Propane Market Size, Share & Industry Analysis, By Grade (HD-5, HD-10, Commercial), By End-user (Residential, Commercial, Industrial, and Others), and Regional Forecast, 2023-2030

The global propane market size was valued at USD 88.77 billion in 2022 and is projected to grow from USD 98.50 billion in 2023 to USD 225.10 billion by 2030, exhibiting a CAGR of 12.5% during the forecast period. The market is surging with increased residential and industrial usage, the transition towards cleaner energy, versatility of propane, and supportive government policies. These factors contribute to the market's sustained growth.

Propane is a by-product of Natural Gas (NG) processing and crude oil refining. The liquid components recovered during NG processing include ethane, methane, propane, butane, and heavy hydrocarbons. Liquid components recovered during oil refining include propane, butane, and other gases.

This gas, also known as Liquefied Petroleum Gas (LPG), is an odorless hydrocarbon gas at normal pressures and temperatures. It is used for residential heating, cooking, and grills. The gas is marketed and sold exclusively for use in motor vehicles and is sometimes branded as autogas to reflect that it is measured, taxed, and dispensed as a fuel. However, it is virtually identical to conventional gas. When pressurized in a tank to 150 pounds per square inch, it becomes a liquid with an energy density 270 times greater than its gaseous form.

COVID-19 IMPACT

Shrink in Industrial and Commercial Activity Caused by COVID-19 Hampered the Propane Market

The gas industry faced challenges due to the reduced industrial and commercial activity during lockdowns and economic slowdowns. Industries, such as manufacturing, hospitality, and restaurants, experienced significant disruptions, leading to decreased consumption of this gas in these sectors. This decline in demand affected gas suppliers and distributors catering to industrial and commercial customers.

The global LPG supply and demand had been growing steadily at more than 3% per year during the pre-pandemic decade of 2010-19 before being brought to a sudden halt in 2020 when the pandemic hit. However, there was a revival of industry growth in 2022, exceeding the demand recorded in 2020, as restrictions were unwound. Global consumption rose by 3.7% in the year to 332 million tons in 2021 and by 2% from 2019, according to the latest Statistical Review of Global LPG prepared by Argus on behalf of the World LPG Association.

LATEST TRENDS

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Increasing Focus on Energy Efficiency and Clean Burning Fuel to Create Market Opportunities

The gas is often called a clean-burning fuel with low carbon emissions compared to other fossil fuels, such as coal and oil. Furthermore, it is an energy-efficient fuel that can help businesses and consumers save money on energy bills. Therefore, the increasing focus on energy-efficient, clean burning will create opportunities for this gas in several residential, commercial, and industrial sectors.

Nitrogen oxides harm the human respiratory tract. Additionally, it can also form acid rain and affect the environment. Vehicles that generally run on diesel fuel emit more carbon when compared to propane-based vehicles. For example, propane-powered vehicles emit 96% less when compared to nitrogen oxide gas-powered vehicles.

As per the U.S. Department of Energy, an increase of more than 1,200% has been recorded in propane gas production within 10 years. Alongside this production, the growth has created extensive opportunities for careers in the gas industry in production, transportation industry, and retail sales and delivery.

DRIVING FACTORS

Adoption of Propane in Recreational Vehicles to Reduce Carbon Footprint to Drive the Market Growth

Autogas vehicles, which produce 90% fewer particulates and 20% less CO2 than petrol vehicles, provide drivers with a cleaner and more affordable option. For instance, the global autogas consumption stood at around 25 million tons in 2022. Propane-powered vehicles have steadily grown over the last two decades as low-emission cost-effective alternative fuels.

• Globally, the number of vehicles that rely on propane autogas has increased from 15 million in 2010 to over 28 million in 2022.


• In Europe, LPG as a fuel type accounted for 2.5% of the 246 million passenger cars on the road. More than 60,000 vehicles in the U.S. are powered by this gas. The majority of them are truck fleets and school buses. India had around 2.5 million LPG vehicles on the road in 2021.

The growth in propane-powered vehicles has also been driven by regulatory support and incentives provided for clean-fuel vehicles. For example, a law passed in the U.S. in 2021 has allocated over USD 5 billion in grants for alternative fueling infrastructure and to replace the existing school buses with those powered by alternative fuel. Although electric vehicles have taken center stage in reducing carbon emissions, this gas will continue to be considered a clean, alternate fuel. Furthermore, the adoption of propane in recreational vehicles will be driven by the growing prices of conventional fuel and the regulatory support provided by various governments, thereby fueling the propane market growth.

Steady Growth in LPG Supply and Demand Globally to Drive the Market Growth

The global LPG sales volume has grown from 240 million tons in 2009 to 317 million tons in 2022, driven primarily by the growing demand in India and China.

• China and India accounted for roughly 32% of the global LPG demand in 2022.


• The China demand stood at 71 million tons in 2022.


• The cooking fuel market has driven the growth in India’s consumption of LPG, which is around 19-20 kg per capita.

The global production of LPG was around 332 million tons in 2022, with the U.S. accounting for 27%. The U.S. and China, top two LPG producers worldwide, saw a 4.3% and 7.4% growth in production in 2021.

RESTRAINING FACTORS

Availability of Alternatives Such as Bio-propane May Hinder the Market Growth

Bio-propane, or bioLPG, is a by-product of Hydrotreated Vegetable Oil (HVO) production that represents about 5% yield on a volume basis. Once purified, bioLPG becomes chemically identical to conventional propane. However, it can reduce CO2 emissions by up to 80%, depending on the feedstock used. Bio-propane output is significantly lower from HVO production from high fatty acid feedstocks, such as Palm Fatty Acid Distillate (PFAD) and tall oil, compared to low fatty acid feedstocks such as virgin vegetable oils or animal fats.

The global bioLPG production was around 368 million liters (97.2 million gallons) in 2020. This is expected to grow as the total HVO and SAF-grade HEFA production could expand to up to 900 million liters (237.7 million gallons) in 2030 and about 1.4 billion liters (370 million gallons) in 2040. The carbon intensity scores for bioLPG are about the same as the CI scores for the HVO produced in the same batch, determined mainly by which feedstock is used.

SEGMENTATION

By Grade Analysis

HD-5 Grade Segment Holds Dominant Market Share Owing to its Pure Form Majorly Used in Transport Industry

Based on grade, the market is trifurcated into HD-5, HD-10, and commercial.

HD-5 is the dominating grade type for the market. HD-5 grade propane is “consumer grade”. HD-5 means that the propane is in its purest form and is suitable for engine fuel use. HD-5 specification depends on acceptable contents. For example, 99% propane and 1% propylene is HD-5 grade propane, the same as 95% propane and 5% propylene. It is the highest quality propane available to the public and is suggested for use with internal combustion engine fuel.

HD-10 grade propane allows up to 10% propylene in the propylene mixture and still has a propane label. The propane has lower-purity grade and is typically used in industrial applications such as forklift fuel, heating, and drying processes. This segment is expected to experience steady growth during the forecast period due to its lower cost compared to HD-5 propane.

By End-user Analysis

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Residential Segment Holds Major Share as it is Widely Used in Cooking, Heating, and Home Appliances 

By end-user, the market is broadly categorized into residential, commercial, industrial, and others. The residential segment holds the dominant market share due to its extensive range of use as a heating fuel in the residential sector. This gas is primarily used in water heating, cooking, refrigerating, clothes drying, powering farms, and industrial equipment. Furthermore, many home appliances, including water heaters, refrigerators, and freezers, use this gas as the primary energy source.

Compared to the residential sector, this gas is used in the commercial sector in much smaller quantities. This gas is also used as a fuel for forklifts and equipment in construction, factories, and warehouses. This application is included in the commercial and industrial sector consumption, depending on the type of business.

REGIONAL INSIGHTS

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By region, the market has been studied across North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa. Asia Pacific is expected to dominate the propane market share due to numerous factors such as rapidly growing population and increasing urbanization in major countries such as China, India, and other countries with increased demand. With its diverse applications and versatility, this gas meets the growing energy needs, including residential, commercial, and agricultural sectors.

North America is the second largest region to hold a significant market share. The propane consumption is closely related to the cold temperature in the U.S. There is high demand for heating and maintaining the average temperature in winter. It is used in the residential sector as well as commercial sectors. For the residential sector, the consumption of this gas is the highest in winter, primarily for space heating, and generally occurs in non-urban areas where other heating fuels (electricity, heating oil, natural gas, and wood fuels) are limited or expensive.

KEY INDUSTRY PLAYERS

Umicore to Bolster its Presence through Organic & Inorganic Expansion Strategies

The global market is considerably fragmented, with various players operating at the national, regional, and global levels. The market participants are significantly focusing on developing high performance with enhanced operational characteristics to fortify their foothold in the industry.

Natural gas processing and crude petroleum refining in ExxonMobil Corporation have a dominant market share among other companies. The company stated that its sales majorly came from the U.S. and held a share of more than 35% of its overall sale.

Other key industry participants include Royal Dutch Shell plc, BP Plc, Chevron, Sinopec, and other small, medium, and large players. These organizations continually focus on expanding their product/service portfolio and reach across the market.

LIST OF KEY COMPANIES PROFILED:

• BP Plc (U.K.)


• Chevron Corporation (U.S.)


• Royal Dutch Shell Plc (U.K.)


• Exxon Mobil Corporation (U.S.)


• ConocoPhillips (U.S)


• Reliance Industries Ltd. (India)


• PetroChina Company Limited (China)


• Sinopec (China)


• Total S A (France)


• Ferrellgas Partners L.P.  (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• February 2023 - Shell completed the acquisition of Nature Energy, a Renewable Natural Gas (RNG) producer from agricultural, industrial, and household waste. This acquisition, announced in November 2022, would increase Shell's ability to help customers decarbonize and accelerate its transition to net-zero emissions.


• December 2022 - BP completed the acquisition of Archaea Energy Inc., a leader in Renewable Natural Gas (RNG), marking a milestone in the growth of BP's strategic bioenergy business. The deal would help expand BP's presence in the U.S. biogas industry, improving its ability to support its customers' decarbonization goals. Furthermore, it would help BP in moving closer to reducing the average life cycle carbon intensity of the energy products it sells.


• November 2022 - ConocoPhillips and TotalEnergies completed the joint acquisition of Hess Libya Waha Ltd., which increased these companies interest in the Waha Concession by 4.1% to 20.4%.


• September 2022 - BP announced that it completed the acquisition of EDF Energy Services, expanding BP’s presence in the U.S. Commercial & Industrial (C&I) retail power and gas business. The acquisition would offer new opportunities for improved integrated lower-carbon energy solutions for customers through integration (C&I) with other BP businesses and capabilities that can support decarbonization goals.


• February 2022 - Chevron Corporation acquired Renewable Energy Group, Inc. The companies also entered a definitive agreement under which Chevron will acquire the outstanding shares of REG in a cash transaction valued at USD 3.15 billion or USD 61.50 per share. The acquisition combined REG's growing renewable fuel production and leading raw material capabilities with Chevron's extensive manufacturing, distribution, and commercial marketing.

REPORT COVERAGE

An Infographic Representation of Propane Market

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The research and business intelligence report offers an in-depth analysis of the market. It further provides details on the adoption of propane across several regions. Information on trends, drivers, opportunities, threats, and restraints of the market can further help stakeholders gain valuable insights into the market. The report offers a detailed competitive landscape by presenting information on key players along with their strategies in the market.

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