SHV Energy and UGI to Launch Joint Venture to Accelerate the Transition of the LPG Industry to a Sustainable Future
SHV Energy and UGI International, a subsidiary of UGI Corporation (NYSE: UGI), leading distributors of off-grid energy, announce the intention to launch a joint venture to advance the production and use of Renewable Dimethyl Ether (“rDME”), a low-carbon sustainable liquid gas, to accelerate renewable solutions for the LPG industry. By leveraging the expertise, innovation capabilities and distribution power of both companies, the joint venture will aim to develop the full potential of rDME as a sustainable solution.
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The parties anticipate the development of up to 6 production plants within the next 5 years, targeting a total production capacity of 300 kilotons of rDME per year by 2027. The aggregate investment is estimated to be up to $1 billion which is expected to involve third party investment.
The joint venture, in which both parties would have an equal stake, will bring scale and critical mass to the rDME market by developing opportunities for investment in production capacity. Moreover, it will promote the use of rDME by driving efforts geared at broad market acceptance, developing new rDME based technologies to gain traction among users, and supporting the development of infrastructure, regulations and standards for the safe use of rDME in the off-grid energy sector. The joint venture aspires to advance the further de-fossilization of the entire LPG industry by making available approximately 20% of the rDME production to peers in the LPG industry.
rDME is a complementary liquid gas that can be produced from multiple renewable feedstocks. Being a safe, cost-effective and clean-burning fuel, rDME is a viable sustainable addition to the energy mix. It has a low greenhouse gas (“GHG”) footprint, reducing emissions by up to 85% compared to fossil fuel alternatives. In both pure and blended form, rDME can help the de-fossilization of LPG by becoming a sustainable alternative for off-grid energy uses including heating, cooking and transport. It is highly compatible with existing infrastructure and equipment. Therefore, with limited incremental investments, rDME can help to quickly transition the LPG industry to a more sustainable future.