New law gives fuel maker a leg up
BRAWLEY – A bill passed unanimously by the state Legislature and signed into law by Gov. Gavin Newsom on Thursday is expected to give an alternative fuel manufacturer here a leg up.
Assembly Bill 2663, sponsored by Coachella Democrat Eduardo Garcia effectively lowers the excise tax on dimethyl ether (DME) when it is used as a diesel replacement or to blend with propane to the same rate as other alternative fuels.
For San Diego-based Oberon Fuels, that means a more equal footing with competing fuels as it ramps up production at its Brawley-based facility. Since 2013, Oberon has been conducting a pilot project here to produce DME, a clean-burning, ultra-low-carbon transportation fuel generated from converting commercial-grade methanol via a reactive distillation process.
Oberon Fuels is in the middle of upgrading its Brawley plant from pilot to demonstration scale, thanks in part to a $2.9 million grant from the California Energy Commission last summer.
The company recently added nine full-time, family-wage jobs to the facility. The plant is expected to produce 1.6 million gallons of DME from more than 5,500 metric tons of waste material when operating at full capacity.
Rebecca Boudreaux, president and CEO of Oberon Fuels, said she expects the plant to reach that capacity within the first half of 2021.
She said the law signed last week will lower the excise tax on DME from 18 cents per gallon to 6 cents per gallon.
“AB 2663 levels the playing field for DME and removes a barrier to adoption for fleets seeking ways to reduce their carbon footprint,” said Boudreaux said. “I want to thank Assemblymember Eduardo Garcia for championing this bill. A bi- partisan and unanimous bill is a testament to his leadership.”
Last year’s CEC funding allowed Oberon to move its Brawley plant from pilot phase to demonstration phase for low-carbon renewable DME (rDME), using methane generated by the breakdown of organic waste ( also referred to as “feedstock”). The automation, design and other system upgrades under way are expected to double the facility’s stable production capacity to 4,500 gallons per day.
The company said the CEC funding also was instrumental in helping it obtain additional private funding. On Sept. 17, Oberon announced a strategic partnership with SHV Energy, the world’s largest distributor of propane, as well as Suburban Propane’s acquisition of a 39 percent stake in the company.
Suburban Propane is a publicly traded, nationwide distributor of propane, fuel oil and related products and services.
“Oberon’s partnership with the state of California and the private sector is proof that it’s possible to address climate change with innovative, cost-effective solutions that also create family-wage jobs in a region of the state that has long suffered from disproportionate economic and environmental impacts,” said Assemblymember Garcia. “We look forward to Imperial Valley and California leading the way to a cleaner and greener future.”
Oberon describes its rDME fuel as a cost-effective, low-carbon, zero-soot alternative to petroleum diesel. The company said rDME is also a cost-effective carrier for hydrogen, making it easy to deliver this renewable fuel for the growing hydrogen fuel-cell vehicle industry.
“Additionally, when blended with propane, rDME can significantly reduce this clean-burning fuel’s carbon intensity,” the company added in release. “Taken together, Oberon can provide the US and global transportation sectors with practical and affordable pathways to zero-emission transportation.”
“This is a perfect example of the power of public-private partnerships to drive innovation, create jobs and have a positive impact on both human health and the overall environment,” said Oberon co-founder and Chief Operating Officer Elliot Hicks. “We look forward to commercial production of renewable DME next year and working with our partners to increase adoption and use around the world.”