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How much potential is there for natural gas in road transportation?

Posted by on 27 June 2019
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Here’s some good news. By choosing to fuel our cars, trucks and busses with natural gas rather than petrol or diesel, we can bring down levels of CO2 emissions and air pollution.

Even better, switching to natural gas shouldn’t present too much of a technical challenge. Gas prices are very competitive, the distribution infrastructure is already largely in place, and the technology is already fully mature.

Several recent studies have tried to assess the extent of the reduction in emissions that could be obtained through switching to natural gas in road transportation, as well as the prospects for the market as a whole.

According to the research, there are some good reasons to be reservedly optimistic about the growth in the number of natural gas vehicles (NGVs), particularly in segments like long distance road freight.

But the outlook for NGVs is dependent on a range of variable regional factors. These include the local price and availability of natural gas, the economic impact of fuel duties, the amount of methane leakage in the supply chain, and local justifications for switching – such as high air pollution or concerns about fuel security.

Here’s a summary of what the research shows, in a digestible question and answer format.

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How many NGVs are on the roads already?

This question is a little tricky to answer. One problem is that many countries count vehicles that run on liquefied petroleum gas – an oil product – as NGVs. These are included alongside vehicles that really use natural gas, either in the form of compressed natural gas or liquefied natural gas.

Another problem with counting comes from the inclusion of dual-fuelled vehicles. Although these vehicles can run on natural gas, the reality is that many will use far more diesel or petrol over their operational lifetimes than they will gas.

Dual-fuelled vehicles also tend to be much less fuel efficient than other NGVs, making them a less desirable option from a climate perspective.

These caveats haven’t deterred NGV Global from arriving at a figure, although it should probably be treated with some caution. The association reports that there were 27,414,984 NGVs on the roads as of this April. To put that in context, the total fleet of cars, trucks and busses in the world numbers around 1.4 billion.

Between them, China, Iran and India account for 50% of the existing fleet of NGVs, according to a report by the Oxford Institute of Energy Studies (OIES). The countries with the highest proportion of NGVs in the vehicle fleet are Uzbekistan and Iran, at 40.8% and 31.9% respectively.

In Europe, Italy is the standard bearer of natural gas vehicle adoption, with around 1 million NGVs and 1000 refuelling stations. It is significant that Italy has very low rates of electric vehicle adoption by European standards.

Of the existing NGV fleet globally, only about 1% were heavy goods vehicles (HGVs) in 2015, according to a recent estimate by the International Energy Agency. But HGVs are also the vehicle type for which the most significant future growth is expected.

How much natural gas is consumed by road transportation?

This is also a little tricky to answer, for similar reasons to the question above. Due to the prevalence of LPG and dual-fuelled vehicles, the reported number of NGVs is not a good indicator of natural gas consumption within the road transportation sector.

A recent estimate from the IEA gives a pretty good indication of consumption levels though, placing natural gas demand from road transportation globally at 48.8 Bcm in 2016.

What are the economic justifications for switching to natural gas?

Alongside reducing emissions, costs can also motivate switching from diesel or petrol to natural gas. These drivers are typically stronger in regions with:

  • Abundant and inexpensive natural gas (as in the US after the shale revolution),
  • Or high fuel duties on diesel or gasoline (as in the UK or Germany).

Long-term cost comparisons between different fuels are more likely to persuade commercial operators, such as trucking companies, than they are your average passenger vehicle owner.

Assuming a higher initial purchase cost for a natural gas fuelled truck, lower fuel costs need to deliver a payback time of less than five years for operators to consider them, according to Dr Mark Stettler, from the Sustainable Gas Institute (SGI).

The length of the payback time varies based on location, oil prices, and who happens to be making the estimate. In the US, Golar LNG estimate a breakeven period of four years for natural gas fuelled HGVs assuming a stable oil price of $85 a barrel.

The Clean Energy Fuels Corporation thinks the payback period could be as low as two years under the right conditions.

Are there any issues with range anxiety?

No, not really, and certainly not for passenger vehicles.

The distance a vehicle can travel before it needs to refuel differs between LNG and CNG fuelled vehicles. For HGVs, the average range for an LNG fuelled vehicles is 1600 km, while for CNG fuelled vehicles it is somewhere between 500 and 1000 km.

By comparison, Tesla’s “game-changing” semi-trailer truck was claimed to have an upper range of 800 km when first announced.

How much could emissions actually be reduced by switching to natural gas?

This is a really interesting question. The most straightforward way to answer it would be to compare the emissions produced per mile travelled from burning natural gas to the emissions produced from burning diesel or petrol – in which case natural gas comes out looking pretty good.

But focusing only on tailpipe emissions ignores a bunch of other factors, including engine efficiency differences, and the emissions incurred by transporting liquid fuels to refuelling stations via tanker. Natural gas has the advantage of being distributed much more efficiently via pipeline.

It also ignores the release of unburned methane from the engine of an NGV (known as methane slip), emissions from refuelling infrastructure, and methane emissions along the supply chain (well-to-pump emissions).

These secondary emissions, collectively referred to as well-to-wheel emissions, are important because methane is a potent greenhouse gas. The release of methane into the atmosphere can undermine the climate argument for fuel switching, although it doesn’t affect natural gas’s contribution to reducing air pollution.

There is substantial variation in the integrity of natural gas infrastructure. The SGI estimates that methane emissions can range from as low as 0.2% to as high as 10%, with a “nominal” average of 1.6%.

Where along this spectrum you can locate a given region has a considerable impact on its suitability for NGV adoption, at least from a climate perspective.

We won’t drill down into the respective merits of different localities and supply sources here. But as a rule of thumb, natural gas from a conventional play, produced by a company subject to effective regulatory oversight, and transported through modern pipeline infrastructure will be a safe bet.

Unconventional plays, complicated supply chains and companies with lower regulatory oversight tend to produce higher levels of well-to-pump emissions.

Another difference comes from the use of compressed natural gas versus liquefied natural gas. The CNG supply chain tends to be slightly leakier than the LNG supply chain according to the SGI (contributing to 20% of well-to-wheel emissions and 19% respectively for HGVs).

So how about the larger share – emissions from refuelling infrastructure and the engine? The upside here is that by mandating the use of more up-to-date technology and incentivising better infrastructure management, policy makers can effectively minimise methane release (whereas they may not have so much control over the supply chain).

Taking all these factors into consideration, the SGI estimate that there is a potential to reduce greenhouse gas emissions from trucking by 16% on average by switching to natural gas.

A broader analysis of well-to-wheel emissions conducted by Thinkstep in 2017 provides breakdowns for different types of vehicles, including passenger NGVs.

The study finds that switching from petrol to CNG in passenger vehicles would bring a reduction in GHG emissions of 22%, while switching from diesel would bring a reduction of only 6.4%.

For HGVs, switching from Diesel to LNG would bring a reduction of 15.1%, while switching to CNG instead would bring a reduction of 15.5%.

It is important to bear in mind that these are averages. The way that an individual vehicle is used will have a sizeable impact on its emissions profile.

For instance, although natural gas holds a lot of promise for emissions reduction in long distance trucking, the same vehicle used for short hop deliveries in an urban centre may produce more emissions than a conventional vehicle.

A final consideration applies to the contribution of different fuel sources to air pollution through the release of NOx and particulate matter. Although natural gas tends to perform better on both measures than the alternatives, some recent research indicates that improvements in engine efficiency for new diesel engines are closing the gap, according to the OIES.

Is there room to bring emissions from NGVs down further?

Again, this is a really interesting question. The answer is yes, considerably – under the right conditions.

It’s also quite an important question, because any discussion about investing in natural gas vehicles and infrastructure is bound to run into the objection that electrification is a much safer bet.

Not only are tailpipe emissions from electric vehicles not an issue, the argument goes, but as the power grid is progressively decarbonised the total lifecycle emissions of the vehicle are also reduced.

For natural gas vehicles to provide a credible long-term alternative, they may need to be able to demonstrate the same progressive tendency towards emissions reduction.

And fortunately, they can – assuming sufficient availability of biomethane to use as a low carbon alternative fuel.

Given that power grids in Europe are far from being fully decarbonised, a vehicle powered by biomethane today represents a significant improvement in lifecycle GHG emissions compared to an EV.

Biomethane fuelled vehicles could even ultimately outperform a fully renewable energy powered EV, according to natural gas infrastructure company SNAM.

The difficulty is that even the most optimistic projections say there will only be limited quantities of biomethane available in future when compared to the existing supply of fossil methane (and many competing sources of demand).

It isn’t yet certain where the most effective applications will be, or how biomethane can make the biggest difference in the decarbonisation effort.

For NGVs to benefit from the growth in biomethane production, the sector will likely require preferential treatment from regulators, which at this stage is difficult to anticipate.

While the long-term viability of NGVs may be in question (hydrogen fuel cell vehicles may also come into play over this time-frame), their near-term utility is less ambiguous.

It is up to policy makers whether they will make use of this window of opportunity, or hold out for a wholesale switch to electrification, hydrogen or some combination of the two further down the line.

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