Making the case for natural gas vehicles

NGV fueling stationIt was interesting to read a Houston Chronicle reporter’s account of the Natural Gas Vehicle USA conference, which just took place in that city. Ryan Holeywell’s conclusion in “The road ahead still isn’t clear for natural gas trucks,” is that companies are quite skeptical about investing in natural gas vehicle (NGV) conversions.

Holeywell cites some impressive sources; UPS can’t get a return on investment in natural gas-fueled tractors unless they travel 500 miles a day, according to Jeff Yapp, UPS vice president for global automotive engineering and operations. Dennis Beal, vice president of global vehicles at FedEx Express, said that trucks that run on natural gas cost much more than their gasoline and diesel counterparts.

I would say there are a few points about the alternative fuel missing from that article………

Fuel cost savings:  Compressed natural gas has been costing users about $2.25 recently in gasoline-gallon equivalent (GGE) pricing compared to diesel, which has been in the $3.90 range recently; gasoline has been about $3.65 in the national average price. Diesel and gasoline prices are likely to go up in the wake of the conflict being experienced in Iraq and instability within other key suppliers of oil to the US market. Energy analysts expect natural gas pricing to remain stable in the US over the next 10 years due to the abundant supply. Several fleets are in the process of making or reinstating contractual agreements with CNG suppliers to lock in the fuel price over a period of time. While alternative fuel tax credits expired at the end of 2013, businesses would be able to take another $0.50 to $0.75 GGE off that price if the tax credits come back; that could bring the cost of CNG down to as low as $1 GGE in some locations, said John Coleman, fleet sustainability and technology manager at Ford Motor Co.

UPS and FedEx are supporters: UPS does see natural gas as the “big game changer,” according to Scott Wicker, the company’s chief sustainability officer. The transport company can save 40% in fuel costs running its long-haul semi-tractor fleet on natural gas instead of gasoline or diesel. Reducing gasoline and diesel is part of the company’s mission to cut emissions and operate more efficiently, Wicker said. FedEx is testing out CNG and liquefied natural gas (LNG) vehicles in its fleet; Frederick Smith, chairman and CEO of FedEx Corp., expects 5% to 30% of all US long-distance trucks to be fueled by CNG or LNG over the next 10 years – as the cost of the trucks come down and fueling stations become more common.

Incentives: While federal tax credits expired at the end of 2013 on the fuel, there are several state programs out there that can reduce the cost of vehicle conversions and fueling. If you look at the US Department of Energy’s Alternative Fuels Data Center, there’s a map of the US by states to click on. In Texas, when the new fiscal year begins in September, the Texas Commission on Environmental Quality (TCEQ) will administer its next NGV Grant Program. Qualifying vehicles must be on-road vehicles with a gross vehicle weight rating of more than 8,500 pounds and must be certified to current federal emissions standards. TCEQ can also award grants through the Clean Transportation Triangle Program, which supports the development of a network of natural gas fueling stations along the interstate highways connecting Houston, San Antonio, Dallas, and Forth Worth.

Fueling infrastructure: Besides privately held CNG and LNG fueling stations, publicly accessible stations are starting to see the light of day. The US Department of Energy’s Alternative Fuels Data Center reports there are now 713 CNG stations and 53 LNG stations in the US. These numbers tend to increase each month and are expected to provide a refueling infrastructure alongside the nation’s highways in the near future.

Emissions reductions: As panelists talked about at the Natural Gas Vehicle USA conference, the challenges and costs to deploy NGVs can be pervasive. Building NGV refueling stations can be up there in cost, and conversions can be in the $8,000 to $18,000 range depending on the vehicle’s weight and other factors. Reducing greenhouse gas emissions by about 25% compared to diesel and gasoline engines does help make the case. Waco-Texas based Central Freight Lines has 114 CNG vehicles in its 1,600 unit fleet; driving range has fallen short of that needed for fleet operations that were estimated when installing 75-gallon CNG tanks into its trucks. All that being said, the company remains committed to the technology and has 50 more NGVs on order. “We’ll continue to invest in CNG because we’re committed that it’s the right thing to do and the right way to go,” said Mari Borowski, director of business development for Central Freight Lines.

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