LONDON, Sept. 17, 2021 /PRNewswire/ -- The global economy continues to be overly dependent on oil and gas reserves to satisfy its energy requirements. Although conventional liquid petroleum gas (LPG) comprises a large portion of the pie, a desire to reduce the carbon footprint has compelled companies to look at bio LPG. Bio LPG is produced from renewables such as plant and vegetable waste and is often a by-product. As prices of conventional gas increase due to depleting supplies, the demand for bio LPG should benefit as it is a cleaner, greener, and more cost-effective solution. In a recent report, Fairfield Market Research states that the bio LPG market was worth US$153.71 Mn in 2019 and should grow at a CAGR of 47% from 2020-2025, reaching a value of US$1020.32 Mn by end 2025.
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Cellulosic Organic Waste is Key to Raising Yield of Bio LPG in Bio LPG Market
The current bio LPG production is marginal in percentage terms because of its low recovery from bio-oil. Nevertheless, if advanced chemical processing techniques that process mixed waste, cellulosic, and bio-oil are commercialized, sufficient bio LPG could be produced to cover a third of global LPG production by end 2025. Cellulosic organic waste - forest residues and crops such as poplar and switchgrass - is essential in raising the yield of bio LPG during the assessment period. Cellulosic waste is the largest component of biological hydrocarbons. Even though mixed waste is substantial, it is lower than cellulosic organic waste in absolute terms, allowing the latter able to deliver the greatest output in the bio LPG market.
Inconsistent Policies and Fluctuating Crude Prices Biggest Challenges in Global Bio LPG Market
Unpredictable government regulations are predicted to be the biggest restraint in the bio LPG market for the foreseeable future. Globally, there is no consistency on biofuel policy and they vary wildly from one jurisdiction to another. A decade ago, some countries offered direct rebates and subsidies to biofuels. After this proved unfeasible, mandates necessitating a certain portion of the market to use biofuels were introduced. Furthermore, the bio LPG market is heavily impacted by the price of natural gas and crude oil as biogas is a direct substitute for bio LPG. Biogas is safer and more environment-friendly than LPG on account of its lower pressure and density.
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Pledge to Decarbonize Economies Ensure European Dominance of Bio LPG Market
More than 90% of the bio LPG is produced and marketed in Europe, making the continent critical from a profitability perspective. Several bio LPG producers such as Total SE, Neste Oil, Global Bioenergies and PREEM Group have their headquarters, giving the continent an edge over others in the bio LPG market. European governments are serious about their commitment to decarbonize their economies, driving the uptake of bio LPG there. As climate activists and increasingly aware consumers raise the alarm of global warming, researchers predict that there will be immense opportunities for stakeholders in the bio LPG market.
Players Doubling Down in Bio LPG Market by Signing Agreements with Convenience Stores
Prominent companies actively involved in the bio LPG market are Neste Oil, Total SE, ENI, SHV Energy, Preem AB, Renewable Energy Group, AvantiGas. In 2019, SHV Energy doubled its supply of bio LPG to major European markets and carefully looked at investment projects worldwide. The company also entered into a joint venture with UGI International to produce Renewable Dimethyl Ether, a low-carbon liquid gas for the LPG industry. It remains to be seen how rivals respond to such developments in the bio LPG market.
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