The Netherlands-headed global distributor of off-grid energy SHV Energy BV, a wholly-owned subsidiary of family-owned multinational SHV, and UGI International, a subsidiary of UGI Corporation, one of the world’s largest Liquefied Petroleum Gas (LPG) distributors, have jointly announced 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.
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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.
The parties anticipate the development of up to six production plants within the next five years, targeting a total production capacity of 300 000 tonnes of rDME per year by 2027. The aggregate investment is estimated to be up to US$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 the fuel 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 percent of the rDME production to peers in the LPG industry.
De-fossilization is pivotal for our industry. Liquid gas is an important, clean and efficient energy source used in over 1 000 different applications by millions of people around the world. Finding accessible, sustainable and affordable feedstock to produce alternative liquid renewable gas is a high priority for the LPG industry. We are convinced that rDME ticks all the boxes to be a gamechanger for our industry. We are excited to join forces with UGI to guide the LPG industry in this important transition. We are ready to take up the responsibility to bring rDME to fruition, which will be to the benefit of the whole industry and its customers, commented Bram Gräber, CEO at SHV Energy.
Ideal for the off-grid energy sector
The companies highlight that rDME is a complementary liquid gas that can be produced from multiple renewable feedstocks. Being a safe, cost-effective, and clean-burning fuel, it is a viable sustainable addition to the energy mix. It has a low greenhouse gas (GHG) footprint, reducing emissions by up to 85 percent 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.
The proposed joint venture leverages our expertise in off-grid energy and renewable fuels. Innovation is at the heart of both our organizations and by teaming up we will combine our strong innovative capabilities. As leading distributors of LPG, we jointly provide an even more extensive global distribution network through which to promote the use of rDME. Although US and EU regulations differ, we are convinced rDME will help LPG down the path of de-fossilization across jurisdictions. We are excited to announce this joint venture proposal and be able to contribute to a more sustainable future for our industry and customers, said Roger Perreault, EVP Global LPG of UGI Corporation, who will become UGI’s CEO next month.