Circular Heaven, along the Tees: Circular Fuels’s first commercial project heads for northeast England

The venture happily named Circular Fuels has announced its new home, at Teesworks on the south side of England’s River Tees. It’s a $200 million waste to rDME project — the best route to decarbonizing LPG, a leading pathway to low-carbon heavy-duty transport, and lays a foundation for green hydrogen. The venture plans to produce 50,000 tonnes/year of rDME at the Teesworks production facility located in the Teesside area. There’s not long to wait, rDME production is expected from Dimeta by no later than 2024.

KEW Technology is the provider of gasification technology to the first commercial rDME plant and a partner in its development. Dimeta will offtake all rDME produced in the first production plant, with the majority provided to the JV partners SHVE and UGI International, and at least 20% made available to other LPG retailers in order to advance the de-fossilization of the entire LPG industry.

And, it’s made from locally-sourced rubbish. How circular is that?

What’s rDME, again?

Renewable DME is dimethyl ether produced from renewable and recycled carbon. rDME is a complementary liquid gas that can be produced from multiple renewable feedstocks. Being a safe, cost-effective and clean-burning fuel, rDME has a low greenhouse gas (“GHG”) footprint, reducing emissions by up to 85% compared to fossil fuel alternatives. 

Why is propane so dang hard?

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. That would be less interesting, perhaps, if LPG wasn’t so darn hard to fossilize.

In a thought-provoking note on the subject, a member of our Due Diligence Wolfpack, Nexant ECA’s Steve Slome, wrote just last week:

Bio-replacement is especially difficult, because of the relatively low value of propane compared to many other fuels—which can be twice as much as propane or more…While this was one of the key features that has helped to sell propane fuels for vehicles…it does not leave very much room for a bio-replacement. A lot of this comes from the way fossil-based propane is produced–conventional fossil-based propane is a byproduct of conventional natural gas processing and oil refining.

Similarly, to conventional fossil-based propane, many of the most competitive routes to bio-propane will be byproduct in nature. 

The main stumbling block before many of the on-purpose routes is that the intermediate required to be converted to propane is generally of significantly higher value than the propane…Several key intermediates that can be converted to propane or propane alternatives include: methanol/DME, propanols, sugars (fermentation directly, catalysis directly, or fermentation to other intermediates), and glycerine. All of these are already priced above the price of propane. 

It begs the question, why would someone take a high-priced molecule and, with some technical difficulty, convert it into a low-value molecule?

But there’s hope. As Wolf Slome puts it, “From the values shown in this analysis, DME is the most reasonable on-purpose propane substitute from an economic standpoint.” 

The Teesside story

It’s great to see this venture located in Teesside. If there’s a circular heaven, the pearly gates might be found along the Tees. It’s home to SeAH Wind’s $400M offshore wind manufacturing, Nova Pangaea, GE wind turbines, Linde, the Net Zero Teesside carbon capture utilization and storage facility, the Centre for Process Innovation, Materials Processing Institute, just to name a few. 

It’s a cliché to say that the green industry of Teesworks is built atop a foundation of heavy fossil-based industry, but in this case metaphor has nothing to do with it. The banks of the south side have been raised some four meters by the cast off rubbish from ironworks and steel-making, and waste made a series of marshes into land for development. The ventured will use waste, sit atop rubbish, and help to revive a region whose prospects at one stage looked like rubbish. Instead, the Tees Valley has been dubbed “the UK’s green capital”, and business is booming.

In its own way, the region has been one-part fossil, one-part sustainable. The environmental impacts of two hundred years of exploiting a nexus of coal and iron-rich soils in the north-east of England has left damage. On the other hand, they’ve been applying some of the most important rules of sustainability — namely, produce locally, source locally, use locally — all along. The technology for handling iron and coal, and making steel, came along much faster than the technologies for tapping waste to make renewable fuels, nevertheless, the locals have many of the right ideas baked into their perspective from the get-go. Effective use of public-private partnership, the development of industrial clusters that share infrastructure and have advantaged logistics, a focus on large markets. And, it’s a step down the Tees to the North Sea, should Dimeta seek low-cost access to trade routes. 

The DME backstory

DME has been on the move.

We reported in May that Oberon Fuels is offering commercial availability of a new approach to drive down emissions across the propane industry: a blend of propane and Oberon’s renewable DME (dimethyl ether). Beginning a few days ago, Oberon partner Suburban Propane Partners, L.P., the third largest propane supplier in the U.S., is the first company to make this more sustainable blended product available to its customers across Southern California.

Here’s our Multi-Slide Guide to Oberon.

Last June, we reported on the JV with KEW to form Circular Fuels, here. In May 2021, we reported on the formation of the SHV and UGI JV, Dimeta, here.

Here’s our Multi-Slide Guide to Dimeta.

Looking ahead

Circular is not a one-and-done company. The company aims at 300,000 tons of production by 2027, via six projects costing $1 billion. After this initial project in the UK, CFL is off to Europe in 2025 and the US by 2026.

Reaction from the stakeholders

“We are thrilled to announce Teesworks as the intended site for our first industrial-scale rDME production facility,” said Søren Jacobsen, Dimeta CEO, “The strong strategic alignment between the Teesworks management team, Dimeta, and LPG industry stakeholders has been crucial to the plant development so far.

“We believe rDME has significant potential to help us achieve our ambitions to be a leader in sustainable energy, and KEW’s proprietary technology is an important new and efficient route to valorize waste,” said Bram Gräber, Chief Executive Officer at SHV Energy. “This announcement builds on our intention to set up a JV with UGI to accelerate renewable solutions for the LPG industry. This new JV together with KEW Technology will give us a solid platform to successfully develop the first of a kind rDME production plant in the UK and then replicate it all over the world.”

“SHV Energy has an impressive global network and strong drive to pioneer novel solutions for their businesses and their customers,” said Kamal Kalsi, CEO at KEW Technology. “By coming together in this joint venture, we can leverage scale and speed to start producing significant volumes of renewable fuel via our unique technology – helping us achieve our vision to maximize the potential of solid waste feedstocks.”