LPG: the sustainable alternative for today and tomorrow

AEGPL Briefing Document on LPGJanuary 2015

Slide 2 to 7 – Overview of LPG use in EuropePart 8 to 12 – LPG contribution to EU policy

objectives

For further information, please contact AEGPL General Manager at: samuel.maubanc@aegpl.be

What is LPG?

Blanket denomination covering Propane and Butane

Comes from multiple sources, as a by-product: Natural gas extraction

(over 65% of global LPG supply, 47% in Europe)

Oil refining/extraction

Easily liquefied and transported

A wide range of applications

Transport

fuel

Cooking

Space and water

heatingAgriculture

Industrialuse

Others

An extensive database of the hundreds of LPG applications can be found here: http://lpg-apps.org/

Distribution of demand in the EU

Residential 40%

Agriculture5%

Industry22%

Autogas33%

Total LPG demand in 2013 = 16,5 million tonnes

* Excluding LPG used as feedstock by chemical industry

Residential: 1. Italy2. France3. Spain4. Germany5. Portugal6. Poland7. UK8. Romania9. Greece10. Netherlands

Autogas:1. Poland2. Italy3. Germany4. Bulgaria5. Romania6. Netherlands7. France8. Greece9. Lithuania 10. UK

Industrial:1. Germany2. UK 3. Spain 4. Sweden5. France 6. Italy 7. Finland8. Poland 9. Greece 10. Portugal

Top-10 LPG markets in EU

A closer look at the residential market

LPG fulfils the energy needs of millions of Europeanhouseholds, especially for space heating/cooling, hotwater, and cooking. These three applications represent onaverage 85% of the total energy use in a European home.

As a portable and clean-burning gaseous fuel, LPG is anideal substitute for natural gas where the gas grid is notavailable (over 40 million households are in this case),typically in rural or peri-urban areas.

In off-grid areas, LPG is a cleaner alternative to morepolluting energy sources such as heating oil and coal, whichtogether still represent 1/3 of the energy mix. LPGcurrently represents 17% of energy use in off-grid areas.

A closer look at the Autogas market

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2003 2005 2007 2009 2011 2013

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STATIONS IN THE EU

7.415

3.5

4.5

5.5

6.5

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2003 2005 2007 2009 2011 2013

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NUMBER OF VEHICLES

LPG is the most widely-used alternative transport fuel in the EU, and also the fastest growing –total number of LPG vehicles increased by 40% in the last 5 years

Over 3 billion euros have been invested in building-up the LPG filling station network already

A closer look at the Autogas market

Across the EU, customers can choose out of:

over 90 models from over

20 manufacturers

In all vehicle segments

From small city vehicles

To delivery vans

With full manufacturer warranty

In addition:

Conversion possible of almost any gasoline-powered vehicle

Development of Dual Fuel (LPG-diesel) technology for trucks and non road mobile machinery

Growing interest in LPG for boats (esp. inland waterways navigation and smaller leasure boats)

LPG contribution to climate policies

In residential or industrial: The GHG footprint of LPG is respectively 17% and 49% lower than heating oil and coal;

LPG emits almost no black carbon, contrary to heating oil, coal and biomass. As suggested by the EuropeanParliament (see motion for resolution B7-0474/2011) and the European Commission (see 2013 Clean Air PolicyPackage), black carbon emissions should be regulated as it is the second largest contributor to global warming afterCO2;

According to projections from the PRIMES Model – tool used by the European Commission for many of its impactassessments – a larger uptake of LPG in off-grid areas until 2030 would result in up to 184 million tonnes of CO2avoided;

In transport: An LPG car can save up to 16% CO2 emissions compared to the same car model fuelled with petrol;

If LPG reaches its objective of representing 10% of the car fleet in Europe in 2020, this would result in 350 milliontonnes of CO2 avoided compared with baseline scenario. It is a low-hanging fruit in decarbonising the transportsector, as LPG does not require any new major investment nor public funding for its refuelling infrastructure;

From a well-to-wheel perspective (including emissions from production and distribution of fuels, in addition to tail-pipe emissions), LPG has a GHG footprint respectively 21% and 23% lower than petrol and diesel. These values aredefined by the EU Joint Research Centre and are referenced in the Fuel Quality Directive;

LPG contribution to air quality policies

In residential or industrial: In transport:

LPG cars generate 96% less NOx (Nitrogen Oxide)than diesel and 68% less than petrol;

LPG cars generate over 4 times less ParticulateMatter than diesel. Diesel fumes were classified ascarcinogenic by the World Health Organisation in2013;

If LPG reaches its objective of representing 10% ofthe car fleet in Europe in 2020, this would representa reduction in external cost (e.g. medical treatment,premature deaths, etc.) of pollutant emissions ofover 20 billion euros;

While the European Commission has recently taken action against 17 EU member states for breaching EU particulate (PM10) and NOx limits, LPG represents again a low-hanging fruit in reducing these emissions

LPG contribution to EU security of energy supply policies

Thanks to its diverse origins (by-product of natural gas and oil extraction andrefining) and the fact it is easy and affordable to transport, LPG offers a verysecure prospect for supply in the medium to long term. It is also notdependant on pipelines and can therefore be delivered virtually anywhere;

The largest part of EU LPG supply is locally produced (refineries across theEU, or natural gas fields from e.g. Norway, UK and Hungary) or importedfrom EU-neighbouring countries such as Algeria;

The global supply of LPG is expected to increase by over 25% between nowand 2020;

Although currently marginal in Europe, the supply of locally-produced bio-propane is expected to develop;

LPG contribution to EU energy efficiency policies

LPG benefits in rural areas are particularly important, as the building stock in these areas isoften older, bigger and less energy-efficient than in urban areas.

A number of efficient technologies such as district heating (only relevant for cities) andconventional heat pumps (not suitable for the retrofit of poorly insulated buildings) areunavailable in rural areas: LPG is an immediately available and clean alternative to heatingoil, coal and unsustainable biomass.

Use of LPG in off-grid areas facilitates the uptake of new high-efficiency technologies suchas gas heat pumps, micro-cogeneration, and thermo-solar installations.

AEGPL general recommendations for upcoming EU Energy and Climate policies

EU policies should not be only looked through the prism of a simple dichotomy between fossilfuels and renewables: both can be combined (e.g. gas heat pumps which are consideredrenewables while running on a fossil fuel) and each energy source or technology comes withdifferent pros and cons regarding energy efficiency, emission of pollutants, or cost-efficiency;

Technology neutrality should remain a pillar of EU Energy and Climate Policies (of particularrelevance to policies on Alternative Transport Fuels);

Alternative Transport Fuels Policies should envisage environmental impact of transport in a moretransversal way: not only tailpipe emissions should be covered by legislation, fuels should beassessed according to emissions from a well-to-wheel or lifecycle point of view (even for electricvehicles);

Legal certainty is vital for innovation and investments in clean and efficient technologies: shortterm incentives or supportive policies for a given technology (“picking-winners”) are often counter-productive;

Climate policies have to regulate not only CO2 emissions but also pollutants having a significantimpact on global warming, such as black carbon;

It is vital that specificities of rural building stock are taken into account in EU Climate and EnergyPolicies (of particular relevance to the upcoming EU Heat Strategy, which the Commission might bereleasing in late 2015 or 2016);

In a similar fashion to what was done for biofuels, and as requested by many stakeholders, thecurrent assumption in EU legislation that all types of biomass are carbon-neutral should berevisited: only genuinely sustainable biomass should be subject to EU incentives;