Episode 60 Transcript: Turning poop into propane

Molly Wood Voice-Over:

Welcome to Everybody in the Pool, the podcast where we dive deep into the innovative solutions and the brilliant minds who are tackling the climate crisis head-on, I'm Molly Wood.

This week, turning poop into propane. Ok that’s a simplification, but only kind of! I have recently become aware that propane is a huge deal. It’s the third most common vehicle fuel after gas and diesel. It's used in heating and cooking in millions of homes, it has all kinds of agricultural uses and is used for petrochemical production. Burning propane for fuel contributes hundreds of millions of tons of greenhouse gas emissions per year.

So my guest today is working on renewable alternatives, and while she’s at it helping to update the California tax code so she can sell the product she’s creating. Let’s get into it.

Rebecca Boudreaux:

I'm Rebecca Boudreaux. I'm the president and CEO of Oberon Fuels. I grew up in South Louisiana, presently live in Hamburg, Germany, and trained as a chemist. So, you know, where do we go from there?

Molly Wood:

I mean, I think we go to Dr. Rebecca Boudreaux first of all, let's like give you your flowers here.

Rebecca Boudreaux:

yeah. So yeah, so I am Dr. Rebecca Boudreaux. And I think another important fact of growing up from South Louisiana, I am Cajun, which the Boudreaux part of it, but I'm actually Asian Cajun because my grandmother's Filipino. So there you go, a new demographic for you.

Molly Wood:

You are the first I have met, that is amazing. I love it and I want to eat all the foods involved in those two. Yeah. Okay, so tell me, all right, so then let's talk about the company. What does Oberon fuels do?

Rebecca Boudreaux:

Well, what Oberon fuels do does, so we make molecules. So that is what we're building molecules. And the molecules that we make are helping global industries like the global propane sector decarbonize. So not a lot of people think about propane, but this is actually used by over three billion people around the world as an energy source. And the number is growing because people are starting to pick up propane, especially in developing countries, instead of burning wood and causing issues of deforestation.

So you have propane coming in is cleaner burning, but then also now thinking about how do we offer them more renewable sources? So we make molecules one called particularly a renewable DME that could help them decarbonize We make other molecules such as renewable methanol that can help the global shipping sector chemical sectors help them decarbonize So we're all about making molecules particularly portable molecules that leverage existing infrastructure to help major industries companies and countries decarbonize guys.

Molly Wood:

So talk to me about those fuels because propane is all by itself. I mean, I obviously want to talk about all of them, but propane, let's start there because it's so interesting. I have only had two people ever mention propane to me as a source of fuel that is, like you said, widely used, little understood by a lot of folks. So talk about it and why it's such a big part of the climate conversation, the emissions conversation.

Rebecca Boudreaux:

Yeah, so propane, if you think of just the US market, it's a little bit is using transportation fuel and forklifts and on -road vehicles, medium duty vehicles. But the primary use is in industrial applications, residential heating and cooking. So it's particularly powerful because it's a portable molecule. So we tend to think of the propane in the outdoor gas heaters or for the barbecue grill. So we're taking advantage of the portable nature of this energy source. And so people who aren't connected to the natural gas grid use propane a lot in particularly rural areas where there's not as much grid infrastructure.

Molly Wood:

And then what brought, and then talk about the other fuel source that you could potentially replace with these molecules. So propane is one and a big one.

Rebecca Boudreaux:

Yes, a big one. Another one that we're looking at creating lower carbon versions of is methanol. So it's actually the precursor before you make DME, you make methanol. Actually two methanol molecules come together to make DME. So methanol today is used as a feedstock to make chemicals. It's a great solvent and it's being getting increasing attention for being used in the shipping industry.

So to power it as a maritime fuel. And so we are making the same molecule, methanol, but looking at using again these same feedstocks, the animal waste, the landfill gas, wastewater treatment gas, agricultural waste to make methanol. So making a lower carbon version of it to displace the traditionally it's made from either coal or natural gas.

Molly Wood:

So it's part of this, I, we have referred a couple of times on this show to this idea of the waste to value chain, that there's this huge opportunity in circularity. So let's put a finer point on the fact that what you're using is existing organic resources that would otherwise be wasted to turn them into fuel, really to oversimplify dramatically. I hope I haven't offended your chemist brain.

Rebecca Boudreaux:

No, no, that's exactly what, that's what we're doing. And it's interesting because, you know, we in particular at Oberon have been focusing on. We refer to them as stranded feedstocks or things that just don't have a home. They're either, you might hear a lot about renewable natural gas that people generate. That is great if you are close enough to a pipeline to inject it. But oftentimes people are too far away. So it's not economical to move that renewable natural gas by truck or some other means to inject in the pipeline. So we're really trying to find those feedstocks that haven't been able to find a home and left to decompose on their own are creating environmental challenges.

Molly Wood:

So you make a renewable molecule that is a key ingredient of propane and allows that propane to be manufactured in exactly the way that it's manufactured now.

Rebecca Boudreaux:

Yeah, so it's fascinating because propane, this global energy source, as I share it, over three billion people use it, has comparable emissions to the commercial aviation sector. Yet almost no one's doing anything about decarbonizing it. And that's where Oberon fits in, making a molecule renewable DME that can then blend, and up to 20 % blend, up to 60 % reduction in greenhouse gases.

And so it's very important that, you know, to leverage existing infrastructure, right? We don't want to throw away all this investment that we have around the world. Four million people work in this industry and know how to move, safely move, gaseous molecules. That's what they've done for almost 100 years. So by introducing lower carbon sources of renewable propane, or in our case, renewable DME, we can leverage existing infrastructure to get more renewable molecules.

into this industry faster.

Molly Wood:

I want to circle back on feedstock real quick, what there are incentives for agricultural producers and various organizations to get rid of this feedstock, right? Do you have to buy it from them? Do you do they pay you to take it away? Like how does the how does the supply side work for you?

Rebecca Boudreaux:

Yes, so the supply side, there are a lot of structures out there. So there are folks like particularly the dairy manure has been a huge source of feedstock for a lot of renewable natural gas projects. In some cases, the farmers are paid. Sometimes the farmers are part of the projects, investors in the facility. So there's a lot of different structures out there. You know, how we've looked at it in developing this project is we really want the feedstock provider to be part of the project.

These are complicated projects, a lot of logistics, manure management, if you use an animal manure, come from multiple farms, and want to align everyone's interests. So there are models as well of sharing on the profits from the project and things of that nature. So there are a lot of different ways the feedstock provider can be involved, but we prefer to try to find a way to align everyone's incentives so that the project works that everybody wants.

Molly Wood:

So who are the customers now? Like I feel like people don't even know how widespread propane is let alone how many companies there are out there who can use this product.

Rebecca Boudreaux:

Yes, so right now, so the renewable DME that we're producing today in Southern California, Suburban Propane is buying that renewable DME, blending it at their facility in Anaheim, California, and they're delivering to 450 customers, primarily being used in forklifts. So they're blending in with the traditional propane they've been using, introducing renewable content. So primarily in forklift operations where propane's heavily used, and also a few on -road vehicles course as well.

Molly Wood:

What, how did you get into this? What is the, you've given us a little of your interesting background, but what was it that led you to this solution and this passion?

Rebecca Boudreaux:

Yeah, so I was trained, as I mentioned, as a PhD chemist. And during my graduate studies, I started my first company with three of my colleagues. It was actually a biotechnology company. And we had an idea on how to make chemotherapy more effective in treating cancer. So we had the idea and built a company out. And so after four years, I sold my stake in that company. And that's when I moved to California to be part of the Innovative Con. Me there, where I eventually met the founders of Oberon a few years later. So I spent the past 20 years leveraging my scientific background to commercialize new technologies and to help me get these technologies to market and helping the company scale to better do that.

Molly Wood:

Right. I know that there is, this is gonna feel abrupt, but I know there's an interesting story about the name of this company Oberon Fuel. So tell me that before we start to really geek out.

Rebecca Boudreaux:

Yes, yes, so Oberon Fuel. So I had just mentioned that I met the founders of Oberon early after it was formed. So it's about five months old. And so of course a natural question is, well, how did you name the company? So one of our founders who is our CTO and a co -founder still with the company now over 14 years later. So he's our OG, he's our original gangsta. He's an MIT mechanical engineer. So very technical, was like, how are we gonna name this company? I think we need something from space. We need some kind of celestial body to name this company after.

So methane is our feedstock. There's a lot of methane out there in the atmosphere and on plants and lo and behold, he found a planet that had a lot of methane on it. It happened to be Uranus. Now, he's like, you know, probably don't want to name your company Uranus. I mean, it's pretty funny, but probably not going to get us very far. But one of the moons of Uranus.

Molly Wood:

Right, not a good name.

Rebecca Boudreaux:

Also had a lot of methane and it was called Oberon. And so the astronomer who discovered a lot of the moons actually for Uranus, there's Titania, Oberon, and so he was a big fan of Shakespeare. So named a lot of the moons of Uranus after Shakespearean characters. So Oberon, the king of the fairies from Midsummer Night's Dream is a moon off Uranus.

Molly Wood:

It's really, I mean, as company name origin stories go, I can really only think of one that even compares. That's outstanding.

Rebecca Boudreaux:

So I really enjoy in professional settings getting to talk about Uranus and Methane, right? Because at our heart, we're all eight -year -old little boys telling Uranus jokes.

Molly Wood:

Yeah. Yeah. We really are. I'm really happy you said that because one of my regular jokes that I'm very proud of is that I have been known to tell my teenage son that I'm feeling a little Jupiter at the moment, by which I mean I feel like a gas giant. And so I'm now going to add methane and Uranus jokes in some way. I haven't figured out exactly how it's gonna, you know. I mean, see, we can workshop this later. We can.

Rebecca Boudreaux:

Yeah, you gotta think about, but you know Jupiter has a lot of hydrogen, so.

Rebecca Boudreaux:

Put a pin in it.

Molly Wood:

There's a whole routine coming here.

Molly Wood Voice-Over:

All right, on that incredibly mature note, it’s time for a quick break. When we come back, the road to commercialization for something like this runs through labs, sure, but it also runs through tax policy as in you need one so you can sell your stuff. That’s after this.

Molly Wood Voice-Over:

Welcome back to Everybody in the Pool. We’re talking with Dr. Rebecca Boudreaux of Oberon fuels about making renewable propane blends to replace a widely used global fuel. For part two here, we’re turning from fart jokes to regulatory frameworks. mostly.

Molly Wood:

Okay, let's focus on the commercialization because what I hear you saying is that there is some remarkable science here that it is a true waste of, you know, it takes materials that would otherwise be massively emitting and then creates a renewable fuel source. And all of that is incredible as long as someone buys it.

Rebecca Boudreaux:

Right. And so as a scientist of the core, you know early in your training you think well the best science always wins, right? Of course if I have a technology that's superior to everything else it's going to be the commercial winner.

Molly Wood:

Yep.

Rebecca Boudreaux:

And we all know that's really not the truth. And sometimes the technology is the easy part. It's creating the marketplace to sell your product and also to create the regulations that enable you to sell the product, but also making sure that as policy evolves that you're not unintentionally or sometimes intentionally excluded. So that's been the journey for us. Cause when we started at Oberon, there were no regulations for DME as a fuel. So we had to create the regulatory framework to be able to legally sell it in California. We had to get taxation laws changed because the laws are written for the here and now.

Molly Wood:

Mm -hmm.

Rebecca Boudreaux:

Right? Yet we were an innovative field that no one had imagined. So we had to work with elected officials and officially California Governor Newsom in 2020 signed legislation to fix the taxation rules that were overtaxing us. So things you never think about as a scientist, but the things that can limit your ability to commercialize if you're unintentionally harmed by the rules in place.

Molly Wood:

Right, absolutely. And then there's also process, which you mentioned, right? Plugging into existing supply chains. Talk about that in addition. And actually, before I even ask you that, tell me more about the taxation laws and the rules and, you know, just as one example, because that is fascinating and must have been, I mean, you know, like, what is the process of discovering like, I'm not even sure we can sell this or we're being, you know, triple taxed.

Rebecca Boudreaux:

So when I joined the O 'Gron team, the company was five months old, and they said, okay, so we have this interesting technology on a small scale we can convert wastewater treatment gas to DME, dimethyl ether, but there's no market for it and there are no regulations in place, so go figure it out. Like, how hard can that be, right?

Molly Wood:

Like just walk us through this journey because what?

Molly Wood:

Right. And it sounds like we should, to clarify, it sounds like sometimes for people a lack of regulation is a good thing, but what you're saying is you discovered a lack of regulation was in fact a big barrier. Right.

Rebecca Boudreaux:

Yes, it was. So we tried, of course, you know, first off is the internet, like how are we going to certify this new fuel in California? So we figured out we were legal to sell DME in 49 states across the US, but not in California. So we tried to figure things on our own. And then we finally connected with the state government, California Department of Food and Agriculture, CDFA, and the California Air Resources Board CARB and said, hi, we're over on fuels. We have this new fuel and we have no idea how to certify it. And they said, well, actually we don't either. We haven't certified a new fuel since the early 1990s and that was propane, but we'll help you figure it out. So they created two pathways by which we could get the fuel certified and they involved getting an international consensus standard. So what are the purity requirements of this fuel that it has to meet?

So we said, okay, we'll get international consensus standards. So I had to figure out, we had to figure out a doer. They said, go talk to ASTM International is one of the options, SAE, ISO. So we approached ASTM. They said, yes, we think this is a valuable thing to do. We'll create a consensus standard, but someone that needs to leave the task force. And they all look at me and I'm like, I just figured out what ASTM stood for like five minutes ago. Like, I'm in charge here?

Molly Wood:

Hmm. Right? Why not?

Rebecca Boudreaux:

Why not? So whoever's the most motivated. So we created a task force to create this consensus standard. A year and a half later, we had a consensus standard went back to California said, okay, this is now passed. So then it goes to public comment. So CDFA actually handled this process. And then in January of 2015, that actually became deeming became legal in the state of California to be sold as a fuel. So we like to say we got legalized before other things did in California. 

Molly Wood:

I prefer your thing to the other thing. I'm just saying. Just saying.

Rebecca Boudreaux:

And so that's just Everything's green. So that's just one example, right? It's not that anyone was trying to harvest, it just hadn't been done before. And that's what happens with innovation is the rules aren't written for it. And it takes your willingness to be uncomfortable going out and doing things that there's no training for that, right? It's not gonna be your expertise, but it's often just the people who are most motivated and the willing who get things done.

Taxation rules. So we, we were moving forward, moving closer to commercialization. 2019, we finally win funding from the state of California. First public funding ever after tens of millions of dollars have been invested in the company. So we're upgrading our facility in Southern California to process renewable feedstock to make this renewable DME. And we realized that the sales and tax use law in California had a taxation rate for propane, LNG and CNG.

But if you didn't fall on any of those buckets, you have this other taxation rate, which happened to be three times the rate of propane, which is what we're trying to replace. So we're already the underdog based on taxation rules. So fortunately, our assembly member, the California assembly member, Eduardo Garcia, who represents our district where our facility is located, authored legislation and carried it through.

It was an interesting year being 2020, the first year of the COVID

pandemic when everything was moving online for the first time, very chaotic time to try to push legislation forward. But they kept moving things forward because they also recognize by this fuel coming forward, the job creation that was associated with it. We were creating jobs in a time in our region, they had 27 % unemployment where our facility was located. We are.

Molly Wood:

Right. You're in Brawley, California, right? Tell it for people who don't know, I am familiar. I did have a lot of reporting in and around Imperial Valley and the Salton Sea, but for people who are not familiar with this region, say more about that.

Rebecca Boudreaux:

Yes, so Imperial Valley is a large agricultural region and it actually produces about 80 % of the U .S. winter crop. And it's two hours east of San Diego hit the brakes before Arizona So a lot of alfalfa and just across the board agricultural products a lot of them come to port of LA and Long Beach and are shipped around the world But because of the agricultural economy, it's typical is very cyclical, right?

You have jobs when there's a harvest and so they've been trying to create a lot of industry a lot of geothermal out there solar wind and now there's actually a large lithium deposit in the Salton Sea that they're working through on how to extract that in an environmentally responsible way. So always looking to create more industry, but it can be challenging for them where they typically have high unemployment in the region.

Molly Wood:

Right. But it's a perfect place for you because going back to your feedstock, it's that's your feedstock.

Rebecca Boudreaux:

That's our feedstock. They recognize companies like ours that are creating family wage jobs. And with his taxation rule, we actually made it through the California assembly and Senate with no negative votes. And California Governor Newsom signed it in 2020 and released it the same day as other bills, which he pegged as part of the climate solution for California. And so we were very excited to, you know, again, another step. The technology is hard, but also the regulations and market development. All of that can be very challenging as well.

Molly Wood:

Right. Okay, and then now, now that we've handled the basic science, the regulatory environment, let's talk about supply chains and fitting into, like you said, existing supply chains, which is so, I mean, with my investor hat on, every time I talk to a company that has a brilliant idea, but involves constructing an entirely new infrastructure to enable it, I get nervous.

Rebecca Boudreaux:

Yes. Yeah, so we have really focused on how can we leverage existing supply chain. So we, with DME, we're tapping into the propane industry. So again, DME and propane, cousins, a lot of similarities. So the existing propane infrastructure can transport, store, and dispense DME with the same infrastructure. If it's a 20 % blend or less, there are no changes required. If it's more than that, you need to change the seals. DME is a great solvent, so you need to harden the seals if it's a 100 % DME or a high level blend. So again, we could use the existing infrastructure.

And so 2020 was actually a big year for us as well in that we brought in new investors. So at the same time we have COVID, we have legislation going through or ramping up our California grant project, a suburban Propane, the third largest propane company in the U .S. recognized the opportunity to leverage what they've done for almost 100 years, but to be part of the solution going forward. And so they invested in Oberon and we've been working together as partners to bring DME into their supply chain. And so our Southern California facility, which started producing the first renewable DME ever in the U .S. in 2021, is being purchased by Suburban Propane.

They're blending it with fossil propane and selling it to about 450 customers in Southern California today using in forklifts and on -road vehicles. So get leveraging it into the supply chain and it's been exciting to see how the global industry organization the World Liquid Gas Association that represents this industry has been working to introduce renewable DME and other molecules into the supply chain creating the guidelines, the protocols, but it takes many many people to bring this forward.

Molly Wood:

So tell me a little more about the, the blending is the cause it sounds like. So what you're saying is that the, your DME helps to create a finished propane product that is more renewable, but not a hundred percent is the goal to eventually get to, a propane product that is wholly comprised of.

DME requiring new seals and things like that, but not like a wholesale change in infrastructure? Like what could, how renewable could we get here is the short version of that question.

Rebecca Boudreaux:

Yes, so you could get to 100 % renewable and it's not just with renewable DME. So another, there is renewable propane that uses different feedstocks of renewable DME. It is a byproduct of renewable diesel production. So you typically get somewhere between five and 8 % of a byproduct renewable propane that's generated.

So there's a small volume of that available and there's technologies trying to figure out how you can scale that. And so that uses a certain types of feedstocks. Renewable DME uses different feedstocks and we purposely make it so 100 % DME. So very complimentary. So we envision a future where you're blending renewable propane and renewable DME together because renewable DME can actually be carbon negative because it can be made from manure feedstocks with and you can avoid emissions. So you get credit for that.

Molly Wood:

Okay.

Rebecca Boudreaux:

so you could really end up with a carbon neutral renewable propane renewable DME product.

Molly Wood:

And what does the timeline look like now, currently of the Brawley facility, which is producing just the DMEs, correct? Not the methanol, yep.

Rebecca Boudreaux:

Yes. That is so that's producing renewable DME and we are looking forward to making announcements in the near future for future production. So stay tuned and many more to come. So we built a pipeline of projects looking around the US and eventually around the world for where their feedstocks that need to be utilized creating problems where they sit today but can be made into more portable molecules that leverage existing infrastructure.

Molly Wood:

And then finally, speaking of incentives, I swear I keep saying last question, but I got a million if I'm being honest. But speaking of incentives, what is the incentive for the propane makers? Is it a cost competitive product? Do they have increasing regulation and reasons to be more renewable? What's the market pull?

Rebecca Boudreaux:

Yeah, so the market pull, so there are multiple factors and it depends, you know, really in that in use application. So there are companies that are trying to meet their sustainability goals. So the customer's demanding a lower carbon product. They want more renewable content, so there's the customer demand. There are increasing regulations. It depends what sector, but if you look at the transportation sector, let's just say in California, they continue to the carbon intensity that's allowed in a fuel continues to go be driven downwards.

And so if you are too carbon intense, you're going to pay into the system. And so they're incentivizing you to continue to reduce your carbon intensity. And the lower you get, the more credits you get. So it's a mix of customer demand, increasing regulation, and just also seeing the future of how do we be part of the solution? How can we leverage what we've done really well for 100 years to do more? and think beyond just the propane molecule, think the DME molecule, hydrogen, and what else could be in the future.

Molly Wood:

I love it Dr. Rebecca Boudreaux, thank you so much for the time. I appreciate it and look out for more announcements from Oberon fuels soon.

Rebecca Boudreaux:

Well, Molly, this has been wonderful. Yes. Well, thank you so much, Molly. It's been wonderful to chat with you.

Molly Wood Voice-Over:

That's it for this episode of Everybody in the Pool. Thank you so much for listening.

Email me your thoughts and suggestions to in at everybody in the pool dot com and find all the latest episodes and more at everybody in the pool dot com, the website. And if you want to become a subscriber and get an ad free version of the show, hit the link in the description in your podcast app of choice. Thank you to those of you who already have. See you next week.