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Renewable Propane: A Reality Check

The propane industry has been advocating for the use of renewable propane to reduce emissions for their customer base. According to 2022 American Community Survey estimates, 153,000, or about 5 percent, of homes across Massachusetts and Rhode Island use propane as their primary heating fuel. That is a large enough number to take a close look at what renewable propane is all about. This blog provides a brief introduction to the fuel, if it will ever be affordable, and its climate impacts.  

What is renewable propane?  

To produce renewable propane, organic feedstocks, like animal fat and vegetable oil, are put into a refinery (sometimes converted petroleum refineries) to produce biofuel equivalents of petroleum-based products. Renewable fuels made in this manner are close enough to their fossil equivalents to be used interchangeably with them making them so-called “drop in fuels”.  


How much does it cost, and will it get cheaper over time?  

propane tank at homeCurrently, the cost of renewable propane is not well-tracked. This leaves information about its cost in New England based on anecdotal evidence and ranging between “slightly more” to $1 a gallon more than regular propane.

It is worth noting for reference that regular propane is already a very expensive way to heat a home in the Commonwealth. Below you can see the expected cost of producing one unit of heat (MBtu) with an electric air source heat pump (ASHP) and compared to propane and oil at their average residential prices as of 11/6/2023. The cost per kWh shown below is for the Commonwealth’s two largest utilities, Eversource and National Grid. Residents of towns with aggregation programs or municipal utilities often pay lower rates.

Heating Method Price Unit Cost Per Unit of Heat (MBtu)
ASHP with Eversource (West, R-3) $0.2905 per kWh $28.5
ASHP with Eversource (East, R-3) $0.3027 per kWh $29.7
ASHP with National Grid (R-1) $0.3435 per kWh $33.7
Heating Oil Average Residential Price $4.12 per gallon $38.1
Propane Average Residential Price $3.49 per gallon $49.0

The propane industry will argue that renewable propane is a new technology and that costs will go down with time. The flaw with this argument is that renewable propane suffers from the same major drawback that has plagued renewable diesel, biodiesel, ethanol, and other biofuels for decades. That is, they take a massive amount of biological feedstocks to make, and there is simply only so much used cooking oil, animal fat, vegetable oil, and other usable organic feedstocks available to turn into fuel. This lack of progress in bringing down the price of biofuels leaves the industry dependent on federal and state subsidies for its continued existence.

renewable propane harvest

Another reason to be skeptical that renewable propane is going to be cheap enough to play a major role in the state’s future is that even if renewable propane could be produced cheaply it would still carry a high retail cost. Between the months of October to March from 2013 to 2023 the average wholesale price for propane on the East Coast was $1.04 while the retail price was $3.08 according to the Energy Information Administration. The cost differential between wholesale and retail propane prices is driven up by the need to send drivers to fill up small propane tanks and the industry’s practice of having people lease propane equipment from propane sellers, limiting many customers’ ability to switch to cheaper providers.


What about its climate impacts?  

There are few parts of climate science that are more debated and complicated than how to properly measure the total emission impacts of biofuels.  

According to the accounting system used by California for its Low-Carbon Fuel Standard, regular fossil propane has a carbon intensity (the amount of greenhouse gas emissions generated from using a fuel divided by the amount of energy the fuel contains), of 83.2. In comparison, renewable propane sources in California’s Low Carbon Fuel Standard records have somewhat better carbon intensities ranging from 62 for renewable propane made from soybean oil to a carbon intensity of 20.5 if it's made from used cooking oil sourced from North America.

So, while at least according to California’s accounting method, using renewable propane could reduce emission by 25% to 75% compared to regular propane, its use would still result in greenhouse gas emissions.  This is in a context where we need to reach net zero emissions by 2050 or sooner. Electrification can get us to net zero. Renewable propane cannot.  

It also needs to be said that funding for emission reduction projects is not infinite and opportunity costs should be considered. If building owners, the state, or a combination of the two, spend money on renewable propane that they would have otherwise invested in more cost-effective energy efficiency and building electrification projects, then the fuel’s use could actively set back the state in reaching its greenhouse gas emission reduction goals.  


Renewable propane could have legitimate use cases, but barring new massive and sustained government subsidies there is no reason to expect it to be economical to use as a home’s primary heating source for the foreseeable future. 

Even if renewable propane was cost-effective, it is not clear that the emission reductions achieved from using the fuel would be enough to comply with the state’s climate goals or that there is an adequate supply of environmentally acceptable feedstocks.  

All things considered, policymakers in Rhode Island and Massachusetts should focus on building electrification and resist calls to subsidize renewable propane.


Further Reading