Prospects for Natural Gas as a Transportation Fuel

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Antony Elliott
7 years ago
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1 R e s o u r c e s f o r t h e F u t u r e s C e n t e r f o r E n e r g y E c o n o m i c s a n d P o l i c y ( C E E P ) Prospects for Natural Gas as a Transportation Fuel Understanding the New Energy Landscape Bipartisan Policy Center D r. A l a n K r u p n i c k, D i r e c t o r 6 / 2 7 / 1 2

as a Transportation Fuel Understanding the New Energy Landscape

2 The President at a UPS facility in Las Vegas after his State of the Union speech

3 Outline Natural gas fuels State of play of natural gas vehicles and policy Is natural gas in transportation a green fuel? What are the economics of natural gas vehicles? Heavy-duty trucks (Class 7-8) Vocational and medium-duty trucks: already in market F-250, F-350 bi-fuels (with gasoline and CNG) Light-duty vehicles

What are the economics of natural gas vehicles?

4 CNG LNG

5 Natural Gas Vehicles in the U.S million NGVs worldwide U.S. is 12 th -14 th globally (behind Argentina, Brazil, India) with 110,000 NGVs U.S. fueling stations: 840 for CNG, 39 for LNG (28 in CA) vs. 4,000 diesel truck stops U.S. fleet composition: almost all CNG, mostly buses, taxis, delivery and refuse trucks, and other fleet vehicles; Honda Civic; bi-fuel trucks (F-250) South Coast Air Basin: 65% of transit buses use CNG CA: Over 60% of refuse haulers use CNG Tulsa: 190 CNG school buses Port of Los Angeles: LNG trucks 5

buses, taxis, delivery and refuse trucks, and other fleet vehicles; Honda Civic; bi-fuel trucks (F-250) South Coast Air Basin: 65% of

6 Infrastructure corridors Utah: Built infrastructure (24 => 41 public stations) for NGVs, making I-15 a natural gas corridor New deal with Shell and Westport and trucking companies for oil sands route (Fort McMurray to Vancouver): LNG UPS long-haul LNG trucks: Salt Lake - Las Vegas - LA corridor Chesapeake Energy, Clean Energy Fuel Corp. and Pilot Flying J for CNG/LNG stations 6

oil sands route (Fort McMurray to Vancouver): LNG UPS long-haul LNG trucks: Salt Lake - Las

7 More on Chesapeake Energy Plan Chesapeake Energy: investing $150 million in Clean Energy Fuels Corp. to develop up to 150 LNG truck fueling stations along major truck corridors (interstates) in the U.S. 70 stations by end of 2012 in 33 states Capacity of system: 3-4 million gallons of LNG/station a year 11K trucks (@125K miles/year)

to develop up to 150 LNG truck fueling stations along major truck corridors

8 From the Clean Energy Fuels website

9 Policy Developments Heavy-duty truck CAFE standards give credit to natural gas vehicles State of the Union speech (S.1863 / H.R. 1380) NAT GAS Act Tax credit for alternative fuels and fuel mixtures with CNG or LNG through 2016 Tax credit for production of CNG and LNG vehicles Tax credit for infrastructure to CNG and LNG through 2016 Voted in Senate on March 13 as an amendment to the highway bill and rejected Sen. Menendez (D-NJ) and Burr (R-NC) are currently reworking the bill Shortening the period for tax credits Narrowing the types of eligible vehicles

vehicles Tax credit for infrastructure to CNG and LNG through 2016 Voted in Senate on March 13 as an amendment to the highway bill and

10 What s green about natural gas? Reductions in conventional pollutants vs. diesel*: Carbon monoxide 20 percent 40 percent lower VOCs 10 percent lower Particulate matter 80 percent lower No oil spills/leaks Energy security benefits if oil backed out Safety issues with natural gas Lifecycle GHGe emissions: Conventional wisdom: 20% cleaner than diesel (including boil off of LNG) May be 30% cleaner than diesel from oil sands Critical role of fugitive methane and global warming potential *

security benefits if oil backed out Safety issues with natural gas Lifecycle GHGe emissions: Conventional wisdom: 20% cleaner than diesel

11 Life-cycle GHG emissions per vehicle kilometer traveled passenger car and transit bus for both 100-year and 20-year time horizons. Life-Cycle Greenhouse Gas Emissions of Shale Gas, Natural Gas, Coal, and Petroleum, Andrew Burnham,* Jeongwoo Han, Corrie E. Clark, Michael Wang, Jennifer B. Dunn, and Ignasi Palou-Riveradx.doi.org/ /es201942m Environ. Sci. Technol. 2012, 46,

Life-Cycle Greenhouse Gas Emissions of Shale Gas, Natural Gas, Coal, and Petroleum, Andrew

12 Alverez et al PNAS, 2012 Fugitive methane below 1.6% of production to provide GHG benefits backing out gasoline vehicle Fugitive methane below 1.0% of production to provide GHG benefits backing out diesel HD vehicle Their estimate: 3% leakage rate: highly uncertain

13 Heavy-Duty Vehicles: Economics 18-wheelers travel 125,000 ~5 miles/gallon diesel LNG for range (energy density: 0.67 of diesel; CNG 0.21 of diesel) ~ $70,000 more expensive investment, but historically lower fuel costs BUT: observed impatience (31% interest rate) 13

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16 Light-duty vehicles Honda Civic Natural Gas (formerly Honda Civic GX) Compare costs and attributes to Honda Civic gasoline and hybrid

18 Conclusions on economics Very Heavy-Duty Now: Niche market for LNG-fueled heavy-duty trucks. Much upside potential. Chicken and egg problem being addressed by shale gas companies. Secondary market needs study. Light-Duty Tougher case for CNG-fueled light-duty vehicles: lots of competition with alternate fuels and GVs; range and cost issues European NGVs overcome one issue by mounting tanks under the back seat and luggage compartment, thereby leaving more trunk space

Light-Duty Tougher case for CNG-fueled light-duty vehicles: lots of competition with alternate fuels and GVs; range

19 Policy conclusion HD truck market working to add LNG. O&Gs need to monetize their gas Externality differential with diesel exists but not large and significant uncertainty Not the best candidate for subsidies

differential with diesel exists but not large and

20 Thank you.

Will Natural Gas Vehicles Be in Our Future?

Will Natural Gas Vehicles Be in Our Future? Alan J. Krupnick examines the bid for natural gas to become a fuel of choice for America s vehicle fleet. Tony Savino/Corbis Natural gas holds the promise of