The role of local, decentralised energy solutions is too often overlooked in the context of current EU policy priorities to increase energy supply

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1 The role of local, decentralised energy solutions is too often overlooked in the context of current EU policy priorities to increase energy supply security while attaining climate change goals. This presentation will focus on the contribution of LPG, one of the key energy sources whose distribution is independent from the transmission grid. 1

2 SHV Gas is the world s leading distributor of LPG. Brands include Calor, Liquigaz and Primagaz. SHV Gas is a privately owned Dutch family company with over 27 individual companies spread over 3 continents with around 16,000 direct employees. This energy company started off as a coal trading company. Today SHV Gas is not only a distributor of LPG, but is also increasingly helping its customers and the European Union move to the next generation of decentralised technologies such as micro-chp and renewables. 2

3 These two pictures represent two important energy challenges for Europe. Firstly - How do we ensure that rural communities have access to modern, efficient and sustainable energy? Secondly - How do we address the air quality problems in our urban areas which still represent a clear and present danger to millions of peoples health today? These are two different challenges, yet they are united by LPG that helps meet them. 3

4 LPG (propane and butane) is an inevitable by product of the oil refining and natural gas extraction processes. It will exist as long as society demands that these two processes happen and that s for the foreseeable future. According to industry predictions, supported by external consultants, it would be possible to double LPG s share of total European energy consumption by With 8% average growth in European energy consumption for and an appropriate regulatory framework, LPG could double its share of energy consumption in Europe, representing a jump from 31 million to 66 million tons. It is also a fuel that is less susceptible to political instability due to its dual source origins and variety of transportation options trains, boats, and lorries. Why LPG? Because it is one of the most secure types of energy. 4

5 Around 120 million people already use LPG in Europe. That s the equivalent of nearly a quarter of the EU population. Where LPG has the most to offer is as a low carbon and clean heating and cooking fuel in rural off-main gas areas where the natural gas grid does not go. 50% of the market for LPG goes into these applications, while around a quarter goes into autogas applications. 5

6 LPG is the lowest carbon conventional fuel available to the millions of citizens living beyond the gas mains. When LPG replaces other fuel technology such as heating oil, solid fuel and most electricity, there are significant carbon savings. LPG is one of the cleanest fuels available in terms of CO2 for example it emits 16-23% less CO2 than petrol, 18% less than oil and 90% less than coal. 6

7 According to a European Environment Agency report released this summer, buildings now rival transport as the main contributor of pollutants such as SOx, NOx and Particulate Matter (PM). LPG is a low emission fuel for NOx, SOx, black carbon and Particulate Matters. It emits 96% less NOx than diesel, hundred times less PM10 than diesel and 99% less SOx than heating oil. LPG is exceptionally clean burning with just CO2, water and trace elements being produced. 7

8 The energy challenges of urban communities in Europe are many, but clearly a key component of their energy needs relates to transport and this is where LPG has a role to play in urban areas. While reducing carbon emissions from transport should be a political priority, it is also important not to forget the contribution that transport continues to make to poor urban air quality. The European Environment Agency estimated earlier this year that since % of the EU s urban population may have been exposed to levels of PM 2.5 above EU standards. This exposure has a real and immediate effect to EU citizens. Again, the EEA estimates that exposure to PM 2.5 in Europe has reduced life expectancy in the EU by more than eight months. 8

9 Too often the answer to these issues is to do nothing, or concentrate on alternatives that are far away. LPG is a stepping stone towards the future a bridging technology in transport that can deliver immediately. There are 7 million LPG-vehicles already on the road in Europe. The infrastructure is in place, with over 31,000 service stations offering LPG. The adoption of autogas brings real benefits. If the LPG-industry roadmap were achieved, 11,000 tonnes of PM could be avoided. The saving in CO2 emissions would be the equivalent of the total greenhouse gas emissions of Belgium, Sweden, Bulgaria and Lithuania in In terms of security of supply, Europe s dependence on diesel and petrol in the automotive fuel market can be broken as LPG is freely traded around the world and scores twice as highly as both petrol and diesel on the OECD s Trade Openness Index. 9

10 Rural areas face a number of challenges that are different from those of the cities. In the UK, for example, there are nearly three times as many households in rural areas living in fuel poverty compared to urban areas. In promoting energy efficiency in Europe, rural areas face their own problems. Rural standing buildings tend to be older and possibly stone built, very often with solid floors and located in isolated communities. The nature of the building stock, and the fuel options available in rural areas, also limit the range of low carbon technologies that can be employed. Rural housing, often with long electricity transmission distances, is also subject to more frequent blackouts than urban housing. 10

11 The future for rural energy is based on the following four principles: Sustainable Sustainable does mean very low carbon but it also means secure, affordable and deliverable. Decentralised LPG is in many ways the original decentralised energy source in most countries it started life providing portable energy to remote farms and hamlets. Today CHP powered by LPG is gaining in popularity providing total home or business energy from a single source. Efficient LPG boilers are now over 95% efficient and when a micro-chp unit is used electricity production for the average domestic rural property can be as high as 85% of electricity needs. Compare this to using electricity which sees an energy loss of 70% before you even switch an appliance on. Modern Renewable technology is now getting more established and the countryside is in many ways leading the way in installing these modern units to homes and businesses. LPG is almost always used as an essential back up to these technologies to ensure supply continuity. In markets like the UK, LPG powered fuel cell boilers should be available on the market as early as

12 The way forward with policymakers according to SHV Gas: 1. Regulations like the Energy Performance of Buildings agreed in recent weeks need to recognise the specificity of rural areas and their access to energy infrastructure. They also need to take into account that a focus on cost can disincentivise new technologies and the take up of cleaner fuels in the short term. 2. Taxation The Energy Taxation Directive proposal should ensure that cleaner fuels are incentivised according to their environmental benefits. Recent drafts of this proposal recognise the CO2 benefits of LPG, however they will make LPG worse off compared to the current provisions where LPG has a zero rating for heating and exemptions for autogas. They also do not include considerations of other externalities such as air quality. 3. Market developments Energy efficient technologies like micro-chp still don t have a framework put in place by Europe and Member States. Indeed, mchp has a weak directive and suffers from a lack of political will to do more. 4. Level playing field A lack of enforcement in many areas sees a threat to legitimate LPG businesses as they try to compete with unlawful competitors. Other fuels do not have the same high level of standards to meet. The LPG industry needs government understanding and support to achieve shared goals. When working together real benefits can be achieved to the environment, society and the quality of peoples lives today. 12

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