Deck: Suburban Propane helped pass a technology neutral low-carbon fuel standard in New Mexico.
By Keith Reid
In March, New Mexico became the fourth state to adopt a low carbon fuel standard. The signing of New Mexico House Bill 41 established a clean transportation fuel standard program to reduce the carbon intensity of transportation fuels through 2040.
The bill sets goals of reducing the carbon intensity of transportation fuels used in the state by at least 20% below 2018 carbon intensity levels by 2030, and at least 30% below 2018 carbon intensity levels by 2040.
According to the New Mexico Environment Department: The clean fuel standard is designed to reduce the carbon intensity of the state’s transportation fuel mix over time. This technology-neutral program allows the state to set a standard for the carbon intensity (i.e. amount of lifecycle greenhouse gas emission per unit of fuel energy) of transportation fuels such as gasoline and jet fuel. Producers or vendors of transportation fuels that produce low carbon fuels (i.e. fuels that are below the standard) generate credits to sell in the clean fuels marketplace. Producers or vendors of transportation fuels that produce high carbon fuels (i.e. fuels that are above the standard) obtain credits in the clean fuels marketplace.
Suburban Propane was part of the New Mexico Clean Fuels Coalition, which led advocacy efforts supporting House Bill 41. The company is a nationwide distributor of propane, renewable propane, renewable natural gas, fuel oil and related products and services, as well as a marketer of natural gas and electricity and producer of and investor in low carbon fuel alternatives. It serves the energy needs of approximately one million residential, commercial, governmental, industrial and agricultural customers at approximately 700 locations across 42 states.
FMN spoke with Doug Dagan, vice president of strategic initiatives, renewable energy about the company’s support of the bill through the coalition and some of its renewable and otherwise low carbon solutions.
Tell us about your involvement with the Clean Fuels Coalition.
It’s been a long process—three years of engagement. We sit on the board of the Low Carbon Fuel Coalition, which includes some well-known names in the traditional energy and electrification space. The coalition’s goal is to promote technology neutral approaches that drive down carbon intensity. I think one of the strengths of that coalition is just the sheer number and diversity of players.
We wanted to make sure that the legislation is truly technology neutral, and that it allows for the best available technology to win out—one that doesn’t put its thumb on the scale in terms of picking an end user or an end goal beyond just saying it’s going to reduce carbon emissions.
What are the opportunities for Suburban Propane?
Fortunately for us, in many cases the best available technology today is propane. And the best available technology of tomorrow is going to be renewable propane, blended with renewable DME or RNG or hydrogen. And those are all products that we have a hand in.
We live in a society that is very divided. But when we can get through to people and explain carbon intensity and explain the realities of the different options that are out there, people do come around. There are technologies today that are abundant, affordable and available, but we are not using them. We can absolutely leverage those and should be using them.
If you put your thumb on the scale and say, “Just electrify everything,” well, the grid can’t handle that. And we’re seeing increased emissions from the electric grid, and in many places the carbon intensity of the electric grid is actually significantly worse than the carbon intensity of propane. In many cases, it’s even worse than the carbon intensity of diesel and gasoline. But if you use renewable propane, the emissions are even lower. If you blend renewable propane with renewable DME, you can get zero or potentially even negative carbon intensity levels.
There does seem to be a challenge getting legislators and regulators to look at alternatives beyond electrification. How have you navigated this?
We try to educate policymakers about that. It’s hard to do because there’s so much resistance to anything other than electrification. But when you can break through and really have a conversation with someone, you can explain to them that carbon intensity is an objective measure that was established by the Department of Energy. It’s been adopted by several states, and what it does is level the playing field. We have a great team here at Suburban Propane, and we’ve been good at getting that message out.
Describe your renewable natural gas product.
We operate a large renewable natural gas facility in Arizona. We have a partnership with seven farms in that area that produce manure that we take into our anaerobic digesters. That process produces raw biogas, and we clean that up in a processing plant and then purify it to almost pure methane, which is the largest component of natural gas.
We also have a facility in the metropolitan Columbus area that takes in and processes food waste and agricultural waste. And then we have a facility in upstate New York where we have partnered with a farm to host an aerobic digester.
We’re selling that to California’s LCFS market for transportation. The biggest application is in natural gas vehicles, whether they’re CNG or LNG.
You describe even greater reductions from adding DME. How does this work?
DME is a molecule that’s very similar to propane, and what it allows for is a blending of the two (DME and propane) that you can move and transport in existing propane infrastructure. It can also be used as a drop-in replacement for whatever you use propane for today. We sell renewable DME (RDME) propane blends out of our Southern California location.
We get the renewable DME molecules from Oberon Fuels, in which we own an equity stake. The DME molecule that we’re delivering comes from renewable methanol, a byproduct of processing wood and paper. The long-term plan is to use an even lower carbon intensity feedstock and get a bigger bang for the buck when you blend it with traditional propane. We’ve invested a lot of time, energy and money to figure out the blending process and test engines to make sure that the product runs without any changes. Users then just take the propane blended with RDME, put it in their forklifts and do their business.
What about hydrogen propane blends? Are you working with those at all?
We are not producing any hydrogen now, but we think that hydrogen is a long-term solution for many applications including heavy industry and material handling.
Our core propane business has a distributed, sort of hub-and-spoke layout across the country. And we’re looking to do a similar hub-and-spoke layout approach with hydrogen.
Back to the platform, you can use RDME and propane to move hydrogen. You move it and store it in a regular propane tank and then put it through a chemical process called reforming to produce hydrogen on site. So that’s one area that we can play in. And you can use biogas to make RDME, renewable propane and RNG. Plus, you can use RNG to make renewable hydrogen. So, there are interplays between each of those pieces, but all three of them really leverage our 95-year legacy of safely and effectively delivering energy to customers and position us to be in a good place for the next 95 years.
