Oberon Fuels applauds passage of California fuel tax bill

By Erin Voegele | September 30, 2020

California Gov. Gavin Newson on Sept. 24 signed a bill into law that effectively allows dimethyl ether (DME) used as a diesel replacement or propane blend stock to be taxed at a lower rate, in line with the rate for other alternative fuels. Oberon Fuels, a producer of renewable DME, has spoken out in support of the bill.

The bill, AB 2663, was first introduced in February. The California Assembly and state Senate unanimously passed the Bill in June and August, respectively, and presented the bill to the governor on Sept. 11. Newsom signed the bill into law on Sept. 24.

The bill lowers the Use Fuel Tax rate of DME from 18 cents per gallon to 6 cents per gallon. The tax rate is also set at 6 cents per gallon of DME propane fuel blend used.

“AB 2663 levels the playing field for DME and removes a barrier to adoption for fleets seeking ways to reduce their carbon footprint,” said Rebecca Boudreaux, president and CEO of Oberon Fuels. “I want to thank Assembly member Eduardo Garcia for championing this bill. A bi-partisan and unanimous bill is a testament to his leadership.”

Oberon Fuels is working to commercialize a technology that converts biogas and industrial waste streams into renewable DME. The company is in the process of upgrading its pilot plant in Brawley, California, to a demonstration scale facility. The effort is being supported, in part, through a $2.9 million grant from the California Energy Commission that was awarded in June 2019. Once complete, the upgraded facility is expected to have the capacity convert 5,500 metric tons of waste material into 1.6 million gallons of DME annually.

Earlier this month, Suburban Propane Partners L.P. announced a deal to purchase a 39 percent state in Oberon Fuels. Under the deal, Suburban Propane also committed to provide additional funding to support the continued development efforts to begin commercializing a renewable DME/propane blended product.