Ewa Abramiuk-Lété, General Manager of the European LPG Association, commented to NaftoRynok on the prospects of the European autogas market and rLPG production. Also, she commented on how the transition to electric vehicles can impact LPG sales in the EU in the coming years.

NR: What is the volume of autogas consumption in Europe in 2023? What are the market trends?  

Autogas consumption in Europe is not just stable but reliably so, with clear tendencies to increase. We anticipate the total European autogas consumption to climb to just over 10 mn tonnes in 2023 from around 9.5 mn tonnes in 2022. This figure demonstrates a consistent trajectory below the pre-pandemic high of 11 mn tonnes in 2019. Mid-sized autogas markets, including Spain, Portugal, and Bulgaria, experienced impressive growth in 2023. France had a solid year, growing by 24 % year on year. And it's worth noting that Turkey is on track to reach an all-time high consumption of 3.4mn tonnes. However, aside from Turkey, many of the largest markets showed no growth in 2022. Italy, Poland, and Ukraine all had a flat or slight decline in 2023, with Poland registering a 7% increase in consumption in 1Q of 2024.

NR: What is driving the growth of demand for autogas? What obstacles do you see for further growth of the LPG market in Europe?

The increase in demand for autogas is mainly due to higher gasoline and diesel prices, making autogas an economically appealing alternative. This has led to solid sales growth in countries like France, the Czech Republic, Spain, Latvia, Norway, and Portugal. However, obstacles such as rising interest rates, high inflation, and the cost-of-living crisis have squeezed household budgets and dampened overall demand.

NR: Has the attitude of policy makers towards LPG changed since they began to actively promote the transition to electric vehicles?

As Europe approaches the 2035 ban on new Internal Combustion Engine (ICE) sales, there is a significant potential for CO2-neutral fuels to play a pivotal role in the decarbonization of passenger cars. An ICE vehicle using renewable fuels can have a similar, if not lower, life-cycle carbon footprint than a battery electric vehicle (BEV). This potential role of CO2-neutral fuels is an exciting prospect for policymakers as they navigate the transition to electric vehicles. The recent developments in the electric vehicle sector underscore the need for diverse alternatives to decarbonize road transport. The European elections have sparked a fresh debate on the future of transport in Europe and the continued relevance of biofuels and carbon-neutral fuels post-2035. Given that autogas is the leading alternative fuel in the EU, its future role in the market warrants serious consideration.

NR: What does the LPG industry expect after 2035, when the EU will ban the sale of new cars with internal combustion engines? When do you think autogas consumption might start to decline?

The accelerating adoption of electric vehicles (EVs) supported by European regulations and government incentives might impact Autogas's consumption levels after 2035. However, it will not make Autogas ​obsolete. The current situation shows that despite the growing popularity of EVs, the market is still faced with several challenges. At the same time, the total number of new vehicle registrations for Autogas continues to rise. This leads us to believe that the demand for Autogas will remain relevant until 2035, supporting the diverse needs of Europeans. What will happen after 2035 will depend on whether European policymakers will decide to open the roads to new cars running on CO2 natural fuels.

NR: Can renewable LPG (rLPG) partially reduce Europe's dependence on imports? What are the current volumes of rLPG production in Europe?

According to Argus Media, in 2023, renewable LPG capacity in Europe stood at 319,000t, up from 248,000t in 2022. We see an intensification of rLPG and rDME production in Europe, as rLPG can be produced as a by-product from HVO/HEFA, Gasification, and Power to X pathways or on-purpose via biogas pathways. We also see enormous potential for rDME production in Europe.

NR: Which companies are the main producers of rLPG in Europe and globally?

The five largest producers of renewable liquid gases (rLPG) in Europe are ENI, Neste, PREEM, Total, and Repsol. According to our outlook, these companies will remain market leaders in Europe in the next five years. With the addition of Marathon, an American producer, these companies are the most significant world producers of renewable liquid gases. Europe, undoubtably is a leader in the production of renewable liquid gases globally.

NR: What feedstocks are used to produce rLPG?

Renewable LPG is produced using various feedstocks, with the primary ones being waste and residue materials. These include used cooking oils (UCO), non-segregated fats and oils (FOGs), tallow, and animal fats. Hydrotreating vegetable oils (HVO) to produce biodiesel and sustainable aviation fuel (SAF) is currently the most prominent pathway, accounting for about 98% of bioLPG output​​. Additionally, new feedstocks and technologies are being explored to increase production capacity and diversify the sources of rLPG​​.

NR: LPG is a traditionally inexpensive product, and that is what attracts consumers. What is the price of rLPG and how can it be reduced?

While, as an association, we cannot speculate about the price, we can discuss strategies that can be implemented to reduce the price of rLPG (renewable LPG). These include improving production efficiency through better technology and processes is critical. Expanding production facilities can lower costs by taking advantage of economies of scale. Forming partnerships can help share resources and cut expenses. Investing in research to find cheaper raw materials and streamline supply chains can also help. Additionally, government incentives for renewable energy can make rLPG more affordable. These combined efforts can significantly reduce the cost of rLPG​.

NR: Are there any subsidy programs for rLPG producers in the EU?

In the past few months, we have witnessed increased support for renewable liquid gases, but they are mostly seen at the national level. The Czech, Italian, and Spanish 2030 National Energy and Climate Plans all mention bioLPG and rDME as fuels that play a role in the national energy mix. Individual schemes supporting renewable liquid fuels, such as tax incentives or direct state aid / public support in selected countries, are also directed towards advanced biofuels or to help companies invest in biomass and renewable hydrogen in energy and fuel production.

Of course, there are European funding schemes that the industry can additionally tap into, such as Horizon 2020 (and Horizon Europe). These schemes have funded projects on advanced biofuels that focus on gasification and fuel synthesis, including biogas, pyrolysis, fermentation, and hydrothermal liquefaction. Another fund is the Emission Trading System (ETS) Innovation Fund, which supports the commercial demonstration and deployment of innovative low-carbon technologies, encompassing biofuel refineries under its focus on energy-intensive industries.

NR: What volumes of rLPG are expected to be produced in Europe in the next 5 years?

Projections indicate that bioLPG production could reach 625,000 tonnes by 2025 if all currently planned projects come to fruition​​. Significant growth is expected from hydrotreating vegetable oils (HVO), driven by increased investment and political support for biofuels, particularly in Europe, and via the Sustainable Aviation Fuels and biogas pathways​​. Alternative production pathways are also being developed to convert feedstocks directly into bioLPG, further contributing to the anticipated increase in production capacity. In the next five years, we will see a scaling up of production, with EU pathways showing that the market can be 100% renewable by 2050 if we see more policy support for bioLPG and rDME.