Ahead of the European Union’s ambitious proposal to ban the sale of new gasoline and diesel internal combustion (IC) engine vehicles by 2035, the Italian liquefied petroleum gas (LPG) Association is preparing for a key review in 2026. The association, led by president Andrea Arzà, will challenge the EU proposal, focusing on the limitations and pitfalls a complete ban of IC engine vehicles would bring.

Arzà spoke to us in November during the LPG week in Rome, on the association’s initiatives and expectations for the LPG market.

OPIS: How does the Italian Association plan to persuade the European Union to consider its proposals for using more LPG instead of completely banning combustion engine (ICE) vehicles?

Arzà: The EU’s “Fit for 55” plan aims for a 55% cut in emissions by 2030 and climate neutrality by 2050. A key part is banning IC engines, which will have the greatest direct implications for the LPG sector. We believe the EU’s plan overlooks emissions linked the whole life cycle of technology, for example from sourcing and production to utilization as well as end-of-life waste management.

We conducted a study, presented during the LPG Week conference, which introduced a fuel blend for cars using LPG, including bio-propane, along with renewable dimethyl ether (rDME). This combination—20% rDME and 80% propane—adheres to EN 589 standards and showcases a 10% to 15% reduction in emissions compared to traditional gasoline.

Another study from the Polytechnic University of Milan analyzed the entire life cycle of electric and IC engines. Electric engines emit zero emissions while running, but we need to look at the entire life cycle of the electric engine, from production to consumption.

This study found that no energy source guarantees a complete emission cut, even if fully renewable. So, adding 20% renewable LPG cuts emissions by 10%. Scaling up this blend with more renewable product significantly boosts performance. Imagine the impact of an 80% renewable LPG and 20% gas blend on the industry!

We strongly believe that we need cars with IC engines powered by renewable fuels instead of electric cars only. For us the priorities are to have a variety of energy sources, an option of choice, with no competition between the different sectors, as well as performance and efficiency.

OPIS: So, what’s the problem, why can’t I drive my car with a renewable LPG fuel blend?

Arzà: In Italy, we’ve made significant progress, but it’s unfortunate that only a few European countries embrace LPG usage due to cultural differences.

For instance, the LPG market in Poland and Turkey surpasses Italy’s market size. Interestingly, the markets in France and Germany are relatively smaller, but they use LPG. Economically robust countries like Germany are less affected by price increases, yet they use more LPG.

The other challenge is finding enough feedstock to produce the quantity of LPG needed. But that’s part of the process. Italy’s refiner Eni said during LPG Week that it plans to increase production of feedstock from organic sources to produce more renewable fuels, including bio-LPG. In Italy Eni declared that they want to increase biofuel production to more than 5 million metric tons/year by 2030. As a side product, bio-LPG production is expected to be around 200,000 mt/year.

OPIS: What is your outlook for the bio-LPG market?

Arzà: By 2030 we will have 200,000 of bio-LPG just from Eni, but it’s possible that companies like Total or BP could develop the technology needed to also produce bio-LPG.

The size of European bio-LPG supply today is less than 200,000 mt/year. We hope to achieve around 1 million mt/year of bio-LPG supply by 2030. If everyone contributes in a similar manner to Eni, I don’t see any reason why bio-LPG production shouldn’t increase. To achieve this goal, we estimate an investment of around €1.5 billion ($1.7 billion) will be required to establish enough bio-LPG production plants by 2030.

OPIS: With the global push for energy security, could you discuss Italy’s strategic priorities in ensuring a reliable and secure supply chain for LPG, and how the association is involved in these efforts?

Arzà: Our goal is to conserve the size of the industry, create molecules that can be blended into the gasoline stream in a safe manner, with no adverse impact for the end-user, nor for the industry. We want to increase blending fossil fuel products with larger quantities of non-fossil fuel products. This can be challenging but also has advantages, as it conserves existing infrastructure and requires less investment while ensuring safety of users.

OPIS: What is the current state of the LPG market in Italy and Europe in terms of consumption and supply? How are you pushing for more consumption without changing the infrastructure?

Arzà: Presently, the Italian market consumes around 3.5 million mt/year of LPG. 50% is consumed by the automotive sector. The domestic sector consumes 25% and the remainder is used by the industrial and commercial sectors.

We hope to maintain and increase consumption as well as supply. We have different scenarios. On the one hand, there are challenges in increasing consumption due to new technology that decreases demand for fuels like LPG. If I have an engine for production or operation, which needs less product for the same output, it is clear that it will potentially reduce regional or even global consumption. For example, new technology allows us to move less, travel less and need less fuel.

OPIS: What are the advantages for adopting a more widespread use of LPG?

Arzà: The replacement of light and heavy oil derivatives with less polluting alternatives represents a significant advantage for the LPG industry. Eliminating pollutants is imperative in both industrial and domestic applications.

This transition doesn’t necessarily involve an immediate switch to heat pumps or electric cars but could instead include a shift from oil to LPG and subsequently to other equipment. This strategic direction offers us an opportunity to be part of the energy transition and maintain or increase consumption and supply of LPG.

OPIS: Where do you see the LPG market headed?

Arzà: Over the next five years, I anticipate a stable market with consistent consumption at 3.5 million mt/year.

The automotive sector is poised to drive LPG demand, as electric cars remain extremely expensive for many, especially low-income consumers who rely on second-hand cars. In 2023, in Italy the number of cars powered by LPG has grown by 10% compared to 2022. That’s one of the best performances ever. This trend is driven by LPG’s cost advantage—50% cheaper than traditional gasoline—and the cautious attitude of potential buyers that await more affordable electric options.

However, the decision to phase out IC engines has adversely impacted the residual value of older cars for those with limited spending power. But despite these challenges, I anticipate another successful year in 2024, with an estimated 10% growth in demand for LPG.

OPIS: How will you navigate the balance between traditional uses of LPG and emerging trends in the energy sector, such as renewable energy integration, especially as the government wants a “mixed energy resources” approach?

Arzà: Innovation is crucial for survival. Our current focus lies in the automotive sector. The challenge we face is to prepare for the 2026 review, ensuring we’re equipped with solid evidence, consistent supply, and comprehensive studies showcasing the performance of LPG. To achieve this, we need to innovate both in terms of producing new molecules as well as new technology.