¶ Intro / Opening
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¶ Introduction to UK Decarbonisation
Hello and welcome to Global LPG Conversations, an Argus podcast where we cover the latest development in LPG markets and prices. My name is Valdemar Jasczyk and I'm the deputy editor for LPG based in London. Today I'm joined by George Webb, the Chief Executive of the Liquid Gas UK Association. We talk about navigating the country's decarbonisation journey and the role of renewable liquid gas.
The British sector has recently called for the government to introduce a renewable heat obligation by two thousand thirty. And this is the latest step in the industry years long efforts to secure its future in energy mix for off grid heating and encourage policy support for renewable liquid gas production. Thanks for joining us, George.
Morning.
So maybe you could provide us a bit of a intro, what is the current state of play for the government's decarbonisation of heating plants? How did we get there and what does the what's the role of the industry in it?
So from the government's point of view there's still a major focus on electrification and that's the sole focus at the moment, but there is recognition from government ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud.
The response from governments on the alternative clean heating consultation should hopefully provide then industry with a clearer picture of our role in that transition to net zero, particularly for those off grid businesses and domestic customers.
Okay, I see. So that's a pretty important live or die kind of situation for the industry with this consultation.
You you could say that, but I think it's probably a jigsaw pe piece, um uh one jigsaw piece in many jigsaw pieces, and there'd probably be more consultations going forward, but it It's a key step for um to give uh industry confidence and to continue investing in renewable um options.
¶ Industry's Renewable Liquid Gas Vision
I see. And it's it's been already, as I mentioned, quite a journey for you all the way back from twenty nineteen, uh then twenty twenty three biomass uh strategy and the change of governments after that. So uh I imagine you're uh uh c you feeling quite optimistic compared to previous years?
Um c m I would say we are optimistic. Um we have got a clear plan through our twenty fifty uh renewable journey to deliver renewable liquid gases for the off gas grid. Um we've done a number of uh of studies, evidence back that we've supplied to government that can prove that we've got the technologies and we've got the feedstocks that could be part of the renewable journey.
Mae'n ymwneud ymwneud â phobl sy'n cael ei wneud ymwneud â phobl sy'n cael ei wneud â phobl sy'n cael ei wneud â phobl sy'n cael ei wneud â phobl sy'n cael ei wneud â phobl sy'n cael ei wneud â phobl sy'n cael ei wneud. It it all comes down to the fact markets will deliver um where government set direction. So we just need that direction from government to for that investment to come through to deliver the renewable fuels.
So th is that the main motivation uh behind your t proposal for renewable heat obligation?
The main motivation regarding a renewable heat obligation, to be clear, we haven't asked government to establish a renewable heat obligation.
Rydyn ni wedi wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi'i wedi
But it needs to be combined with suitable and supportive incentives and policies that will build help build up growth and demand for industry. And that's through stimulating investment and encourage the build out the build out of supply. Our position simply is that without this required policy support, um, combined with a well designed obligation, we will not see the investment that we need to bring um to introduce renewable liquid gases to meet net zero.
They're joined together really. The supportive obligation, but alongside that we really need to see those supportive policies. So so it needs to be a joined up approach.
Fair enough. And how uh you have uh set targets in the policy with starting with uh three percent and arriving at ten percent by two thousand thirty. How did you how did you arrive at those targets? And how does that compare to maybe other industries that uh exploring similar approach?
Well we took a bit of a str strategic approach to this of how how we would get to targets that not only would suit industry but would be recognised by governments as as being targets that that are realistic, but also is a cost effective to the consumer. So we worked collaboratively with uh consultancies such like Talan.
Um and they set the initial obligation rates working with industry that looking at the um all the detailed feedstock reports that we've we've compiled over the last few years. Um were done by Fraser Nash. And they did a s lot of modelling from two thousand and twenty one on demand um and supply.
But we've also utilised comparative mandates such as the SAF mandate, the RTFO and the Green Gas Quota to help inform our thinking. So all that process went into the project which Talan read which which Talon led. mewn gwirionedd mewn gwirionedd mewn gwirionedd mewn gwirionedd mewn gwirionedd mewn gwirionedd mewn gwirionedd mewn gwirionedd mewn gwirionedd mewn gwirionedd mewn gwirionedd
Uh that's plans for the future, well some of it very immediate future. What what is the situation now in terms of renewable liquid gas uh supply uh for the in in the industry? And where where does in does uh supply come from?
¶ Current RLG Supply and Demand
The the the majority of renewable liquid gas gases currently come from imports. Um but that's largely down to the lack of positive clarity from government'cause there's been this electrification first approach. Um in in terms of supply our latest industry census, which you can read if you go online and note that industries currently we're supplying about twenty five million litres of renewable liquid gases at the moment.
Um but that's planned to be increased to thirty-five million over the next uh twelve months. So so productivity is is developing. Um, but it that would could well be accelerated if we had more of a a clarification of what the future holds.
Okay, and uh that's on the supply side, but who uh on the demand side with the lack of policy clarity that you mentioned and uh lack of the mandate, who are the main buyers of renewable liquid gas? in the UK, what kind of uh industries uh seek it given that I mean obvious premium for the product.
I I think I think that th there's a cross section of of uh of consumers that are supportive, those who are trying to do their bit for the for the for the environment. You've got um commercial and industrial uh users who are looking to um reduce their greenhouse gas effects and you've got domestic customers, so there are a cross section of consumers that are willing to look at renewable liquid gases.
Um, but when you look at start looking at um the the mix that we're looking at on this journey to become a hundred percent renewable by twenty fifty to meet net zero. The amounts of renewable gases in i at the start of this journey are relatively low um uh i in comparison to to the larger uh volumes.
Right. And the mandate would covers uh domestic and industrial customers.
Um looking at the obligation we're looking to fit in with the clean heat strategy at the moment. So basically that would be looking to um just cover the heat section of the uh of of the government's ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud ymwneud.
Right, right. Commercial and domestic heating. And uh what uh what is the volume volume wise, what is the size of the market at the moment?
Size of the market in the UK volume wise totally is about one point one million tonnes.
Okay. Uh just give some figures for our listeners to understand the both the scale of the challenge and obviously the needs of the support uh for the production and imports to ramp up to meet it.
¶ Essential Government Policy Support
And speaking of that support, uh obviously you mentioned that this has to g uh has to go hand in hand with the industry uh providing the mandate. So what kind of support are you expecting for the government in order for this to work?
Um looking at the support that we're looking for, I mean basically we it can be anything from taxonomy to giving us um the green light. Um yw yw yw yw yw yw yw yw yw yw yw yw yw yw yw yw yw yw. So we just need that clear policy support and direction and that will allow industry to begin the journey of bringing renewable liquid gases to market at scale.
Without that, there won't be the confidence to deliver it in in in developing renewable liquid gases, even though we've spent over two hundred and sixty million. as an industry without any policy clarity because we believe that we've got a product that can be part of that energy solution going forward. So it goes back to clear policy support, the direction needed. Um and then we can bring these m these uh liquid gases to to market at scale. Simple as that.
Mm. Yeah, two hundred and sixty million to commit without well, any guarantees for the future is really uh quite a testament to uh to the industry uh on its journey. And you also have plans for investment to go forward even as you're awaiting this policy clarity in the coming years, right?
Rydyn ni'n ymwneud â phobl sy'n ymwneud â phobl sy'n ymwneud â phobl sy'n ymwneud â phobl sy'n ymwneud â phobl sy'n ymwneud â phobl. yw'r rdme neu'r adnodd yw'r adnodd yw'r adnodd yw'r adnodd yw'r adnodd yw'r adnodd yw'r adnodd yw'r adnodd.
Fair enough. And yeah, it's not saying uh it's quite a gamble, but it ha there has been quite a shift Well maybe direction is the same. There could have been quite a shift in policies over the last few years regarding decarbonisation. Uh how certain uh are you uh that we'll still be on the same journey in the next Well say by the next election time.
Um, I'd like to have have have have a a crystal ball which I can I could look into. It it's simple for me. Th the the the government has set the policy and we have to work to the policy that is set out as of today. That policy is and it it can change around the edges, but what's setting law is that we have to meet net zero by twenty fifty.
So the w we won't go off the course, that is still our aim. Um, net zero target date is where we've all got to meet. We understand that. Policy maybe change in between, but at the end of the day, uh twenty fifty is still the target date for the industry.
Alongside that, we just need the government to give us more uh direction of of that we are going to be a solution so we can bring all these jigsaw pieces together to bring these renewable liquid gases to the marketplace because it won't happen overnight. Um it's not a straightforward process. We have to work with refiners, we have to work with technology companies, people who can build these sites.
Fair enough, yes. It might get slower, might get faster, but the destination is all the same. And I suppose there's a bit of a difference also from uh region to region. So you had also engagements with the governments in Scotland and Northern Ireland Uh how's that differs from uh talk with uh talks with Westminster?
Um th there are slightly different policies, but at the end of the day we're still working to the fact that we have to prove that we can bring these renewable liquid gases and working with them to encourage that environment. So even though there are slight different different policies, particularly with Scotland, the Westminster
It's not to the degree where where um it we have to have a total different strategy. At the end of the day, we're still working to the same aim of twenty fifty and we have to deliver renewable liquid gases and we need that. supportive policy environment for us to do that. So it's it's similar convers conversations with all the devolved governments. Rydyn ni'n ymwneud â'r Cymdeithasol, Cymdeithasol, Cymdeithasol, Cymdeithasol, Cymdeithasol, Cymdeithasol, Cymdeithasol, Cymdeithasol, Cymdeithasol.
Right, yeah, fair enough. Uh the bit more to uh juggle but as you said it's all comes down to the same basic
¶ Renewable Heat Obligation Mechanics
Uh just moving back to well the renewable heat obligations uh the the core of this podcast, uh could you please give us more details of how does it work? He introduces for example a system of tradable certificates. So how the trading work, the commitments and all those those small pieces that will make it work.
So i uh simply the the the renewable heat obligation proposal is based upon um similar mandate schemes such as the renewable transport fuel obligation. Um, in the same way that certificates can be traded to cover any shortfall in supply, um, that is vital. um to what we propose. Um we do, however, propose that a cap is introduced to ensure that there is a minimum level of supply, which is physic actual physical project, as opposed to certificate.
And that's to ensure the stimulation and growth in the RLG market. So um that there is a so that's basically where we are at the moment. There has to be a m a minimum amount of supply to encourage that production of renewable liquid gases. It can't be a total certification process.
uh for the sake of proving your credentials to government there has to be physical supply and uh supposedly m higher and higher uh as we go along.
Correct.
But you see uh the goal of two thousand uh ten percent by two thousand thirty, following that it's uh more of a discussion between the government, you don't have anything Uh for intermediate targets after that.
The reason why we've gone to twenty thirty and ten percent looking at our supply outlooks and demand, that's something that we know we can deliver. Post twenty thirty will be dependent on ymwneud â phobl sy'n ymwneud â phobl sy'n ymwneud â phobl sy'n ymwneud â phobl sy'n ymwneud â phobl sy'n ymwneud â phobl sy'n ymwneud â phobl sy'n ymwneud â phobl sy'n ymwneud â phobl sy'n ymwneud â phobl.
Rydyn ni'n meddwl, mae'r cynllun ymwneud â phobl, mae'r cynllun ymwneud â phobl, mae'r cynllun ymwneud â phobl, mae'r cynllun ymwneud â phobl, mae'r cynllun ymwneud â phobl, mae'r cynllun ymwneud â phobl, mae'r cynllun ymwneud â phobl, mae'r cynllun ymwneud â phobl. It's also about um policy and encouraging um investments within to the industry and those supportive uh policy narratives that that are key to any in investment into an industry.
Yes and this uh the idea of the obligation short term targets but discussions afterwards It's becoming quite popular across uh Europe in fact. You found a bit of inspiration from just across the Irish Sea, isn't that right?
Um w inspiration, I c you could call it that, yes, it inspiration, but s certainly that um we're we're with Southern Islands. Um there has been more of a push looking at a um an obligation process and we've certainly looked at the route that they've been taking and that's no doubt had um an impact on this project for us. Um for for obvio for obvious reasons. Um so um yeah, that has that in an imp impact on our on our project, um no doubt because they're such close neighbours.
¶ Industry's Future Roadmap and Demands
Okay. And looking forward, what what are the next steps uh for the industry and for well securing its role in the decarbonisation journey after you submitted your response to a consultation? How Can you just lay out what what the next steps are?
So the next steps for us is we're looking for something supportive to come back from fro from the consultation, which shows we have a a a place in the energy mix. That's the first one. We want to see the support around the offtake of BioRPG from SAF processor to ensure it reaches the market rather than that BioRPG being recycled back into the SAF processor.
I know, how do we go about that? Can government support the discussions with the SAF producers and what do we need to do to see that level of biography coming into the marketplace? We also but we also want to see a fair playing field for renewable liquid gases in comparison to SAF based upon things like sustainability criteria.
and feedstock and greenhouse gas calculation criteria. We would like to see support extended to hybrid technologies because we've got a ho we're a very good solution for hybrid um options going forward that utilises up renewable liquid gases. But also we like new new products that are coming through or like RDME that we're working on at the moment to become a solution, whether that's as a blend or as a hundred percent solution.
for um industrial use. We like to see government support for a PAS six six six six document, which is basically something that's a specification for boiler manufacturers to work to to supply equipment and technology into the marketplace and gives a a level playing field on on what those technologies need to meet to looking at the blend uh the blend of that renewable liquid gas. So there's a number of areas that we work we are looking for.
Okay. So yeah, so a lot of moving parts there from yeah securing supply of stuff or uh uh equipment with hybrids uh to just policies and technical aspects. So quite a lot of work ahead of you for sure.
Mae'n llawer o gwaith, llawer o llawer o llawer o llawer o llawer o llawer o llawer o llawer o llawer o llawer. But the the the great thing is we have we w we've got a story to tell which is backed up by hard evidence that we could be part of the future and deliverable and deliver a renewable liquid gas
uh to meet those future expectations for net zero and we've got a robust supply chain already in place to utilise. So the story's good. We just need that green light from government and that policy support.
All right. Well good luck with getting that green light. Thank you so much, George, for coming to our podcast. Thank you to our listeners. We look forward to doing another one of these in the near future, so please keep an eye on your social media and other feeds for that. And of course for the latest of all the topics do go to your Argos LPG subscriptions, like international Argos LPG Daily, Argos LPG World twice a month and Argos LPG out.
And if you're interested in any of them, do not hesitate to contact us.
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