US.
In this frame, the abundance of distillate oil and coal-powered space, water and process heating
consumed by the industrial and commercial sectors is an opportune area for switching to lower
emission fuels. Indeed, coal and heating oil make up 49% of fossil fuel energy consumption in the US
industrial sector. For the commercial sector this share is 20%, with the remainder natural gas. One
option is switching to an alternative lower-GHG fuel source. LPG is a realistic alternative. The carbon
intensity of LPG is 35% lower than coal and 16% lower than heating oil.
US-LPG production has nearly doubled in a decade. This abundance of native energy resource newly
developed in conjunction with shale, puts the US in an excellent position to cost-effectively transition
away from highly-polluting coal and oil, to cleaner gas and biogas.
67Mt of LPG was produced by the US in 2017, just over half was exported outside of the country. This
analysis will consider the impact of utilising a proportion of this resource to power the industrial and
commercial space, water and process heating demand currently powered by higher-emission fuels –
oil and coal. While electrification and natural gas may have arguably lower margins; the abundance,
low-cost and lower emissions from LPG make this fuel a credible choice for changing.
To do this we develop two scenarios which we compare to a business-as-usual 2040 pathway:

•• Switching scenario which takes advantage of existing switching opportunities
from oil/coal to LPG
•• Capital replacement scenario – encourage the development of more fuel switching
through the replacement of old oil and coal boilers
Our analysis shows that emissions from this sector can be reduced by 178MtC02, saving the economy
$11 billion in terms of abated GHG emissions30.
Industrial and Commercial Sector Account for 44% of Final Energy

Consumption
The industrial and commercial sectors (I&C) accounted for 44% of total final energy consumption in
the US31. Total economy-wide emissions in 2017 were 5,142 million metric tons of C02 (MtC02)32. The
I&C sector accounted for 44% of these emissions.
28
83% of US adults surveyed think that it is important to create a world fully powered by renewable energy as of 2017 (Orsted
,2018). 71% of adults think that global warming is happening with only 13% thinking that it is not (Yale Program on Climate Change,
2017).
29
407 Mayors have signed up to the Climate Mayors initiative in the US.
30
See modelling for capital replacement scenario
31
EIA (2018) Energy Consumption by Sector.
32
EIA (2018) Primary Energy Consumption, Energy Expenditure and Carbon Dioxide Emissions Indicators.
33
Contents Foreword
1000
Final energy consumption by energy source (mtoe)

900
800
700
600
500
400
300
200
100
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Coal Natural gas Petroleum Renewable LPG
Figure 14 - final energy consumption by energy source (EIA)
The industrial and commercial sectors are important because for genuine action on air pollution and
climate change, businesses and policymakers will need to consider how to support a transition away
from highly polluting fuels – such as coal and oil. In 2017, the consumption of coal and petroleum
accounted for 51% of total economy-wide energy consumption.
Res idential, 19%

Industrial, 27%
Commerci al, 17%

Tra ns port, 37%
Figure 15 - share of carbon emissions by sector (EIA, 2017)
Coal and heating oil make up 49% of fossil fuel energy consumption in the US industrial sector. For
the commercial sector this share is 20%, with the remainder natural gas. One option to combat GHG
emissions is switching to an alternative lower-carbon fuel source such as LPG. The carbon intensity of
LPG is 35% lower than coal and 16% lower than heating oil.
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Contents Foreword
Opportunity – abundant, low-cost and lower emission LPG
Additional to the environmental benefits, a shift in consumption of high-emission fossil fuels to LPG is
interesting for two reasons: US-domestic production is booming – creating security of supply benefits,
and cost-savings are achievable, especially against distillate oil.
The US is the world’s largest producer and exporter of LPG. In 2017, the US produced 67 Mt33 of LPG
of which 51% was exported, signifying that this domestic fuel is abundant in supply. Supply has
boomed as a result of the shale gas revolution and increased by nearly 70% in a decade, with further
expansion expected over coming years. Diverting some of the surplus production to displace high-
emission fuel consumption in the I&C sector would be environmentally beneficial, facilitate US
decarbonisation pledges and support security of supply.
Indeed, the price of LPG is also favourable when compared to oil. In the commercial sector EIA data
suggests that LPG is 12% cheaper on average than distillate oil in 2018. For industrial users this price
saving is even greater against distillate oil per MMBtu (30% cheaper) – but, unabated coal remains
cheaper than both LPG and oil despite its very high GHG and air pollutant emissions.
25 25
20 20
Price, $/mmBTu
Price, $/mmBTu
15 15
10 10
5 5
0 0
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
LPG Heating oil Coal LPG Heating oil
Figures 16 and 17 - industrial and commercial fuel prices (EIA, 2017) (no commercial fuel price for coal)
Yet, high-emission fossil fuel consumption is projected to rise
However, the opportunities for switching are not being realised. According to the latest projections by
the US EIA34, consumption of coal and heating oil in the industrial sector is projected to increase 0.2%
and 1% respectively on average per annum between 2018 and 2040. Indeed, it seems that the
opportunity to switch from high emission fossil fuels to lower emission alternatives such as LPG has
yet to be taken. In 2018, final energy consumption of industrial coal and heating oil was 22 million
tonnes of oil equivalent. A third of this consumption was attributed to process heat (7.2 Mtoe).
For the commercial sector, final energy consumption (coal and heating oil) was nine million tonnes of
oil equivalent, with space heating accounting for a quarter of this. Consumption of energy for space
heating in the commercial sector is projected to increase 0.2% on average per annum over the same
period.
33
WLPGA (2017) Statistical Review of Global LPG 2017. Data converted from tonnes to toe using 1.18 factor.
34
EIA (2018) Annual Energy Outlook 2018.
35
Contents Foreword
The levels of process and space heating in the I&C sector and the EIA projections to 2040 form the
basis of our business-as-usual (BAU) scenario.
40
35
30
Annual carbon emissions, MtC02
25
20
15
10
0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040
Industry Commercial
Ecuity Economics
Figure 18 - annual carbon emissions from the I&C sector (business-as-usual scenario)
Figure 18 models the business-as-usual GHG emissions from the industrial and commercial heating
sectors. Between 2018 and 2014, total I&C emissions increase 8% to 34MtC02. This is equivalent to
7.5 million passenger vehicles driven for one year35 or 14% of the number of passenger vehicles in the
US in 201636. Nitrogen Oxide (NOx) pollution increases 8% to 41Kt over the same period, equivalent
to 3% of total industrial NOx emissions37 in 2017.
Low hanging fruit: existing fuel-switching opportunities
There are existing and immediate opportunities for switching high emission fossil fuel consumption –
oil and coal - to cleaner alternatives in the industrial and commercial sectors. The Manufacturing
Energy Consumption Survey (MECS) - prepared by the EIA and sent to industrial companies every four
years - enquires about the fuel-switching capability of a respondent’s facility. The survey questions the
capability of a facility to substitute energy sources (i.e. coal to LPG) over a short timeframe (within 30
days and without extensive modifications to existing capital equipment).
The latest results for US industrial users showed that in 2014 the volume of coal and heating oil that
could be switched to an alternative fuel source was 17% and 6% respectively. This is an immediate
win and suggests that just under a fifth of coal consumption can be substituted for LPG without major
disruption.
35
EPA (2017) Greenhouse Gas Equivalences Calculator.
36
Bureau of Transportation Statistics (2018) National Transportation Statistics 2018 1st Quarter.
37
EPA (2018) Air Pollutant Emissions Trends Data.
36
Contents Foreword
Figure 19 shows the impact fuel-switching can have on the I&C sector. In 2040, emissions from
switching are 5% lower than emissions from the BAU level (35MtC02). BioLPG consumption can
reduce emissions further to 13% against the BAU level. NOx emissions are 35.1Kt in 2040, a decrease
of 8% on 2018 levels.
40
Annual carbon emissions, MtC02
35
30
25
20
I&C emissions - BAU I&C emissions - switching I&C emissions (with bioLPG)
Ecuity Economics
Figure 19 - annual carbon emissions from the I&C sector, 2018-2040 (switching scenario)
Cumulative emissions,
Savings against BAU, MtC02
MtC02
I&C emissions (switching) 763 20
I&C emissions (BioLPG impact) 730 53
Table 3 - cumulative emissions (2018-2040) from switching and using BioLPG compared against BAU scenario.
Given the current switching potential, the I&C sector could save 20MtC02 cumulatively by 2040. This
degree of switching is too modest to take advantage of the abundance of lower-emission LPG which
will be produced in the US over the coming decades.
The MECS results provide insight into the factors which restrain the rate of switching.
37
Contents Foreword
Other 12%
Combination of others 12%
Unavailable storage for alternate fuels 0%
Long-term contract in place 0%
Environmental restrictions 0%
Unavailable alternative fuel supply 8%
Switching adversely affects prodcuts 4%
Equipment not capable of switching 64%
0% 10% 20% 30% 40% 50% 60% 70%
Reasons why coal could not be switched to an alternative fuel, %
Figure 20 - reasons cited for not being able to switch to an alternative fuel (MECS, 2014)
Over two-thirds of industry operators answered that their coal-powered equipment was not capable
of switching to an alternative fuel source such as LPG. This suggests that for greater decarbonisation,
a technology and fuel transition will be required.
Challenge – encouraging a technology switch
I&C operators typically look to repair rather than replace their existing boilers – this reduces the number
of switching-opportunities. Cost and boiler characteristics typically drive this behaviour. On the cost
side replacing a boiler is expensive, operators prefer to repair capital equipment instead. Below is a
table comparing the capital cost, maintenance cost and lifetime of the boiler.
Industrial boiler Commercial boiler
Retail price, $k 60 16.6
Total installed cost, $k >60 25.8

Annual maintenance cost, $k 0.6-1.8 1.8
Lifetime, years 40 25
Table 4 - Industrial and commercial boiler cost and lifetime (International Energy Agency & Energy Technology
Systems Analysis Programme (2010), EIA (2018)
There are two most-likely pathways for boiler replacements: either the boiler comes to the end of its
useful life (25 to 40 years) or the replacement is undertaken as part of an energy upgrade. Table 4
shows the high replacement costs the I&C sector face. It is cost-effective to repair a boiler which for
the industrial sector ranges between 1 and 3% of the retail price. For the commercial sector, this
increases to 11% of the retail price but at $1,800 annually, this is cheaper than paying $17,000 for a
new boiler.
38
Contents Foreword
As a result of this tendency to repair rather than replace, the stock of boilers is currently quite old.
Research by Energy and Environmental Analysis (EEA) in 2005 showed that the total stock of industrial
and commercial boilers was 163,000 – 43,000 industrial boilers and 120,000 commercial boilers. It
also provided insight into the age profile of these boilers in the I&C sector.
Figure 21- age distribution of boilers >10MMBtu/hr, Energy and Environmental Analysis (2005)38
Figure 21 shows just over half (53%) of boilers are between 0 and 40 years old. 47% of boiler capacity
is at least 40 years old meaning they are due for replacement. 76% of boiler capacity is at least 30
years old and around 7% of boiler capacity is less than ten years old.
Whilst the preference for repair of existing technology and the status quo is a challenge for encouraging
a transition in I&C consumption to lower emission fuels, the population of older boilers provides an
opportunity to cost-effectively switch to modern, efficient gas-heating systems.
38
Energy and Environmental Analysis Inc (2005) Characterization of the U.S. Industrial/Commercial Boiler Population.
39
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Scenario analysis – benefits of I&C high-emission fuel switching
In this scenario, we assume that policy is encourages a rapid-switching of boilers in the I&C sector
which facilitates fuel-switching to LPG. The rate at which boilers are replaced in-part depends on the
age characteristic of the existing boiler population. Table 2 shows that the lifetime of a boiler in the
I&C sector is between 25 to 40 years old. In addition, figure 7 shows that 53% of boilers are up to 40
years old.
As a result, we assume that a switching rate of 50% could be achieved by 2040. This means that by
2040, half the energy consumption of coal and heating oil in the I&C sector is substituted by LPG.
40
Annual ca rbon emissions, MtC02
35
30
25
20
15
10
I&C emissions - BAU I&C emissions (capital replacement) I&C emissions (with bioLPG)
Ecuity Economics
Figure 22: Annual carbon emissions from the I&C sector, 2018-2040 (capital replacement potential modelled)
Figure 22 shows the impact on emissions where the I&C sector replace capital equipment at a faster
rate (50%) and substitute coal and heating oil for LPG. By 2040, the I&C sector cumulatively save 62
MtC02 (see table below). The impact of substituting coal and heating oil for BioLPG amplifies the
emission savings which, by 2040, is equivalent to 6% of 2017 I&C heating emissions. The impact on
NOx emissions is greater with emissions falling to 20.5Kt, a reduction of 46% on 2018 levels.
Cumulative emissions, Savings against

MtC02 BAU, MtC02
I&C emissions (capital replacement) 721 62
I&C emissions (BioLPG impact) 605 178
Table 5: Cumulative emissions from rapid-switching and using BioLPG compared against BAU scenario.
40
Contents Foreword
The US Environmental Protection Agency (EPA) estimate the social cost of carbon dioxide39 (SC-C02) to
value the climate impacts of rulemakings. The SC-C02 is a measure, in dollars, of the damage done by
a metric ton of carbon dioxide in a given year. The dollar figure can also represent the benefit of a C02
reduction. Using a discount rate of 3%40, the SC-C02 in 2018 was $42 (2017 prices) per metric ton of
C02. By 2040, this rises to $70 per metric ton of C02.
Switching scenario Capital replacement

Cumulative GHG emission savings, MtC02 20 62
Social benefit from reduced emissions, $ million 1,178 3,695
Social benefit from using BioLPG, $ million 3,112 10,650
Table 6: Cumulative GHG emission savings and social benefit from reduced emissions
By 2040, the US economy can save just under $4 billion in abated GHG emissions by
encouraging the I&C sector to replace existing capital equipment, and switch from high-
emission fuels to LPG. This rises to $11 billion as BioLPG is developed and commercialised.
Exposure to Particulate Matter (2.5) can affect both your lungs and heart. Various scientific studies
have linked particulate pollution exposure to a range of health effects such as premature deaths in
people with heart or lung disease, nonfatal heart attacks, aggravated asthma and decrease lung
function. The environmental effects include making river streams acidic, affecting the diversity of the
ecosystem and depleting nutrients in soil.
Figure 23 compares the PM2.5 emissions in the business-as-usual scenario compared with the two
scenarios modelled; switching and capital replacement.
90
80
Annual PM2.5 emissions, kilotonnes
70
60
50
40
30
20
10
0
BAU Switching Capital replacement
Ecuity Economics
Figure 23 - annual PM2.5 emissions from the I&C sector (BAU, switching and capital replacement scenario)
39
EPA (2016) EPA Fact Sheet: Social Cost of Carbon.
40
Yield on 30-year US Govt Treasury bond is 3.01% (Bloomberg, August 2018)
41
Contents Foreword
Switching scenario Capital replacement
Cumulative PM2.5 savings against BAU, Kt 156 478

Social benefit from reduced emissions against
205 628
BAU, $ million
Table 7 - cumulative PM2.5 emission savings and social benefit from switching and replacing capital equipment
There are clear social and economic benefits for the I&C sector to replace the existing stock of old
boilers and switch to using a lower-carbon fuel such as BioLPG. The existing potential for the I&C
sector to switch to LPG yields total GHG savings of 20MtC02 by 2040 and this saves the US economy
$1.2 billion. Encouraging more rapid switching of capital equipment yields emission savings of 62
MtC02 and saves society $3.7 billion. The benefits from developing and commercialising BioLPG have
been clearly demonstrated - emission savings and the social benefit increase significantly.
The price of LPG in the I&C sector is favourable against heating oil. While the industrial price of coal is
lower than LPG and heating oil, coal has a significantly negative impact on the environment. Several
principal emissions result41 from coal combustion including sulphur dioxide (contributing to respiratory
illness), nitrogen oxides (contributing to smog) and particulate matter (contributing to lung disease).
41
EIA (2018) Coal & the Environment.
42
Contents Foreword
C4. Rural heating shift for European

households
Can gas transition heating technologies and bioLPG reduce the
cost of meeting Europe’s decarbonisation targets beyond 2030
for buildings off the gas grid? What is the economic benefit of a
future off grid heat mix that includes gas transition technology
and bioLPG vs. a silver bullet approach based purely on
electrification?
Executive summary
•• The decarbonisation of rural heating is challenging but necessary if the European Union
and its Member States are to meet their climate change targets. These buildings are
typically larger, older and less well-insulated, and more likely to be consuming oil and
coal.
•• LPG, BioLPG and gas-transition technologies should play a role in a cost-effective

transition to lower emission heating. Electrification of heat is less suitable and costlier
than gas alternatives in larger, less-efficient homes.
•• Such a mixed technology approach - with LPG and BioLPG playing a significant role - is a
third of the cost of a 100% electric heat pump approach and provides a net positive
social benefit to Europe when carbon savings are accounted for.
Context
The European Union and 194 states signed the Paris Agreement in 2016 to mark an historically
significant consensus that action must be taken to tackle dangerous climate change. Together these
countries account for almost all of the world’s greenhouse gas (GHG) emissions.
As part of the its participation in the process, the EU and Member States re-committed to a 40%
reduction in GHGs by 2030 and noted this target’s consistency with a 2050 deep decarbonisation
trajectory (80-95% reduction on 1990 levels). This action is built on a strong and growing view
amongst European citizens that climate change is a serious problem, with 92% of respondents to a
recent EU-survey agreeing to this statement42.
To effectively tackle economy-wide emissions by 80-95%, EU Member States will need to address the
energy use of buildings, which account for 36% of the region’s emissions43. Heat decarbonisation is
therefore a necessary but not sufficient part of hitting long-term climate change targets.
42
European Commission (2018) Citizen support for climate action.
43
European Commission (2018) Buildings.
43
Contents Foreword
But of course, whilst an important element, energy policy should focus on more than just sustainability.
Fifty million Europeans live in energy poverty today, a condition which is associated with poor health
outcomes, constrained social mobility and lower wellbeing44.
Energy poverty is a multi-faceted issue, but it is clear that any heat decarbonisation will not be successful
if it adds significantly to the cost of heating homes and pushes more European citizens into energy
poverty. Therefore, it is important for policymakers to consider both the emission reduction potential
of various technology pathways, as well as their costs.
This issue is even more pertinent in rural - typically off-grid - areas where people are on average at a
greater risk of suffering from poverty or social exclusion. Indeed, this problem is most severe in Eastern
European countries like Bulgaria and Romania, where at least half of the rural population is at risk from
poverty or social exclusion. Off-grid decarbonisation cannot be achieved successfully without
considering the economic challenges these communities face.
Technology Solutions
Encouragingly there are heating technologies that can deliver immediate and sustained emission
reductions against high carbon fossil fuels - such as heating oil and coal - which are commonly
consumed in off-grid areas. These include high temperature heating systems which can deliver lower
GHG emissions (e.g. LPG boilers), and very low levels (e.g. biomass), and low temperature heating
systems - such as electrically driven heat pumps which will in time offer very low emission heating.
Add to this a raft of newly developed technologies and biofuels, including gas-absorption heat pumps
which run on gaseous fuels with little electrical input, and hybrid heat pumps which consist of a
connected/integrated low-cost boiler with an electrical heat pump. These systems can be termed gas-
transition technologies and offer consumers the benefit of even more efficient heating systems.
The LPG industry is additionally developing BioLPG, a low emission fuel which can be used as a
substitute for conventional LPG in existing heating systems. Taken together with modern condensing
boilers and the gas transition technologies noted above, policymakers have a range of lower carbon
heating alternatives which can support a shift away from heating oil and coal consumption in off-grid
areas.
Other alternatives to oil and coal also exist. Electrical heat pumps offer potentially high efficiencies and
low running costs which is an advantage. But this is contingent on operating in good conditions,
which for electrical heat pumps can be characterised by use with large radiators and relatively stable-
heating demand which allows operation at a consistently low temperature. Whilst heat pump upfront
costs may remain comparatively high, their advantage - potential running cost savings - is greatly
influenced by the operating efficiency of the system. This can vary from application to application, and
is greatly influenced by the installation quality and the building-type that the system is installed in.
Heat pumps typically perform best in energy-efficient buildings, where the system can provide a
consistent level of heating output.
As with transport where electric vehicles are seeing increased policy interest and take-up, it is tempting
to support mass-electrification of heat as the solution. Especially given reductions in electricity GHG
emission intensity over time. But as with other heating technologies, installation may not be suitable
in certain building-types.
44
European Commission (2018) Energy Poverty.
44
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Challenging Building Stock
Unlike with power decarbonisation, which involves the transition from certain centralised generation
plants such as coal to lower emission plant (RES), heat decarbonisation is far more complex, and will
require changes to the heating systems in millions of homes, offices, and buildings - as well as potential
changes to infrastructure to cope with new demands on the electricity grid for example.
These buildings are diverse in character and location. Certain heating systems are more suitable
installed in particular properties than others and vice versa. It is therefore challenging for policymakers
to know which technologies to support, and which heating systems are not aligned with long-term
energy objectives.
Off-grid Buildings
Generally off-grid properties - especially in rural areas - are less energy-efficient, larger in size and older
than similar dwellings in urban centres where the pace of renewal and urban development drives the
provision of more energy efficient buildings. There are of course exceptions to this, including a
proportion of “off-grid” properties situated in town and cities which are heated by electricity.
However, the most pressing off-grid heating challenge is to transition those properties - often rural,
older, and less energy efficient - which consume high carbon fossil fuels, in particular heating oil and
coal. Consumers rarely change their heating systems and fuel-type, and it is therefore challenging but
necessary to switch these properties away from oil and coal to credible alternatives.
This chapter will consider whether gas transition technologies can play a role in this off-grid
heating transition, or whether an approach based on electrical heat pump deployment is
preferable.
Off-grid fuel Consumption
The EU consumes 785TWh of off-grid fuels45 for heating each year. Of this, nearly half is attributable
to high carbon fossil fuel heating - from heating oil and coal. Over the next 32 years, just this group
of heating oil and coal households will emit just under three billion tonnes CO2e - all else equal. This
is equivalent to the annual emissions from the whole of the UK, French, Italian, Spanish, German, and
Dutch economies46.
45
Here defined as heating oil, coal, biomass and LPG. Note that existing electrical is not considered in the sce-
nario modelling in detail - other than as one of numerous solutions, as its decarbonisation pathway is al-
ready clear, and no switching is necessary. Switching from biomass is also ignored as this brings no GHG emission
saving benefit.
46
Eurostat (2018) Total GHG emissions by countries (excluding LULUCF, including aviation) – 2016.
45
Contents Foreword
Figure 24 illustrates our baseline scenario for off-grid fuel consumption up to 2050 - using DG Energy
data as a starting point, and accounting for some energy efficiency improvements over time. In this
scenario, there is no switching to other fuels or technology types, but we model an increasing
production and consumption of bioLPG (as a superior and preferred alternative to LPG) over the period
- as evidenced by the transition in figure 24. This is an assumption, but the levels of production
analysed in this chapter are less than current estimates of European potential by 2040 and 2050 -
therefore possible with appropriate policy and industry support.
450
EU28 off-grid SFH heating consumption (TWh)
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100
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2016
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2045
2046
2047
2048
2049
2050
Oil Coal LPG bioLPG
Ecuity Economics
Figure 24 - EU28 oil, coal and LPG consumption profile for heating (baseline scenario)
Figure 25 illustrates the impact that this fuel consumption has on emissions over the period. As
expected, emissions remain high - and decrease by 20% as a result of BioLPG inclusion and some
energy efficiency improvements.
120
EU28 off-grid SFH GHG emissions (MTCO2e)
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2016
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2018
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Oil Coal LPG bioLPG
Ecuity Economics
Figure 25 - EU28 oil, coal and (bio)LPG emission profile (baseline scenario)
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Contents Foreword
However, policymakers could act to restrict the sales of new heating oil and coal boilers. Indeed, the
UK, Belgian and Dutch governments are currently developing policies which restrict the consumption
of these high carbon fossil fuels. To reflect the benefit of such political action, figures 26 and 27
consider an alternative scenario in which the sale of new heating oil and coal boilers is banned from
2025.
Heating oil and coal consumers instead switch to one of the following alternatives in the below
proportions:
BioLPG condensing boiler - 30%

Electric heat pumps - 30%
LPG hybrid electric heat pump - 20%
Biomass pellet boiler - 10%
LPG gas absorption heat pump - 10%
These proportions are assumed and are reflective of the relative costs and market-readiness of each of
the technologies. The rate at which switching occurs is also based on current typical rates of boiler
replacement in European countries.
Figure 26 shows that in this heating transition scenario, fuel consumption falls from 381TWh to
225TWh as household’s switch gradually away from heating oil/coal boilers to heat pumps (electric,
hybrid and gas driven) and gas transition technologies. This switching starts from 2025 and involves
just under 7% of the heating oil/coal household population transitioning to a lower emission system
each year.
450
EU28 off-grid SFH heating consumption (TWh)
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100
50
0
2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Oil Coal LPG bioLPG Biomass Electric heat Pumps LPG heat pump (bio)LPG - hybrid HP Electricity - hybrid HP
Ecuity Economics
Figure 26 - EU28 off-grid heating consumption (heat transition scenario)
47
Contents Foreword
In emission reduction terms, this reduces off-grid annual emissions from heating oil coal and LPG
households by just under 80% over the period, and by 1 billion tonnes CO2e against the baseline
scenario. Monetised using a social cost of carbon figure (€45/tonne47) this equates to €46 billion worth
of emission savings over the whole period against the baseline.
Consumption of LPG and BioLPG in condensing boilers and gas transition technologies48
play an increasing role in this scenario, with fuel use increasing from 26TWh/year to 110TWh/year by
2050 - which is more than a quadrupling of current levels. This helps to lower emissions from rural
heating, most immediately through lower emission LPG, and increasingly because of an assumed
increased volume of BioLPG. This drop-in fuel can deliver 80%+ reductions in GHG emissions against
heating oil and coal and does not come with a high upfront cost for off-grid households who wish to
switch heating systems.
120
EU28 off-grid SFH GHG emissions (MtCO2e)
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60
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2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Oil Coal LPG bioLPG Biomass Electric heat pumps (bio)LPG heat pump (bio)LPG - hybrid HP Electricity - hybrid HP
Ecuity Economics
Figure 27 - EU28 off-grid heating emissions (heat transition scenario)
Technology Cost of Transition
This chapter argues that gas transition technologies should play a key role in delivering heat
decarbonisation in European off-gas grid homes. The modelling has shown that deep emission
reductions (82%) can be achieved by supporting a mixture of technologies - including gas technologies,
electric heat pumps and biomass boilers - which can be installed in off-grid properties to best fit the
preferences of consumers and the diverse characteristics of the buildings they live in.
However, these new technologies will cost money, and are often at a premium to existing coal and
heating oil systems.
47
OECD & UCL (2015) Monetary Carbon Values in Policy Appraisal.
48
Hybrid heat pumps and gas absorption heat pumps.
48
Contents Foreword
Given that decarbonisation is required and valued (€46 billion carbon savings), we argue that not only
does this mixed technology approach make sense from a consumer choice perspective, but also from
an economic perspective. Blanket electrification will be a costlier and more challenging pathway to
enact, and policymakers should instead look to support a range of technologies rather than just one
solution.
Figure 28 shows the modelled levelised costs of the technologies considered here across the top ten
high-carbon fossil fuel heat consuming European countries49. This levelised cost of heating metric
takes account of each technologies’ upfront cost (country-specific data), expected operational lifetime,
operating efficiency and running costs (based on country specific fuel prices). This analysis clearly
shows a large range of electric heat pump costs which is reflective of the range of efficiency levels that
we must assume and model for.
Optimising the deployment of technologies into the building types in which they operate best, will
reduce the total cost of decarbonising heat in off-grid areas. Electric heat pumps can operate efficiently
and at a reasonable levelised cost, but some of the larger, older and less-energy efficient properties in
off-grid areas are less suitable for their optimal operation. Instead, gas transition technologies can
provide a more cost-effective solution, whilst also lowering carbon emissions - especially with the
potential for BioLPG supply over the coming years.
Figure 28 - levelised cost of heat range for off-grid heating technologies covered (€/MWh)
Germany, Poland, France, UK, Spain, Belgium, Italy, Greece, Ireland and Austria. Switzerland is omitted from this list because of
49
data restrictions. Together these countries account for around 90% of Europe’s consumption of heating oil and coal for heating.
49
Contents Foreword
Using the levelised cost50 data we modelled the expected cost of transitioning from heating oil and
coal to either:
1. 100% electric heating pump pathway (75% ASHP, and 25% GSHP cost split)
2. Pragmatic, mixed technology pathway (with all technologies featured in figures 26 and
2751)
The table below summarises the analysis results. Firstly, it demonstrates that off-grid heat decarbonisation
will cost money, as oil and coal off-grid heating is displaced by new lower emission heating systems.
As the social cost of GHG emissions is often undervalued, or not valued at all in the cost of heating,
this is not surprising. However, in this scenario the mixed technology pathway is substantially more
cost-effective than the 100% electric heat pump decarbonisation route. This involves an increasing
role for lower-carbon LPG, highly-efficient gas transition technologies, and ultimately low-emission
BioLPG. Policymakers should support a range of technologies to best deliver low emission heating to
a diverse building stock, and varied consumer preferences.
The table also shows that both pathways generate substantial carbon savings, which when monetised
exceed in value the pecuniary cost of the transition away from oil and coal heating. Therefore, on a
social basis the decarbonisation of off-grid heating provides a net benefit to Europe, and LPG and
BioLPG should play a key role in this transition.
Transition from high carbon fossil fuels to lower emis- 100% electric Mixed
sion alternatives - cumulative costs and savings against heat pump technology
baseline, € billion pathway
Carbon savings (2018-2050) against baseline, € billion 46.4 45.6
Cost of transition against baseline, € billion 37.3 11.2
Net social benefit from transition, € billion 9.1 37.0
Table 8 - Cumulative costs and savings against baseline, € billion
50
We assume that the fuel price of bioLPG is equivalent to conventional LPG prices based on initial supply which is not
expected (source: Mercury Fuel Systems). Note that other production routes may be costlier.
51
(BioLPG condensing boiler (30%); electric heat pumps (30%); LPG-hybrid heat pump (20%); biomass pellet boiler (10%);
and LPG gas-absorption heat pump (10%).
50
World LPG Association
WLPGA
182 avenue Charles de Gaulle, 92200 Neuilly-sur-Seine, France
+33 (0)1 78 99 13 30
association@wlpga.org
www.wlpga.org

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The role of LPG in shaping

the energy transition

© 2018 World LPG Association. World LPG Association (WLPGA)

We would also like to thank Liquid Gas Europe for

Foreword by James Rockall 4

The timing has never been better to do so:

The outcomes of our research are telling:

•• In the EU rural heating market, a mixed technology approach to decarbonisation - including

Replacing 50% of diesel trucks with LPG trucks by 2030.

Drivers shaping the global energy

Poverty and Wellbeing

The role of LPG in shaping the transition

Industry and LPG

Information box: BioLPG – production, emissions and potential

The regional context

C1. LPG use for heavy and medium duty

Poor Air Quality: a public health crisis

The Contribution of the Transport Sector

Stationary fuel combustion Transportation

Figure 19- US NOx emissions by sector (thousand tons) (EPA, 2017)

Figure 2 - % fuel use of MGVs and HGVs in the US (EIA, 2017)

Medium-duty trucks Heavy-duty trucks

Figure 3 - projection of new medium and heavy-duty trucks in the US (EIA)

Pollution Reduction Challenges: how to tackle emissions from new

Playing its Part: an increased role for LPG

Figure 4 - automotive pollutant emissions by fuel type3

NOx total (g/mmBtu)

GHG well-to-wheel emissions (purple marker)

Diesel truck 125,000 149,016 25,250

0 50,000 100,000 150,000 200,000 250,000 300,000

Total capital cost, $ Total fuel cost, $ Total maintenance cost, $

The Propane Education and

Scenario Analysis: a shift to new LPG OEM trucks

NOx emissions savings, Kt

C02 emissions NOx emissions

Savings from replacing 50% of diesel trucks to LPG NOx CO2

What would be the environmental and monetary benefits of

•• Conversion - a vehicle makes use of a conversion kit which enables it to run on a

Savings from converting 2 million diesel trucks to LPG NOx CO2

Appendix: Assumptions for LPG vs diesel truck lifetime cost comparison

Variable/input Diesel LPG truck Source

Conversion cost, $ - 12,000 PERC

Average MPG 6.1 5.7 US Energy & Information Administra-

Fuel cost/ gallon, $ 3.03 2.83 AFDC https://www.afdc.energy.gov/fu-

Federal incentives, $ 0 0.36 PERC Autogas Calculator https://www.

Other lifetime costs**, $ 11,250 1,000 PERC Autogas Calculator https://www.

Average heavy-duty truck miles 30,000 30,000 EIA/Ecuity assumption

Lifetime, years 10 10 EPA

C2. LPG use for on-site back-up power

•• Compared to diesel, LPG has a lower nitrogen and carbon intensity.

Res idential, 1.5, 2% Other, 1.5, 2%

Industrial, 20, 25%

Commerci al, 57, 71%

Dell Children’s Medical Centre of

Tackling the Emissions from Existing Diesel Generation Capacity

Figure 11 - electricity generation from distributed generators by fuel source

Diesel LPG Bio-LPG

Switching from diesel to LPG also has an impact on air quality.

C3. American industrial and commercial