On the road to sustainable energy supply in road transport potentials of CNG and LPG as transportation

Transcription

1 On the road to sustainable energy supply in road transport potentials of CNG and LPG as transportation fuels Short study in the context of the scientific supervision, support and guidance of the BMVBS in the sectors Transport and Mobility with a specific focus on fuels and propulsion technologies, as well as energy and climate Federal Ministry for Transport, Building and Urban Development (BMVBS) AZ Z14/SeV/288.3/1179/UI40 Main contractor: Deutsches Zentrum für Luft- und Raumfahrt e.v. (DLR) Institut für Verkehrsforschung Rutherfordstraße 2, Berlin Tel.: , Fax: -283 Subcontractors: Institut für Energie- und Umweltforschung Heidelberg GmbH (IFEU) Wilckensstraße 3, Heidelberg Tel.: Ludwig-Bölkow-Systemtechnik GmbH (LBST) Daimlerstraße 15, München/Ottobrunn Tel.: Deutsches Biomasseforschungszentrum ggmbh (DBFZ) Torgauer Straße 116, Leipzig Tel.: Authors C. Heidt, U. Lambrecht (IFEU), M. Hardinghaus, G. Knitschky (DLR), P. Schmidt, W. Weindorf (LBST), K. Naumann, S. Majer, Dr. F. Müller-Langer, Dr. M. Seiffert (DBFZ) Heidelberg, Berlin, Munich, Leipzig, 26 September 2013

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3 Summary Liquefied petroleum gas (LPG, Autogas ) and compressed natural gas (CNG) are the most common alternative fuels for motor vehicles worldwide. A number of countries subsidise the utilisation of gaseous fuels in the transport sector for reasons including environmental benefits, diversification of the fuel market and the reduction of supply dependency. In Germany, CNG and LPG are subsidised with a reduced mineral oil tax rate under the German Energy Tax Act (EnergieStG) until the In association with the Mobility and Fuels Strategy of the German Federal Government, the present short study investigated the utilisation of CNG and LPG in motor vehicles to inform the current debate on the possible extension of the present subsidies. The focus is on recent and future developments of both the market and associated environmental impacts in Germany. The following conclusions arise: 1. Despite competitive costs, CNG and LPG vehicles account for a low proportion of the current overall stock. Financial benefits have resulted primarily in conversion of petrol to LPG cars. The total costs of ownership (TCO) of both CNG and LPG vehicles are competitive in comparison to conventional engines (diesel / petrol) in the present tax framework. However, according to the German Federal Motor Transport Authority (KBA), CNG and LPG vehicles account for approx. 1% of the total German vehicle stock (status in 2012). The majority are petrol cars that were converted to LPG. CNG on the other hand is utilised more frequently in production-line vehicles in the car and commercial vehicle sectors. Without energy tax benefits, the TCO would be higher compared to diesel vehicles in most cases. Thus, new registrations and conversion rates are expected to further decline without subsidies after Yet, the present situation also indicates that TCO competitiveness is only in part responsible for the overall acceptance and sales figures of CNG and LPG vehicles. To further promote implementation, a number of additional measures are required. These include improved consumer information, extension of the range of vehicles on offer and concerted efforts to improve the fuelling station infrastructure. 2. The utilisation of CNG and renewable methane instead of petrol or diesel may reduce road transport emissions of greenhouse gases (GHGs) and pollutants. In contrast, LPG offers fewer environmental benefits than CNG, and lacks overall potential for integration of renewable energies. CNG engines are currently associated with the lowest environmental impacts among current powertrains. A natural gas vehicle operated with fossil fuels is generating the lowest GHG emissions (-15 % in comparison with petrol cars). However, substantial GHG savings may be achieved with the utilisation of biomethane (up to -66 % compared to petrol). The GHG emissions of LPG vehicles show a modest -9% reduction. Page 3 of 79

4 A look at the emission of pollutants reveals that both CNG and LPG vehicles compare favourable to diesel vehicles, in particular with respect to NO X emissions (TTW). In contrast, LPG produced from crude oil is at a disadvantage compared to conventional fuels with respect to NMHC und SO 2 emissions, which ensue primarily during fuel supply (WTT). Future potentials for the reduction of environmental burdens are greatest for CNG. Increasing use of hybrid technology in vehicles is expected to result in reduced fuel consumption rates. These advances in fuel efficiency could be more pronounced for CNG than for petrol or diesel engines. Furthermore, CNG engines may utilise renewable methane from additional supply pathways, e.g. synthetic methane derived from biomass or renewable electricity. If the development of the renewable energy sector is accelerated, additional and surplus capacities of renewable electricity could be utilised to produce synthetic, so-called RE methane. For LPG, no novel renewable pathways ready for the market are expected at present. Nonetheless, mid-term advantages of LPG would include an additional diversification of the energy supply in road transport. LPG in Germany is primarily produced from crude oil at present; however, it may also be obtained from natural gas. Promising applications for CNG may also be found in the commercial vehicle sector, which is still dominated by diesel engines at present. Low exhaust emissions in CNG vehicles are particularly beneficial in cities, and CNG city buses are already common. Moreover, the CNG infrastructure may be able to contribute to the future fuel supply for long-distance freight transport with liquefied natural gas (LNG). 3. Individual subsidisation of CNG and LPG may contribute to the sustainable energy supply of the transport sector. In this context, the framework should target longterm integration of renewable energies. In the case of future subsidisation, renewable energy potentials of CNG should be considered above all. Thus, individual energy tax rates or statutory blending quotas may promote renewable fuels in particular. Although CNG from fossil natural gas is associated with fewer environmental benefits, tax benefits in the coming years would support both the development of the CNG vehicle market and the CNG infrastructure. These measures could facilitate the integration of renewable energies, e.g. biomethane and methane derived from renewable electricity, into road transport. There is less overall support for continued subsidisation of LPG. However, LPG greenhouse gas emissions are lower than those of petrol, and the contribution to the diversification of the fuel sector could be taken into consideration in the subsidy extension debate. Energy taxation could follow the principles of the EU alternative fuels strategy, i.e. seek to differentiate between CO 2 and GHG emissions. Page 4 of 79

5 Table of contents Summary Background and aims of the study Market situation of natural gas vehicles Overview Fuel properties and engine technology Range of models Vehicle stock Development to date Current trends for registration of CNG and LPG vehicles Comparison of costs and perspectives for passenger cars Methodology for full cost accounting Comparison of the full cost for new vehicles and conversions Future perspectives for the vehicle stock Environmental comparison and potentials for renewable energies Structure of the environmental comparison Fuel supply Well-to-tank (WTT) Overview of the emission factors under investigation Comments on fossil fuel production and supply Comments on renewable fuel production and supply Vehicle operation tank-to-wheel (TTW) Vehicles under investigation Fuel consumption Greenhouse gas and pollutant emissions Well-to-wheel (WTW) comparison Greenhouse gas emissions Primary energy consumption and pollutant emissions Well-to-wheel (WTW) comparison Greenhouse gas emissions Primary energy consumption and pollutant emission Perspectives for the promotion of CNG and LPG in road transport Page 5 of 79

6 4.1 Benefits from an environmental perspective Potential subsidy framework Appendix I: Amortisation potential of LPG conversion for the German petrol vehicle fleet Appendix II: Well-to-tank calculations Methodology Physical energy content method Allocation of byproducts Embodied energy Other impact categories Fossil fuels Petrol and diesel from crude oil Petrol and diesel from tar sands CNG from natural gas LPG from crude oil/natural gas Renewable fuels Biomethane Synthetic methane from renewable electricity (RE methane) Appendix III: Energy taxation for fuels Literature Page 6 of 79

7 Table of figures Figure 1: Development of the natural gas vehicle stock in Germany...13 Figure 2: Figure 3: Comparison of the average full cost depending on type of drive of new vehicles in the B-segment small cars...15 Range of amortisation of LPG conversion ( ) depending on mileage and consumption...17 Figure 4: Schematic of the environmental comparison...19 Figure 5: Biofuels subject to energy tax benefits credited to the quota in 2011 and 2012 (DBFZ based on BLE 2013 and BAFA)...26 Figure 6: Methanation of H 2 from electricity utilising CO 2 from biogas upgrading...28 Figure 7: Exemplary comparison of CO 2 emissions and relevant vehicle design of selected passenger cars...33 Figure 8: WTW Greenhouse gas emissions for passenger cars in Figure 9: Comparison of the CO 2 benefits of CNG and LPG from fossil supply pathways for motors cars in 2010/2012 in recent studies...41 Figure 10: WTW greenhouse gas emissions of city buses in Figure 11: WTW pollutant emissions of passenger cars in Figure 12: WTW pollutant emissions for city buses in Figure 13: WTW greenhouse gas emissions for passenger cars in Figure 14: WTW greenhouse gas emissions for city buses Figure 15: WTW pollutant emissions for passenger cars Figure 16: WTW pollutant emissions for city buses in Figure 17: Energy tax losses and GHG savings in relation to a petrol vehicle in 2012 (Calculation in Appendix III)...52 Figure 18: Potential of conversion to LPG for the German vehicle fleet...55 Figure 19: Crude oil refinery...68 Page 7 of 79

8 List of tables Table 1: CO 2 emissions from fuel combustion...20 Table 2: Overview of energy consumption and emissions WTT...22 Table 3: Table 4: Table 5: Overview of the marketability of the renewable supply pathways under investigation...24 Dumped energy according to German Network Development Plan [NEP 2013, p. 64, Table 9]...27 Fuel consumption of a small family car (Golf class) in the NEDC after JEC Table 6: Fuel consumption of average passenger cars in 2012 and Table 7: Fuel consumption of average city buses in 2012 and Table 8: Emission factors for greenhouse gases TTW...37 Table 9: Emission factors for air pollutants TTW...38 Table 10: System boundaries and fundamental assumptions of recent studies on environmental comparisons of CNG/LPG with other fuels...40 Table 11: Supporting framework for the subsidisation of CNG and LPG...54 Table 12: Energy flows and emissions from crude oil production...58 Table 13: Energy flows and emissions from crude oil transport...58 Table 14: Energy flows and emissions from the production of petrol and diesel in oil refineries...59 Table 15: Fuel consumption and GHG emissions of an inland waterway vessel...59 Table 16: Energy flows and emissions from the production of synthetic crude oil (SCO) from tar sand deposits in Canada...60 Table 17: Fuel consumption and GHG emissions of an oil tanker...61 Table 18: Table 19: Table 20: Energy flows and emissions from the production and processing of natural gas...62 Energy flows and emissions from transport of natural gas over great distances...62 Natural gas consumption and emissions from gar turbines of natural gas compressors...63 Page 8 of 79

9 Table 21: Energy flows and emissions for the production and processing of LPG...64 Table 22: Fuel qualities of LPG...65 Table 23: LPG transport vessel Djanet [Kawasaki 2000]...65 Table 24: Fuel consumption and emissions of a 40 t lorry...67 Table 25: Energy demand and emissions from LPG production in a crude oil refinery...68 Table 26: Overview of data for ecological parameters of biomethane supply...70 Table 27: Table 28: Parameters of the examined concepts for biomethane production from renewable resources/liquid manure and biodegradable waste [Biogasrat 2011]...71 Input/output data for the production of methane from CO 2 and hydrogen (incl. CO 2 supply)...73 Table 29: GHG savings costs for energy tax benefits in comparison to petrol...74 Page 9 of 79

10 1 Background and aims of the study Natural gas (CNG) and liquefied petroleum gas (LPG, Autogas ) are subsidised with a reduced mineral oil tax rate under the German Energy Tax Act (EnergieStG) until the Public debate on the extension of these subsidies beyond 2018 is already under way. The present study aims to compile facts, arguments and requirements in favour of and against the extension of subsidies of the two energy carriers. The scope includes the following sections: Technologies and associated costs of CNG and LPG in comparison with diesel and petrol vehicles based on the status quo, yet including future perspectives. Development of the CNG/LPG fleet in road transport to date, including an assessment of the potential influence of changes to current parameters on the development of future vehicle stock. Illustration of promising supply pathways for renewable methane including benchmark values for typical GHG and pollutant emissions, complemented by a discussion of the present and future market perspectives of biomethane and RE methane on the fuel market. Comparison of the environmental impacts of CNG and LPG vehicles with respect to established and alternative fuel supply pathways today (2012) and in the future (2030). Discussion of the perspectives of CNG and LPG vehicles to advance integration of renewable energies into the road transport sector. Points argued in favour of and against further energy tax benefits of CNG/LPG beyond 2018, or rather necessary pre-requisites for such measures (e.g. based on renewable energies and sustainability criteria). Page 10 of 79

11 2 Market situation of natural gas vehicles 2.1 Overview Fuel properties and engine technology LPG (Liquefied Petroleum Gas), also known as autogas, consists primarily of the hydrocarbons propane and butane. These arise as byproducts of natural gas and crude oil production. The physical properties of LPG do not significantly differ from those of petrol (with the exception of density), and LPG may be utilised as fuel in modified petrol engines. The liquefaction of LPG is relatively simple (at 8 to 10 bar), thus facilitating storage and trade. CNG (Compressed Natural Gas) or natural gas has a chemical composition of over 80 % methane. In Germany, it is offered as H-Gas or L-Gas which differ in methane content and heating value. At 200 bar, the compressions of natural gas for storage purposes on board the vehicle requires higher pressure levels than LPG. For this reason, CNG is carried in a pressure tank. Complex technology is required for the alternative liquid storage as Liquefied Natural Gas (LNG), as it requires cooling at C. Compressed natural gas has a heating value per kg similar to petrol, and is utilised in modified petrol engines. The higher anti-knock capacity of CNG (octane number 120) allows combustion in CNGoptimised engines with higher compression levels, thus resulting in higher energy efficiency in comparison with LPG and petrol (octane number 100) [Stan 2005]. However, CNG fuel storage under high pressure requires measures obsolete for LPG, i.e. solid large-volume containers and high-pressure control of engine supply. In contrast, LPG may achieve better mileage at relatively low pressure levels with small tank volumes. LPG vehicles commonly pursue a bi-fuel concept, i.e. the vehicles are equipped with both LPG and petrol tanks. In contrast, CNG vehicles are offered as bi-fuel or dedicated drives, the latter being equipped with a small emergency petrol tank only. Conversion from petrol to gas operation requires an additional pressurised tank, a separate injection system with hoses fitted with a pressure gauge and an appropriate engine management. Due to differences in storage pressure, bi-fuel drive with CNG and LPG is not possible. Conversion costs for vehicles are much lower for LPG than for CNG. Technological advances allow injection with internal or external mixture formation. In this context, modification with direct injection is more elaborate. The conversion of diesel engines is also possible. However, the fact that spontaneous combustion requires the installation of an ignition system renders conversion distinctly more expensive and rarely viable from an economic angle. Page 11 of 79

12 2.1.2 Range of models The range of models on the market for gas vehicles to date is very limited. In Germany, 44 LPG models from 25 model ranges are available for order, whereas 21models from 12 model ranges are available for purchase with CNG drive (status 07/2012). A selection of additional vehicle features and options is virtually non-existent. The majority of vehicles on offer belong to the MPV segment, or the small and large family car segments. The current vehicle market is characterised by a multitude of options for vehicle body and equipment. Thus, the limited selection for gas vehicles may prevent overall popularity and growing expansion. 2.2 Vehicle stock Development to date In 2011, the global number of natural gas vehicles registered was about 15 million [NVGA 2012]. Gas vehicles represent a high proportion of the total vehicle stock in Pakistan, Bangladesh, Armenia, Iran, Bolivia and Argentina. The global market development for gas vehicles is generally much more than dynamic compared to the situation in Germany. This trend is driven by considerable expansion in Iran, China and Pakistan as well as by emerging markets in a number of newly industrialised countries. The global number of vehicles operated with LPG in 2010 was about 17.5 million [WLPGA 2011]. Demand for LPG is also dynamic (+59 % between 2000 and 2010) with a small number of countries acting as major drivers of the demand. The most important markets are in Poland, Turkey and Korea. With the exception of Korea, where a great number of LPG cars are production-line vehicles, the great majority of LPG cars are converted petrol vehicles. In the segment of heavy-duty commercial vehicles, LPG drives are rare due to the elaborate conversion procedure involved. The global trend for countries with a well-developed fuelling station infrastructure and established refineries is an increased integration of LPG due to the low costs for modification and production. Countries with natural gas deposits (and poorly developed infrastructure) tend to favour natural gas. In Europe, natural gas vehicles have a high market share in Italy and Bulgaria (see [NGVA Europe 2012]). Furthermore, a considerable number of CNG vehicles is operated in Germany and Sweden. According to WLPGA, the most important markets for LPG vehicles are in Europe are in Poland and Italy (see [WLPGA 2011]). According to the German Federal Motor Transport Authority, as of about 75,000 CNG vehicles and 455,000 LPG vehicles were registered, respectively. This is representative of a proportion of 1.2 % of the total stock. A further 18,000 commercial vehicles are operated with CNG, whereas the number of LPG commercial vehicles comes to Most CNG commercial vehicles are registered in the category of light commercial vehicles below a two Page 12 of 79

13 ton payload. Among heavy-duty commercial vehicles, operation with gas is virtually nonexistent except for CNG city buses. Figure 1: Development of the natural gas vehicle stock in Germany Current trends for registration of CNG and LPG vehicles In recent years, the trend for increases in LPG vehicles has distinctly shifted from new registrations to conversions. In this context, the new registration of LPG cars fell below 5000 vehicles, or 0.15 % of all new registrations, in Simultaneously, conversion numbers reached 95,000, thus representing over 95 % of the increase in LPG cars. Hence, the overall increase remains constant. However, the increasing age of the LPG fleet was responsible for an increase in end-of-life vehicles. For this reason, the overall stock increase was slowed. The year 2012 saw a significant increase in LPG new registrations against the trend of recent years. Despite this increase, the increase of vehicle stock was slower. Data on vehicle conversion and end-of-life for 2012 are not yet available. Therefore, conclusive evaluations of the newest trends in vehicle stock development are as yet unfeasible. Slightly lower levels of conversions among new registrations and a growing number of end-of-live vehicles may be expected. The quota of end-of-life vehicles is expected to rise in the coming years from 13.5 % to 19 % of the total stock due to an ageing fleet. Without a significant increase in new registrations, Page 13 of 79

14 projections for future trends are likely to predict low growth or virtual stagnation of the LPG fleet. The development of the CNG fleet is not characterised by such obvious trends. In contrast to LPG, the market for conversion is very small. New registrations of CNG vehicles account for about 0.2 % of the annual new registrations. The year 2012 saw a further decline in the growth of the CNG vehicle stock. Evidently, increasing numbers of end-of-life vehicles and a decrease in new registrations are equally relevant factors in the CNG fleet. Thus, the trend points towards a stagnation of the CNG vehicle stock. However, future developments in the range of models on the market or changes to the tax framework are likely to influence the fleet growth. The factors are discussed in the following chapter (see Chapter 2.3.3). 2.3 Comparison of costs and perspectives for passenger cars Methodology for full cost accounting The calculations for the comparison of costs depending on the type of drive for new vehicles are based on data from the ADAC car cost database (effective July 2012). Factors examined include loss of value without interest, maintenance costs (e.g. oil changes and inspections including common wearing parts and consumables, expenses for new tyres), insurance premiums for collision damage waiver and comprehensive cover with a 50 % no-claims discount, motor vehicle tax as well as fuel costs according to manufacturer data after ECE R84 1. Fuel costs are assumed to remain constant over an operation period of four years. Energy tax benefits in force until are included according to the German Energy Tax Act of (EnergieStG), 2 (2) 2. For the comparison of full costs under full taxation, regular energy tax rates according to EnergieStG 2 (1) 7 and 8 3 and resulting higher VAT levels are calculated. Biomethane is commonly sold at the same price as CNG, thus no distinction is made. To illustrate the influence of differences in taxation, the full costs of diesel engines with a mineral oil tax similar to petrol are included. To simplify comparisons, vehicles with available gas drive are structured in segments following the classification of the German Federal Motor Transport Authority. Modelling of the average price per segment reduces the influences of price policies of individual manufacturers. The small car segment presents the most diverse range on offer with 12 models or versions from eight manufacturers. Thus, this segment exemplifies the actual market situation most 1 Fuel prices: Diesel 1.45 /L, Normal/Super 1.60 /L, SuperPlus 1.69 /L, LPG 0.81 /L, CNG 1.03 /kg, Ethanol 1.15 /L /MWh gaseous hydrocarbons; /t liquid gas /MWh gaseous hydrocarbons; /t liquid gas Page 14 of 79

15 accurately. In the full cost accounting of the present study, the probability density function of the annual mileage in the respective vehicle segment interferes with calculation of the full cost. Hence, the level of utilisation is reported for the purpose of assessing the comparison of cost in reference to the actual utilisation. In addition, the quartiles of the mileage distribution are reported. These distributions are derived from data reported in the study [Mobilität in Deutschland 2008] Comparison of the full cost for new vehicles and conversions The average full cost of the different types of drive in the B-segment is illustrated in Figure 2. Cost differences for the average annual mileage are generally very slight. The full cost associated with an annual mileage of 15,000 km for CNG and LPG engines in the small car segment over four years is approx. 300 below petrol engine costs and approx. 150 below diesel. In case of full energy taxation, average CNG/LPG costs in the segment would exceed the cost of diesel but not those of petrol. Figure 2: Comparison of the average full cost depending on type of drive of new vehicles in the B-segment small cars The comparison of costs between types of drive in individual cases is complicated by differing costs depending on engine model and size, but primarily obscured by the price policy of the individual manufacturers. Different types of drive are positioned and promoted differently Page 15 of 79

16 on the market. The surcharge for LPG may range between 5.5 % and 26 % of the petrol vehicle price (list prices 07/2012). The purchase of an LPG vehicle is generally less expensive than a diesel car. However, a competitive offer for a diesel vehicle may render the full cost over four years more economical than the LPG engine. In contrast, LPG cars are generally more economical over four years in comparison with petrol, except in isolated cases with very low mileage. CNG vehicles are also subject to a highly variable price policy (2000 to over 5000 surcharge). Thus, the purchase costs of CNG engines in some cases exceed those of a diesel car, yet CNG cars are more economical. However, the calculations further reveal that for some models, the CNG version is currently less economical than the diesel engine. The comparison of full costs associated with type of drive differs depending on manufacturer, model and annual mileage. In consequence, diesel or petrol engines may compare favourably in some cases. The buyer of a new vehicle may struggle to identify potential savings in the individual case. Relevance of commercial registrations and company vehicle taxation The German new vehicle market is dominated by commercial new registrations. In 2012, almost 62 % of new registrations were commercial customers (see [KBA 2013]). It is common practice for the drivers of these company cars to select their vehicles. Current legislation on the taxation of company cars includes the new vehicle list price, taxing 1 % of this price as an employee fringe benefit in addition to taxable monthly income. Thus, the costs for the driver are proportional to the original price, but not the running cost. In consequence, there is an incentive to select inexpensive models, whereas economy of consumption is ignored. Taxation of company cars according to consumption or emission levels could generate a distinct shift towards the new registration of gas vehicles. The differences in commercial registrations depending on the segment are noticeable. Equal registration numbers of private and commercial cars are reported only in the small car segment. In higher segments, the proportion of commercial cars clearly prevails. In consequence, there are hardly any higher segment gas vehicles on the market. The conversion of petrol vehicles to LPG services a different market. The specific mileage that renders conversion economically viable strongly depends on consumption and conversion costs. Figure 3 illustrates the range of mileages to amortisation of an LPG system with conversion costs between 1800 and 3500 depending on fuel consumption. The vertical range of the amortisation area reflects the conversion cost. For instance, the conversion of a vehicle with a consumption of eight litres breaks even after a mileage between 33,000 and 65,000 km, depending on engine model and associated conversion cost. In this context, the conversion costs of older, simpler engine models are lower than those for engines with sophisticated injection technology. It is evident that conversion is particularly beneficial in vehi- Page 16 of 79

17 cles with high consumption. An analysis of the conversion potential of the German passenger car fleet reveals that 20 % of the current petrol car stock would break even within two years 4 of LPG conversion. The actual conversion rate of petrol cars, however, is as low as 0.3 %. Thus, the cost advantages of conversion to LPG are practically ignored at present. Figure 3: Range of amortisation of LPG conversion ( ) depending on mileage and consumption Future perspectives for the vehicle stock The future costs of gas vehicles versus conventional passenger cars depend on a number of factors. These include differences in fuel and technology costs, but also prevailing price policies and model ranges of individual manufacturers. At present, fuel prices are strongly influenced by differences in energy taxation. Thus, subsidisation policy is going to define future fuel costs of CNG and LPG in comparison with conventional vehicles. The current framework on average favours diesel engines for new vehicles if no tax benefits apply. However, CNG and LPG may be more economical in individual cases depending on manufacturer and mileage. Overall, the expiry of existing tax benefits is going to put an end to the savings associated with gas engines for the driver. In consequence, a decrease in new registration numbers may be expected. In contrast, LPG conversion is going to retain its amortisation potential for a major proportion of the fleet regardless 4 The time period to amortisation was calculated based on mileage after [MiD 2008] and [Polk 2008] depending on the type of engine (see Appendix I for details) Page 17 of 79

18 of tax benefits. This particularly applies to vehicles with high consumption, high mileage and simple engines. Future engines on the market are expected to be fuel-efficient petrol engines with complex technology. Thus, the conversion potential is greatest in the midterm. Ultimately, developments on the global market for liquid and gaseous fuels are going to define future fuel pricing. A prognosis for the global market is fraud with uncertainty and thus outside the scope of the present study. The comparison of full costs for new vehicles reveals a considerable range. Depending on model and mileage, significant savings or additional costs for CNG/LPG in comparison with other types of drive could be detected. In addition to fuel prices, future competitiveness of CNG/LPG vehicles will depend on both the model range of offer and the price policy of the individual manufacturer. The trajectory for the market is difficult to predict. However, existing legislation on environmental aims may promote future benefits for CNG/LPG vehicles. In this context, CNG vehicles offer a relatively convenient and technologically simple option for manufacturers to significantly reduce CO 2 emissions and comply with CO 2 fleet targets. The second half of 2012 saw the introduction of four new CNG models to the market with further new releases announced. Greater variety and choice among CNG/LPG vehicles could support competitiveness with other types of drive, as well as attract customers to favour gas vehicles. Furthermore, the exhaust emission standard Euro 6 is going to come into force in In consequence, exhaust emission control will have to be adapted to reflect stricter nitrogen oxide regulations, in particular for diesel engines. The additional cost may be transferred to the customer, potentially reducing or even cancelling out cost advantages of diesel vehicles over gas drives. However, perspectives for the future of gas vehicle stocks may not be reduced to consideration of costs alone. To date, this has been demonstrated in the development of CNG/LPG new registrations and the overall low utilisation of the LPG conversion potential in the fleet. In other words, even energy tax benefits for gas fuels have not been instrumental in promoting a major establishment of alternative fuels to date. The user perspective reveals several potential reasons for the lack of acceptance. Among those may be the limited availability of fuelling station infrastructure and an overall lack of information and ignorance towards specific saving potentials. Ultimately, additional subsidisation measures, e.g. development of the fuelling station infrastructure along major motorways and through roads and improved information policy, may be required for the sustainable integration of LPG and CNG into road transport (see Chapter 4.2). Page 18 of 79

19 3 Environmental comparison and potentials for renewable energies The comparison of costs shows that the full costs of CNG and LPG vehicles are fully competitive with conventional engines while subject to energy tax benefits. Positive environmental effects associated with CNG and LPG are a prerequisite for an extended subsidisation through reduced energy taxes and additional measures (e.g. development of the infrastructure). A detailed environmental comparison considering present and future technologies is presented in the next chapter. For this purpose, the overall procedure is introduced (3.1) followed by a detailed description of the baseline data on fuel supply (3.2) and vehicle operation (3.3). Chapters 3.4 and 3.5 illustrate and discuss the environmental impacts along the entire production pathway under present and future conditions. 3.1 Structure of the environmental comparison The environmental comparison of CNG and LPG vehicles includes two separate time horizons, i.e. the present situation (2012) and a future scenario (2030). The vehicles, fuels and supply pathways under investigation are presented in detail in chapters 3.2 and 3.3. Time horizon Vehicle Fuel Supply pathway Emissions 2012 Passenger car LPG Crude oil CO 2 eq 2030 City bus CNG Natural gas NMVOC... Figure 4: Schematic of the environmental comparison The environmental comparison is focused on GHG emissions. These are reported in CO 2 equivalents. A brief explanation of the methodology for the calculation of CO 2 equivalents associated with fuel supply may be found in Appendix II: Well-to-tank calculations. CO 2 emissions derived from the combustion of fuels may be inferred from the carbon content and the heating values of the fuels. The fuel-specific emission factors reported in TREMOD [IFEU 2012] which are consistent with GHG inventories of the German Federal Environment Agency (Table 1), serve as standard values for the calculations. Page 19 of 79

20 Table 1: CO 2 emissions from fuel combustion Fuel Petrol Diesel CNG LPG g CO 2 per MJ Source: [IFEU 2012] For fossil fuels, CO 2 emissions derived from combustion during vehicle operation (TTW) are included. In contrast, vehicle operation with renewable fuels is considered carbon neutral. Therefore, only the proportion of fossil materials required for supply is factored in the calculations. GHG emissions from combustion of CH 4 and N 2 O are always assigned to the TTW portion of the model. As a rule, these emissions account for an overall low percentage of the GHG emission total (see Chapter 3.3.3). Parameters in addition to GHG emissions in the environmental comparison include: Nitrogen oxides (NO X ) Non-methane hydrocarbons (NMHC) Sulphur dioxide (SO 2 ) Renewable and non-renewable cumulative primary energy demand (CED) The emission of the pollutants NO X, NMHC und SO 2 contribute to air pollution in cities as well as acidification and eutrophication. Therefore, their annual emission rates are limited for each EU member state under the NEC Directive (2001/81/EC). At present, a future extension of the NEC Directive to include particulate matter emissions (in the form of PM 2.5 ) is being discussed 5. It was outside the scope of the present study to distinguish between fine and coarse particulates (dust) generated during fuel supply (WTT). Therefore, the investigation includes exhaust particles generated during vehicle operation (TTW) only (Chapter 3.3). The cumulative energy demand (CED) is defined as the sum of all energies derived from primary energy feedstocks within the system, including renewable energies and nuclear energy. Nuclear energy in particular is associated with very low GHG emissions. 5 Page 20 of 79

21 3.2 Fuel supply Well-to-tank (WTT) Fuel supply is a central aspect of the environmental comparison due to the fact that fuel type and supply pathway may significantly influence the associated environmental impacts. The following chapter characterises the supply chains for CNG and LPG and the conventional fuels petrol and diesel. An analysis of the environmental impacts including the emissions of greenhouse gases (GHGs) and selected pollutants and energy consumption is carried out. However, the focus is on prospective renewable supply pathways and their potentials for the application in road transport Overview of the emission factors under investigation Table 2 illustrates the overview of pathways included in the analysis with the respective energy consumption and associated emissions. For the characterisation of the current situation in 2012, a distinction was made between established (fossil only) and alternative fuel supply chains (LPG from natural gas and biomethane). For the projection of the year 2030, a number of fossil and renewable options were considered due to the fact that the political framework influencing the fuel mix in 2030 is not yet determined. From the present point of view, the supply chains under investigation are expected to be available in A brief description of the individual pathways may be found in the following chapters. Additional information on the methodology and assumptions for the calculation of well-to-tank emissions and energy consumption including detailed descriptions of the pathways or crossreferences may be found in Appendix II: Well-to-tank calculations. Page 21 of 79

22 Table 2: Overview of energy consumption and emissions WTT Fuel Supply pathway Cumulative energy demand (CED) CO 2 eq NMHC NO X SO 2 CO 2 eq WTW* MJ/MJ % renewable g/mj Typical pathways in 2012 Petrol Crude oil % Diesel Crude oil % LPG Crude oil % CNG Natural gas 4000 km % Alternative pathways in 2012 LPG Natural gas % Biomethane 6 Biogas / biodegradable waste (electricity mix today) Biogas / renewable resources / liquid manure (electricity mix today) % % Additional pathways for 2030 Petrol Tar sands % Diesel Tar sands % CNG/ biomethane/ RE methane Natural gas 7000 km % Biogas / biodegradable waste (electricity mix 2030) % Biogas / renewable resources / liquid manure (electricity mix 2030) SNG / wood (electricity mix 2030) % % Electricity / H 2-Electrolysis % NB: Blending of biofuels to fossil fuels not considered *equals CO 2 eq including CO 2 from the complete combustion of fossil carbon. CH 4 und N 2O generated during combustion in the vehicle not included (see Chapter 3.3.3). Source: own calculations. See Appendix II: Well-to-tank calculations 6 CO 2 eq in this study were updated from [BMVBS 2013]. The data are representative for the common range of the respective supply pathway. Page 22 of 79

23 3.2.2 Comments on fossil fuel production and supply At present, petrol and diesel are predominantly produced from crude oil. LPG in Germany arises as a byproduct during crude oil processing, although it may also be sourced as a byproduct during natural gas production. It is common practice to process LPG on site for subsequent transport to Europe by ship, whereas natural gas for CNG is commonly transported by pipeline (covering an average distance to the EU of 4000 km for marginal demand). Future consideration of fossil fuel supply chains should seek to focus on demand and availability in particular. The average transport distance of natural gas for the supply of CNG is expected to rise to 7000 km by In addition to production from crude oil, petrol and diesel could be supplied through extraction from tar sands. At present, this technique plays a minor role in overall fuel consumption. However, the share of fuel derived from tar sands could increase in the future due to the scarcity of conventional crude oil. An increase in tar sand mining and processing would be associated with environmental impacts. Blending of biofuels It may be expected that fuels available at fuelling stations will contain a blend of biofuels, e.g. - up to 7 vol. % biodiesel in diesel - up to 5 vol. % (E 5), or 10 vol.% bioethanol (E 10). The stipulations of the Biofuels Quota ( 37 BImSchG) of 6.25 % (MJ/MJ) further allow the offsetting of biomethane against the quota. Biofuels applied in the context of the quota achieved an energetic proportion of 5.6 % or 5.8 % 7 in 2011 and In 2012, this would correspond to greenhouse gas (GHG) savings of approx. 2.9 % or 2.4 %, respectively, in reference to typical or default values of the 2009/28/EC Directive compared to purely fossil petrol or diesel. Due to these minor GHG savings of biofuels, and the wide range of outcomes depending on substrate and country of origin of liquid biofuels, the focus of the present study is restricted to purely fossil fuel supply. For LPG derived from crude oil or CNG from natural gas, blending of biofuels (e.g. biomethane) is equally excluded Comments on renewable fuel production and supply In principle, the individual drive options under investigation (diesel, petrol, CNG, LPG) are compatible with a multitude of fuels derived from renewable energy sources. One principal focus of the present study was the investigation of renewable fuels applicable to the target 7 Calculation based on [BLE 2013] Page 23 of 79

24 drive options CNG/LPG, and the associated environmental impacts (see Table 2). In contrast, liquid biofuels are excluded from the present environmental comparison. Renewable fuels for 2012 include compressed biomethane derived from biogas. In addition, the projection for 2030 explores biomethane produced from the gasification of wood chips with subsequent methanation (i.e. bio-sng) and compressed methane derived from renewable electricity (RE methane). In theory, production of bio-lpg is equally conceivable, yet there is little market relevance at present. Therefore, this option is introduced, but not included in the environmental comparison scenario for In addition, liquefied biomethane (LBG liquefied biogas) is currently under consideration in countries like Germany and the Netherlands, whereas Sweden and the United Kingdom are already establishing its application. However, due to the scarcity of data, this pathway is excluded from the analysis. Table 3 gives a broad overview of the renewable fuels included in the analysis. A detailed characterisation may be found in the following paragraphs. Table 3: Overview of the marketability of the renewable supply pathways under investigation Pathway Brief description Feedstocks Technological status quo Market situation Biomethane from biogas Fermentation, gas processing Renewable resources (mostly maize) Organic waste and residues (e.g. biodegradable waste, sludge, distillers grains, straw) Commercial GER: major capacities based on renewable resources (esp. electricity and heat sector), minor capacities based on residues (currently relevant for the transport sector) Biomethane from synthetic natural gas (Bio- SNG) Gasification, gas conditioning, synthesis, gas processing Lignocellulosic biomass Pilot phase EU: Demonstration plant in Güssing/Austria, commercial plants in Sweden under construction RE- Methane Electrolysis of H 2 with renewable electricity and subsequent methanation Electricity, Pilot phase GER: ZSW/Stuttgart CO 2 (CO 2 from air), EWE/Werlte (CO 2 from biogas upgrading) Bio-LPG Byproduct of HVO/HEFA production; depending on the concept also BTL/Fischer-Tropsch- Synthesis Oil-based (HVO) or lignocellulosic (BTL) biomass HVO/HEFA: commercial BTL/FT: to date pilot phase LPG utilisation frequently plantintegrated (e.g. process energy) HVO: GER: no plant, EU: Rotterdam, Porvoo Page 24 of 79

25 Biomethane In 2010, approximately 10 PJ of gas fuels were utilised in Germany (Drucksache 17/9621 based on Energiestatistik). Biomethane may act as a supplement or substitute for natural gas, thus representing a strategic resource for sustainable mobility in the coming decades. Capacities for the supply of biomethane from biogas were substantially expanded in the past five years. However, the establishment of gas-powered vehicles has been relatively slow. As a result, biomethane sales targets in the fuel sector have been achieved to a limited extent. The production of biogas via fermentation (anaerobic fermentation) with subsequent gas upgrading and infeed into the grid represents the current state of the art. The plant capacity installed by the end of 2012 of approx. 70,000 Nm 3 /h [DBFZ et al. 2013] equals an annual production capacity of more than 20 PJ. Moreover, further 36 plants are under construction, and 38 additional plants are in the planning stage [DENA 2013]. Throughout Europe, available capacities amount to approx. 700 MW of biomethane in the key regions Sweden, Switzerland and the Netherlands [Green Gas Grids 2012]. More than 80 % of current facilities in Germany are operated with renewable resources, i.e. predominantly maize and grass-based silage, as well as animal waste like liquid manure. In the transport sector, biomethane is applied primarily from residues and waste materials. This may be linked to the fact that as of 2011, biomethane derived from residues and waste materials is eligible to receive double credits within the quota framework according to 37 BImSchG. In contrast to bioethanol and biodiesel, there is no specific quota for biomethane. Moreover, natural gas as a fuel is not subject to a quota. As a result, biomethane is only applied to the quota as a biofuel if there is no alternative, or if available alternatives are cost-intensive in comparison. Figure 5 presents biofuel utilisation in Germany in 2011 and 2012 according to an evaluation report 8 of the German Federal Office for Agriculture and Food (BLE) in contrast with the official mineral oil statistics of the German Federal Office of Economics and Export Control (BAFA). According to [BLE 2013], approx. 0.3 PJ biomethane were applied in road transport, including one third not credited to the quota. In 2012, biomethane in road transport amounted to approx PJ, representing more than 10 % of natural gas based fuels. The total included 0.9 PJ (and 0.8 PJ thereof double credited) credited to the quota. The increase between 2011 and 2012 is based almost exclusively on biomethane from residues and waste materials. Please note that in contrast to the relative growth, the absolute increase of biodiesel derived from waste edible fats and oils is significantly higher than the increase of biomethane from residues and waste materials. 8 Applies to certified biomass after Biokraft-NachV and BioSt-NachV Page 25 of 79

26 Biofuels in PJ/a Quota credit Quota volume 136 PJ 6.25% biofuels quota in 2012 equals approx. 136 PJ 120 Tax-exempt biofuels 100 Biomethane double (waste) Biodiesel double (waste) 80 Biomethane (esp. waste) 60 Bioethanol (energy crops) Hydrotreated oils 40 Biodiesel (waste) 20 Biodiesel (oil seeds) [BLE] 2011 [BAFA] 2012 [BLE] 2012 [BAFA] BLE data BAFA data Figure 5: Biofuels subject to energy tax benefits credited to the quota in 2011 and 2012 (DBFZ based on BLE 2013 and BAFA) Sustainability certification is required for crediting 9 to the biofuels quota. The German Biokraft-NachV 10 does not define a default value for biomethane from renewable resources. Moreover, calculation methodology for the GHG balance complying with the legal framework is not fully developed to date. Stakeholder projections for 2013 assume that the absolute volume of biomethane utilised in road transport will increase by a third in comparison with the previous year [DENA 2013]. Thus, the relative volume remains rather constant. Verbio alone may supply biomethane from bioethanol production residues (distillers grains) with a current capacity of 60 MW 11 to both the road transport and cogeneration sectors. Under the German Renewable Energy Act (EEG), biomethane from renewable resources is primarily applied in the electricity and heat sectors. 9 In this case by transfer of compliance with obligations to a third party according to 37a Satz 4 BIm- SchG (German Federal Immission Control Act) 10 Biofuels Sustainability Ordinance 11 Source: verbiogas ( corresponding to approx. 1.8 PJ/a at full load Page 26 of 79

27 Furthermore, biomethane may be supplied through the gasification of lignocellulosic/ woody biomass with subsequent methanation. In contrast to biomethane from biogas, this conversion technology is not currently available on the market. Bio-SNG is successfully produced in a pilot plant in Güssing (Austria) with a capacity of 1 MW biomethane. Additional plants in the planning or construction stage are located in Sweden, Switzerland and Germany. However, expectations for development of bio-sng production facilities fall short due to economic challenges in competitiveness, although the technology is readily available. Nevertheless, the production pathway remains promising for future utilisation of residues and waste materials as well as lignocellulosic biomass (no immediate food/feed competition). Synthetic methane from renewable electricity (RE methane) Electricity may be converted to hydrogen through electrolysis, which in turn may be used to synthesise methane in combination with CO 2. The application of this procedure is being considered for wind and solar power plants at times of excess electricity and low demand. Thus, the integration of fluctuating renewable power sources into the energy system would be facilitated [dena et al. 2012]. Excess electricity converted to RE methane may be stored in the existing natural gas infrastructure. Thus, storage of large capacities over extended periods of time is feasible, and the volumes in storage are available for a number of applications, including CNG fuel. However, future quantities of so-called excess electricity are very sensitive to a number of parameters. These include expansion of both the renewables sector and the grid, electricity storage, demand side management and not least increasing the flexibility of existing conventional power plants. Short-term gains from excess electricity are negligible compared to the total of electricity generated from renewable resources. Nonetheless, accelerated development of the renewable energy sector would in all likelihood result in regionally significant quantities within the present decade. Fluctuations in renewable electricity generation may reach proportions of 70 %, 80 % or more in the annual energy balance. If no countermeasures like energy storage are taken, the resulting excess electricity increases dramatically, as illustrated in Table 4 in scenario C Table 4: Dumped energy according to German Network Development Plan [NEP 2013, p. 64, Table 9] Page 27 of 79