Natural Gas VehiclesEIA

2010
The Contribution of Natural Gas Vehicles to Sustainable Transport
InternatIonal energy agency

MIchIel nIjboer
WO R K I N G PA P E R
INTERNATIONAL ENERGY AGENCY

The International Energy Agency (IEA), an autonomous agency, was established in November 1974. Its mandate is two-fold: to promote energy security amongst its member countries through collective response to physical disruptions in oil supply and to advise member countries on sound energy policy. The IEA carries out a comprehensive programme of energy co-operation among 28 advanced economies, each of which is obliged to hold oil stocks equivalent to 90 days of its net imports. The Agency aims to: n Secure member countries access to reliable and ample supplies of all forms of energy; in particular, through maintaining effective emergency response capabilities in case of oil supply disruptions. n Promote sustainable energy policies that spur economic growth and environmental protection in a global context particularly in terms of reducing greenhouse-gas emissions that contribute to climate change. n Improve transparency of international markets through collection and analysis of energy data. n Support global collaboration on energy technology to secure future energy supplies and mitigate their environmental impact, including through improved energy efficiency and development and deployment of low-carbon technologies. n Find solutions to global energy challenges through engagement and dialogue with non-member countries, industry, international organisations and other stakeholders.
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2010
The Contribution of Natural Gas Vehicles to Sustainable Transport
The views expressed in this working paper are those of the author(s) and do not necessarily reflect the views or policy of the International Energy Agency (IEA) Secretariat or of its individual member countries. This paper is a work in progress, designed to elicit comments and further debate; thus, comments are welcome, directed to the author at: naturalgasinfo@iea.org
InternatIonal energy agency

MIchIel nIjboer
WO R K I N G PA P E R
OECD/IEA2010
Thecontributionofnaturalgasvehiclestosustainabletransport
Acknowledgements
Efforts from several people, both within and outside the agency have been critical to this working paper. The author of this document, Michiel Nijboer, gas analyst at the Energy Diversification Division, would like to express gratitude to anyone who has in any way Page|3 contributedtothisproject. DataandfeedbackfromanddiscussionswithseveralparticipantsintheNGVindustryadded significant value to the analysis. In particular, gratitude goes out to Jeffrey Seisler (Clean Fuels Consulting), Davor Matic (OMV) and Brett Jarman (NGV Global) for providing information and contacts, discussing ideas and reviewing parts of this working paper. The case studies in this paper would not have been possible without the information provided by Felipe Dias (IBP, Brazil), Mr. Fernandes (Techsource, Brazil), Alireza Rahnama (Iran), AnumitaRoychowdhury(CSE,India)andMuazzamHussain(OGRA,Pakistan).Variouspeople have provided information for the analysis or feedback on the draft version, including: Jeanet van Dellen (IGU, Norway), Anneli Petersson (Swedish Gas Center), Peter Seidinger and Franz Marschler (OMV, Austria), Roy Moojen (Aspro, The Netherlands), Dag Lilletvedt (Liquiline, Norway), Erik Bthker (CNG Net, The Netherlands), Guido Wember (E.ON Gas Mobil, Germany), Ita Soerijanto (NGV Communications Group), Lee Giok Seng (ANGVA, Malaysia), Hien Ly (CFS, Australia) and Muriel Desaeger (Toyota, Belgium). Gratitude also goes out to NGV Global for providing us with the opportunity to present our work at the 12thWorldIANGVConferenceinRome,June2010. Input and guidance from the following IEA colleagues have been very helpful in different stages of the process: Sun Joo Ahn, Alexander Antonyuk, Toril Bosoni, Pierpaolo Cazzola, AnneSophie Corbeau, Ian Cronshaw, Francois Cuenot, Ellen Dalland, Anselm Eisentraut, Catherine Foureix, Lew Fulton, Dagmar Graczyk, Timur Gl, Ghislaine Kieffer, Kazunori Kojima,FrankMatthew,AnneMayne,BertrandSadin,ChristopherSegar,MarilynSmithand EditaZlatic. The author remains fully responsible for the content of this working paper and any errors or omissionsaresolelyhisresponsibility. Asaworkingpaper,thisdocumentreflectsworkinprogress;input,suggestions,correctionsor commentsfromreadersareappreciated.Pleasesendcommentstonaturalgasinfo@iea.org.
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Tableofcontents
Acknowledgements........................................................................................................................3 Executivesummary........................................................................................................................7
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1.Introduction..............................................................................................................................11 2.CurrentstatusofNGVmarketsandtechnology......................................................................13 2.1DevelopmentofNGVfleetsandretailinfrastructure.....................................................13 2.2Technologyandperformance .........................................................................................18 . 3.EnvironmentalperformanceofNGVs......................................................................................23 3.1Greenhousegasemissions..............................................................................................23 3.2Localairquality................................................................................................................26 3.3Noise................................................................................................................................31 4.Economicsandpolicy...............................................................................................................35 4.1Fuelprices........................................................................................................................35 4.2CompetitivenessofCNG..................................................................................................37 4.3TheoryonNGVpolicy......................................................................................................38 4.4LocalfactorsforNGVpolicy............................................................................................39 5.Casestudies..............................................................................................................................41 5.1Brazil................................................................................................................................41 5.2India.................................................................................................................................45 5.3Iran...................................................................................................................................51 5.4Pakistan...........................................................................................................................53 5.5UnitedStates...................................................................................................................55 5.6Europe.............................................................................................................................59 6.SustainablepathwaysforNGVs...............................................................................................61 6.1Potentialforbiogasuseintransport...............................................................................62 6.2BiomethaneprojectsinEurope.......................................................................................65 6.3NGVs:Apathwaytohydrogen?......................................................................................71 7.Conclusionandoutlook............................................................................................................73 Abbreviationsandacronyms.......................................................................................................76 References....................................................................................................................................77 Listoffigures Figure1:TotalnumberofNGVsworldwide.................................................................................13 Figure2:Compositionoffleets.....................................................................................................14 Figure3:GrowthofNGVfleetinselectedcountries....................................................................14 Figure4:EstimatedannualnaturalgasconsumptionbyNGVs....................................................17
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Figure5:EstimatedshareofNGVsindomesticnaturalgasconsumption...................................17 Figure6:EstimatedannualnaturalgasconsumptionbyNGVs....................................................18 Figure7:Relativeemissionsofvehiclesintypeapprovalanalysis...............................................27 Page|5 Figure8:Lightdutyvehicle(car)emissions..................................................................................28 Figure9:Lightcommercialvehicleemissions...............................................................................29 Figure10:Heavydutyvehicleemissions:NOxandPM................................................................30 Figure11:Heavydutyvehicleemissions:HCandCO...................................................................30 Figure12:CostsofCNGversusgasolineindifferentscenariosofgriddevelopment..................37 Figure13:NumberofNGVsinBrazil.............................................................................................42 . Figure14:MarketshareofalternativestogasolineinBrazilianLDVmarket ..............................43 Figure15:FuelpricesandconversionstoNGVs...........................................................................44 Figure16:GasinfrastructureinBrazil ..........................................................................................45 . Figure17:NaturalgasinfrastructureinIran.................................................................................52 Figure18:CNGconsumptioninPakistan......................................................................................54 Figure19:PriceofnaturalgascomparedtootherroadfuelsintheUnitedStates.....................56 Figure20:NaturalgasstationsbyState(asof2010)...................................................................57 Figure21:InterstateCleanTransportationCorridor,California...................................................58 Figure22:Swedishgasinfrastructure...........................................................................................67 Listoftables Table1:MarketshareofNGVintotalfleetincountrieswithatleast1%NGVmarketshare.....15 Table2:NumberofNGVfuellingstationsinselectedcountries.....................................................15 Table3:Countrieswithatleast600NGVsperfuellingstationonaverage.................................15 Table4:Welltotankemissions ...................................................................................................25 . Table5:TaxesaspercentageofenduserfuelpricesinOECDcountries2009............................35 Table6:Enduserpricesforroadfuels.........................................................................................36 Table7:NumberofNGVstationsinBrazil200610.....................................................................43 Table8:FivecitiesinIndiawithmostdevelopedNGVmarket....................................................46 Table9:CO2emissionsfromvehiclesinIndia..............................................................................49 Table10:TypicaleconomicsofaLNGVtruckintheabsenceoftaxcreditsandsubsidies.........56 Table11:CO2savingsfromdifferentusesof100m3/hbiogasproduction..................................63 Table12:Greenhousegasabatementcostsacrossdifferenttechnologies.................................64 Table13:BioSNGpotentialversusNGVgasdemandin2030.....................................................64 Table14:CompositionofvarioustypesofbiogascomparedtofossilgasinTheNetherlands...70 Table15:ExpectedregionalNGVgasconsumption.....................................................................74 Listofboxes Box1:Storageofnaturalgasfortransportation..........................................................................20
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Executivesummary
Keymessages: Thenumberofnaturalgasvehicles(NGVs)andfuelstationshasgrownverystronglyin the past decade and continues to do so, although it is still a niche market, from the Page|7 perspectiveoftransport(lessthan1%ofworldroadfuelconsumption)andnaturalgas markets(lessthan1%ofworldgasdemand).
Naturalgascanplayasignificantroleincuttingvehiclecarbondioxide(CO2)emissions, butoverthelongtermtherewillneedtobeacommitmenttotransitiontoverylowCO2 gassources,suchasbiogasorbiosyntheticgas.Naturalgasmaybeespeciallyimportant for cutting CO2 emissions from heavyduty vehicles (HDVs), since other options such as electrificationappeartobelimited.
Vehicle and fuel technology for natural gas is available today and relatively affordable, particularlyincomparisonwithotheralternativefuelvehicles(AFVs).
Dependingonthecontext,NGVcanhavestrongbenefitsindifferentcountriesincluding: improving air quality and reducing noise in urban areas; diverting oil from domestic consumption to export; improving energy security; and reducing government spending on road fuel subsidies. Governments should carefully consider the role of NGVs compared to other AFVs, such as electric, fuel cell and biofuel vehicles, and weigh the costs and benefits of each for different modes of transport. In this context, it appears thatNGVsmaycomparefavourablyinmanybutperhapsnotallnationalcontexts.
Natural gas can be competitive visvis gasoline where transmission and distribution gridsarepresent;incountrieswherethisisnotthecase,thereisoftenanopportunityfor simultaneous gas market development and increasing NGV market share. While investmentsinvehiclesandretailinfrastructurecangeneratepositivereturns,temporary governmentsupportmayberequiredtoestablishanNGVmarket.Withoutsuchsupport, many countries are unlikely to achieve selfsustaining NGV markets with substantial penetrationlevels.Investmentsingridsarelikelytotakeplaceonlywhereothersectors canalsobenefitfromnaturalgassupply.
Marketdevelopment
Although in the past decade the worldwide market for use of natural gas in vehicles has developedstrongerthaneverbefore,thistechnologyremainsanichemarketasthecurrentshare ofnaturalgasinroadtransportationisstillverylimitedinallbutafewcountries.Thecountries withthehighestlevelofmarketdevelopmentareArgentina,Brazil,India,IranandPakistan. While retrofit is still applied, especially outside Europe, there is a general tendency towards originalequipmentmanufacturer(OEM)vehiclesandmoreOEMmodelshavebecomeavailable overthepastyears,althoughtheavailabilityvariesfordifferenttypesofvehiclesonacountry tocountryorregionalbasis.Theequipment tobuildfuelstationsforNGVsiswidelyavailable andtechnologycontinuestoimprove.
RoleofNGVinalowcarbonfuture
NGV programmes are usually driven by other goals than greenhousegas reduction, although NGVs can certainly contribute to decarbonising transportation and as such should be part of plans to move towards sustainable transport. On average, a 25% reduction in carbon dioxide
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equivalent(CO2eq)emissionscanbeexpectedonawelltowheel(WTW)basiswhenreplacing gasoline by lightduty vehicles (LDVs) running on compressed natural gas (CNG). While the technology for biosynthetic gas is not fully developed yet, biogas could provide significant quantities of a lowcarbon fuel in the longer term at low or even negative greenhousegas abatementcosts.Europeiscurrentlyseeinganincreasingnumberofprojectsaimedspecificallyat the production of biomethane and its use in vehicles. In principle, NGVs can also provide a pathwaytohydrogenbutmoreresearchisrequiredtoassesshowandtowhichdegreethiscanbe accomplished.Forvariousreasons,thepotentialtoreducegreenhousegasemissionsbyreplacing largequantitiesofdieselfuelconsumptioninHDVsbynaturalgashasbeenunderutilised.
NGVpolicy
NGV programmes are driven by a variety of factors, including the improvement of local air qualityindenselypopulatedareas,freeingupmorevaluableoil(products)forexports,reducing government spending on subsidies, stimulating economic development by promoting local production of vehicles, improving security of supply by replacing an imported fuel with a domesticallyabundantfuel,andoverallgasmarketdevelopment. Governments can stimulate NGV development at many different levels and coordinate an integratedapproachwithallstakeholders.AnynationalorregionalNGVstrategyneedstotake into account a number of local factors to tailor general principles to the context. There is no "onesizefitsall"approach.
Casestudies
Brazils remarkable average annual growth of almost 60% in number of NGV during the past decadehasrecentlysloweddownduetocompetitionfromethanolflexfuelvehiclesandsupply constraints. On the latter point, new gas discoveries/developments will lead to a marked improvementofthedemandsupplysituation.Amajorpotentialsourceofgrowthofnaturalgas consumption in Brazilian transport, notably heavyduty transport, is very dependent on government policy. The country currently lacks strong government policy or initiatives from otherstakeholdersthatcouldchangethissituationinthenearfuture. IndiacouldbecometheworldslargestNGVmarketifitcanmanagethepolicyandsubstantial investment challenges for grid development, fuel price (de)regulation and enforcement of qualityandsafetyregulations.Intercitybusesandtruckshavesofarremainedanunexploited potential.AnotheruncertaintyisthepotentialforIndiatoreplacenaturalgasbybiogasorbio syntheticnaturalgas(bioSNG). IraninitiatedanambitiousCNGprogrammetoalleviatepressureongovernmentbudgets and copewithashortageofrefinerycapacityinthefaceof(possiblefurther)internationalsanctions byusingadomesticallyavailablefuel.Thissetthecountryonapathofdramaticgrowth,which couldcontinueinthefutureiftheHDVsegmentwillbeincludedintheprogramme. Driven by energy security, the Government of Pakistan has stimulated the introduction and growthofCNGuseintransportationbyseveralpolicymeasures.Thishasresultedinthelargest NGVfleetin theworld,overtwomillionvehicles,consuming2.5billion cubic metres(bcm)of naturalgasperyear. TheUnitedStatescurrentlyhasveryfewNGVsandlimitedinfrastructure.Thismaychangeas policy support is growing, prospects for gas supply have improved dramatically over the past twoyears,vehicleavailabilityisimprovingandtheeconomicsareattractiveforfleetowners.A
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strategy aimed at HDV fleets would also mean that retail infrastructure costs can be kept relativelylowwhilestillcoveringwideareas. EuropewouldneedstrongpolicysupportforNGVstoplayasignificantroleinthetransportfuel mix,butastheworldslargestcarmarket,itcertainlyhaspotential.Dependingonhowfuture technological developments play out in relation to Europes increasingly stringent norms, the benefitoflowerpollutantemissionscoulddriveNGVgrowth.However,themajorimpetusfor Page|9 growthislikelytobegreenhousegasreductionbyusingbiomethane,particularlyinHDVs.
Futureoutlook
Ingeneral,intermsofpollutantemissionscomparedtocurrentdieselvehicles,NGVsperform well, particularly in the HDV segment. While OECD countries could see this gap closing, many nonOECDcountrieshaveadoptedstandardsthatwerethenorminEuropeortheUnitedStates ten or more years ago. Therefore, improving air quality is likely to be a stronger driver for natural gas in the nonOECD countries than in the OECD countries. The simultaneous development of gas markets, public transportation and the economy in general in many non OECD countries could provide momentum for NGV programmes. As a result, the IEA expects thattheregionsthatarecurrentlyleadinginNGVs,AsiaPacificandLatinAmerica,arelikelyto continuetodoso. While liquid fuels are taxed at least to some extent in all OECD countries, many nonOECD countries have low tax rates or subsidy schemes in place on energy prices in general and for transportation fuels in particular. Disregarding the effect of subsidies or taxation, IEA analysis indicatesthatnaturalgascancompetewithgasolineinallscenariosinwhichgastransmission anddistributiongridsarepresent. Somecountrieswillneedtoinvestheavilyinvehicles,retailinfrastructure,andtransmissionand distributiongridstoaccomplishtheprojectedgrowth.Whileinvestmentsinvehiclesandretail infrastructurecangeneratepositivereturnsinmanycases,temporarygovernmentsupportmay berequiredtoestablishamarket,asmanycountriesareunlikelytoachieveselfsustainingNGV markets with substantial penetration levels without it. Investments in grids are likely to take placeonlywhereothersectorscanalsobenefitfromnaturalgassupply.Taxandsubsidypolicies needtobesustainableinthelongruninordertofacilitatetheseinvestments,notwithstanding the fact that governments have a variety of instruments at their disposal to support developmentofNGVmarkets.
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1. Introduction
This IEA working paper evaluates the potential costs and benefits of using natural gas as a vehicle fuel for road transportation, as well as the policy related to its market development. Therearegoodreasonstoanalysetheuseofenergyintransportationandtoexplorewaysto decarbonise the sector as transportation needs continue to grow in many parts of the world. Page|11 The transport sector is currently responsible for 23% of energyrelated CO2 emissions, and transport associated CO2 emissions will more than double by 2050 according to the Energy TechnologyPerspectives2010(ETP2010)BaselineScenario(IEA,2010a). Whereasimprovingenergyefficiencyremainsofparamountimportance,alternativefuelsneed tobeevaluatedtoreducetheimpactofgrowingenergyuseintransportation.Evenwithlower energy and carbon intensity, transportation will continue to have (potential) negative impacts onhealth,safetyandenvironment. There are several alternative fuel technologies, including natural gas, biofuels, full or hybrid electricvehicles(EVs)andhydrogenfuelcellvehicles.Naturalgasisthefocusofthispaper,both fromfossiloriginaswellasrenewablegasintheformofbiomethane.Naturalgascanbeusedin a compressed (CNG) or liquid (LNG) state in several modes of transport, including road transportation,offroad,rail,marineandaviation.1 Notwithstanding the potential for natural gas in other modes of transport, road transport dominates the total use of energy in world transport and as such will be the scope of this working paper. This includes LDVs (passenger cars, light commercial vehicles), as well as mediumduty vehicles (MDVs) such as vans or heavyduty vehicles (HDVs) such as buses and trucks. Potential benefits of using natural gas in transportation include cost reduction, greenhousegas emissions savings, local air quality improvements, noise reduction, revenue increasesfromoilproductsandenergysecurityenhancement.Thecasestudiesinthispaperwill discusstherolethesebenefitsplayinBrazil,India,Iran,PakistanandtheUnitedStates,aswell asreviewgovernmentspolicyinstrumentsusedandthestakeholdersthatplayedanimportant roleinmarketdevelopment. Considering the future potential of biomethane to substantially decrease greenhousegas emissionsofroadvehiclesatlowornegativeabatementcosts,onesectionisdedicatedtovarious aspectsofthisfuel.Thissectionfeaturesageneraldiscussionofitsproductionprocess,costsand futurepotential,andfocusesondevelopmentsinEuropebydiscussingtwopanEuropeanprojects andpresentingcasestudiesonbiomethaneinSweden,Germany,AustriaandtheNetherlands. ThefinalchapterevaluatesthefuturepotentialofNGVs.However,thepurposeofthispaperis nottoproducenewprojectionsonthenumberofvehicles,theirgasconsumptionand/orshare ofthemarket,butrathertodiscusstherequirementsintermsofinvestmentsandpolicybased onexistingprojections. Thispapermakesseveralreferencestospecificproductsdevelopedbycertaincompanieswith theaimofhighlightingkeytechnologies.ThisdoesnotsuggestanIEAendorsementofanygiven technology; rather it seeks to acknowledge innovation and avoid possible confusion. The IEA cannot,however,beexhaustiveinitsmarketsurveyandmaynotbeawareofothercompanies that offer similar products. Any such companies are invited to bring their work to the IEAs attentionforfuturereference.
AccordingtotheInternationalGasUnion(IGU),ModerntechnologiesmakeitpossibletoflyonLNGtomostofthe majorairportsintheworld.
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2. CurrentstatusofNGVmarketsandtechnology
Keymessages: Althoughtheworldwidemarketforuseofnaturalgasinvehicleshasclearlydeveloped morestronglythaneverbefore,thistechnologyremainsanichemarket,asthecurrent Page|13 shareofnaturalgasinroadtransportationisstillverylimitedinallbutafewcountries. ThecountrieswiththehighestlevelofmarketdevelopmentareArgentina,Brazil,India, IranandPakistan.
While retrofit is still applied, especially outside Europe, there is a general tendency towards OEM vehicles for both LDVs and HDVs. More OEM models have become availableoverthepastyears,buttheavailabilityvariesfordifferenttypesofvehicleson acountrytocountryorregionalbasis.
The equipment to build fuel stations for NGV is widely available and technology continuestoimprove.
2.1DevelopmentofNGVfleetsandretailinfrastructure
ThissectionpresentsthepastdecadesdevelopmentsintermsofNGVfleets,useofnaturalgas2 asatransportfuelandinfrastructureforNGVsinselectedcountriesandregions. Although the use of natural gas for the propulsion of vehicles is certainly not new, the past decade is the era in which global NGV development has demonstrated its strongest growth. Starting from a very low base of little Figure1:TotalnumberofNGVsworldwide more than one million vehicles, this 12 hasincreasedtoacurrentestimateof justover11millionvehicles.
Millions
TheglobalfleetofNGVsconsistslargely ofpassengercars/LDVs,althoughthere are some regional differences in the composition (Figures 1 and 2). Forty fourpercentofallpassengercars/LDVs areinLatinAmerica.Almosttwothirds of all MD/HD natural gas buses are in theAsia/Pacificregion,while53%ofall trucksareintheRussianFederationand CIS,andAsiaPacificisleadingwith78% of all other vehicles on natural gas (threewheelersandtuktuks).
10
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: NGVGlobal,NGVCommunicationsGroup.
Unlessanexplicitdistinctionismade,referencestonaturalgasasatransportfuelcanbegasfromeitherfossilor organicorigin.
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Figure2:Compositionoffleets
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Source:InternationalGasUnion(IGU)(2009).
Some countries in particular have shown a remarkable growth in recent years, albeit from a smallbase(Figure3).Iranisthecountrythathasexperiencedbyfarthehighestaverageannual growthintheNGVfleetoverthepastfiveyears.Startingoutfromanegligiblefleet,numbers havegrowntoalmosttwomillions. Figure3:GrowthofNGVfleetinselectedcountries
2,500,000
2,000,000
1,500,000
Pakistan Iran
1,000,000
India China
500,000
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source:NGVGlobal,NGVCommunicationsGroup.
CurrentmarketshareofNGV
Despitethestronggrowthinthepastdecade,thetotalnumberof11millionNGVsstillpalesin comparisontoatotalworldwidenumberofaround780millionlightdutypassengervehiclesin 2007(ETP2010).FewcountriesworldwidehaveattainedanNGVpenetrationratehigherthan 1%(Table1).BangladeshhasbyfarthehighestmarketshareofNGVs,albeitwithaverylimited numberofNGVs,almost180000asof2009(NGVGlobal).3
3 www.iangv.org/toolsresources/statistics.html
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Table1:MarketshareofNGVintotalfleetincountrieswithatleast1%NGVmarketshare
Country Bangladesh Armenia Pakistan Bolivia Argentina Colombia Iran Malaysia Myanmar Peru Brazil NGV market share (%) 61 30 26 26 24 24 14 11 8 7 5 Country Tajikistan India Egypt Kyrgyzstan Ukraine Bulgaria Italy Moldova Trinidad & Tobago China NGV market share (%) 5 5 5 3 3 2 2 1 1 1
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Source:NGVAEurope,NGVCommunicationsGroup.
ThestockofNGVsisnotdistributedevenlyacrosscountriesandregionseither.Morethan70% of all NGVs and almost half of all fuelling stations are to be found in only five (nonOECD) countries: Argentina, Brazil, India, Iran and Pakistan. The total number of vehicles in OECD countriesislessthanonemillionandoverhalfoftheseareinItaly.
DevelopmentofNGVretailinfrastructure
Therearecurrentlyalmost17000fuellingstationsforNGVsworldwide.Overhalfoftheseare locatedinjustfivecountries(Table2). Thesefivecountriesalsorepresentthemostremarkablegrowthintermsofnumberoffuelling stationsinrecentyears,althoughcountriessuchasArmenia,Bulgaria,PeruandThailandshould also be mentioned. Europe has almost 3500 stations, of which around 900 are located in Germanyand800inItaly. One of the indicators for measuring the development of NGV markets is the number of vehiclesperfuelstation.Averylownumberofvehiclesperfuelstationshasanegativeimpact on the economic sustainability of the fuelling stations; whereas a very high ratio may imply queues forming which, in the longerterm,canbedetrimental Table2:NumberofNGVfuellingstationsinselectedcountries tothegrowthoftheNGVfleet. Country Number of fuelling stations Adrawbackofthisratioisthat it does not account for Argentina 1 851 geographical spread of fuelling Brazil 1 771 stations and vehicles, in other China 1 339 words the proximity of the Iran 1 260 stations and the vehicles. Pakistan 3 000 Unfortunately, there is no Source:NGVCommunicationsGroup. regionaldataavailable.
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According to IGU (2009), 600 to 1 000 vehicles4 per fuelling station is an economically sustainable ratio for public fuel stations. While the worldwide average of 672 is within these limits, there are few countries within this range (Table 3). Some countries exceed the 1000vehicles/stationratio,whichcouldindicatetheneedformorestationsinordertoavoid queues. However, as mentioned above, in reality this is very dependent on the geographical spread of stations and vehicles, as well as the type of vehicles (as the refuelling time differs substantiallyfordifferenttypesofvehicles). Table3:Countrieswithatleast600NGVsperfuellingstationonaverage
Country Argentina Bolivia Brazil Bulgaria Colombia Egypt India Iran Italy Kyrgyzstan Myanmar Pakistan Peru Singapore Ukraine Uzbekistan Source:NGVCommunicationsGroup,NGVAEurope. Number of fuel stations 1 851 128 1 704 76 485 119 500 1 079 770 6 37 3 000 94 5 283 63 Cities with fuel station(s) 330 6 295 36 79 16 8 611 150 n/a n/a 50 2 1 n/a n/a Vehicles per fuel station 976 959 912 793 618 1 027 1 400 1 607 803 1 000 617 750 922 900 707 746
Fuelconsumption
Whilethenumberofnaturalgasvehiclesandtheirshareinthetotalfleetcertainlygiveanidea ofthecountriesinwhich NGVsplaya significantrole,inordertomeasuretheimpactsofthe use of NGVs, it is also important to look at the total amount of gas consumed by NGVs, the share of this gas consumption in total domestic gas consumption and the share in total fuel consumptionfortransport. In total, the estimated natural gas consumption by NGVs in 2008 was 21.12 bcm (IGU, 2009), comparabletotheannualgasconsumptionincountrieslikeBelarusorQataror0.7%ofworld gasconsumption.WhileLatinAmericaisstillleadingintermsofnumberofvehicles,mostofthe natural gas (9.94 bcm) is consumed by NGVs in the AsiaPacific, most likely due to the higher shareofbusesandtrucks.Figure4illustratesthedevelopmentinestimatedannualnaturalgas consumption5inselectedcountries(currentlyusingatleast1bcm/y).
4 5
Carequivalents;thisfiguremaybemuchlowerfordepotbasedstations. Thesenumbersshouldbetreatedwithsomecautionastheestimatedannualconsumptionisderivedfrommonthly gas consumption data; the availability and quality of this data differ from country to country and can be highly inconsistent,incompleteordelayed.
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Figure4:EstimatedannualnaturalgasconsumptionbyNGVs
4.0
NGconsumptionfortransport(bcm)
3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2006 Argentina 2007 Brazil 2008 China 2009 Iran Ukraine 2010
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Note:DottedlineindicatesunavailabilityofdataforIranfor2008and2009. Source:IEAanalysisbasedonNGVCommunicationsGroupdata.
The share of natural gas use for transport in total natural gas consumption in these countries is plottedinFigure5.Twocountries,BoliviaandColombia,wereaddedsincetheirabsolutenumber ofgasusefortransportisnotremarkable,unliketheirshareinthetotaldomesticgasconsumption. Figure5:EstimatedshareofNGVsindomesticnaturalgasconsumption
14% 12% 10% 8% 6% 4% 2% 0% 2006 Argentina Ukraine Brazil Bolivia 2007 China Colombia Iran 2008
Source:NGVCommunicationsGroup,IEAdataandanalysis.
Anotherperspectiveistolookattheshareofnaturalgasconsumptioninthetotaldomesticfuel consumptionfortransport.Therearecurrently17countries6wherethisshareis1%orgreater. ThecountrieswiththemostsignificantsharesareincludedinFigure6.
Thesecountriesare:Argentina,Belarus,Bolivia,Brazil,Bulgaria,Colombia,Egypt,Georgia,India,Iran,Italy,Korea, Moldova,Pakistan,Russia,ThailandandUzbekistan.
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Figure6:EstimatedannualnaturalgasconsumptionbyNGVs
Pakistan
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India
3%
Other Naturalgas
Brazil
4%
Argentina
0
Source:IEAdata.
10
20
30
40
50
60
Fuelconsumption roadtransport(Mtoe)
2.2Technologyandperformance
Experimentswithnaturalgasuseinenginesfortransportationstartedasearlyasthe1930s,but thefirstperiodthatsawanysignificantactivitybeganinthe1970s,whennaturalgaswasseenas asecurefuelintheaftermathoftheoilcrisis.Sincethatperiod,NGVshaveenteredandexited thestageofseveralcountries/regionsindifferentperiods,whiletechnologycontinuedtoevolve. Somerelevantcharacteristicsofnaturalgasthathaveconsequencesforitsuseasafuelforroad transportationinclude: itslowcarboncontentduetothecomposition(themainsubstance,methane,hastheleast numberofcarbonatomsperhydrogenatominamoleculeofallhydrocarbons); thelowenergydensityatatmosphericpressureandtemperaturecomparedtoliquidfuels, which means compression (CNG) or liquefaction (LNG) is needed to reach an acceptable vehiclerange; thehighoctanenumberof130,reflectingthehighdetonationresistance,whichallowshigh compressionratios,reducesenginenoiseandeliminatestheneedfortoxicadditivessuchas aromatic hydrocarbons (usually used to improve the octane number of gasoline); the high octane number also makes the fuel require ignition by spark plugs or injection in a spark ignitedengineor,inacompressionignitionengine,thelowcetanenumbermakesitrequire apilotfuelforignition; thepowerlossthatisaresultofairinthecylinderbeingreplacedbyfuelvapour; the fact that it is lighter than air, which in case of leakage causes the gas to disperse with sufficientventilation; itisonlyexplosiveinarangeof5%to15%mixture(byvolume)withair. Thissectionfocusesonthecurrentstateoftechnology,discussingtheavailabilityofenginesand powertrain components for NGVs, OEM models of NGVs as well as the retrofit option. The sectionthenfeaturesabriefdiscussionofinfrastructuretechnology.Finally,drawingonexisting studies and data, the environmental performance of various types of NGVs in terms of emissionsandnoisewillbeevaluated.
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Availablevehicletechnology
Naturalgascancoveralmostthewholespectrumofvehicles,rangingfrommotorcycles,tuktuks, cars,vans,buses,trucks,offroadvehicles,shipsandtrains,includingevenairplanes.Asmentioned earlier, this working paper focuses on the most common form of use: road transportation. This section discusses the state of technology of lightduty vehicles (LDVs), as well as mediumduty Page|19 vehicles(MDVs)andheavydutyvehicles(HDVs).Noexplicitdistinctionismadebetweenvehicles runningonCNGandvehiclesrunningonLNG.Generally,CNGismorecommonlyusedforLDVs whileHDVsrequiremoreenergytorunandtendtouseLNGtomaintainanacceptablerange. Notwithstanding the differences between CNG and LNG in terms of gas supply, retail infrastructureandonboardfuelsystems,thispaperdiscussesNGVsatagenericlevel.
Lightdutyvehicles
ThedevelopmentofNGVmarketshasinthepastreliedheavilyonretrofitinmanycountries. While retrofit is still applied, especially outside Europe, there is a general tendency towards OEMvehiclesforbothLDVsandHDVs.TheoverallavailabilityofOEMLDVsonnaturalgashas improvedoverthepastyearswithvehiclemanufacturerssuchasFiat,Volkswagen,Mercedes Benz,Opel,Renault,Citron,Peugeot,aswellasseveralAsianmanufacturersaddingCNG(bi fuel)modelstotheirproductrange.Availabilityofmodelsvariesfromcountrytocountry/region toregion,asillustratedinmoredetailinInternationalGasUnion(IGU,2009). ThedifferenceinbetweentheretailpriceofanOEMLDVrunningonnaturalgasversusasimilar model running on petrol or diesel is an important parameter in the market development of NGVs.InmanycountrieswithsuccesfulNGVmarkets,thepricedifferentialforconsumershas been reduced through subsidies, tax exemptions, etc. While the premium for an NGV varies widely from countrytocountry, based on data obtained through the IGU questionnaires in 2009,thereisanaveragepricedifferenceofEUR1956foranNGVversusitspetrolequivalent. Forthepurposeofcalculatingabatementcosts,the2006studybyTNO,IEEPandLATassumed values for the additional manufacturer costs of USD 2000 (EUR 1 450) for small, USD 2350 (EUR1750)formedium,andUSD2750(EUR2050)forlargeNGVsinthe200812timeframe, which corresponds to additional retail prices of USD 2800 (EUR 2 090) for small, USD 3400 (EUR2520)formediumandUSD4000(EUR2950)forlargevehicles.
Mediumandheavydutyvehicles
Inmostcountriesandregions,theavailabilityofMD/HDNGVsisnolongerabottleneckinthe marketdevelopmentofNGVs.Busesoperatingonnaturalgasarewidelyavailable,andrecent developments (e.g. highpressure direct injection dualfuel engines) have improved the availability of natural gas trucks. Manufacturers currently offering natural gas HDVs include Mercedes,Iveco,Ford,Volvo,MAN,Isuzu,NissanaswellasnumerousChinesemanufacturers. HeavydutyapplicationsofNGVsincludealargevarietyofvehicles,suchasbuses,trucks,garbage trucks,portvehicles,offroadvehicles,forklifts,tractorsandotheragriculturalvehicles,andeven exotic applications such as ambulances, fire trucks and 150 tonne roadtrains for longhaul transportintheAustralianoutback.Themostcommonapplicationdiffersfromregiontoregion: busesinAsiaandEurope;agriculturalvehiclesonnaturalgasinRussiaandtheCIS.Mediumduty vehicles(3.512tonnes)includedeliveryvansandsmallerversionsofbusesandtrucks. Althoughdataonpricedifferencesisscarce,thetypicaladditionalcostforanHDVrunningon natural gas in comparison to its diesel counterpart lies in the range of EUR30000 to
OECD/IEA2010
EUR35000, although this varies from countrytocountry. Conversion costs vary widely, but tendtobeintheorderofmagnitudeofhalfofthepricepremiumonanOEMvehicle. Dualfuel7technologyisnotinandofitselfarecentdevelopment,buttherecentpasthasseen computerised optimisation of engine performance. The principle of dualfuel technology is simple,yetpromising.Duetoitschemicalcomposition,i.e.thepropertiesofmethane,natural gasnormallyrequiressparkignitionandisthereforeusedinenginesthataredesignedtorunon gasoline.Dieselenginesareinherentlymoreefficient,butusecompressionignitionratherthan sparkignition.Thismeansthattheengineusestheheatgeneratedbycompressiontoinitiate ignition to burn the fuel. In dualfuel engines, a certain amount of diesel is still used for this purpose.However,therestofthedieselfuelcanbereplacedbynaturalgas8whichisignitedby the diesel (called pilot fuel). The high compression ratio that gives diesel engines their advantageinthermalefficiencycanbemaintainedduetothehighoctanenumberofmethane. The degree to which dualfuel engines actually replace diesel by natural gas depends on the amountofenergyrequiredergotheloadoftheengine.Whentheengineisidling,onlyasmall amount of energy is required, which can be fully provided by the pilot fuel. In this case, no naturalgasisconsumed.Astheloadincreases,theenergyconsumptiongoesupandthedegree ofdieselthatisreplacedbynaturalgasaswell.Asaconsequence,anurbancycle(stopandgo operation)wouldhavealowerdisplacementofdieselduetothe,onanaverage,lowerloadthan isthecaseforintercitytransportorlonghaultrucking(overtheroadoperation).Thismeansthat transit buses, urban delivery trucks and refuse trucks may be less likely candidates for this technology,althoughtherearecertainlyexamplesofthislatterapplication(e.g.seesectionon Sweden). A different methodology is used by HighPressure Direct Injection engines developed byWestport,whichhaveaquantityofpilotfuelthatismoreorlessfixedacrosstheenginemap. Box1:Storageofnaturalgasfortransportation
Atatmosphericpressureandtemperature,naturalgashasanenergycontentofaround40MJ/m3 or50MJ/kg,ascomparedtogasoline35(MJ/L)anddiesel(39MJ/L).Inordertoreachanacceptable range,gasneedstobestoredinawaythatincreasestheenergydensity.Therearecurrentlythree technologies for this. The most common are CNG and LNG. CNG is gas that is compressed to a pressureofusually200bar,afterwhichitisstoredincylinders.LNGisgasthathasbeenliquefiedby coolingittobelowitsboilingpointof163C(atatmosphericpressure)andsubsequentlystored. TherearetwostandardsfordispensingLNG:saturatedLNG(8barand130C)orcoldLNG(3bar 150C). A new and promising technology that is not commercialised yet is Adsorbed Natural Gas (ANG).Throughtheadditionofamicroporousmaterial(e.g.activatedcarbon)intothetank,either thevolumecanbeincreasedatthesamepressure(whichresultsinahigherrange)orthevolume canbemaintainedatalowerpressure(whichmeanslowercostsforrefuellingandamoreoptions toshapethefueltank).ANGpotentiallyoffersahigherstoragecapacitythanCNGwithlowercosts andcomplexitythanthoseassociatedwithLNG,buttherearestillsometechnologicalbarriersthat requirefurtherRD&D.
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Aproblemfacingdualfueltechnologyisthelackofformalrecognition;whileUNECERegulation 110allowsthesimulataneoususeoftwofuelsinoneengine,countrybycountrycertificationis required and European type approval is not yet possible, because the technology is yet to be defniedwithinEuropeanregulationsandaformaltestfuelisdifficulttoidentifyconsideringthe
Not to be mistaken with bifuel technology; a bifuel vehicle runs on either of two different fuels (usually to be selectedbythedriver),whereasdualfuelvehiclesrunontwofuelssimultaneously. 8 Eithercompressedorliquefiedandofeitherfossilororganicorigin.
OECD/IEA2010
continuouslyvaryingmixtureofdiesel/naturalgasintheengine(ENGVA,2007b).Itisexpected thatcertificationproceduresfordualfuelheavydutyenginesshouldbeinplacewithinthenext severalyears(CleanFuelsConsulting,2010). An emerging technology for HDVs is a natural gas/electric hybrid vehicle. This is seen as a promising technology by manufacturers of HDVs, but recognition within the body of Euro VI Page|21 regulationsisrequired(ENGVA,2007b).
Retrofit
WhileOEMvehiclesmaybepreferablefortheirqualitycontrolsystems,reliability,andengine optimisation, retrofit can certainly be a good solution as well. OEM vehicles are faced with a rangeofchoiceswhenitcomestoAFVandalsohaveinvestedmassiveamountsinconventional fuel technology. This means that while they are innovative, they can also be conservative in theirinnovationprocessandtheuncertaintiesassociatedwithanewmarketmaycausethemto directR&Dandproductdevelopmentand/ormarketingeffortsmoretowardsconventionalfuel technologies.Intheabsenceof,orwhenfacedwithlimitedvariety/availabilityofOEMvehicles, retrofitcancreateamarketthatthenactsasademandpulltowardsOEM. Using natural gas in an internal combustion engine means that some form of ignition is required. While the sparkignited gasoline engine seems to be the most obvious option for conversion to natural gas, natural gas can also be used in diesel engines despite the compression ignition principle. Besides the aforementioned dualfuel technology, a diesel engine can also be converted to run on natural gas by replacing the diesel injectors by spark plugs. It is very important that this conversion is carried out by skilled personnel, as the compressionrationeedstobereducedandenginemanagementneedstobeoptimised.While accidentswithretrofittedvehiclescertainlyhavehappened,thetechnologyandknowledgeare available to ensure proper after market conversion of vehicles to run on natural gas. This technologyandknowledgeneedstobedisseminatedandtheNGVindustrystrivestoensureits applicationthroughstandardisation,certification,trainingandregulation.
Infrastructuretechnology
The equipment to build fuel stations for NGVs is widely available and technology is still improving (e.g. ionic compressors). Although components for fuel stations are fairly standardised and available, the design of a station needs to be tailored to each specific situation.Theinvestmentrequiredtobuildafuelstationdependsonanumberofsitespecific factors,including: inlet capacity of the station: since CNG needs to be delivered to the vehicle at 200 bar (usually),thehighertheinletpressure,thelessstagesofcompressionareneeded; thesizeandtypeofthestation:apublicstationdiffersfromaprivatestationintermsofpeak capacity,numberofdispensers,redundancyincompressors,slowfillversusfastfill,etc.; planning: with careful planning of the fuelling process of different types of vehicles, the investment can be substantially reduced (e.g. by limiting the required peak capacity and thereforethenumberofcompressorsneeded); dedicatedCNGstationorCNGdispenser(s)addedtoexistingmultifuelstations; requiredbackupcapacity/redundancy; connectiontothenaturalgasandelectricitygrid:thiscanbequitecostly,particularlyifthe stationislocatedfaraway.
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Aspartoftheresearchforthisstudy,theIEAcollecteddataoninfrastructurecostsfromvarious sourceswiththeassistanceofNGVGlobal.Thesedatawereusedfortheeconomicanalysis.The individual data cannot be published due to their commercially sensitive nature. Roughly, the range of investment for a public station serving an economically feasible amount of vehicles varies from USD 200000 to USD 500000. Costs in nonOECD countries are likely to be in the lowerendofthisrange,whereascostsinOECDwouldtendtobemoreinthehigherendofthe range.Therangefordedicatedstationsforfleetownersvarieswidelyaswell.Costsrisewiththe size(intermsofcapacity,expressedincubicmetresperhour(m3/hr),althoughtherecertainly areeconomiesofscale. BesidesCNGstations,thereisalsotheoptionforLNGorLCNG(liquefiedtocompressednatural gas)stations.ThesestationsaresuppliedwithLNGratherthanpipelinegas,whichmeansthat thenearvicinityofapipelineisnotarequirement,butitalsomeansthattheadvantageofless roadtransportofthefuelitself(whichcandiminishcongestionincertaincircumstances)does not apply. These stations either distribute LNG or both LNG and CNG (in which case they are reffered to as LCNG stations). Since LNG is kept just below its boiling point, the gas can be pressurised with no need for compressors. Cost estimates for these types of stations are EUR101/kgofgasoutputperhourforaLNGstationandEUR1100/kgofgasoutputperhour foraLCNGstation.9WhileHDVscancertainlyrunonCNGaswell,inmanycasesLNGmaybe preferableduetothelongerrangethehigherenergydensityofLNGprovides.
This excludes land purchase and permit costs. Based on a LCNG station with gas output of 800 Nm3/hour or 574kg/hour. A gas station with this capacity can refuel about 50cars per hour. Source: Cryostar in Asian NGV Communicationsnewsletter,December2008.
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3. EnvironmentalperformanceofNGVs
Keymessages: Onaverage,a25%reductioninCO2eqemissionscanbeexpectedonaWTWbasiswhen replacinggasolinebyLDVsrunningonCNG.Comparisonstogreenhousegasemissionsof Page|23 dieselvehiclesorcomparisonsbetweenHDVsarelesscommonlymadeandappeartobe moredependentonthetypeofvehicle.
Assessing benefits of NGVs in terms of local pollutants requires detailed analysis. In general,NGVsperformwellcomparedtocurrentdieselvehicles,particularlyintheHDV segmentandwhenlookingatthetotalofHCandNOxemissionsaswellasPM.
Thebenefit thatNGVs haveoverdieselandgasolineinterms ofemissions isclosingas standardsbecomeincreasinglystringent,buthowfuturetechnologicaldevelopmentswill playoutexactlyinthelightofincreasinglystringentemissionnormsisunsure.
ManynonOECDcountrieshaveadoptedstandardsthatwerethenorminEuropeorthe UnitedStatestenormoreyearsago.ThismeansthatNGVshavehigherrelativebenefits in this regard in nonOECD countries. As a result, improvement of local air quality is expectedtobeastrongerdriverforNGVsinnonOECDcountriesthaninOECDcountries.
InindividualcasesNGVbusesandtruckscanhavesignificantbenefitsinnoisereduction, although currently in general this cannot be demonstrated with substantial data sets acrossawiderangeofvehicles. The use of natural gas as a fuel for transportation is associated with several potential environmental benefits, most notably air emissions and noise. Drawing from existing studies, this chapter will evaluate the environmental impact that NGVs can have and compare the benefitsagainstalternativemeanstoreduceemissions. Ofallhydrocarbons,methane themain componentofnaturalgashas thelowestcarbon to hydrogen ratio. This means that, compared on an energy equivalent basis to conventional road fuelssuchasgasolineanddiesel,lesscarbondioxideisreleasedintotheairwhenitisburned.This doesnottakeintoaccounttheefficiencywithwhichthefuelisusedintheengine.Thecycleofa dieselengineismoreefficientthanthatofasparkignitionengine,whichpartlycounterbalances thelowercarbonintensityunlessnaturalgasisusedinacompressioniginitionengineusingdiesel as a pilot fuel (see section on dualfuel technology). The net effect on the tanktowheel (TTW) emissionswillbediscussedinthissection.Notwithstandingthefactthatthelargestproportionof greenhousegasemissionsonaWTWbasisoccurintheTTWpartofthechain,theimpactofthe originofnaturalgasisofsomesignificanceasisillustratedinvariousstudies.
3.1Greenhousegasemissions
Thegreenhousegasinvolvedinacomparisonbetweengasoline,dieselandCNG/LNGareCO2, CH4andN2O,thoughmostlycomparisonsarebasedonCO2equivalents.Thissectionfocuseson CO2emissionsfromnaturalgasoffossilorigin(biomethane,whichisaloworzerocarbonfuel onalifecyclebasis,isaddressedinaseparatechapter).Severalstudiesonthegreenhousegas emissionsofNGVsin comparisontoconventionaloralternativefuelswillbediscussedbefore reachingaconclusion.10
10
Notethatemissionfiguresmentionedinthissectionarebasedondifferentreferencevehicles,enginesizes,test cycles,etc.Werefertotheoriginalsourcesforadetaileddescriptionoftestmethodologies.
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EngererandHorn(2010)citeastudybyPriceWaterhouseCoopers,whichisbasedonCOPERT andCONCAWE,reportingCO2emissionsonaWTWbasisofjustover120g/kmforCNGversus 160g/kmfordieselandjustover190g/kmforgasoline.Theonlyfuelsperformingbetterinthis analysis are ethanol (110 gCO2/km) and bio diesel (90 gCO2/km). The authors claim that substantial future emission reductions of diesel vehicles will happen at the expense of efficiency, thereby increasing the CO2 reduction of CNG versus diesel. They conclude that the transition to CNG vehicles could, therefore, contribute to the attainment of the European Unionsgoaltoreachemissionsof130gCO2/kmonaveragefornewcarsby2015. A 2005 IEA study by Gielen and Unander (IEA, 2005) calculated a WTW CO2 reduction of 12kgCO2/GJto22kgCO2/GJ(or17%to26%)versusconventionalgasoline.CNGisoutperformedby ethanolandFTgasoline/dieselfrombiomassandhydrogen,dependingonthesourceofelectricity. A2006studybyTNO,IEEPandLATonbehalfoftheEuropeanCommission,basedontheCONCAWE studyandaTNOstudyfrom2003,concludedthefollowingonCNGregardingCO2emissions: IncludingthedirectemissionsofCH4andN2O,thereductionindirectgreenhousegasgases (onaTTWbasis)fromCNGunderrealworlddrivingconditionsamountto18%comparedto gasoline and 7% compared to diesel. According to CONCAWE (2006), the reduction is 23% compared to gasoline and 17% compared to diesel. For the purpose of the study, authors assumedaTTWgreenhousegasreductionof22%versusgasoline. TNO subscribes to the view that direct injection technology and associated technical measures have a higher efficiency improvement potential when applied to natural gas enginesthantopetrolengines. Welltotank(WTT)emissionsareprovidedfromCONCAWE(2006)andrangefrom8.4gCO2 eq/MJto21.7gCO2eq/MJofCNG,dependingtheoriginandthereforethetransportdistance ofthenaturalgas.NotethattheseresultsarespecifictoEuropeangassupplyoptions. Assuming marginal gas demand to be supplied from the Middle East or Southwest Asia, transportedoveradistanceof4000km,thetotalWTWgreenhousegasemissionsofCNG aredeemedtobe144.2gCO2eq/km,83%ofthegasolinelevel. NGVA Europe claims 20% to 25% CO2 reduction in cars running on natural gas over similar gasolinevehicles,whereasCO2savingsofHDNGVsareabsentornegligiblecomparedtodiesel vehicles(NGVAEurope,2009b;ENGVA,2007a).DualfuelHDVs,retainingtheefficiencyofthe dieselcyclebyrunningonamixtureofnaturalgasanddiesel,havearound20%CO2advantage comparedtonormaldieselvehicles.Ina2003report,theformerENGVA11statedthatby2010 sparkignitedNGVsareexpectedtoemitabout13%lessCO2thanHDVsrunningondiesel(due toalossofefficiencyindieselvehicles,resultingfromanincreasingamountofequipmentfor emissionssuchasNOxandPM). AstudyoftheactualTTWgreenhousegasemissionsintheurbanuseofrefusecollectiontrucks inMadrid(Lpezetal.,2008)comparesCNG(inasparkignitedengine)toB30(30%biodiesel) anddiesel.Theresultsshowthatthereducedefficiency(4%)oftheOttocycleversusthediesel cycle is compensated by the chemical composition of the fuel (the higher proportion of hydrogentocarboninmethanecomparedtodiesel),resultinginanobservedTTWreductionof 13%inCO2eq/km.CombinedwithWTTemissionsdatafromaGeneralMotorsstudy,assuming anEuropeangasmix,theWTWemissionsreductionofCNGversusdieselamountstoaround 400gCO2eq/kmor17%.
11
The European Natural Gas Vehicles Association (ENGVA) was succeeded by the Natural Gas Vehicles Association Europe(NGVAEurope)in2008.
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Aseriesof2009reportspreparedfortheCaliforniaAirResourcesBoardwithinthecontextofthe Low Carbon Fuel Standard set the carbonintensityofgasoline (95.06 gCO2eq/MJ) and ultralow sulphurdiesel(94.71gCO2eq/MJ).ThegreenhousegasemissionsoftheuseofCNGinanHDVat 68gCO2eq/MJindicateareductionof29%and28%respectively,althoughthelatterwillbelower in termsofgCO2eq/kmsincetheenergy consumptionofa dieselvehicle islowerthan thatofa CNGvehicle.ForLNGthepictureisdifferent:thecarbonintensityisdeterminedtobeintherange Page|25 of72gCO2eq/MJto93gCO2eq/MJ,dependingontheoriginofthegas.Thismeansareductionof 1%to22%(again,thisdoesnottakeintoaccounttheenergyefficiencyofthevehicle). DatafromtypeapprovalsbytheGermanKBAshowsthatforLDVs,comparedtogasoline,the averageCO2reductionis20%.Comparedtodiesel,thepictureisdiverseonacarmodelbasis. Overall,theaverageCO2emissionisthesamefortheselecteddieselmodelsandtheNGVs(bi fuel and dedicated), 142 g/km. For the LCVs, NGVs emit on average 17% less than similar modelsrunningongasolinewhereastheyemit10%morethansimilardieselmodels.TheKBA doesnotprovidedataonCO2emissionsforHDVs. Theoverallpicturethatemergesisanaverage25%reductioninCO2eqemissionsonaWTWbasis when replacing gasoline by LDVs running on CNG. Comparisons to greenhousegas emissions of dieselvehiclesorcomparisonsbetweenHDVsarelesscommonandappeartobemoredependent onthetypeofvehicle.Insomecasesasignificantreductioncomparedtodieselseemsattainable, butinothercasesdieselvehiclesemitsignificantlylessCO2thanNGVs(e.g.LCVs). In any case, the origin of the natural gas and the steps in the supply chain are of obvious importancefortheWTTemissions(Table4),whereastheTTWemissionsaredeterminedbythe fueleconomyofthevehicleandthecarboncontentofthefuel.Theshareofothergreenhouse gasthanCO2appearsfromvariousstudiestobemarginal(TNO,2006;Lopzetal.,2008).This means that the higher total hydrocarbon emissions of NGVs due to the tailpipe methane emissions or the higher N2O emissions of diesel vehicles do not Table4:Welltotankemissions substantially influence the total WTT CO2-emission Fuel (gCO2/MJ fuel) greenhousegas emissions in terms Petrol 12.5 ofCO2equivalents. Hydrocarbons(HC)areinsomecases CNG EU-mix 8.4 regulated on the basis of total CNG transported over 4000 km 14.0 hydrocarbons (THC); in other cases, CNG transported over 7000 km 21.7 only nonmethane hydrocarbons (NMHC) limits are set. Methane is Source:TNO,IEEPandLAT,2006. neithertoxicnorreactive,butwitha GWP of 21 it is a strong greenhouse gas. This can be seen as an argument to manage it as a greenhousegasratherthanapollutantemission,eventhoughitisaHC.TheformerENGVAhas madeacase(ENGVA,2007b)formanagingTHCandNMHCseparately,arguingthatonesingle THC limit could impair the NGV industrys ability to meet the future EUROVI norms at acceptablecostsifthislimitweretobedecreasedsignificantly.Inthispaper,italsocallsthe longtermHClimitstheemissionstofocuson,indicatingthatbothlowerHCfromtheengineas wellasaftertreatmentwithcatalystsmayberequired,wherethelatteroptionisexpectedto increasethecostsofNGVpowertrains. The European car market is the largest in the world. In December 2008, the European Union introducedarequirementonmanufacturerstoreduceTTWCO2emissionstobelow130g/km by 2015 with a gradual phasein from 2012 onwards. A longterm target has been set at 95gCO2/km in 2020. This agreement applies to cars only; a similar proposal to reduce CO2 emissionsfromLCVsto175g/kmby2014and135g/kmby2020metresistancefromseveralEU
Diesel 14.2
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member countries earlier this year.12 The targets for cars are based on CO2 emissions only. Alternatively,theycouldbebasedonCO2equivalentemissionsratherthanjustCO2emissions, whichwouldmeanthatmethaneandnitrousoxideemissionsarealsoincluded.Thiscouldmake sensesincetheoverallintentionofthisagreementistoreducegreenhousegasemissionsfrom thetransportsector,whereastheEUROnormsareaimedatimprovingairqualitybyreducing local pollutants. If methane emissions were to be included in the ACEA agreement, limits on hydrocarbonsundertheEUROemissionnormscouldbebasedonNMHC.TheACEAtargets(and fines) could then work as a stimulus for the NGV industry to reduce methane emissions from vehicles,dependingonhowchallengingthetargetsareandwhatthemostcosteffectiveoption istolowervehiclegreenhousegasemissions.
3.2Localairquality
Transportationimpactslocalairqualitythroughtheemissionofseveralgasesandparticles.Many of these are regulated, such as carbon monoxide (CO), particulate matter (PM), nitrous oxides (NOx)andhydrocarbons(HC).Theseemissionshavevariousdetrimentalimpactsonpublichealth andtheenvironment,especiallyindenselypopulatedurbanareaswithhightrafficintensity. TheframeworksforemissionlimitsinEuropeandtheUnitedStatesarefairlysimilar,whilemost nonOECD countries adopt older versions of these norms. The frameworks evolve not only in thelimitvalues,butalsointhetestcyclesandthetypesofemissionsincluded.Asisdiscussedin the IEA Working Paper Deploying Renewables in Southeast Asia Trends and potentials, particularlyindevelopingcountriestheseverityoftheproblemscreatesasubstantialpotential economicvaluefortechnologiesaimedatimprovingairquality.TheexposuretoPMalonehas been estimated to cause 3.4 billion life years lost in 2005 in India, China and Europe. This sectionwillbelookingintothebenefitsthatnaturalgascanhaveinthisregard. A2009studybyVTTTechnicalResearchCentreofFinlandcomparedemissionsfromfivebuses.Two busesrepresentedEuroIVemissionlevels;theotherthreerepresentedenhancedenvironmentally friendlyvehicle(EEV)13emissionleveltechnologies.ThetestedNGVwasastoichiometricCNGbus. This bus was the only vehicle to fall well within EEV limits on PM and NOx (for PM even within proposedEuroVIlimits).ItdidshowsignificantlyhigherCOemissionsthandieselbusesequipped with Exhaust Gas Recirculation (EGR) or Continuously Regenerating Trap (CRT), but well within proposed Euro VI limits. Unburned methane also caused the CNG bus to emit much more hydrocarbonsthanthedieselbuses,atalevelequaltoorjustaboveproposedEuroVIlimits.
PollutantemissionsanalysisbasedonEuropeantypeapprovaldata
The number of different vehicles available in different categories (in terms of emission limits such as EURO IV, EEV etc) and the number of different types of emissions require careful consideration, which means that a comprehensive study on this issue will inevitably get very detailedandtechnical,andassuchwouldbebeyondthescopeofthisworkingpaper.Indeed, an analysis of type approval emissions data from the German Kraftfahrt Bundesamt (KBA) illustratesthecomplexityofsuchatask.
12 13
HetFinancieeleDagblad,BlokkadetreftaanscherpingCO2normenbestelwagens,16March2010. Enhanced environmentally friendly vehicle, an EU norm for HDVs in the M2 and M3 category which is more stringentthanEuroVbutlessstringentthanEuroVI.
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Figure7:Relativeemissionsofvehiclesintypeapprovalanalysis
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Note:Foreachpollutantineachcategory(LDV,LCV,HDV)theindexissetat100fortheleveloftheaveragedieselvehicle.This meansthatlevelsofpollutantemissionscannotbecomparedbetweencategoriesofvehicles,onlyconclusionsabouttheeffectsof fuelcanbedrawnfromthisgraphforeachcategoryseparately. Source:IEAanalysisbasedonKraftfahrtBundesamtGermany.
While many data are available, the question is which vehicles are comparable and how the impacts of different powertrain options, tyres, engine configurations, test gas qualities, etc. shouldbeincludedintheanalysis.FortheanalysisofLDVsandLCVs,vehiclesrunningonnatural gas (either monofuel or bifuel) were identified and gasoline and diesel versions of the same modelwereselected.Wherepossible,modelsmeetingdifferentEUROstandardsandequipped withandwithoutparticulatefilterswereused.ComparisonofHDVsislessstraightforward;here comparablevehiclesintermsofenginesizeandpowerwerechosen.Theselectionofvehicles herealsoincludesvehiclesunderdifferentEUROnorms,includingEEV. Different testing cycles exist and are used to determine the emissions of HDVs for type approval,includingtheESC(Europeanstationarycycle)andtheETC(Europeantransientcycle). For compression ignition engines (diesel), both ESC and ETC are used with the limits on emissionsdifferingbetweenthem,whereasforpositiveignitiongasengines,onlyETCisused. This means that no data is available for natural gas engines for HDVs based on ESC and a comparison could only be made on the basis of ETC. It should be noted that emissions are higherunderETCthantheyareunderESC,butsinceenginesarecomparedonthebasisofthe samecyclethisdoesnotinfluencetheoutcomesoftheanalysis. For diesel vehicles, no separate data for HC emissions are available, but numbers for NOx emissionsandthetotalofHCandNOxareavailable.Thereasonforthisisthatthetradeoffin diesel vehicles between HC emissions and NOx emissions has led the industry to focus on the total of these two types of emissions. To reduce workload in type approvals, measuring HC emissionsseparatelyisnotrequired.Fornaturalgasvehicles,PMlevelsareoftennearorbelow
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detection levels and lower than for diesel vehicles, even when equipped with a PM filter. EmissionsdataforHDVsareexpresseding/kWhratherthan(m)g/km. ThedatafromtheKBAalsofacilitatecomparisonsbetweenmonofuelCNGvehiclesversusbi fuel NGVs running on natural gas or bifuel NGVs running on gasoline versus their monofuel gasoline counterparts. The results for these comparisons will be discussed in the following sections. Figure 7 summarises the average values of all emissions for LDVs, LCVs and HDVs, expressedinanindexnumber.
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Lightdutyvehicles
TheanalysisofLDVsincludes62vehicles,19ofwhichareNGVs(fourdedicatedand15bifuel gasoline),24dieselvehiclesand18gasolinevehicles. AsbecomesclearfromFigures7and8,NGVstendtohavesomewhatlowerCOemissionsthan gasolinevehicles,butdieselvehiclesoutperformNGVsonCOemissions.OnHC+NOxemissions, the situation is reverse: NGVs perform better than diesel vehicles, but worse than gasoline vehicles(onbothhydrocarbonsandNOx).Aspointedoutearlier,though,mostofTHCemissions from NGVs are methane emissions, which are neither toxic nor reactive and in that sense incomparabletootherpollutantemissions.Unfortunately,forLDVsnoseparatedataonNMHC emissionsareavailablefromthissource.TheemissionsofPMarenotspecifiedforNGVsnorfor gasoline vehicles, whereas diesel LDVs emit on average 6mg/km, up to38 mg/km. When equippedwithafilter,thisisreducedto0.32.8mg/km. Figure8:Lightdutyvehicle(car)emissions
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Source:IEAanalysisbasedonKraftfahrtBundesamtGermany.
Asnoted,mostoftheNGVsinthisanalysisarebifuel.Whilethisallowsforalongerrange,in terms of emissions the monofuel CNG vehicles tend to perform better than a bifuel NGVs running on CNG. Also, a bifuel NGV running on gasoline tends to emit more than a gasoline vehicle.Thisillustratesthatsomesacrificeshavetobemadeintermsofengineoptimisationto allowfortheflexibilityofusingtwofuelsinonevehicle.
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Lightcommercialvehicles
TheanalysisofLCVsincludes41vehicles,13ofwhichareNGVs(twodedicatedand11bifuel gasoline),18dieselvehiclesand10gasolinevehicles. Figure9:Lightcommercialvehicleemissions
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HC+NOx(mg/km) HC+NOx(mg/km)
600 500 400 300 200 100 0 0 200 400 600 CO(mg/km) CNG diesel gasoline 800 1000 1200
Note:TwoextremevaluesforgasolineLCVswereexcludedfromthegraph(3281mg/kmCO). Source:IEAanalysisbasedonKraftfahrtBundesamtGermany.
LCVsrunningonnaturalgasemitsubstantiallylessCOthandiesel,whilecomparedtogasoline thedifferenceismuchlesspronounced(Figure9).ThesameapplieswhencomparingNGVsand gasolinevehiclesonHCandNOxemissions:theyeachperformbetterthantheotherinasimilar number of comparisons. Again, the picture is much clearer in comparison to diesel: NGVs outperformdieselinallcomparisonsofsimilarvehiclemodels.AsisthecasewithLDVs,there are no data on PM emissions for gasoline and NGVs. Diesel LCVs emit PM in a range of 2080mg/km,butthisisreducedto1mg/kmwithafilter. With a limited number of vehicles to compare, it is more difficult to determine whether the flexibility of bifuel comes at a cost of higher emissions. There are only two dedicated CNG vehiclesintheLCVcategoryandthereisnosimilarbifuelversionforthesemodels.Comparing thebifuelNGVstosimilargasolinemodelsresultsinamixedpicture,withtheNGVsgenerally emittingmoreCOandNOxbutlessHC.
Heavydutyvehicles
TheanalysisofHDVsincludes28vehicles,12ofwhichareNGVs(11dedicatedandonebifuel gasoline)and16dieselvehicles. TheselectedNGVsintheanalysisemitonaverage34%lessCO,24%lessNOxand79%lessPM than their diesel counterparts (Figures 10 and 11). However, they emit 28% more NMHC and whenmethaneemissionsareadded,totalHCemissionsaresixtimeshigheronaveragethanfor diesel vehicles. The wide range of methane emissions from NGVs (0.02 for avehicle with EEV classificationto1.19foraEUROIIIvehicle)suggeststhattechnologyinthisrespectisadvancing and available. It should also be noted that N2O is (obviously) not included in the NMHC measurements since its not a HC, but nevertheless it is a powerful greenhouse gas that also contributestothedepletionoftheozonelayer(Ravishankaraetal.,2009).
OECD/IEA2010
Figure10:Heavydutyvehicleemissions:NOxandPM
4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 0 0.005 0.01 0.015 PM(g/kWh) CNG Diesel 0.02 0.025 0.03
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NOx(g/kWh) NOx(g/kWh)
Note:OneobservationforadieselHDVwithextremevalueswasexcludedfromthegraph(PM0.13g/kWh,NOx4.8g/kWh). Source:IEAanalysisbasedonKraftfahrtBundesamtGermany.
A 2007 position paper by ENGVA (ENGVA, 2007b) provides some useful insights into the technical options available to car manufacturers to meet EUROVI limits in several scenarios with natural gas. In this document, NOx and HC emissions are considered to be the most challengingtomeet.ThereportstatestheexpectationthattheindustrywillbeabletomeetCO andPMemissionlimitsfairlycomfortablywithexistingtechnology.Itconcludesbymentioningthat all proposed sets of heavyduty EuroVI emissions limit values can be reached with natural gas vehiclesusingalreadyavailablestoichiometrictechnologiesandalsothatcostsarenotexpected todifferverymuchfromthoseinmakingheavydutydieselvehiclesmeettherespectiveemissions limitvaluesforCO,HCandNOx,althoughthereissomeuncertaintyregardingmethanesensitive catalyticequipment.Leanburntechnologymayprovideaddedbenefits,suchaslowerexhaustgas temperaturesandhigherefficiency,butrequireexperimentalresearch. Figure11:Heavydutyvehicleemissions:HCandCO
0.25 0.2
HC(g/kWh)
0.15 0.1 0.05 0 0 0.5 1 CO(g/kWh) CNG Diesel 1.5 2
Note:OneobservationforaCNGHDVwithextremevalueswasexcludedfromthegraph(HC1.26g/kWh,CO0.02g/kWh). Source:IEAanalysisbasedonKraftfahrtBundesamtGermany.
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Unregulatedemissions
Sofar,thediscussionofvehicleemissionshasconcentratedonregulatedemissions.However, regulatory systems differ from countrytocountry and from regiontoregion, so what is regulated in one country/region is not necessarily regulated in a different part of the world. Naturally,thedegreetoorthemannerinwhichacertaintypeofemissionisregulatedcan Page|31 also vary. It is recommendable that the health effects of vehicle emissions that are currently unregulatedarestudiedinordertorevisesomesystemsofemissionlimitsaccordingly. As this is a highly technical subject on which data are (unsurprisingly) scarce, it requires a detaileddiscussionofthecausesandconsequencesofdifferentcompounds.However,sucha discussion would be beyond the scope of this working paper. Since it is relevant for policies related to NGVs, though, reference is made to the aforementioned 2009 study by VTT, which shows that the CNG bus overall outperformed diesel vehicles on unregulated emissions. The mostnotabledifferencesarefoundinaldehydes,nitrousoxides,sulfates,nitrates,polyaromatic hydrocarbons(PAH)andmutagenicityofparticles. TheCNGbusinthestudyemitted0.29g/kmofammoniawhereasthisisnegligibleforthediesel vehicles.TheproposednewEuroVInormforHDVsincludesNH3(ammonia)normsforthefirst time (10ppmlimit).Whilethere havebeenreportsofhightestvaluesforNGVs,theindustry attributes this to calibration issues combined with catalyst selection and does not seem to expectNGVstoencounteranyproblemsinmeetingthisstandard.
Discussion
The benefit that NGVs have over diesel and gasoline in terms of emissions is diminishing in countries and regions with the most stringent emissions standards, Gbut given that all technologiesareconstantlyevolving,itisunsurehowfuturetechnologicaldevelopmentswillplay outexactly.Thisdoesgiverisetothequestionifmajorinvestmentsinnaturalgasasanalternative fuelcanbejustifiedonthebasisoflocalairqualityand/orgreenhousegasemissions,atleastin countries or regions where the current vehicle stock is based on fairly recent norms. Many nonOECDcountrieshaveadoptedstandardsthatwerethenorminEuropeortheUnitedStates tenormore yearsago. Thismeans thatthe benefits ofNGVsare much more pronounced,ifat leastfairlyrecentNGVtechnologyisused.Whileusingthenewestvehiclesbasedonconventional fuelswouldobviouslyalsohelpcombatairpollutionproblems,NGVsmayinthesecircumstances be a more costeffective option as the benefits of NGVs were much more pronounced for the slightlyolderthanlatesttechnology.Thecurrentandexpectedfuturegrowthinthenumberof vehiclesinthesecountriesandtheiruseindenselypopulatedareascreatesagoodpotentialfor thedevelopmentofNGVmarkets.Leapfroggingtothenextgenerationtechnologycanbetoobig ofastepinmanyofthesecountries,meaningthatnaturalgascanbeatransitionfuelforalonger period of time. As a result, natural gas may be playing a role in a wider range of modes of transportinnonOECDcountriesandregionsthaninOECDcountriesandregions.
3.3Noise
NoisereductionisnotoftencitedasoneofthemainadvantagesofNGVs,butinsomecircumstances theuseofNGVscanhelptoreducenoiseinareaswhereitmatters.Indevelopedcountries,norms oftenexistwhichmayimposelimitsonforexampleovernighturbandeliveryortheconstructionof newbuildingsinacertainarea.Indevelopingcountries,noisereductionmaynotbethefirstpriority whencopingwithrapidgrowthoftransportandnormsdonotalwaysexist.Thekeyquestionsforthis briefdiscussionofpotentialbenefitsNGVscanhaveintermsofnoisereductionare:
OECD/IEA2010
Whyisnoiseaproblemthatshouldbeaddressed? TowhatextentcanNGVscontributetosolvingthisproblem? Noisefromtrafficismorethananuisance,itsarealanddifficulttoavoidproblemindensely populated areas. As a 2007 study by CE (CE, 2007) mentions: noise is very costly to society [and] should be taken as seriously as other forms of pollution, as it is similarly damaging to human health. Various studies show that noise (or in some cases vibration/pulsation) from trafficcannegativelyimpacthumanhealthandwellbeing,aswellastheconditionofstructures such as buildings, roads, tunnels and bridges. More specifically, a study by the WHO (2008) showsthatsevereannoyanceandsleepdisturbancecanalreadyoccuratlevelsaslowasabout 40 dB(A). According to this study, the effects for which sufficient evidence is present for an associationwithroadtransportrelatednoiseexposureinclude:annoyance,sleepquality,sleep disturbance, insomnia, hypertension and ischemic heart disease and reduced cognitive functioning. While the study provides a framework for noise, rather than an overview of the status of transportrelated noise problems, it does give some guidance by stating that 50 or 55dB(A) (Lden, outdoors) could be used as a threshold value for health impact assessment for severeannoyanceandseveresleepdisturbance.TheaforementionedCEstudymentionsthat in2000about44%ofthepopulationoftheEU25(over210millionpeople)wereexposedto roadtrafficnoiselevelsabove55dB(A). While there is a wide array of possibilities for noise mitigation, including noise barriers, lower speed limits, lownoise road surfaces, nogo zones for HDVs, optimisation of traffic flow, tire designetc,theengineremainsanimportantsourceoftrafficnoisethatcanbecombateddirectly. AstheCEreportstates:Themostcosteffectivemeasuresarethoseatthelevelofvehicles.This canbedonebyshieldingthesourceofnoise,butalsotoaddresstherootoftheproblem. Notwithstanding recent technical developments, diesel engines are inherently noisier than petrolandnaturalgasvehicles.Thisisduetothepressurewaveinthecylinderwhichiscaused by the sudden ignition. While substantial sets of data from independent research into the comparative noise production from NGVs relative to diesel vehicles are scarce, there is some informationavailable. A good source is the data from the aforementioned type approvals by the German Kraftfahrt Bundesamt.ForLDVs,NGVsdonothaveanadvantageovereithergasolineordieselvehiclesin termsofnoiseproduction.Vehiclesrunningongasolineanddieselactuallyproducedlessnoise inmostcomparisons.Havingsaidthis,LDVsonaverageemitsignificantly(9dB)lessnoisethan HDVs.LCVsonaverageproduceslightlymorenoisethanLDVsandagain,NGVsdonothavea clearadvantage.Instationarymode,NGVstendtobenoisierthandieselvehiclesbutlessnoisy than gasoline vehicles. Whereas in motion, NGVs tend to produce less noise than diesels and performsimilartogasolinevehicles.ForHDVs,onlydieselvehiclesareavailableforcomparison. Thedataillustratestheimportanceoftakingintoaccountvariouselementsinthepowertrainof anHDV(exhaust,transmission)asthesecanmakeadifferenceofupto10dB.Thedatadoes not support the statement that HDVs running on natural gas produce less noise than diesel, althoughthisisthecaseinalimitednumberofcomparisons.Inmostcasesthereiseitherno differenceorNGVsproduce1dBto3dBmore.Intwocases,theNGVproduces2dBand3dB less.TheaverageHDNGVproduces89dBinstationarymodeand79dBinmotion,whilethe averagedieselproduces90dB(stationary)and79dB(inmotion). In conclusion, the type approval data from the KBA indicates that while NGVs do not have a pronounced overall advantage of producing less noise than diesel or gasoline vehicles, in individualcasestherecanbesignificantadvantages.Thisisconfirmedwhenindividualexamples areconsidered,suchasaspecificIvecotruck.ThistruckrunsonLNGorliquefiedbiogas(LBG)
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andisthefirsttobecertifiedformeetingthePIEKlightnormintheNetherlands,whichsetsa 72dBmaximumtoreducenoisefromurbandelivery. ThecaseofgarbagecollectioninMadrid(NGVAEurope,2009a)alsoillustratesthebenefitsthat NGVscan haveinnoisereduction.In thiscasethereisanextraneedforsilentvehicles,since garbagecollectioniscarriedoutatnight,whileinhabitantstendtoleavewindowsopen.While notarequirementforhomologation,noisehasbecomepartofmunicipaltenders.Noisefrom Page|33 CNGvehicleswasfoundtobealmosthalfthatofdieselvehicles(5dB(A)). SeveralothercasesconfirmthatinindividualcasesNGVbusesandtruckscanhavesignificant benefits, although currently this cannot be demonstrated with substantial data sets across a widerangeofvehicles.
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4. Economicsandpolicy
Keymessages: Dataonenduserpricesshowthatwhileliquidfuelsaretaxedatleasttosomeextentin allOECDcountries,manynonOECDcountrieshavelowtaxratesorsubsidyschemesin Page|35 placeonenergypricesingeneralandfortransportationinparticular.
IEAanalysisindicatesthatnaturalgascancompetewithgasolineinallscenarioswhere gastransmissionanddistributiongridsarepresent.
LiteratureprovidescategorisationofpolicyinstrumentsforNGVs,butnoevidenceonthe effectivenessofvariouspolicies.GovernmentscanstimulateNGVsdevelopmentatmany differentlevelsandcoordinateanintegratedapproachwithallstakeholders.
Any national or regional NGVs strategy needs to take into account a number of local factorstotailorgeneralprinciplestothecontext,thereisnoonesizefitsallapproach. The additional costs for vehicles and investments required for infrastructure have been addressed in the chapter on technology. In this chapter, differences in prices as a result of differentregimesfortaxationand/orsubsidieswill bediscussed anddifferentregionalpricing systemsfornaturalgaswillbeoutlinedbriefly,lookingathowtheserelatetooilpricesaswell. Also,theoutcomeofananalysisofgreenhousegasabatementcosts,basedontheIEAMobility Model,willbepresented.SincetheeconomicaspectsofNGVsareheavilyinfluencedbypolicy and regional pricing systems for gas, many of these aspects cannot be discussed on a global basis but should be addressed at a national or regional level. For this reason, this section will startwithsomebriefgeneralcommentsaboutthetheoryofpolicyrelatedtoNGVs,butinthe next chapter look more closely at the practical side and economics in a number of different NGVsmarketsinOECDaswellasnonOECDcountries.
4.1Fuelprices
Oneofthemostsignificantparamterswhenintroducinganewfuelforuseinroadtransport,or increasing its market share, is the relative prices of fuel and the regimes for taxation and subsidies.Itwouldbebeyondthescopeofthisworkingpapertoprovideacompleteoverview of subsidies and taxation on road fuels in place worldwide. Rather, some key data will be provided and a number of countries will be discussed more indepth in chapter 5 with case studies.Onaverage,itisclearthattaxestendtobealargeportionofenduserpricesforfuelsin OECDcountries(Table5). Table5:TaxesaspercentageofenduserfuelpricesinOECDcountries2009
Country Argentina Bolivia Brazil Uzbekistan Minimum 0.4% 17.2% 7.8% 4.8% Maximum 64.4% 72.6% 48.5% 51.1% Average 42% 57% 25% 18%
Note:Thenumbersfornaturalgasrefertoresidentialconsumers;whenusedasafuelfortransportation,naturalgasisoftentaxed differently,inmanycaseslower. Source:IEA.
OECD/IEA2010
Dataonenduserpricesalsoshowthat,whileenergypricesaretaxedatleasttosomeextentin allOECDcountries,manynonOECDcountrieshavelowtaxratesorsubsidyschemesinplaceon energy prices in general and for transportation in particular. This leads to large differences in endusepricesbetweencountriesandbetweenfuels(Table6).
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Naturally, CNG prices before subsidies and/or taxation differ from country to country and particularly, from region to region, aswell as a result of different regional pricing systems for naturalgas. AmoredetaileddescriptionofthistopicisincludedinMediumTermOilandGas Markets(IEA,2010b),thissectionprovidesabriefoverviewofthethreemainsystems. TheNorthAmericanmarket(Canada,MexicoandtheUnitedStates)isverymuchaspotbased market. Natural gas prices are the result of gastogas competition on various hubs in this region,whereverysubstantialvolumesaretraded.TheUnitedStateshasbyfarthemostliquid spotmarketfornaturalgasworldwide.WhiletheoptionofLNGimportsand(toalesserextent) exports imply that prices in no market can be set in complete isolation from other regional markets, the NorthAmerican market is driven mostly by regional demand and supply, notwithstandingtheeffectthatchangesinothervariables(suchascoal,powerandCO2prices) can have on gas supply and demand. This was illustrated by the effect that the production of shalegasplaysanda1.7%declineindemandhadonprices.Forexample,ontheHenryHub(the mostliquidofUShubs)theaveragespotpricein2009wasUSD4/MBtuorhalfthelevelin2008. Table6:Enduserpricesforroadfuels
Country/Region OECD Europe OECD North-America OECD Asia Argentina Bangladesh Brazil China Egypt India Iran Malaysia Pakistan Diesel (USD/lge) 0.70 0.31 0.74 0.30 0.22 0.47 0.33 0.10 0.35 0.01 0.30 0.37 Gasoline (USD/lge) 0.74 0.31 0.96 0.34 0.36 0.66 0.41 0.09 0.55 0.05 0.33 0.50 CNG (USD/lge) 0.39 0.16 0.33 0.14 0.12 0.38 0.22 0.04 0.18 0.02 0.12 0.26
Notes:Dataaretakenatvariouspointsintimeandcanthereforevaryfromdataelsewhereinthisdocument;gasolinerefersto regulargasoline,exceptforPakistan(onlypremiumavailable). Source:NGVEurope.
ThesecondregionalpricesystemisEurope,whichisahybridmarketinthesensethatwhilethe conventional system of longterm oilbased contracts is still in place, spot markets are increasingly influencing natural gas prices. The UK hub, National Balancing Point (NBP) is the most liquid hub and hubs in continental Europe tend to follow NBP prices in a fairly narrow bandastheUnitedKingdomisemergingasatransitcountryforEuropeangasduetoitsLNG terminals and pipelines (IUK and BBL14) connecting the United Kingdom with continental Europe.Sincedemandstartedtodropinmid2008asaresultoftheeconomicdownturnand theUnitedStatesmaintainedhighproductionlevels,spotpriceshaveremainedverylow,while
14
AlthoughstrictlyspeakingnophysicalorvirtualflowispossibleyetthroughBBLfromtheUKtotheNetherlands.
OECD/IEA2010
oilpricesrecovered.ThishasresultedinagapofonaverageUSD5/MBtuin2009,whichleaves manyexpertsquestioningthesustainabilityoftheoilbasedpricingregime.Someadjustments weremadetolongtermcontractsearly2010.Itremainstobeseenwhethertheseadjustments willbeextendedbeyond2012. The third regional pricing system is the Asian or Pacific price system, which is mostly characterised by Asian countries situated at the Pacific basin and importing/exporting LNG to Page|37 andfromeachotherandtheMiddleEast.LNGpricesareoilindexedanddespiteadropinmid 2009 have remained much higher than spot prices in NorthAmerica and European markets, whilealsoincreasinglydeviatingfromEuropeanoilbasedprices.15 In other markets (such as the FSU, MENA and Latin America), prices are often regulated by governmentsasisdiscussedinWorldEnergyOutlook2009(WEO2009)(IEA,2009).Therefore, whenassessingrelativeCNGprices,itisimportanttorecognisetheregionalgaspricingsystem, aswellasnationalregimesforfueltaxesandsubsidies.
4.2CompetitivenessofCNG
ToassessthecompetitivenessofCNGwithcurrentfuels,ananalysiswasmadetocomparethe variable costs and fixed costs for CNG in different scenarios of transmission and distribution (T&D)griddevelopment.ThepurposeofthisanalysisistoconcludeatwhatlevelsofT&Dgrid developmentnatural gas asatransportationfuel cancompetewith themost commonlyused fuel today, gasoline. Calculations were made using the IEA Mobility Model and input on CNG retailinfrastructurehasbeenobtainedfromvarioussourcesintheNGVindustry.Atanoilprice ofUSD80/bblanaturalgaspriceofUSD9/MBtuwasassumed,whichcorrespondsroughlyto average prices for the past five years under oillinked contracts in Europe or Asia/Pacific. NaturalgascancompetewithgasolineinallscenarioswhereT&Dgridsarepresent(Figure12). Figure12:CostsofCNGversusgasolineindifferentscenariosofgriddevelopment
1.80 1.60
Costs(USD/Litergasolineequivalent)
1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00
Transmission&Distributioncosts variablecosts
gasoline
Well HighlydevelopedT&Dand NoT&Dgrid, Shared Shared Well Well retail limitedretail construction constr. developed developed developed T&Dand T&D,limited distribution, T&D,limited T&D,fair retail retail limitedretail retail retail development Levelofinfrastructuredevelopment
Source:IEAanalysis.
15
While still indexed to oil, these prices have recently become affected by other influences as well, leading to differentpricethanonewouldexpectonthebasisofoilpricedevelopmentonly.
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Thisanalysisisbasedonresourcecostsandassuchdoesnotreflectanyinfluencefromtaxesor subsidies, which means that in cases where natural gas is cheaper per unit of fuel (scenarios DG)thisisaresultofthedifferenceincostsonly.Whatisalsoclearfromthisanalysisisthat theinfrastructurecostsforgasolinearelowerthantheyarefornaturalgasinallscenariosbut G, which is compensated by much lower variable costs (the actual fuel) for natural gas. This suggests that in principle, natural gas is cheaper as a fuel, but gasoline benefits from the positionthatitbuiltupoverthecourseofmanydecades.
4.3TheoryonNGVPolicy
Several studies have evaluated the options and challenges for policies aimed at replacing an incumbenttransportfueltechnologywithnewAFVtechnology.Thissectionwillprovideabrief overviewofthemainconclusionsfromexistingliterature. Policy instruments can be categorized as regulation (outcome, technology or fuel based), incentives(targetedatconsumersorsuppliers)andmarketcreation(governmentfleets,direct investment in infrastructure) and policies should be designed to reduce key barriers affecting eachstakeholdergroup(Yeh,2007).Policyinstrumentsthathavebeenusedincludeincreasing taxes for conventional fuels (e.g. Argentina), subsidizing conversion (e.g. Colombia, Pakistan, China, Thailand), subsidising the purchase of vehicles and/or fuel consumption (e.g. United States,Thailand),regulationofthefleet(e.g.India,Iran,Egypt)andpromotionofinfrastructure development(e.g.UnitedStates,China).InsomecountriestherelativelyhighshareofNGVsis explainedbyhistoricallylownaturalgasprices(e.g.Ukraine,Armenia),whichraisesdoubtsover futuredevelopment(EngererandHorn,2010).IGU(2009)statesthatgovernmentincentivesfor NGVs(andcleanfuelsingeneral)shouldbelinkedtotherelativeshareofmarketgrowth.When market share is low incentives need to be higher and then adjusted over time to reflect increased market penetration. Further research is needed on the effectiveness of various policiesandonnetworkanalysisofinteractionsandtiesstrengthbetweenstakeholderswhere onestakeholderprovidesincentivesforotherstakeholder(Yeh,2007). In addition to changing regulatory conditions and providing financial incentives, the public sectorcancoordinatestakeholderstoaligntheirexpectationsandactionstowardsacommon goal of replacing a socially inferior equilibrium by a more preferable equilibrium. When expectations diverge, establishing a strong, sharedbelief in a certain technology is imperative (Yarime,2009).Struben(2006)alsopointsoutthatadoptionofAFVswillnottakeoffwithout coordinationbetweenautomakers,fuelsuppliersandgovernments.Coordinationisessential on pilot region selection, target market, vehicle portfolio selection, asymmetric incentives for urbanandruralstations,otherincentivepackagesandstandardization. Government intervention is required to break through the technological lockin of existing technologies or path dependence. Technological lockin originates from strong complementarities among components of a complex technological system (Yarime 2009). Specifically,threetypesofpositiveexternalitiescontributetopathinterdependecy:knowledge spillovers, economies of scale through demand for the same inputs and positive user externalitiesthroughtechnologiesusingthesameinfrastructure(CowanandHultn,1996).In addition to government policy, several factors are identified which can help automobile fuel marketstoescapethelockinofexistingtechnology,includingacrisisintheexistingtechnology, technologicalbreakthroughs,changesintaste,tailoringatechnologytoaparticularnicheinthe market and scientific measurements of relative merits of AFVs (Cowan and Hultn, 1996). ConsumerstendtounderestimatethetrueeconomicbenefitsofinvestinginNGVsandvehicle imageandfunctionalityhaveproventoaffectconsumersdecisionsaswell(Yeh,2007).
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ConsumersviewavailabilityofstationsasanobstacleifthenumberofCNGfuellingstationsis less than 10%20% of conventional stations. The challenge is attaining an optimum ratio of vehiclestorefuellingstations.Thevehicletorefuellingstationindex(VRI)indicatesthespatial density of network and profitability of stations; optimal from empirical research is 1000vehiclesforeachstation(thisisconfirmedbyEngererandHorn,2010).Developmentof VRI in the countries studied suggests that programmes must be sustained for long periods Page|39 before adoption becomes selfsustainable: []at the current stage, none of the countries examined here [which includes Argentina, Italy, Pakistan, India and United States] is likely to achieve selfsustaining NGV markets if favourable government policies are removed. (Yeh, 2007). Struben (2006) finds through modelling that underlying dynamics are much more complex than simple chickenegg analogies suggest and explains why AFVs generally fail to exceedpenetrationlevelsofafewpercent.
4.4LocalfactorsforNGVpolicy
When designing regional or national NGV policies or transport policies involving NGVs, it is importanttotakeintoaccountseveralfactorsthatplayaroleatthislevel,including: thecurrentstateofthevehiclestockintermsofsharesoffuelsinmix,vehicleemissionsand fueleconomy; thepresenceoflocalairqualityissues:wheredotheyoccur,whichemissionsareinvolved, how severe are the problems (now and on the longer term, taking into account future developments such as population growth, urbanisation, growth of transportation needs, etc.); thelevelofnationalgreenhousegasreductiontargets/ambitionsandalternativestrategies toaccomplishthesegoals; theavailabilityofnaturalgasthroughdomesticproductionand/orimports; thelevelofgriddevelopment:overalllength,butmoreimportantlygriddensity,vicinityof densely populated areas and opportunities to create synergy with grid extension for other sectors; theavailabilityof(OEM)vehiclesandrefuellingequipment:diversityofmodelsavailable,the stateoftechnology,domesticallyproduced/import,costs; marketing,consumerpreferences,publicacceptanceofCNG/LNGasavehiclefuel; theinstitutionalcontext:whichstakeholdersareinvolved,whichinterestsdotheyhaveand howcananincentivestructurebedesignedtoaligntheinterests; government finance: in what way can CNG be stimulated while not putting any/too much strain on government budget or even, how can CNG strategy help to solve government financeissues?
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5. Casestudies
Keymessages: Brazils remarkable growth in NGVs during the past decade has recently slowed down due to competition from ethanol flexfuel vehicles and supply constraints, but recently Page|41 the demandsupply situation has eased. A major potential source of growth of natural gasconsumptioninBraziliantransport,beingheavydutytransport,isverydependenton government policy. There are currently no strong signals that the lack thereof will be restoredinthenearfuture.
India could become the worlds largest NGV market, if it can manage the challenges of substantialinvestmentsforgriddevelopment,fuelprice(de)regulationandenforcement of quality and safety regulations. Intercity buses and trucks have so far remained an unexploited potential. Another uncertainty at this point is the potential for India to replacenaturalgasbybiogasorbioSNG.
IraninitiatedanambitiousCNGprogrammetoalleviatepressureongovernmentbudgets and cope with a shortage of refinery capacity in the face of (further) international sanctions by using a domestically available fuel. This set the country on a path of dramaticgrowth,whichcouldincreasefurtherinthefutureiftheHDVsegmentwillbe includedintheprogramme.
Driven by energy security, the government of Pakistan has stimulated the introduction andgrowthofCNGuseintransportationbyseveralpolicymeasures.Thishasresultedin the largest NGV fleet in the world, over two million vehicles, consuming 2.5 bcm of naturalgasperyear.
TheUnitedStatescurrentlyhasveryfewNGVsandinfrastructure,butthismaychangeas policy support is growing, prospects for gas supply have improved drastically over the pasttwoyears,vehicleavailabilityisimprovingandtheeconomicsareattractiveforfleet owners.AstrategyaimedatHDVfleetswouldalsomeanthatretailinfrastructurecosts canbekeptrelativelylowwhilestillcoveringwideareas.
Europe would need strong policy support for NGVs to play a significant role in the transport fuel mix, but as the worlds currently largest car market it certainly has potential. Depending on how future technological developments play out in relation to Europes increasingly stringent norms, the benefit of lower pollutant emissions could driveNGVgrowth.However,themajorimpetusforgrowthislikelytobegreenhousegas reductionbyusingbiomethane,particularlyinHDVs. This chapter provides a more in depth review of Brazil, India, Iran, Pakistan and the United States, focusing on the development of the NGV market and the policies driving the development,orlackthereof.Somerecentdevelopmentsinpolicyandmarketdevelopmentin Europewillalsobediscussed.
5.1Brazil
BrazilisLatinAmericaslargesteconomyintermsofpopulation,GDPandenergyconsumption. While the countrys transport sector is mostly associated with its extensive use of sugarcane ethanol (blended with gasoline), the growth of natural gas use in transportation has been remarkableinthepastdecade.WhiletheNGVprogrammestartedin1991/92,theauthorisation in1996tousenaturalgasinanyvehiclereallygotthegrowthstartedthatbecameparticularly
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stronginthefirsthalfofthepastdecade,althoughithassloweddowninthepastthreeyears (Figures13and14).AshasbeenthecaseinotherLatinAmericancountries,theBrazilianNGV marketwasmostlycreatedthroughaftermarketconversionofvehicles,inparticulartaxisand lightcommercialvehiclesastheseareabletorecovercostsquicklyduetotheirhighmileage.All vehicles are flexfuel, capable of running on either gasoline or ethanol combined with natural gas.NGVsrepresentalmost5%oftotalvehiclestockinBrazil,4%oftotalroadfuelconsumption and10%ofnaturalgasdemand.Withjustover1.6millionNGVs,Brazilisatthefourthposition worldwideandthirdintermsofrefuellingstations. Figure13:NumberofNGVsinBrazil
Millions
1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2000
Source:NGVCommunicationsGroup.
2001
2002
2003
2004
2005
2006
2007
2008
2009
TherearecurrentlyvirtuallynoMDVsorHDVsrunningonnaturalgas,althoughrecentlysome efforts are starting to be directed at encouraging the use of natural gas for these modes of transport as well. The IGU (2009) and other sources cite a number of reasons for the lack of natural gas use in HDVs, including: high costs, lack of distribution infrastructure, taxes, diesel culture, bus operation concession contracts by municipalities, lack of government policy and incentivesandquestionableenvironmentalstandards.WhilethereareanumberofmajorOEM ofHDVsinBrazil,thelackofdemandforthereasonsmentionedcausesthemnottoproduce HDNGVs.Theethanolproducerslobbyisalsosaidtoplayaroleinkeepingnaturalgasoutof theHDVsegment. The 1771 refuelling stations are public CNG stations integrated with liquid fuel stations (Table7).TherearevirtuallynoprivatestationsorLNG/LCNGstationsinBrazil.Thesestations are all connected to the grid while an additional 50 stations are not gridconnected and are supplied by trucks (so called motherdaughter systems). On a national level there are on average912vehiclesperrefuellingstation,whichisalevelthatisconsideredtobeeconomically sustainable for station operators and does not create large queues for vehicle owners (IGU, 2009). Most of the stations are located in the major cities, and as of May 2010, in total 295 cities have CNG refuelling stations (NGV Communications Group). The Blue Corridor initiative may in the future provide a stimulus to NGVs in Latin America. However, this gas highway whichwouldconnectArgentina,Brazil,ChileandUruguay,facesanumberofchallenges.A2005 studyconcludedthatbasedonthegeography,existinginfrastructure,currentandfuturecargo
OECD/IEA2010
and passenger transport, the potential integration benefits and estimated investments and costs, the project should be put on hold. There has not been any progress (reported) on this projectsincethisstudywascompleted. Figure14:MarketshareofalternativestogasolineinBrazilianLDVmarket(26millionvehicles)
40 35
MarketshareLDV(%)
Page|43
) 30 % ( V 25 D L e r 20 a h s t e 15 k r a M 10 5 0 2003 2004 2005 2006 2007 2008 2009
Diesel Ethanol Flexfuel NGV
Note:Gasolinesharedeclinedfrom81%in2003to50%in2009. Source:LosekanandVilelainFernandes(2010).
ThegrowthofNGVsinthepastdecadeislargelyduetoPetrobraspolicytoencouragetheuse of the suddenly abundant natural gas through low prices after the Gasbol pipeline started operations.ThepaybackperiodfortheconversioncostsofonaverageUSD1390equalaround eight months compared to ethanol. Besides the low prices, the Brazilian government also encouraged NGV conversion by providing loans to acquire conversion kits for taxis and by installing a lower tax on the ownership of NGVs (1% compared to 4%). The main drivers for government include reducing the costs of imported fuels, economical development and reducingemissionsfromtransportation. ThecaseofBrazilalsoillustrateshowpromotingNGVscangohandinhandwithdevelopment ofagasgrid.LocaldistributioncompaniesencouragedNGVsinordertocreategasdemand,but also because it stimulated the development of the grid. In remote areas NGV demand can be metbyusingmotherdaughtersystems,suppliedwithLNGfromBrazilstworegasificationterminals (a third terminal is to come online Table7:NumberofNGVstationsinBrazil200610 2013).Thissupplysolutioniscommonly Year NGV Stations used to supply stations located at 150200kmfromthenearestpipeline. 2006 1 320
2007 1 486 One reason for the recent slowdown of NGV growth in Brazil is increased 2008 1 633 competitionfromethanol (Figure15). 2009 1 702 Ethanol has become cheaper than 2010 1 771 CNG for transportation since mid Source:TNO,IEEPandLAT,2006. 2008 and technology for flexfuel cars hasdeveloped;nowadaysmanydifferentmodelsexistthatallowtheirownerstobenefitfrom various different types of fuel that are available and show different pricing differentials at variouspointsintime.Brazilcurrentlyhasnobiomethaneprojectsunderway.
OECD/IEA2010
Figure15:FuelpricesandconversionstoNGVs
Page|44
Alcohol -7.1%
Source:ANP/IBP.
OtherreasonsfortherecentslowdownofNGVgrowthincludethediversionofnaturalgasto power generation, since initially hydro capacity could not keep up with growing electricity demandandpossibilitiesforincreasinggassupplieswerelimited.Timeshavechanged,though. Heavyrainfallin2009increasedhydroelectricpowergeneration,thecrisislowereddemandand Brazil is now facing a 22mcm/day oversupply.16 Imports from Bolivia reached the minimum levelof24mcm/dinlate2009andPetrobraswasnotrunningitssecondLNGterminalnearRio deJaneiro.Gasdemandisexpectedtorecoverin2010andsettogrowinthenextdecade,but much will depend on Petrobras virtually the only producer structurally lowering its prices underlongtermcontracts,ratherthanoccasionallyofferinggasinauctions. Brazilreliesonimportsforabouthalfitsdemand,mostofwhichissourcedthroughtheGasbol pipelinefromBolivia,thelargestgasexporterinLatinAmerica.Withthesevolumesunlikelyto grow further in the future due to Bolivias nationalisation of companies and policy of encouraging domestic consumption, Brazil will increase future LNG supplies to meet growing gas demand, particularly from power generation. Brazils proven gas reserves amount to 365bcmasoftheendof2009anddomesticgasproductionreached14.3bcmin2008,which resultsinaR/Pratioofaround25years. TheinstitutionalframeworkoftheBrazilianenergysectorisrelativelywelldevelopedsincethe 1997 reforms that saw the adoption of the Petroleum Investment Law and ended the legal monopolyofPetrobras.TheregulatorANP,establishedin1998,enjoysahighlevelofautonomy (20062009 Triennium Work Report of the IGUs programme committee C on developing gas markets ) in overseeing the value chain from E&P to distribution. Future challenges include furtherderegulation,reducinggovernmentinvolvementinthesectorandthedominantposition of semipublic Petrobras. Brazil has the ambition to further develop its natural gas resources, includingsubsaltdepositsandreservesintheAmazone,andtobecomeagasexporter. Brazils gas network is relatively well developed along the coast and Southeastern areas, but muchlesssoinland(Figure16).Themaintransmissiongridhasatotallengthof9219km.The distribution grid is over 18000 km long, most of which is located in the states of So Paolo
16
WorldGasIntelligence,31March2010.
OECD/IEA2010
(8228km)andRiodeJaneiro(4934km).ThesystemislinkedwiththeBolivianandArgentinan gas grid; talks with Argentina and Venezuela to build a new pipeline have not yet led to investmentdecisions. Figure16:GasinfrastructureinBrazil
Page|45
Source:ANP.
RecentlyCEGRioreportedthatisisexpectingthemarkettoimproveagainin2010ontheback ofapricedifferentialthatfavoursgasconsumptionoverethanol.Thecompanyreportsthatin RiodeJaniero,thenumberofconversionstonaturalgasincreasedfrom2300permonthinthe first half of 2009 to 5400 in November 2009 and it is now engaging in a campagne aimed at convincingconsumersofthefinancialbenefitsofconvertingtheirvehiclestorunonnaturalgas (NGVGlobalNews,27January2010). ThecaseofBrazilisaninterestingone,becauseitillustratesthatalthoughLatinAmericaasa whole is well supplied and a net exporter of natural gas, improving crossborder interconnections and investment climates through institutional change and regional co operation will be key for this region to become an integrated market. This would enhance transparencyandthesecurityofbothsupplyanddemand,whichpromotesthegrowthofNGVs aswell.TherecentslowdownofgrowthinthemarketshareintheLDVsegmentmaycometoa haltifthesupplysituationimproves,butmuchwilldependoncompetitionfromflexfuelethanol vehicles as well. A major potential source of growth of natural gas consumption in Brazilian transport, being heavyduty transport, is very dependent on government policy. There are currentlynostrongsignalsthatthelackthereofwillberestoredinthenearfuture.
5.2India
With many densely populated cities and ambitious plans to extend the transmissions and distribution network, India is regarded as a country with a big, possibly the biggest potential worldwide for the use of NGVs and indeed the country has seen very significant growth in recentyears.Indiaalsofacesanumberofchallengingreformsanddevelopmentsthatwillshape theevolutionoftheIndiangasmarketaswellastheNGVmarket.Thiscasestudyreviewsthe
OECD/IEA2010
NGVmarketdevelopment,discussesthedriversoftheCNGprogramme,therelationwithgas marketdevelopment,thestateoftechnologyandtheroleofstakeholders.
NGVmarketdevelopment:Past,presentandfuture
Page|46
WhendiscussingNGVdevelopmentinIndia,theCourtrulingsarecommonlycitedasthemajor driving force. Notwithstanding the unique and important role that the legal system played in developmentofNGVmarketsinIndia,thisisonlypartofthestory.Initially,thedevelopmentin MumbaiwasdrivenbypublicpolicyaswellasapricedifferentialbetweenpetrolandCNGthat drovecommercialinterestfromtheownersoftaxifleets. InDelhi,thepubliccampaigntoimprovelocalairqualitywasthemajordrivingforceinthelater 1990s,aidedbytheSupremeCourtsdecisionin1995whichinstalledandempoweredamulti stakeholder body. This body, the Environmental Pollution (Prevention and Control) Authority, assessedin2001thatCNG,amongothers,couldberegardedtobeenvironmentallyacceptable. ThisfreedthewayforCNGprogrammesastheSupremeCourthadissuedadirectiveaimedat theuseofcleanfuels,whileonlyspecifyingtheuseofCNGforcitybuses. During the past decade, CNG programmes were introduced in nearly 30 cities, in some cases orderedbythecourt,leadingtoasteadygrowthinthenumberofNGVsinIndiauptoacurrent estimatednumberof935000vehicles(NGVGlobal),includingbuses,threewheelers,taxisand smallcommercialvehicles.IntotalallNGVsinIndiaconsumelessthan2%ofdomesticnatural gasdemand.The30citiesaremostlylocatedinMaharashtraandGujarat,inthe(North)West ofthecountry,whileDelhiandMumbaiarebyfartheleadingcities(Table8). Table8:FivecitiesinIndiawithmostdevelopedNGVmarket
City Delhi Mumbai Pune Vadodara Surat Source:CSE,2010. Number stations 171 136 7 3 25 CNG volume
(mcm/y)
CNG price
(USD/kg)
Number vehicles 290 000 191 000 600 3 900 80 000
Cars/taxis
(%)
Autos
(%)
LCVs
(%)
Buses
(%)
507 402 0.7 11 55
0.42 0.49 0.62 0.53 0.61
61 29 8 16 46
32 68 79 80 51
2 1 0 0 0
4 1 14 4 1
SomeindividualstategovernmentshavetakensupportiveactionstostimulategrowthofNGVs. While some of the success can certainly be attributed to these measures, unless harmonised, these efforts could lead to costs and revenues being spread unevenly between states (CSE, 2010).Delhihastakenseveralinitiatives,including: lowerinterestonloansforthepurchaseofCNGthreewheelersandtaxis; VATsubsidiestoreplaceolddieselLCVsbyCNGvehicles; fullexemptionofCNGforautomotiveusefromsalestax; taxationofdieselfuel(USD0.006/L)tofundcleantransportationsubsidies. ThedevelopmentofpublicbustransportprogrammesinmanycitiesingeneralandtheNational UrbanTransportPolicyinparticularprovidemomentumforNGVdevelopmentasthecountryis onthevergeofmakingsignificantinvestmentsinthepurchaseofvehicles,whichwillmeanthat alongtermchoicehastobemade.
OECD/IEA2010
DriversforNGVprogrammes
There are two main drivers for NGV programmes in India: improving local air quality and alleviating the pressure on the budgets of government and oil marketing companies for effectivelysubsidizingimportedfuels,despitethesubsidiesinplaceonnaturalgas. Theshareofdieselvehiclesinnewcarsaleshasalreadyincreasedfrom4%in2000to30%in2010 Page|47 and it is expected to increase further to 50% by 2012 (CSE, 2010). This leads to an increasing shareofdieselvehiclesthatarecertifiedaccordingtoemissionstandardsequivalenttoEuropean standardsaboutadecadeago,whichhassignificantdetrimentaleffectsonlocalairqualityinthe manydenselypopulatedcitiesofIndia.ParticularlyemissionsofPMandNOxcauseseverhealth problems, as is confirmed by several studies. Diesel fuel was found to have contributed up to 61%oftotalPM2.5ambientconcentrationina2004studysuportedbytheWorldBankwhile anotherstudyfounddieselenginestocontribute40%toNOxemissionsfromvehicles. In the past five years, the government of India has been forced to come to the rescue of Oil Marketing Companies that incurred very substantial underrecoveries, amounting to over USD25 billion in FY 200809 (IEA, 2010). While the APM17 has been formally abolished for petroleum products in 2002, implicit subsidies remain in place by the governments policy to protectIndiancustomersbynotallowingOMCtoeffectuatepriceincreasesthatwouldreflect changesinglobalmarketprices.
Gasmarketdevelopment
The development of the natural gas market in India will be the topic of a forthcoming IEA workingpaperandregulationofdownstreamfuelpricesinIndiahasbeendiscussedextensively inarecentIEAworkingpaper.Therefore,thediscussionheredoesnotgointogreatdetail,but focuses on recent developments and future challenges for increasing domestic production, expansionofT&Dgridsandprice(de)regulation.
Reserves,productionanddomesticdemand
Indiahas1074bcmofprovedandindicatedgasreservesasof1April2009andproductionhas beenalmostflataround30bcmsince2002.Productionisestimatedtohavereached46bcm18 in2009,though,whichwouldpartlyreducethegapbetweensupplyandpotentialdemand.The expecteddoublingofproductionbetween2008and2011andincreasedregasifcationcapacity arelikelytosetgasdemandinIndiaonapathtosignificantgrowth.IEAforecastsIndiaasoneof the fastest growing gas markets worldwide with an annual increase of 5.4% over 20072030, reaching132bcmby2030(WEO2009,ReferenceScenario).
Infrastructure
Expansion of city gas distribution networks is expected to cover around 150 to 200 cities by 2014(CSE).GAILsfutureplantitledTheroadaheadforeseesverysignificantinvestmentsfor the next 15 years regarding CNG programmes. A total number of 298 cities are seen as the potentialtargetuntil2014.AninvestementofaroundUSD8billioncouldbring27bcm/yofCNG
17
AdministrativePricingMechanism,thepricingsystemunderwhichtheGovernmentofIndiadirectlycontrolsprices forpetroleumproducts. 18 Basedonthisnumber,theR/PratiofornaturalgasinIndiaequals23years.
OECD/IEA2010
Page|48
to almost 15 million households and four million vehicles. For the period up to 2020, an additionalUSD1.8billioninvestmentwouldbring6bcm/yto117citiesthatarelocatedatmax. 200kmfromexistintingorplannedpipelines.Ultimately,by2025,69citiesthatwillnotbein thenearvicinityofapipelineremaintobesuppliedwith4bcm/yofCNGataninvestmentof roughly USD 1 billion. The Petroleum and Natural Gas Regulatory Board estimates that in the nextfiveyears,aroundUSD13billionwillberequiredforexpansionofthenaturalgasgridand anadditionalUSD2.2toUSD3.3billionforcitygasdistributionnetworks.Whethertherequired investmentswillbeobtaineddependsontheregulatorycontext. In June 2009, the Ministry of Petroleum and Natural Gas published its Vision 2015 For Consumer Satisfaction and Beyond. The strategy laid out in this document includes the ambition to extend the CNG and pipeline distribution network across the country. The aim of thisstrategyistoincreasethenumberofNGVsandaccessofhouseholdstonaturalgas,thereby reducing the dependency on LPG. At present, CNG is supplied to 35 cities and 860000households are supplied with natural gas from pipelines (PNG). The government has now decided to increase the supply of CNG and PNG multifold so that more than 200 cities couldbecoveredby2015. The oil and gas industry plays an important role for growth of NGVs by developing gas infrastructureandmarkets.ThemostcommonformoforganisationiswhereGAILformsajoint venturewithpublicsectoroilcompanies,whichisoftenappliedinprogrammeswithCNGprices under the APM (CSE, 2010). Alternatively, private companies can source gas at free market pricesanddevelopcitygasdistribution. ThedownsideofIndiasfocusonthreewheelersandsmallLCVsisthatthelimitedfueluptake of these vehicles does not create large CNG demand, which may make it difficult to justify investmentsincitygasdistribution.Providingabout500mcm/yofCNGrequiresaninvestment ofroughlyUSD55toUSD65million.ItisclearthatCNGinitselfcreatesinsufficientdemand, synergy with other sectors is essential. Synergy can be created by connecting industry, decentralisedpowerandresidentialsectorstonewgridsaswell.Ifnosynergycanbecreated whilethereissignificantdemandforCNGintransportationthenmother/daughtersystemscan beamorecosteffectiveoptionthanadedicatedpipelinetosupplyregionswithCNG.
Price(de)regulation
The state government does not differentiate between fuels for excise duties, but the unique pricing scheme of India with its administrative price mechanism (APM) and marketbased gas prices does still favour NGVs to a certain extent. CNG programmes in cities such as Delhi and MumbaibenefitinthepastfromlowergaspricesundertheAPM,butsincethedecisioninMay 2010,toraisepricesundertheAPM,CNGpriceshavegoneupconsiderablyfromUSD0.49to USD 0.61/kg.19 A few weeks later the rise of diesel and petrol fuel prices restored the price differentialtopetrolbeing47%anddieselbeing31%moreexpensivethanCNGinDelhi. Otherregions,suchasGujarat,withmorerecentCNGprogrammesarelessdependentonAPM andtoacertaindegreeexposedtofreemarketprices.Whilepricedifferentialswithdieselare stillsufficienttosupportCNGprogrammes,somearguethatataxpolicyshouldensurethatthis is sustained, as taxing other fuels is likely to provide more longterm stability than direct subsidies(CSE,2010).
19
Notethatthepricesintable6datefrombeforethisincrease.
OECD/IEA2010
Considering the increasingly importantrole that India isattributing to LNG in its natural gas supply, the effect of LNG prices on CNG prices is also an important factor for NGV programmesinthefuture.AttractingLNGwillmeanthatIndiawillhavetocompeteonglobal gasmarkets.TheIndianstategovernmenthasinthepastindicatedthatitwilltakemeasures to ensure the competitiveness of CNG in a deregulated scenario, but no clear details are knownatthispointwhilemarketsareslowlymovingtowardsliberalisation. Page|49
Technology,qualityandsafety
Since NGVs are aimed at reducing local air pollution, it is important that heavily polluting vehiclesarereplacedwithNGVsthatperformsubstantiallybetter,notonlyintheshortterm butoverthewholelifetimeofthevehicle.SeveralstudieshaveshownthatCNGprogrammes inDelhihaveindeedcontributedtoasignificant(24%)dropinPMlevelscomparedto1996 and had the most significant impact on air quality in this city (CSE, 2010). Studies also indicatethatreductionofsulfurindieselandpetrolhadhadasiginificantimpactandwarned that an increase in usage of vehicles can offset the lower per kilometer emissions. While EuroIICNGbuses,equipedwithathreewaycatalyticconvertor,emitmoreCOandHCthan EuroIIdieselsdo,theyperformmuchbetteronPMandNOx(EnergyandResourcesInstitute, 2004inCSE,2010). IndiahasbothretrofittedvehiclesandOEMvehicles.Retrofittedvehiclesarelikelytobeless fuelefficientthanOEMvehicles(CSE,2010).Inparticular,threewheelersandcarswilltendto emit more CO2 than counterparts running on gasoline or diesel (Table 9). India produces a largeshareofOEMvehiclesdomestically.Thevehicleindustryhashadtorespondquicklyto thefuelsubstitionstrategyanddidsoforregulatedtypesofvehicles(buses,threewheelers, taxis and LCVs) more proactively than it did for cars, since there was no legal obligation to drive stable growth of this segment. As a result, the car market in India is dominated by aftermarket conversion as the car industry has only very recently begon to show interest in producingOEMcarsonCNGduetothepricedifferentialcreatingamarketpulleffect.Large trucksonCNG(orLNG)arecurrentlynotverycommoninIndia,neitherthroughaftermarket conversionnorfromOEM. Table9:CO2emissionsfromvehiclesinIndia
Vehicle Three-wheeler Three-wheeler Car Car Car Engine displacement < 200 < 200 <1 000 <1 000 1 000-1 400 Vintage post-2000 post-2005 1996-2000 post-2000 post-2000 126 127 156** Gasoline twostroke/fourstroke 62/72/74 Diesel 174* 132* 129** CNG OEM four-stroke/ retrofit twostroke 78/58 n/a 149 144 131
*dieselvaluesforthreewheelersrefertoenginedisplacement<500CC **dieselvaluesforcarsrefertoenginedisplacement<1600CC Source:ARAIinCSE,2010.
BusesareanimportantpartoftheNGVsfleetinIndia,mainlyasaresultofgovernmentpolicy inconjunctionwithSupremeCourtrulings.TheCNGbusmarketisbeingservedpredominantly bytwomajorIndianproducers,whileotherplayersareenteringthemarketaswell.Innovation isimportantinthissegmentandproducersfindithardtomatchgrowingdemand.Thepolicyof manyIndiancitiestoincreasepublicbusfleetsislikelytodriveafurtherincreaseinthenumber
OECD/IEA2010
ofCNGbuses,whichputspressureon theindustry todeveloptechnologies tosimultaneously address PM, NOx and ozone emissions as well as fuel efficiency. While 11 cities are currently introducingEuroIVtechnology,EuroIIIremainsthenorminmostofIndia.Technologyhastobe optimised in terms of engine concept (stoichiometric or leanburn) and aftertreatment of exhaustgasesandchoicesoftechnologyhavetoreflectthelonglifetimeofvehicles.
Page|50
Technical problems have occurred in both aftermarket conversion of vehicles and OEM vehicles. Aftermarket conversion is generally the cheapest option; in 2002, conversion of a dieselbustorunonCNGcostaboutUSD9000whileanewOEMbuswouldcostfourtimes thatamount.Indiahasseenaround12CNGbusfireaccidentsin2001and2002asaresultof badconversionpracticeandevennow,enforcementofsafetyregulationremainsanissueof paramount importance. In total about 2800 buses have been converted in India and while regulationsforauthorisationandaccreditationofconversionworkshopsisinplaceaswellas periodic audits, implementation has not been sufficiently stringent. Quality or safety issues associated with OEM buses and threewheelers have been identified and solved relatively easier, as most of these vehicles are produced by domestic companies. The Delhi Transport Corporation, owner of 4 500 CNG buses and in the process of acquiring another 5000 CNG buses,hasdecidedtobuyonlyOEMvehicles. The nonadulterable characteristic of CNG is an advantage in comparison to liquid fuels. Fuel adulterationreferstothe(illegal)practiceofblendingdifferentliquidfuelswithotherfuelsor substances,usuallywiththeaimtoprofitfromfinancialincentivesarisingfromdifferenttaxes thatareimposedondifferentfuels.Thispractice,whichisacommonprobleminIndia,canbe detrimentaltohumanhealthaswellasengineperformance,resultinginhigheremissions. The bus industry in India is taking its first steps towards some future technologies as well, including CNG/hybrid buses and HCNG. A CNGpluginhybrid bus prototype has been developed, which is claimed to reduce fuel consumption by 20%30% compared to a conventional ICE. At this point no data on fuel economy, emissions, costs or introduction strategyisavailable.AsforHCNG,afterfiveyearsofR&DafirstHCNGdispensingstationhas beencommissionedatDwarkainJanuary2010.ThreewheelersandcarscanrunonHCNGbut need to go undergo engine calibration to achieve the targeted emission. The 80/20 CNG/H2 blend has been identified by the stakeholders involved as the optimal ratio in terms of costs, range and emissions. Two ministeries jointly funded the USD 1.1 million investment for the station. Costs of hydrogen production remain a bottleneck for largerscale introduction. India aimstoreachonemillionhydrogenvehiclesby2020(mostlytwoandthreewheelers)aswell as1GWofpowergeneration,whichintotalwouldrequireaUSD5.6billioninvestment.
Outlook
IndiaisclearlyprogressingintheimplementationofCNGintheLDVandLCVsegmentaswellas transit buses. The intercity buses and trucks have so far remained an unexploited potential though,whilethereareindicationsthatthesecontributeheavilytopollution(CSE,2010).This heavyduty segment could be a very interesting market for CNG/LNG as well. Currently, CNG stationsareconcentratedincitiesbutperhapsalimitednumberoffuellingstationsalongmajor routes could help replace a large amount of diesel fuel by natural gas as these HDVs tend to travelbypredictableroutesanduselargequantitiesoffuel.Also,onesinglefleetownertendsto own many vehicles which means that few stakeholders are involved. For this strategy to succeeditisimportantthatOEMofHDVsareinvolvedandproducededicatedNGVs,whereon boardfuelstorageisoptimisedfortransportationofcargoandengineperformance.
OECD/IEA2010
AnotheruncertaintyatthispointisthepotentialforIndiatoreplacenaturalgasbybiogasor bioSNG.WhilethereplacementofolddieselvehiclesbymoremodernCNGtechnologywill likelybringsomebenefitsingreenhousegasreduction,alongtermcontributiontoreducing CO2emissionsfromIndiastransportationsector20wouldbenefitgreatlyfromeitherthedirect or indirect (through certificates) use of biogas in vehicles. Agricultural residues as well as garbage and seage treatment are likely to provide feedstock for biogas production as the Page|51 countrystrugglestomeetfoodcropdemand,meaningcroplandisnotlikelytobeallocatedto biofuelfeedstock.Currenteffortsrelatedtobiofuelsarefocusedonliquidfuels,butbioSNG couldtheoreticallycover27%oftotaltransportfueldemand(IEA,2010).However,torealise this potential more mature technology, government incentives and private investments are required. The question is also whether demand and supply of biogas will not be geographicallyremotefromeachother.
5.3Iran
With434thousandbarrelsperday(kb/d)in2009,Iranisamongtheworld'smainconsumersof gasoline.Demandisstimulatedbysubstantialgovernmentsubsidies.Whilethecountryhasthe world'ssecondlargestoilreserves,itcurrentlylackstherefinerycapacitytomeetitstransport fuel demand and it imports about 50% of its gasoline and 10% of its diesel demand. Internationalsanctionspreventtechnologytransferandfunding,21requiredtoincreaserefinery capacity, and cause International Oil Companies to curb gasoline exports to Iran. Attempts to tacklefuelsubsidiesandultimatelylowerdemanddoappeartobemovingforwardwiththe intention to gradually phase these out until they are fully eliminated by 2015, but face fierce oppositionintheIraniansociety.Thissituationhasledthegovernmenttorationgasolineand develop alternatives. In this context, a strategy aimed at natural gas vehicles can alleviate severalproblemssimultaneously. First,thereisthetremendouscosttotheIraniangovernmentofsubsidisingcurrentroadfuels. TherealcostofgasolineisaroundUSD0.52/LtoUSD0.57/LandtheretailpricewasUSD0.09/L to USD0.14/L, which implies a subsidy of USD 0.38/L to USD 0.48/L. Although the price of naturalgaswasdoubledinNovember2009,subsidiesensurethattheretailpriceofnaturalgas isequaltoorlessthanhalfthegasolineprice(IGU,2009)oraroundUSD0.04/Lge(litreofgas equivalent). Assuming a market price of natural gas of USD 5/MBtu, this implies a subsidy of aroundUSD0.1/Lge,roughlyonequartertoonefifthofthesubsidyongasoline.Thisleadsto the conclusion that reduced fuel subsidies compensate for the government investments in developing the NGVs fleet and infrastructure. Naturally, an elimination of gasoline subsidies wouldcreateaneconomicincentiveforCNGsalesandvehicleconversions,whichwouldmean thatthegovernmentcouldcutbackspendingonconversionsubsidies. BytheestablishmentofIranianFuelConservationOrganisation(IFCO,subsidiaryofNIOC),the government aims to promote NGV market development (among others). In recent years, the numberofNGVsandfuellingstationshasexpandeddramaticallyduetogovernmentsupported conversion. As of May 2008, Iran had over 1.8 million NGVs of which 99% were cars or LDVs, 7000 were buses and 80 were minibuses. So far the government has paid for 90% of the expensesincurredforconvertingpetrolvehicletoNGVsfor1.5millionvehicles.AtaboutUSD 750 per vehicle, this brings the total government contribution to USD1.125billion. While this
20 21
AlthoughgrowthofthevehicleparkcanincreasetotaltransportCO2emissions. In the calendar year ending 20 March 2010, Iran managed to attract only USD 8 billion of the required USD 35 billioninforeigninvestmentintotheO&Gindustry(IHSCERA).
OECD/IEA2010
represents a very significant investment indeed, it is important to note that the import bill of gasolinefortheIraniangovernmentisreportedtohavebeenUSD8billioninitscalenderyear ending20March2010. Second, gas is an abundant resource in Iran and despite delays in the countrys efforts to increasegas productionfromtheSouthParsfield,thecurrentlevelof630mcm/d(IHS CERA) cancertainlysupportcurrentNGVdemandof2.3bcm/yandevensiginificantexpansionofthe NGVs fleet would pose no challenge for supply to match demand, although seasonality in gas supplyanddemandinIrancancausesorttermgasshortages.Theinfrastructurefornaturalgas issufficientforestablishingNGVmarketsandtheexpectationisthatfuturenetworkexpansions willensurethatthiscontinues(Figure17). Therapidexpansionofthegridisdrivenbythegovernmentsambitiontoreducedependency on oil, regional shortages of gas, and to promote industrialisation and employment (IHS Cera 2010).Thenetworkcovers560citiesand3226villages.Currentlythereare1260CNGstations in operation in 611 cities (as of December 2009, NGV Communications Group). The large majorityofthesearepublicCNGorgasoline/CNGstations.Almost800morestationsareunder construction. Establishing a network of refueling stations was a multistakeholder effort. City councilswereinvolved,ministriesandmilitaryorganizationsprovidedland,NationalIranianOil Companyprovidedbudget,NationalIranianGasCompanyprovidednaturalgas,theMinistryof Energy provided electricity, the Ministry of Industry was involved, OEM were involved to manufactureNGVsandIRISIwasinvolvedforissuingregulationandstandards,etc. Figure17:NaturalgasinfrastructureinIran
Page|52
Source:IEA.
Third, an NGVs strategy can create employment opportunities and economic growth. IFCO promotes public awareness and acceptance of NGVS, the development of standards, creating productionofpartsforNGVmarkets(e.g.cylinders,compressors)andR&DonNGVtechnology.
OECD/IEA2010
ConversioncentresandaftersalesforOEMNGVShavebeensetupandtechnicalstaffhasbeen trained.InthemediumtolongertermtheaimistoproduceallOEMNGVsdomestically(initially bifuelandeventuallydedicated).Already,vehiclemanufacturersaremandatedtomakeNGVs 40% of their production portfolios (600000 out of 1.5 million annually) and the government activelysupportsR&DofNGVs.Fornow,theIranianOEMofvehiclesarededicatedtosupplying thedomesticmarket,butinthefutureexportstoTurkeyandPakistanmaybeanoption. Page|53 The government will continue to support and subsidise the conversion to and the domestic productionofNGVs.Iranhassetatargettohave2.4millionNGVsontheroadand2400CNG stations by the end of the next Iranian year (20 March 2012) and 3.5 million NGVs by 2015, whichdemonstratesthatwhatmayhavestartedasatechnologytosolveashorttermproblem isnowpartofalongertermstrategy.Ifthisgoalisattained,onethirdofthetotalvehiclefleet wouldbepoweredbynaturalgas,replacingroughly112000b/dofrefinedcrudeoil. Finally,whileitwasnotthemaintarget,NGVscancontributetoahealthierlivingclimatein denselypopulatedcitiesaswell.However,IranhasnotsetanyemissionlimitsforNGVs.It has adopted the Euro 3 norms per 21 March 2008 and will adopt the Euro 4 norms from 21March2012;theseapplyonlytogasolineanddieselvehicles.NGVsareexpectedtobeable tomeetEuro4norms. The Iranian government policy to encourage CNG use in transport is aimed at LDVs, while theavailableconventionalfuelsaredirectedtowardsHDVs.Theplantoproduce6000OEM CNGbusesinafiveyearperioddoesnotseemtoattractmuchgovernmentsupport.Having saidthis,allbusesandmosttaxisinthe12millionpeoplecapitalrunonnaturalgas.22Since dieselcostsonlyUSD0.02/L(IRR160/L) 23,theeconomicsdonotcurrentlyencourageHDV ownerstoswitchtonaturalgas. Inconclusion,whileIransCNGprogrammeisdrivenpartiallybyfactorsthatareuniquetothis country,namelytheinternationallyisolatedpositionandthethreatoffurthersanctionsdue to its nuclear programme, it is certainly worth evaluating its drivers and strategy. Iran illustrates how an NGVs strategy can work at multiple levels, involving government finance, securityofsupply,gasmarketdevelopment,employmentandenvironmentalissues.Itwillbe interesting to follow its future progress, particularly if natural gas use in the HDV segment weretobepromoted.
5.4Pakistan24
PakistansfirstintroductionofCNGgoesbackto1992andwithmorethantwomillionNGVsand over 3 000 CNG stations today25 located in 50 cities (as of April 2008, NGV Communications Group), it is the worlds leading country in terms of NGVs. CNG represents a growing part of Pakistani gas consumption (Figure 18) as the number of vehicles more than doubled in just three or four years. An overall investment in NGV market development of approximately USD1billion has been made, half of which in the last two fiscal years, and the government intends to continue its growth path to reduce pollution from transportation and reduce pressureonitsdepletingreservesofforeigncurrency.Thesereservesareunderpressuredueto (amongotherreasons)thesteepdropintheexchangerateofthePakistanirupeeaswellasthe
22
EnergyTribune,PushingtheGasPedal:TehranMakesNGVsTopPriority,13March2009: www.energytribune.com/articles.cfm?aid=1434). 23 IRR=Iranianrials. 24 ThissectiondrawsheavilyonPakistanscountryreporttothe2010IANGVconferenceinRome. 25 About74%oftheseareonindependentsites.
OECD/IEA2010
governmentspolicytoprotectthedomesticmarketfromsharplyrisingglobaloilprices.Asin manynonOECDcountries,pricesofoil,gasandpowerareregulatedandsubsidizedinPakistan. ThePakistanigovernmenthasstimulatedintroductionandgrowthofCNGuseintransportation by(partiallyorcompletely)exemptingCNGequipmentfromduties,specificallypromotingthe use of CNG in rickshaws and buses, subsidizing the testing of cylinders, encouraging training programmes and setting a specific tariff for CNG to create a price differential. NGVs are predominantly bifuel OEM vehicles, produced in Pakistan by (subsidiairies of) OEM such as Suzuki,ToyotaandSantro.Thejobcreationinvolvedisalsoseenasoneofthebenefitsofthis programme.Fuelstationsareownedbyprivatecompanies. Energy security is a major driver for the government. Pakistan has substantial gas reserves, estimated at 852 bcm as of the end of 2008 (Cedigaz). With natural gas production reaching 38.6bcm(IEA)in2009,theR/Pratiois22years.Asignificantshareofgasisconsumedingas fired power generation (11.7 bcm in 2007, IEA). Since Pakistan currently has no crossborder pipelinesorregasificationterminalsithasnooptionstoimportorexportgas.PlanstobuildLNG regasificationterminalshaveallbeendelayedorputonholdduetofinancingorotherissues.It isalsodifficulttoseehowPakistanwouldbeabletoattractLNGsuppliesatpricesthatarenot muchhigherthantheaveragepricethatthegovernmentsetsforthedomesticmarket.Pakistan did succeed in securing a natural gas sales and purchase agreement with Iran recently, which will bring almost 8 bcm/y of gas into the country from 2014 through a pipeline that is to be constructed.EarlierplansofIndiabeingpartofthisagreementhavebeencancelled,sothisgas willbedestinedforthePakistanimarketandbepartlyusedtosatisfygrowingpowerdemand. Figure18:CNGconsumptioninPakistan
Shareindomesticgasconsumption
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3,000
CNGconsumption (mcm/y)
7% 6% 5% 4% 3% 2% 1% 0% 0203 0304 0405 0506 FiscalYear CNGconsumption(mcm/y) ShareNGconsumption 0607 0708 0809
2,500 2,000 1,500 1,000 500
Note:Shareingasconsumptionhasbeencalculatedonthebasisofcalenderyeardata. Source:CountryreportPakistan(2010IANGVConference),IEA.
ThetransmissiongridinPakistanhasatotallengthof8502kmtransmission.Thedistribution grid is 62625 km, which is similar to the networks in Belgium or Spain, while Pakistan is singificantly bigger and more than half as densely populated as Belgium. The Oil and Gas Regulatory Authority (OGRA) is the responsible body for licensing of stations and equipment andregularsafetyinspections.CurrentlytherearebiomethaneprojectsinPakistan,butthese areprimarilyforpowergenerationratherthanforvehiclefuel.
OECD/IEA2010
5.5UnitedStates
TheUnitedStatesisaninterestingmarkettoevaluateintermsofNGVs,notonlybecauseofthe potential that the huge volumes of fuel consumed in the transportation sector offer, but also becauseapolicymaybeadoptedinthenearfuturethatwouldhelptheexistingmarketdriven efforts gain force. It is also an interesting case, because the approach is mostly fleetdriven, Page|55 focusingonmakingHDVsrunonnaturalgas.Thisisillustratedbytheaveragefuelconsumption intheUnitedStatesofroughly10000m3pervehicle(1bcmand100000vehicles),whichisvery high compared to the world average of roughly 2000 m3. It is also worth noting that LNG accountsfor20%intermsoffuelvolumesoftheUSNGVmarketasLNGisusedtodriveHDVs. Havingsaidthis,87%ofallNGVsintheUnitedStatesarecarsandLCVsandonly4000vehicles runonLNG. It has often been noted that NGVs are riding the proverbial shale wave and it is indeed likely thattheimpressivegrowthandpersistanceofgasproductionfromshaleplayshascontributed to the perception of gas as a domestic fuel that can help the United States in its difficult challengetoreducedependencyonforeignoil.Whetheritcanandwillactuallyachievethisisa questionworthlookingintoabitmore. Asinanymarket,ifnaturalgasfortransportationistobecomeasuccessintheUnitedStates, economics have to be sound for both vehicle owners and fuelling station builders/operators. This means that either aftermarket conversion or OEM models have to be available, the conversioncostsorpricepremiumonOEMNGVsmusteitherbelimitedorsubsidised,agood fuelpricedifferentialneedstobeinplaceandagoodstrategyforarefuellingstationnetwork based on commitments from fleet owners is required. These factors will now be evaluated moreclosely. For cars, the availability of OEM vehicles running on natural gas is extremely limited in the United States. While the 1990s saw some cars coming to the market, they disappeared again andsofar,theHondaGXistheonlyOEMcarcurrentlyavailablethatrunsonnaturalgas.Other carmanufacturers,suchasMercedes,areconsideringtobringtheirEuropeanmodelstotheUS market though and US car manufacturers are now also considering coming back into the market.26Convertingvehiclesafterleavingthefactorywithcertifiedsystemsisanoptionthatis availableforarangeofcars,pickupsandvansaswell.Althoughthecostsaresubstantial,inthe range of USD 12000 to USD 18000, these are offset by federal income tax credits and the quality is assured nowadays as the systems are tested to comply with the same emissions performancerequirementsasOEMvehicles(NGVAmerica,2010). ForcommercialvehiclesandHDVs,itsadifferentstoryastheavailabilityiscertainlyimproving. Awidevarietyofmodelsisnowavailableandtruckscanreacharangeupto600milesonLNG. LCVs and truck owners are demanding customers. Their vehicles are required to run cheaply, reliablyandefficientlytomakemoneyinabusinessthatischaracterisedbysmallmargins.This means that factors such as vehicle range, reliability and maintenance, refuelling time and convenienceareimportant.Inthisregarditistellingthatoutof1900AFVsinthefleetofUPS, one of the largest fleet owners in the United States, CNG accounts for 1100 vehicles. Heavy dutynaturalgasvehiclesareseeninmanydifferentapplicationsintheUnitedStates,including specialised vehicles in marine ports and airports, school buses, waste collection, transit buses andlonghaultrucks.Nonroadapplicationsincludingrailroadandcoldironingofshipsinports mayalsobepromisingapplications,butfalloutsidethescopeofthisworkingpaper.
26
GM recently announced the marketing of CNG powered vans in the US: www.ngvglobal.com/cngpoweredgmc andchevroletcargovansreadyforlate20100518.
OECD/IEA2010
Table10:TypicaleconomicsofaLNGVtruckintheabsenceoftaxcreditsandsubsidies
Natural Gas price (USD/MBtu) LNG costs (USD/gallon diesel equivalent) Diesel fuel consumption (gallons/y) 5.00 2.03 20 000 3.00 19 384 40 000 2 95 688
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Diesel price (USD/g) Fuel costs savings (USD/y) Incremental costs LNG truck (USD) Pay Back Period (y) Savings over seven-year lifetime Source:Neandross(2009).
IncrementalcostsandsavingsforanNGVtruckvary,butTable10summarisessometypicaldata asreportedbytheindustry.Thisillustratesthatevenintheabsenceofsubsidiesintheformof grants, tax credits etc., the fuel price differential is sufficient to make the economics of NGVs interesting for fleetowners, notwistanding the fact that some fleetowners will require a pay back period shorter than the two years mentioned in this example. Figure 19 illustrates the historicpricedifferential(nationwideaverage)ofvariousalternativefuelscomparedtogasoline anddiesel. Figure19:PriceofnaturalgascomparedtootherroadfuelsintheUnitedStates
Source:DOECleanCitiesAlternativeFuelPriceReport,April2010.
Eventhougheconomicslookalreadyquiteattractiveforvehicle/fleetowners,legislationmay be on its way that would provide substantial incentives for the use of natural gas in transportationtobothvehicleownersandinfrastructurebuilders,thesocalledNATGASAct 2009(NewAlternativeTransportationtoGiveAmericansSolutions).Ifadopted,theNATGAS Actwouldamongstothersextendfor10to15yearstheexistingUSD0.50/GGEtaxcreditfor CNG/LNGwhenusedinvehiclesaswellastheincometaxcreditsforthepurchaseofanNGV. Furthermore, several tax benefits would be provided to encourage infrastructure investments. While the IEA does not currently have the data to assess to which degree infrastructure investments require subsidisation, it seems that the vehicle/fuel side of the marketmaybeoversubsidisediftheNATGASActweretobeimplementedinthesensethat partofthesubsidieswillbeusedtofinanceinvestmentsthataretheresultofsoundbusiness casesalready.
OECD/IEA2010
Besidestheeconomicsforfleetowners,otherfactorsareseenasimportanttoo,suchashaving champions:majorcompaniesinacertainindustrywhotaketheleadwillcauseotherstofollow. Some believe that reputation may be even more important than subsidies, although sound economicsdoremainaconditiosinequanon.Inthisrespect,theroleofUSgasindustryisalso worth noting. While the industry supported NGVs up to the liberalisation of markets in the 1990s,itretreatedsoonafterthat.However,theriseofshalegascombinedwiththeincreased Page|57 availability of LNG means that gas producers find themselves more and more looking for demandinanoversuppliedmarket.Soobviously,anynewmarketpresentingitselfcancertainly count on a healthy interest from gas producers, who can certainly help to drive NGV market development by either investing directly or actively support lobbying or PR/marketing campaigns. This development is illustrated by EnCanas Natural Gas Vehicles Drive Project, whichaimis convertingseveralfleetvehiclestonaturalgas,purchasingnaturalgaspowered HondaCivicGXvehiclesforemployeeuseandembarkingonaconsumerandindustryfocused educationcampaignaboutnaturalgasasatransportationfuel".27Theimportanceofreputation (heavily influenced by knowledge or the lack thereof) goes beyond the fleetowners as LNG productionsiteshavealsosufferedfromNIMBYeffects. Ashasbeenmentionedbefore,theindustryismainlytargetinglargefleetowners.Toillustrate thetypeofprojectsthattheUnitedStatesiscurrentlyseeing:largetransportationcompanyJB HuntsecuredUSD19millioninstateandfederalfundingfor262LNGtrucksandtworefuelling stations and logistics company Cal Cartage received USD 12 million in funding for 132 LNG trucks(currentlytheyhave400LNGtrucks)plusUSD1millionfortwoLNGfuelstations. Figure20:NaturalgasstationsbyState(asof2010)
Source:DOE,AFDC.
Refuelling networks are emerging slowly but steadily (Figure20). Station builder Clean Energy recentlyreportedthatitcurrentlybuildsonestationperweek(NGW,5April2010).Intermsof LNGinfrastructurethereare60fuelstations,eightproductionplantspluslandfillLNGsites.The stationarycharacteristicoftheLNG marketisillustratedby thefactthat54%ofthemarket representstransitbuses,30%refusevehicles,12%portapplicationsandonly4%isonroaduse,
27
http://coloradoenergynews.com/2009/07/naturalgasvehicleprogramunveiledbyencana
OECD/IEA2010
althoughtheindustryexpectsthelattertogrowsubstantiallyinthenextfiveyearsasittarget thefleetof,intotal,threemilliontrucksintheUnitedStates. California has a high concentration of LNG and CNG stations, with many in and around Los Angeles. In Los Angeles, refuse trucks were used to solve the chicken and egg dilemma and other vehicles followed six to seven years later. Now, 350 out of 750 trucks run on LNG. To illustrate the costs involved, an LNG project for the city of San Bernardino (CA) received USD1.7millioningrants,ofwhichUSD1.23millionwasusedforthestationandUSD492000 was used to purchase 20 trucks (Neandross 2009). Another city, Barstow, received USD2.8millioninfederal,stateandlocalfundingforapublicaccessLNGstationandabackup CNGtubetrailer(whichcoveredallcosts). TheInterstateCleanTransportationCorridorcoversthegreaterLosAngelosregionandmakesit possible to drive a LNGV anywhere in the state (Figure21). This project started in 1996 as a multistakeholder approach with involvement of Gladstein, Neandross & Associates as LNG consultant, UPS as a fleetowner and the government at a federal, state and local level. It involvestwolandfillLNGsites,butitdoesrelyonsubsidiesasitcouldnototherwisecompete with pipeline gas. So far, it has received USD 28.9 million from the government to develop 23refuelling stations and deploy 505 HDVs and 160 LDVs on natural gas and LPG, replacing 26millionlitresofdieselannually.28 Figure21:InterstateCleanTransportationCorridor,California
Page|58
Source:Neandross(2009).
Since EPAs decision that greenhouse gases contribute to air pollution and as such pose a danger to public health, it has been engaged in various efforts to reduce greenhousegas emissions. Among these efforts is a joint EPA/DoT proposal to gradually improve the average fueleconomyofcarsby2016to35.5milespergallon(MPG),ora42%improvementcompared to the current average of 25 MPG. This is estimated to raise prices of cars by an average USD1300 by 2016, although the savings over the lifetime of a vehicle would amount to USD2800. The consequence of this would be that for LDVs, the impetus for NGVs growth would be (further) diminshed as potential fuel cost savings decline. While there certainly is
28
http://ictc.gladstein.org.
OECD/IEA2010
opposition to EPAs mission to develop mechanisms to reduce greenhousegas emissions in generalandalawsuithasbeenraisedagainstthisspecificregulation,theAllianceofAutomobile ManufacturershassupportedthepolicysincetheWhiteHouseannounceditearly2010.
5.6Europe
Potentially,NGVscouldbeoneofthefewgrowthmarketsfornaturalgasinEurope.Residential demandisexpectedtodeclineasthermalefficiencyincreasesinmanycountries,populationis settodeclineinthefutureandthestockofhousesisnotstronglyincreasing.Industrialactivity will show limited growth as GDP increases and the average energy intensity of GDP is slowly declining.Powerproductionisamajorsourceofuncertainty:whilegasislikelytobethedefault fuel for new power generation projects other than renewables, its average load factor in this sectorwillbelowerwhenitfulfillsabackupfunction. EuropeisunlikelytoseeabottomupapproachinNGVmarketdevelopment,inthesensethata market pull from consumers and fleet owners will create a market for NGVs and refuelling stations. Besides the chicken and egg dilemma and the fact that NGV technology is not very wellknown with the general public, one of the reasons for this is the high market share of diesel,alsointheLDVsegment.Dieselvehiclesprovidegoodeconomicsfortheirowners,which are hard to beat. What this means is that NGV market development will have to be policy driven. However, strong policies aimed at the use of natural gasvehicles are not present at a EuropeanlevelandalsolackingonanationallevelinmostEuropeancountries.Thequestionis thentowhatextentNGVscanprovidebenefitsthatwouldbeabletodriveNGVprogrammes. Considering that the greenhousegas benefits for LDVs of natural gas compared to diesel enginesareinprincipleeithernonexistentorlimited,thisdoesnotprovideastrongdriverfor policies aimed at growth of NGVs. For HDVs things look different as 5% of European CO2 emissions are caused by trucks,29 for which dualfuel technology and/or biomethane may be verygoodoptionsinagreenhousegasreductionstrategy.Atthemoment,theEChasonlyjust startedtoplantheintroductionofCO2limitsonHDVsandthisislikelytotakealotoftimeto implement.29 Gasoline vehicles on the European road on average have a higher fuel economy thantheydointheUnitedStates,whichalsotakesawaysomeofthepotentialbenefitsofNGVs comparedtothiscountry.Asdiscussedinthesectionongreenhousegasemissions,theACEA agreement forces the European car industry to reduce the weighted average of the CO2 emissions of their car sales, which could provide a stimulus for them to actively promote the sales of NGV models since this would allow them to sell more of the more profitable models thattendtohavehigherCO2emissions.Howthisplaysoutexactlywilldependonthestrategy of car makers, who could also decide to put more effort into developing and selling more efficientgasolineordieselvehicles,ratherthaninvestinginAFVtechnologies. What remains as potential drivers are benefits of NGVs in terms of reduced local pollutants, reduced noise and a transition to biofuels or hydrogen. As discussed in the section on local pollutantsemissions,NGVsatthispointhavesomebenefitsovergasolineanddieselvehicles. Themainuncertaintythatfacespolicymakersistowhatextentthesebenefitswillbesustained within the next five to ten years as increasingly stringent emission norms drive car manufacturers to produce cleaner gasoline and diesel engines or develop powertrain options for exhaust gas treatment. It has often been commented that at some point for conventional fuels(particularlydiesel)atradeoffwillemergebetweenlowerpollutantemissionsandlower greenhousegasemissions,asadding morepowertrainoptions totreatexhaustgaseswill add
29
Page|59
HetFinancieeleDagblad29April2010,BrussellegttrucksCO2regelsop.
OECD/IEA2010
masstothevehicleandcreatecounterpressuretotheengine,bothofwhicharedetrimentalto the fuel economy. This would be advantageous for NGVs which in principle require no aftertreatmentofexhaustgasesandbenefitfrommanyoftheefficiencyimprovementoptions availabletogasolineanddieselvehiclesaswell.
Page|60
AtthispointtheIEAhasinsufficientinformationtojudgewhetherNGVswillbeabletosustain theirbenefitsintermsofemissionsasmuchofthe information oncuttingedgetechnologyis still in a proprietary stage. Also, only policy makers can decide at what point the acceptable levelofpollutantemissionsisreached.Thisisreallythestartofthediscussion:whichemissions shouldberegulatedand whatisthe maximumacceptablelevel.Thisdecisionshouldreflecta tradeoffbetweenwhichtechnologyisavailableatareasonablecostandwhichimplicationsfor publichealthareacceptableindenselypopulatedareas.Itshouldthenbelefttothemarket(car manufacturersandtheircustomers)todecidethefuelofchoicetomeetthesetargets,although policyinitiativesmaybenecessarytoensurethatoptionsareavailable. Inprinciple,directsubsidiesonvehiclesorfuelwoulddistortthemarketandleadtoinefficient allocationsalthoughitshouldbenotedthatinfrastructureinvestmentsforanyAFVsmayneed subsidisation to overcome the advantage that the incumbent fuels have in terms of existing infrastructure. This government support can be of temporary nature, though, and not necessarily take the form of subsidies. Guarantees for loans can provide a solution in case of soundeconomicsbutfinancingdifficultiesinatightcreditmarket.Governmentscanprovidea guaranteed offtake of fuel by purchasing NGVs or converting vehicles for their own fleets. Grantingprivilegestocleanvehiclesincities,forexampleparkingspacesorlanesonhighways can also stimulate demand at no costs. For noise, the same principle applies: if governments wishtosetnoiselimitsfromtrafficindenselypopulatedareas,itcanconsequentlybelefttothe markettodecidewhichtechnologyisbestequipedtomeettheselimits.Governmentsdoneed toensurethatregulationisdesignedtoprovidepotentialcandidatesaccesstothemarket.For example,inmanyEuropeancountriesthesimultaneoususeoftwofuels,suchasinadualfuel engine,isnotyetallowed. Lookingattwokeycountries,ItalyandSweden,theshareofCNGvehiclesinnewcarsalesover 2009 and the first four months of 2010 has been quite limited. Sweden saw some relatively goodsalesnumbers,whichsomecontributetoademonstrationofbiogasuseinaracingcarbut could also be due to the introduction of the first turbocharged CNG sedan in Europe at the beginning of 2009, leading to a market share just under 3% on average. Italy had an average marketshareofCNGinnewcarsalesof5.6%30althoughthisfellsharplyafterthefirstquarter of2010asincentiveswerenot continued.Somefearthatoveralldemand coulddropby over 30% and state that government stimulation is required to increase the current network of roughly750stations(NGVAEuropeinGasVehiclesReport,June2010).
30
Asaresultofgovernmentincentives,NGVaccountedfor6.9%ofnewcarregistrationsoverthefirsthalfyearof 2009,ofwhich6.2%wereOEMvehiclesand0.7%retrofit:www.ngvaeurope.eu/averagemonthlyngvpassenger carregistrationsinitalynow14200vehiclesoralmost7ofthetotalmarket.
OECD/IEA2010
6. SustainablepathwaysforNGVs
Keymessages: NGV programmes are currently seldom based on the goal to reduce greenhouse gas, whichisnottosaythattherearenopotentialbenefitsinthisrespect.Takingalongterm Page|61 perspective is essential when assessing the role of NGVs in a regional or national low carbonstrategy,asisacarefulconsiderationofthetypesofvehiclesthatwillbetargeted withcertainpolicyinstruments.
Whilethetechnologyforbiosyntheticgasisnotfullydevelopedyet,thiscouldprovide significant quantities of a lowcarbon fuel in the longer term at low or even negative greenhousegasabatementcosts.Whilebiogascanalsobeusedforotherpurposes,itis one of the few costeffective alternatives to significantly reduce greenhousegas emissionsfromespeciallyheavydutytransport.
Europe,mostnotablySwedenandGermany,iscurrentlyseeinganincreasingnumberof projectsaimedspecificallyattheproductionofbiogas,itsupgradingtobiomethaneand useinvehicles,eitherdirectlybysupplyingfuelstationsorindirectlybyallocatingthegas throughcertificates.
Inprinciple,NGVscanalsoprovideapathwaytohydrogenbutmoreresearchisrequired toassesshowandtowhichdegreethiscanbeaccomplished. While it is not a very common driver for NGV programmes, the introduction of NGVs can certainly be part of a greenhousegas reduction strategy. The different options to reduce greenhousegas emissions from transport need careful consideration, though. The relative meritsofNGVsneedtobecomparedwithotheroptionsintermsoftheirtotalgreenhousegas reduction potential, the marginal abatement costs as well as nongreenhousegas related aspects of various fuels. It is extremely important to take a long term perspective when assessing the role of NGVs in a regional or national lowcarbon strategy as technological developments can over time change the relative merits of AFVs significantly and lockingin a certaintechnologycreatesbarriersforthesucceedingtechnology. Thissaid,atthispointreplacinglightdutygasolinevehiclesbyNGVsgenerallyresultsina25% savingsofCO2eq/kmonaWTWbasis.ReplacinglightdutydieselvehiclesbyNGVswillinmost cases not result in a reduction of greenhousegas emissions. Replacing heavyduty diesel vehiclesbyNGVscanbeaveryinterestingoption,butisverydependentontheexacttypeof vehicle, the technologies (engine type, powertrain, exhaust gas treatment etc) that are compared as well as the actual realworld use of the vehicle. In general, the greenhousegas reductionsresultingfromthereplacementofaheavydutydieselvehiclebyaHDNGVarelikely to be present, but not very substantial. This means that programmes that aim to reduce greenhousegas emissions from buses and trucks by replacing diesel with natural gas should consider ways to maximize the greenhousegas reduction, such as using dualfuel vehicles and/orthephysicalorvirtual31useofbiogas.
31
Virtualreferstotheusageofcertificates.
OECD/IEA2010
6.1Potentialforbiogasuseintransport
Organic alternatives for fossil natural gas (sometimes referred to as green gas) can be producedintwoways.Currently,mostlargescaleproductionsites(suchassewagetreatment plantsandlandfillsites)useanaerobicdigestionofbiomasstoproducebiogas.Inthelongrun, thepotentialvolumesthatcanbeproducedwiththistechnologyareratherlimitedduetothe specificfeedstockthatisrequired.Biosyntheticnaturalgas(SNG)canbeproducedfromawide range of biomass feedstock by a process involving thermochemical conversion (gasification) and cleaning/methanation (removing sulphur compounds, halogenated compounds, siloxanes, ammonia,dustandparticles).ThetechnologyforbioSNGisnotfullydevelopedyet.According to the German DFBZ, the R&D required includes demonstration of the overall chain, plant availability and reliability, use of approved system components and cost reduction.32 Also, measuringthequalityandquantityofbiogasproducedarechallengingaspectsoftheprocessas theycanbequitecostly. Forbothanaerobicdigestionandgasification,theresultinggasisusuallyupgradedtobringitup tostandardsforgridinjectionoruseinvehicles.ThisinvolvesremovingCO2,whichisoneofthe morecostlypartsoftheprocessbutalsoprovidesavaluablebyproduct.Typically,propaneor LPG is added to biogas increase the caloric value; in Sweden around 7% 9% vol. is added.33 Overall,thetypicalinvestmentforatreatmentplantwitha300Nm3/hofrawgascapacity,the investment is in the order of magnitude of USD 1350000 (EUR 1 million) and the operating costsfora200Nm3/hplantareintheorderofUSD2.0ct/kWh(1.5ct/kWh)(IEA2006).There are various upgrading technologies: Pressure Swing Adsorption (PSA), water scrubbers and chemical/physical scrubbers. The energy consumption of different technologies ranges from 0.25 kWh/Nm3 for PSA and water scrubbers to 0.6 kWh/Nm3 for chemical scrubbers. Which technologyismostrecommendeddependsonthesituationandinparticularontheavailability of water. Combining CAPEX and OPEX, costs range from USD 1.6 ct/kWh (EUR 1.2 ct/kWh) to USD 3.2 ct/kWh (EUR 2.4 ct/kWh) of biomethane for various capacities and upgrading technologies.Therearesignificanteconomiesofscaleinupgrading. Biomethaneisatermcommonlyusedtodescribegasthathasbeenupgradedtoaround97% methane.Althoughupgradingisnotalwaysstrictlynecessary,itdoesreduceproblemsdueto thevarietyofgascompositionanditincreasestheenergycontent(andthusvehiclerange).A vehiclerunningonbiomethanehasarangethatistypically15%higherthanitisonfossilnatural gas,34liquefaction(LBG)resultsinatriplingofthevehiclesrange. WhiletheNGVindustryisworkingonbiogasprojects,itgenerallydoesnotseethisasthefuel thatwillenableit toreachitstargets,sincethevolumeswillremainlimited forsometimeto come.Theprospectofcreatingapathwaytoacarbonneutralorevencarbonnegativesolution (if methane emissions are avoided) is a powerful one, though, which can help the industry convincepolicymakerstosupportNGVstrategies.InIEAsview,itisimportantthateffortsare combined. This section will show that bioSNG has the potential to significantly reduce greenhousegas emissions at greenhousegas abatement costs that are lower than those for fossil natural gas. Also, it will show that bio SNG production could (in theory) cover full NGV demand.Therefore,onahorizonofoneortwodecades,theaimforNGVsstrategiesshouldbe tomaximisetheshareofbiogasintransportation.
32
Page|62
DFBZpresentationBiomethaneasfuel,Berlin1October2009: www.fnrserver.de/cms35/fileadmin/allgemein/images/veranstaltungen/biofuelconference/S3_3_MuellerLanger.pdf. 33 Howmuchneedstobeaddeddependsonthecommongasqualityinthecountry. 34 Duetothehighermethanecontent,nottotheorganicsource.
OECD/IEA2010
TherearebasicallytwowaystoconnectNGVstobiogas.Thedirectlinkwouldbetotransport locally/regionallyproducedbiogasdirectlytoarefuellingstationforNGVs,withnolinktothe network(otherthanfordemand/supplybalancing).Theindirectlinkmeansthatbiogasinjection into the grid and utilisation of natural gas in vehicles are not physically connected, but only administrativelylinkedthroughtheissuanceandpurchaseofcertificates.Inthelattercase,one couldaskwhyitshouldbetheresponsibilityoftheNGVsectortoensurethatgasproductionis Page|63 sustainable. Usually, the demand side is not very much concerned or involved with upstream mattersandinmostcountries,NGVswillhavethelowestshareindomesticgasconsumption. However,ifanNGVstrategyisfoundedontheaimofreducinggreenhousegasemissions,then this does imply a responsibility to make sure that greenhousegas reductions are indeed attainedandmaximised.Asinmostcasesadirect,physicallinkbetweenbiogasproductionand itsconsumptioninavehicleisdifficultandunnecessary,greencertificatesprovideanefficient andpracticalwayofmakingvehiclescarbonneutralthroughtheuseofCNG/LNG. Althoughbiogasproductionisunlikelytoexceedtotalgasdemandinmost(ifnotall)countries and other gas consuming sectors could naturally also buy these certificates, other sectors are likely to have more alternatives to reach the same goal. So in essence, there is a tradeoff betweenloworzerocarbontechnologiesfortransport(suchasEVandhydrogen)versuslowor zerocarbontechnologiesforothergasconsumingsectors,suchastheresidential,industrialand powersector.Improvingefficiencyremainsparamountthoughinallenergyconsumingsectors andwillinmanycasesalsobethecheapestoptionintermsofgreenhousegasabatementcosts, andinmanycasesitcanprovidenetsavings. Vehiclesaddanotherpotentialapplicationofgasthatcanbeusefulinsomecircumstances,but biogas,bioSNGandbiomethanecanbeinjectedintothegridandneednotnecessarilyendup being used in vehicles. The CO2 saving from a 100 m3/h biogas plant is dependent on the utilisationofresidualheat(basedonthesituationintheUnitedKingdom)(Table11).Ifbiogasis producedinaremotelocationwherethereisnobaseloaddemandfortheresidualheatanda gasgridisnearbyitispreferabletoinjectthebiogasintothegrid.Inprinciple,usingthisgasfor the production of electricity yields a higher saving than the end use in transportation does as the maximum (indeed even the average) efficiency of a gasfired power plant is much higher thanthatofaninternalcombustionengine(althoughtheCO2savingsobviouslydependonthe existing power mix). But as mentioned before, under many circumstances there are more alternatives for decarbonising power production that there are for decarbonising transport (particularlyHDVs). Table11:CO2savingsfromdifferentusesof100m3/hbiogasproduction
Option On site electrification (no use of waste heat) On site electricity and use of waste heat Grid injection, end use in transport Grid injection, end use in heat generation Grid injection, end use in power production Source:RenewableEnergyAssociation,CNGServices. CO2 savings (t/y) 754 1 723 1 305 1 026 1 567
Wherethereisnogasgridavailable,gascanbetransportedtostationswithCNGtubetrailersas the case of Sweden illustrates. Also, landfill sites may produce gas that can be used to fuel vehiclesthatserveinnearbycities,whichproducethewasteforthelandfillsite,creatingalocally closedloopintermsofwastemanagementandgreenhousegas,whilesimultaneouslyreducing localpollutantsandnoiseindenselypopulatedareas.Anotherreasontousebiogasinvehicles
OECD/IEA2010
can be that grid injection requires that summer demand is high enough to facilitate baseload injection throughout the year, which is not always the case. Vehicles can then either help to increasebaseloaddemandofnaturalgasfromthegrid,asgasdemandfortransportationisless likelytohaveseasonalfluctuations)orbefuelledwithlocallyproducedbiogasdirectly.
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Whilecostsareanobstacleintheshortterm,inthelongtermbioSNGisexpectedtobeatthe low end of the cost range for advanced, lowgreenhousegas biofuels. Table 12 provides the greenhousegasabatementcostsrelativetoabaselinegasolinevehicleforanumberofoptions in the near term and the long term, based on the IEA Mobility Model. These calculations are basedonanLDV(car)withamileageof200000kmina15yearlifetimeanda7.5Lge/kmfuel consumptioninthebaselinecase.Forthelevelofgriddevelopment,scenariosDandF(asused inTable12) wereassumedfortheneartermand longterm,respectively.Therangesindicate dependencyofthecostsonthefuelmixofpowergenerationorconversiontechnology. Table12:Greenhousegasabatementcostsacrossdifferenttechnologies
Technology Oil price scenario (USD/bbl) Baseline vehicle bio-SNG Efficient vehicle gasoline hybrid Efficient vehicle bio-SNG Efficient vehicle gasoline Efficient vehicle plug-in hybrid Efficient vehicle natural gas Baseline vehicle natural gas Electric vehicle, range 150 km Source:IEA. Near term
(USD/tCO2 avoided)
Long term
(USD/tCO2 avoided)
80 300 110 230 140 245-560 275 510 600-1 930
120 -40 -30 -10 -5 30-55 60 105 80-205
CombiningthepotentialforbioSNGproductionby2030accordingtoarecentIEAstudy(IEA, 2010c)withtheforecastednaturalgasconsumptionbyNGVsin2030accordingtotheIGU(IGU 2009),demonstratesthatavailabilityofjustover10%ofglobalagriculturalandforestryresidues sufficestoproduceenoughbioSNGtocoverdemandfromNGVs(Table13).However,whilethe production of bioSNG shows a considerably higher conversion efficiency than other (liquid) biofuels (cellulosicethanol, biomasstoliquid [BTL] diesel), it should be noted that these fuels will ultimately compete for the same feedstock, in particular since there are little liquid alternativestofossilfuelsthancanbeusedinmarinevesselsandairplanes. Table13:BioSNGpotentialversusNGVgasdemandin2030
Region Africa Americas Asia, Middle-East and Oceania Europe, Russia and CIS World Bio-SNG at 10% residue potential
(billion Lge)
NGV gas demand

(billion Lge)
20 60 107 34 221
1 64 151 31 247
Source:IEA(2010c),2010IGUStudygroup5.3reportJune,2009(BAUsubscenario2).
Largescale grid injection of biogas, bioSNG or biomethane requires that the institutional framework be developed to create incentives and provide clear expectations for all parties
OECD/IEA2010
involvedinthevaluechain.InmanyEuropeancountries,policiesincentivisepowergeneration from biogas but not grid injection. In addition, international standards concerning the composition of the gas and quality and quantity measurement need to be established. Some countries,suchasSweden,SwitzerlandandGermanyhavedevelopednationalstandardswhich in some cases differentiate between quality standards for limited volumes and standards for unlimitedvolumes. Page|65
6.2BiomethaneprojectsinEurope
Themainfocusofthisworkingpaperisontheuseofnaturalgasinvehicles,beitfromfossilor organicorigin,andassuchitdoesnotaimtoprovideacompleteoverviewoftheprinciplesand practice of biogas production. However, considering its potential to decarbonise the power sector, it is worth to explore current activities related to biogas in transport. Europe is an interesting region to analyse in this regard as it is seeing more and more initiatives aimed at usingbiogasspecificallyfortransportation.Anotherreasonwhybiogasisparticularlyinteresting intheregionisthatlocallyproducedbiogaswouldfitwellinadiversificationstrategy,aimedat reducing reliance on imported gas as total demand grows. This also reduces greenhousegas emissions in the WTT part of the cycle. This section briefly descirbes some panEuropean projectsandlooksatdevelopmentsinSweden,Austria,TheNetherlandsandGermany.
BiogasMax
Much valuable experience has been gained through the EC Integrated BiogasMax project, funded under FP6. In eight cities/regions,35 pilots were setup and progress was monitored in the production, upgrading, distribution and grid injection of biogas and its use in vehicles. In total100HDVsinwastecollectionandpublictransportplus789LDVsfromprivatecompanies andprivatetransportwereinvolvedandmonitoredduring4.5millionkmoveroneyear.Thegas was mostly sewage gas, landfill gas, biomethane from biowaste and in some cases produced fromagriculturalcrops.Somemainconclusionswere: highsatisfactionoffleetmanagersanddrivers,trainingisessential; highvehiclereliability,morefrequentmaintenance; energyefficiencyneedstobeimproved(now3040%lessthandieselengines); needforadditionalfuelstoragecapacityandsafteyrequirementsforgarages. The project involved several different types of policy measures, ranging from obligations for publicauthoritiestousecleanvehiclestosubsidiesinvariousforms(includingtaxexemptions, waivingofexciseduties,congestioncharges,parkingfees,investmentgrantsetc).Besidesthe commonbarriersoflimitedvehicleavailability,highercostsandlackofinfrastructure,anumber ofbiomethanespecificbarrierswereidentified: a lack of incentives for the use of biomethane as a vehicle fuel rather than for electricity productionandincentivesaimedatpromotingbiomethaneoverfossilnaturalgas; alackofawareness,knowledgeandinformationaboutbiomethane; alackofstandardsforbiomethanequality; highinvestmentcostsforbiogasplants.
35
Thesecitiesandregionsare:Berne(Switzerland),GteborgandStockholm(Sweden),Lille(France),theregionof LombardyandRoma(Italy),TorunandZielonaGra(Poland).
OECD/IEA2010
Thisillustratesthatwhilebiomethaneisverysuitableasafuelfortransportation,thereiswork tobedonebypolicymakers,regulatorsandthebiogasindustrytoremovebarriersforfullscale marketpenetration.
Madegascarproject
Page|66
ThegoaloftheMADEGASCARprojectistoincreasethenumberofNGVs,withafocusonlight vehicles,andimprovingsupplyandinfrastructure.TargetsaretoincreasethenumberofNGVs by5000,construct40newfuelstationsand100newbiogasproductionplantsinthe13partner regions.36Theprojectisabouthalfwayintermsoftimeandhasalreadyexceededthefirsttwo targetsbyfar,butthe100biogasproductionplantshasproventobenotachievableinpractice (it is now ten). Knowledge building and dissemination is also an important part of the project andamongothers,theprojecthasproducedanumberoffactsheetswhichcanbefoundatthe projectwebsitewww.madegascar.eu.
Sweden
Sweden is a very interesting case in the sense that the byandlarge marginal CO2 free power generation capacity37 means that transport is the logical choice of policy aimed at climate changetargets.TransportaccountsforabouthalfofthenationalCO2emissionsandindeed,the Swedish government aims in the long run to decouple CO2 emissions from road freight from GDP growth. Partly, the country can reach its goals by replacing road passenger and freight transport with electric railroad, but the use of biofuels and diesel instead of gasoline (which reducesCO2emissions)arealsopartofthegovernmentsstrategy.SinceSwedensnaturalgas networkonlycoversthewesterncoast(whichconsistsof540kmtransmissionand3000kmof distribution pipelines), it may make sense to use biogas in the near vicinity of its production, whichmakesagoodcaseforitsuseinNGVs(Figure22). Sweden currently has over 23000 NGVs, the majority being LDVs and LCVs, which consumed morethan67millioncubicmetres(mcm)in2009.Although thisisnotasignificantvolume,it represents a growth of 16% compared to 2008, and 65% of this volume is biomethane (EnergigasSverige).Currently26%ofbiomethaneproducedisusedasavehiclefuelwhile50%is usedforheat,8%forelectricityand14%isflared.InDecember2009,therewere136refuelling stationsinSweden(asofJune2009,NGVCommunicationsGroup),ofwhich104publicand32 private,and55morewereunderconstruction. Sweden currently has a total of 227 biogas plants, of which 140 municipal sewage treatment plants,54landfillsites,fourindustrialwastewatertreatmentplants,17codigestionplantsand eight farm plants (Swedish Energy Agency, 2010). There is a huge but unrealized potential in bioSNG production from onfarm plants and bioSNG from forest residuals, total potential biomethaneproductionfromwasteandresidualproductsisestimatedat74TWh(SwedishGas Center). The ultimate goal is to replace 99 TWh of energy used in transport in the for of oil products. Incentives for the use of biogas in vehicles are in place in Sweden and examples of biomethaneprojectsareabound(Biogasst,2008).
36
Theseregionsarelocatedin10countries:Austria,Bulgaria,CzechRepublic,Germany,Lithuania,Poland,Slovenia, Spain,SwedenandtheUnitedKingdom. 37 SwedenhasthelowestcarbonintensityofenergysupplyamongIEAcountries(IEACountryReviewSweden,2008).
OECD/IEA2010
Figure22:Swedishgasinfrastructure
Page|67
TheboundariesandnamesshownandthedesignationsusedonmapsincludedinthispublicationdonotimplyofficialendorsementoracceptablebytheIEA.
Source:IEAdataandanalysis.
TheLinkpingBiogas38plant(locatedintheEastofthecountry,wherethereisnogasgrid)has anannualtreatmentcapacityof100000tonnesofbiomass,comingfromanimalmanureand different food industries in the vicinity of city (which has 140000 inhabitants). It produces 4.7million m3 of upgraded biogas (97% methane), used in 64 buses and a number of HDVs (trucks)andLDVs(privatecars,taxisanddistributionvehicles).Theplantstartedproductionin 1997 and this year the first buses also started running on biogas. Since 2002, the urban transport fleet consists of only biogas buses, resulting in a CO2 reduction of 9000 t/y. In additiontotheslowfillingstationforbuses,whicharerefuelledduringthenight,therearealso 12publicbiogasfastfillingstations,someofwhicharesuppliedthroughalowpressurepipeline fromtheupgradingplantandsomeofwhicharesuppliedthroughacontainersystem.Thetotal investmentwasUSD19million(EUR14million).In2005,adieselpoweredtrainwasconverted torunonbiogasbychangingtheengineandequippingitwithstoragecylindersforcompressed biogas(CBG),allowingitarangeof600km.Thiswascheaperthanelectrificationofthetrack. Emission levels were lowered from Euro 1 to Euro 5 levels and greenhousegas emissions are now zero (on a lifecycle basis). Apart from the transportation aspects of the project, artificial fertiliser has been replaced by digestate from the biogas plant and an environmentally sound processisnowavailableforthetreatmentofregionalorganicwaste. Arlandaairportisanexampleofanoffgridfuellingstationthatissuppliedwithcanistersthat aretransportedbytrucks.Itsnoteworthythattheequipmentherewasreplacedtwiceinthree yearstime,becausetheoriginalcompressorscouldnotcopewiththehighinletpressurefrom the canisters.ThecostsforthiswereUSD0.9million(SEK7million),additionaltotheorginal
38
Source: IEA Bioenergy Task 37, 100% Biogas for urban transport in Linkping, Sweden, available at http://www.ieabiogas.net/Dokumente/casestudies/linkoping_final.pdf
OECD/IEA2010
investmentofUSD270000(SEK2million),whichillustratestheimportanceoftheplanningand design phase of a station. The 250 taxis, five airport transfer buses and a number of refuse trucksconsume3000Nm3eachday.CO2capsandspecialtaxistandswereusedasincentives. Vsters illustrates different parties working together in a wastetoenergy project, involving farmers, an energy company and a waste company who set up a common biogas production andupgradingplantandtwofillingstations,onefor40busesand12refusetrucksandtheother publiclyaccessibleandservingaround50vehiclesperday.Thefillingstationforbusesisafast filling station, which refuels a bus within five minutes39 and up to four buses simultaneously. Some minor difficulties have emerged, but could generally be overcome fast enough not to influencebustraffic. Eskilstunahasalonghistorywithbiogasproductionandstartedwithbiogasupgradingtovehicle standardsin2002withsewagesludge,organichouseholdandfoodindustrywasteasfeedstock.It isnowhometoaproductionplant,anupgradingplant,afillingstationforbuses(500000Nm3/y) andapublicfillingstationservingaround50vehiclesperdayandalmost300000Nm3/y.Forthis project its interesting to note the cooperation with the gas company AGA Gas to sell excess volumesandhavefossilnaturalgasasabackupincaseofdeficits.TechnologycamefromNew Zealandandhasgenerallyworkedwell,thoughsomesoftwareproblemshavearisenandsupport andsparepartshavenotalwaysbeenreadilyavailableinthepast. Norrkping is another example of a cooperation between a municipality, a gas company (E.ON) and the stateanditalsoshows the high relative uptakeof fuel by HDVs. Thefilling stationsfor busesprovides700000Nm3annuallyto16buses,whilethepublicstationsupplies70000Nm3to around20customersperday(E.ONcompanycars,taxisandanumberofprivatecars).Balancing demandandsupplywaspreviouslyarrangedbystorage(capacityoftwodaysconsumption)and lorry transports from elsewhere in Sweden, but now the E.ON station is connected to another biomethane station in Norrkping, which is supplied from another production plant and shortages of gas are rare. The Swedish state provided 30% funding for the USD 1.2 million (SEK8.9million)investmentrequiredforthefillingstationsandthestoragefacility. Uppsala originally invested USD 0.7 million (SEK 5 million) in a filling stations (including grid connection), which has been expanded several times leading to a total investment of USD2.7million(SEK20million).Thestationnowservesbiomethaneatapetrollinkedpriceto 54buses,twotrucksandtentotwentycarsonadailybasis.Themunicipalityistheownerand operator and as such has no profitability objectives and indeed is losing money on the productionsystem.Sinceareconstructionaroundfiveyearsaftertheoriginalconstruction,no technical difficulties have been experienced and in case of shortages, natural gas can be deliveredbylorryfromNorway.ThelackofaconsistentstandardinSwedenforthehandlingof biomethaneasavehiclefuelhasledtoconfusionamongconcernedauthorities. The municipality of Kungsbacka operates eight dualfuel garbage trucks which run on 70% biogasand30%RME. Biogasisexemptoftaxuptoatleast2013.Thetaxreductiononnaturalgasusedasautomotivefuel willbephasedoutduring201115.Continuationofthefringebenefittaxationofacompanycarwith anenvironmentalclassificationafter2011iscurrentlysubjecttodebate(SwedishGasCenter,2010). Ingeneral,themostimportantlessontobelearnedfromtheseexperiencesisthatthedesignof a station is a crucial phase. Selection of equipment, capacity of the station, the location, grid
39
Page|68
Usuallythistakesabitlonger,1015minutes.Fastfillingacartakes25minutes.Slowfillingtakesseveralhours, butusuallymeansthatawholefleetisfuelledsimultaneouslyfromthesamecompressor.
OECD/IEA2010
connection, land ownership, safety requirements and a supply route in combination with a backup/balancingstrategyareinterrelatedaspectsthatmustbethoughtthroughverycarefully toavoidcostlychangesinalaterstage.Itisclearthatinvestmentsaresubstantial(rangingfrom USD0.2toUSD1.3million,SEK1.5toSEK10million)andlargefleetownersprovidethebest guaranteeforastableofftakeofsubstantialvolumes.
Page|69
Austria
A biomethane demonstration project in Bruck an der Leitha, Lower Austria, demonstrates a potential solution for the summer injection problem. Due to the lower pressure it is often preferable to inject biogas into a local distribution grid rather than the transmission grid. However, biogas production is most costeffective as a continous process, which means that injectionneedstobebaseload.Whileadditionalgascanusuallybeprovidedfromfossilsources ifthebaseloadisnotsufficienttocoverdemand,insummer,localdemandintheareathatis servedbythedistributiongridmaybetoolowtoguaranteeofftakeofthebaseloadvolumeof biogas.ThefacilitynearBruckanderLeithaisconnectedtotwogrids.Inthewintermonthsall the biogas produced fed into the distribution grid (operating at 3 bar) and consumed in the community, while in the summer months, excess biomethane is fed into the regional grid (operatingat60bar).Thefacilityproducespurifiedbiogasatnaturalgasstandardatarateof 100m3/h,feedingupto800000m3/yintothegridwhichisvirtuallyusedinNGVs40andused for combined heat and power (CHP or district heating). Its interesting to note that vehicles were chosen as the virtual destination for the biogas because of the profitability in this segment of the market (high taxes on conventional fuels create a good margin for bioCNG). Thisprojectalsoincludesresearchonthedemandsideofbiogas,namelyutilisationinaFuel Cellanddieselengine.
TheNetherlands
The Netherlands has a large number of farms, which creates the potential for anaerobic digestion of manure for biogas production, plus most of these farms are connected to the natural gas grid. Indeed, several projects involving biogas injection into the distribution grid have already emerged in the past decades. Usually, the feedstock is from sewage treatment, landfillsites,agriculturalresiduesand/orliquidwastestreams.Gasunie,theholdingcompanyof theDutchTSOGastransportServicesrecentlygavethegreenlightforbiogasinjectionintothe transmission grid, if the biogas produced meets certain quality standards (Table14). Gasunie alsodevelopedacertificationsystem,whichmeansthatgreengasproductionandconsumption can be linked virtually. One Dutch car importer supplies the purchaser of a new NGVs with 90000kmworthofgreengascertificates(frombiogasproducedinTheNetherlands). WhatislackingintheNetherlandsistheNGVsretailinfrastructure.Thecountryisseeingsome activity in this field, but numbers remain low. There are currently only 2000 vehicles and 51refuelling stations, although the industry expects to have 100 stations by 2011. The Dutch governmentfacilitatestheconstructionofstationsthroughinvestmentsubsidies(notlimitedto biogasstations)andhasmadeaUSD290million(EUR214million)subsidyschemeavailablefor biogasproductionin2010.About10%ofallpublictransportationbusesinTheNetherlandsrun onnaturalgas,eitherfossilorbiogas.
40
NGVGlobal:www.ngvglobal.com/austriantrialbiomethanefacilityovercomesbarriers0702#more9100andproject website:www.virtuellesbiogas.at.
OECD/IEA2010
Table14:CompositionofvarioustypesofbiogascomparedtofossilgasinTheNetherlands
Vehicle Methane CO2 Biogas < 200 < 200
3
Groningen gas post-2000 post-2005 1996-2000 post-2000
Upgraded biogas
(grid injection)
Biomethane 174* 132* 129**
Bio-LNG 78/58 n/a 149 131
62/72/74
Page|70
Caloric value (MJ/m ) Energy content in fuel tank (MJ/l)
<1 000 1 000-1 400
127
156**
Source:Platformduurzamemobiliteit(2009).
Accordingtoa2007reportbytheworkingcommitteeEnergieTransitiePlatformNieuwGas, 10%ofDutchgasconsumptioncouldbebiogasby2020,increasingto50%in2050.TheDutch governmentadoptedthesevaluesastargets.
Germany
Germanycurrentlyhas900fuellingstations(ErdgasMobil,2010)in735cities(asofDecember 2009, NGV Communications Group), thereby surpassing Europes main NGVs country, Italy. Interestingly,thenumberofNGVsisquitelimitedcomparedtothenumberoffuellingstations ataround90000vehicles(ofwhich30%areLCVsand15%areHDVs,ErdgasMobil2010).Even thoughthisisonlyafractionofthetotalstockofroughly50millionvehicles,thisdoesrepresent a doubling of numbers in five years period. This growth is mainly due to strong government policy in the beginning of the century aimed at a rapid development of the public CNG filling stationnetwork,investmentsbythegasindustryandacommitmentfromtheadministrationto keep reduced tax rates for CNG as a vehicle fuel up to 2018 and for biomethane up to 2015. SomelocalgovernmentsprovideincentivesforthepurchaseofNGVsbyconsumers.Themarket shareofNGVsinnewcarsalesandtotalvehiclestockinGermanyisnegligibleandithasbeen suggested that heavy promotion of sales of NGV models at the expense of gasoline and particularlydieselmodelsinthedomesticmarketisnotpartofthestrategyofGermanvehicle OEM,despitetheirinterestinsellingNGVmodelsinothermarkets. TheUKbasedRenewableEnergyAssociationstatesthatthebiogasindustryisnowGermanys fastestgrowingrenewableenergysource,attractinginvestmentsoverUSD1.35(EUR1billion) p.a.TheDVGWstatesthatcurrently99%ofthe4500biogasplantsdonotinjectbiogasintothe gridbutproduceelectricityinsteadandinmostcasestheheatislost.Thegovernmentwantsto address this and aims to substitute 10% of natural gas with biogas by 2030 (currently 1.7%). Injectioncapacityhasgrownfrom6000m3/hin2008to20000m3/hin2009anditisexpected to grow to 48,000 m3/h in 2010, since the industry is becoming more and more interested. Technical standards focus among others on sulphur compounds and minimizing flaring to decreasemethaneemissionsfromupgradingandstorage. BiogasPartner41lists38upgradingplantsinGermanycurrentlyoperating,withatotalcapacityof 23853Nm3 biomethane perhour.Another15 plantsare underconstructionand29areinthe planning phase. If all these plans were realized, that would put the total capacity at 57093 Nm3/h.ThebiggestplantinGermany(Gstrow)hasafeedincapacityof5000m3/h.Germanlaw statesthattheminimumflowofsummertimedemandisnotavalidreasontolimittheentryof biogasintothegrid.Anotherprovisionstatesthatinjectionshouldbeeconomicallyfeasiblefor thegridoperator,butatthemomentallcostsrelatedtothisareallowedtobeincludedinthe regulatory operating costs, which the grid operator is allowed to include in the tariff.
41
www.biogaspartner.com.
OECD/IEA2010
Neverthelessthephysicalrealityisrelevant:wherewillgasactuallybeusedandhowtolerantis theequipmentto(changesin)thegasquality.Thefactthatbiogasfeedinisallowedtoexceed theofftakelevelofthemarketinthesummertimemeansthatforthelargestpartoftheyear thegashastobepressurized,whichiscostlyandthesecostsaresharedamongallconsumers. According to the Berlin Energy Agency, gas market regulation in Germany creates barriers for biomethanetoaccessthegasgrid.TheGasnetzzugangsverordnungregulatespreferentialaccess Page|71 forbiomethaneandcostsharingbetweenthebiogasproducerandthenetworkoperator,but regulatory barriers still exist. For instance, different gas grid operators have differing quality demandsfollowingfromtheirspecificequipment. TheRathenowbiogasplantnearBerlinproduces1150m3/hofrawbiogaswhichisupgradedto biomethane.Biomethaneisinjectedintothegridatafeedincapacityof520Nm3/handaround 2315 MWh of electricity is produced annually. BioCNG20 is made available to the Berlin fuel stations.Theinvestmentforthewholeplant(includingCHP)wasUSD12million(EUR9million), whichwasfinancedpartlybythegovernment.Nooverviewofthecoststructureisavailableasthis iscommerciallysensitiveinformation,buttheproducedgasis89ct/kgmoreexpensivethanCNG. ThepriceofBioCNGisUSD1.3/kgtoUSD1.4/kg(EUR0.95/kgtoEUR1.02/kg)inBerlin. The German public/private energy agency Dena recently published recommendations (Dena, 2010)forastrategyaimedatincreasingtheshareofnaturalgasandbiomethaneinGermanys road fuel mix, in order to reach the targets included in the federal governments 2004 fuel strategy.Ifthegoalsof0.5%to1%shareinroadfuelmixby2010and2%to4%in2020areto beattainedfromthe2009levelof0.3%,astaggeringannualgrowthof29%isrequired.Theonly wayforGermanytoreachthislevelofgrowthistomaximizethegrowthintheLCVandHDV segmentandtodevelopanintegratedapproach. WhileGermanyisoftencitedasanexampleofstakeholderscooperatingtowardsthecommon goal of growth of NGVs numbers, Dena (2010) states: policy makers and government, the petroleum industry with its filling station networks, the gas industry (including biomethane producers), vehicle manufacturers and dealers and research institutes, each with their own particular interests, have not been taking a harmonised approach to users. The document providesafairlydetailedoverviewoftheactionsthatarerequiredandwhichstakeholdersare involvedinthisaction.DenasestimatesofCO2savingsare24%onCNG(averageEUnaturalgas mix),39%forBioCNG20and97%forpurebiomethane(whichissimilarto100%windelectricity poweredvehiclesonhydrogenorelectricity).
6.3NGVs:Apathwaytohydrogen?
Natural gas can to a certain degree be mixed with hydrogen, which results in lower pollutant emissions,particularlyCOandNOxandCO2emissionsduetotheincreaseinhydrogentocarbon ratio(Fernandes2010;Simio,2010).Whilesometestsshowthatenergyefficiencyofthevehicle isimprovedupto15%ashydrogenisadded,even beyondmerelythereplacementofcarbon atomswithhydrogen,theevidencetosupportthisstatementdoesnotappeartobeconclusive. The overall CO2 emissions on a WTW basis are obviously largely determined by the way the hydrogenisproduced. Varioustestsandstudieshavepointedoutthefactorsinvolvedinchoosinganoptimalvolume ratio of hydrogen/natural gas, such as vehicle range, WTT and TTW CO2 emissions, costs, and pollutant emissions. As the WTT emissions increase linearly with a higher share of hydrogen while the rate of decline in TTW emissions decreases as the share of H2 increases, the WTW emissionsdecreaseinitiallybutincreasefromacertainpointonwards.A15%20%(vol.)share
OECD/IEA2010
of hydrogen is often mentioned as optimal. So far, most tests have involved stoichiometric engines,whiletheapplicationofhydrogen/methaneinleanburnordualfuelenginesisseenas a promising route for further research. As the combustion properties of hydrogen differ from methane(hydrogenhasalowerignitiontemperature),enginetuningisrequired.
Page|72
The CarbonSaver technology that has been developed by Atlantic Hydrogen Inc. over the courseofthepastdecadetodecarbonisenaturalgasmaybecomeinterestinginthefuture.This system would be inline with the fuel delivery system in the fuel station and removes carbon fromnaturalgasbyuseofapatentedplasmatechnology,whichresultsinamixtureofmethane and hydrogen and pure carbon powder (which is a valuable byproduct). This technology is expectedtoseepilotprojectsinthenearfuture. MoreresearchisrequiredtoassesshowandthedegreetowhichNGVscanpavethewayfora hydrogeneconomyintermsofinvestmentsininfrastructure,technologydevelopmentandpolicy.
OECD/IEA2010
7. Conclusionandoutlook
Keymessages: The regions that are currently leading in NGVs AsiaPacific and Latin America are likelytocontinuetodoso. Page|73 For the projected growth to materialise, substantial investments will be required in vehicles and retail infrastructure as well as transmission and distribution grids in some countries. While investments in vehicles and retail infrastructure can generate positive returns in many cases, temporary government support may be required to establish a market.Investmentsingridsarelikelytotakeplaceonlywhereothersectorscanbenefit fromnaturalgassupplyaswell. Taxandsubsidypoliciesneedtobesustainableinthelongruninordertofacilitatethese investments.WhileNGVprogrammescanalleviatepressureongovernmentbudgetsby replacing fuels that are (more) subsidised, taxation of motor fuels also provides an importantsourceofrevenueforgovernmentsinmanycountries.
NGVprogrammesaredrivenbyavarietyoffactors,includingtheimprovementoflocal air quality in densely populated areas, freeing up more valuable oil (products) for exports, reducing government spending on subsidies, stimulate economic development by promoting local production of vehicles, improving security of supply by replacing an importedfuelwithadomesticallyimprovedfuelandoverallgasmarketdevelopment.
Thesimultaneousdevelopmentofgasmarkets,publictransportationandtheeconomyin generalinmanynonOECDcountriesprovidemomentumforNGVprogrammes.
Forvariousreasons,thepotentialtoreplacelargequantitiesofdieselfuelbypromoting theuseofnaturalgasbyHDVshasbeenunderutilisedandthusfar,verylittleactionhas beenundertakentoconstructgashighways. Having discussed the current state of markets, the economics of NGVs, the technology, its benefitsandchallenges,aswellasthepoliciesandmarketdevelopmentinaselectednumberof countries,thispaperwilllooktothefuture,aimingtoidentifythefutureprospectsofNGVs. ConsumptionofnaturalgasbyNGVsisexpectedtoremainstrongestintheregionsthatarealso currently leading in NGV market development, AsiaPacific and Latin America (IGU, 2009). In theseregions,NGVsareexpectedtoreachverysignificantsharesoftotalgasconsumptionwhile inotherregionssuchasEuropeandNorthAmerica,theshareisexpectedtoremainextremely limited.ConsumptionofnaturalgasbyNGVsisexpectedtoriseinconjunctionwithoverallgas demand,leadingtoamodestgrowthinitsshareinallregionsexceptLatinAmerica(Table15). If these projected demand figures42 become reality, the consequences of this rather concentrated demand of CNG/LNG for these gas markets are substantial. Or rather, the prerequisites for this growth to materialize are significant. IGU estimates that 104 million equivalent43 NGVs will be on the road (which corresponds to just over 3% of the vehicle park basedonETP2010Baselineprojections44)andover133000fuelstationswillbeoperationalby 2030.Thismeansthataround93millionvehiclesneedtobeputontheroadintwodecadesat
42 43
IGUsforecastsarebasedonanassumedoilpriceofUSD120in2020andUSD150in2030. Thewordequivalentisimportanthereasitmeansthatonetruckorbuscountsas1015cars. 44 IGU(2009)mentionsashareof7%basedonadifferentassumptiononthetotalamountofvehicles.
OECD/IEA2010
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anaverageconversioncostorpricepremiumofUSD1000pervehicle,atcurrentcostlevels,45 impliesaninvestmentin vehiclesofUSD93billion,without consideringthe costsofreplacing vehicleswithinthisperiod.Naturally,theinvestmentsmadebyvehicleownersarehighlylikely toberecoveredbyfuelcostsavings,buttheinvestmentwillneverthelessstillneedtobemade. AssuminganaveragecostoffuelstationsofUSD350000,thetotalinvestmentrequiredforthe additional117000fuelstationsequalsaboutUSD41billion.Thisinvestmentcaneitherresult from a private company where a profitable business case can be made or by government incentiveswherethebusinesscaseisnotprofitable.Perhapsthelargestinvestmentisinthegas marketdevelopmentassomeofthecountriesareonapathtocombineNGVprogrammeswith investmentsintransmissionandparticularlydistributionnetworks.Asdiscussedinsomeofthe case studies, these investments can be very substantial indeed. It is likely that they will only materialiseinsituationswheresynergywithothersectors,suchaspowerproduction,industry orresidentialcustomers,ispresent. Table15:ExpectedregionalNGVgasconsumption
Region Asia-Pacific Europe Eastern-Europe/Eurasia ME & Africa Latin America North America Total 24 2 6 9 15 3 59 NGV gas consumption (bcm)
2015 2020 2025 2030
Share regional gas demand (%)

2015 2020 2025 2030
46 4 10 17 25 5 107
67 6 14 26 34 6 152
91 10 17 35 44 8 206
4 0 1 2 9 0 100%
6 1 1 3 14 1 100%
8 1 2 4 17 1 100%
9 2 2 4 19 1 100%
Source: NGV gas consumption based on IGU 2009 subscenario 2 (Region specific average consumption per equivalent NGV in each region business as usual scenario; includes biomethane), share in regional gas demand calculated using IGU data and WEO 2009ReferenceScenario.
Liberalisationofmarketsandpricereformsarealsoapressingissueinmanycountriesthatare engaged in programmes to increase the use of natural gas in transportation. This is not a coincidenceasnaturalgasreplacesfuelsthatareoftenheavilysubsidizedinanefforttoprotect the domestic market from changes in global commodity prices. In that sense, using CNG for automotive purposes can bring relief to government budgets that are under pressure from under recoveries, although CNG itself may also be subject to (implicit) subsidies. In these cases,afinanciallysustainabletaxationandsubsidiespolicyisrequiredtodriveastablegrowth for NGV markets as the stakeholders involved need longterm security in order to decide to investinthistechnology. As the case studies have illustrated, NGV programmes usually have more than just one single motivation.Althoughonedrivercanbedominant,usuallyitwillbeamixoffactorsthatcausea governmentand/orotherstakeholderstoactivelyencouragethegrowthofNGVmarkets.The possibledriversincludetheimprovementoflocalairqualityindenselypopulatedareas,freeing up more valuable oil (products) for exports, reducing government spending on subsidies, stimulateeconomicdevelopmentbypromotinglocalproductionofvehicles,improvingsecurity of supply by replacing an imported fuel with a domestically improved fuel and overall gas marketdevelopment.Thesimultaneousdevelopmentofgasmarkets,publictransportationand theeconomyingeneralinmanynonOECDcountriesprovidemomentumforNGVs.
45
Thismayoverstatecostsastheyarelikelytodeclinewitheconomiesofscale.
OECD/IEA2010
Thepastdecadehasseenverysubstantialgrowthinnumberofvehicles,fuelstationsandgas consumption in transportation. So far, with little exceptions, this growth has been concentrated mainly in LDVs (e.g. threewheelers, cars, taxis) and transit buses. For various reasons, the potential to replace large quantities of diesel fuel by promoting the use of naturalgasbyHDVshasbeenunderutilised.Thereasonsforthisvaryfrominertia(thelackof willingnesstochangethestatusquo),lobbyingbystakeholderswithinterestsinliquidfuels, Page|75 minorpricedifferentialsbetweendieselandnaturalgas,lowavailabilityofNGVmodelsand, very importantly, the lack of infrastructure. While blue corridors could provide a cost effective way of constructing CNG/LNG refuelling infrastructure and plans certainly exist in regions such as (Eastern)Europe, Latin America and Asia, very little action has been undertakentoactuallyconstructthesegashighways.
OECD/IEA2010
Abbreviationsandacronyms
AFV bcm
Page|76
alternativefuelvehicles billioncubicmeters biomasstoliquids compressedbiogas combinedheatandpower compressednaturalgas enhancedenvironmentallyfriendlyvehicle EuropeanStationaryCycle EuropeanTranscientCycle electricvehicle FischerTropsch hydrocarbon hydrogen/CNGblend heavydutynaturalgasvehicle heavydutyvehicle liquefiedbiogas liquidtocompressednaturalgas lightcommercialvehicle lightdutyvehicle litreofgasolineequivalent liquefiednaturalgas millionBritishthermalunit millioncubicmetres mediumdutyvehicle naturalgasvehicle nonmethanehydrocarbon originalequipmentmanufacturer particulatematter RapeseedMethylEster syntheticnaturalgas totalhydrocarbons transmissionsystemoperator tanktowheel welltotank welltowheel
BTL CBG CHP CNG EEV ESC ETC EV FT HC HCNG HDNGV HDV LBG LCNG LCV LDV Lge LNG MBtu mcm MDV NGV NMHC OEM PM RME SNG THC TSO TTW WTT WTW
OECD/IEA2010
References
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OECD/IEA2010
IEA(InternationalEnergyAgency)(2005),AlternativeFuels:AnEnergyTechnology Perspective,IEA/ETOWorkingPaper,IEA,Paris. IEA(2006),IEABioenergyTask37,EnergyfromBiogasandLandfillGas,BiogasUpgradingto VehicleFuelStandardsandGridInjection,IEA,Paris.

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OECD/IEA2010
Struben,J.(2006),IdentifyingChallengesforSustainedAdoptionofAlternativeFuelVehicles andInfrastructure,MITSloanWorkingPaper462506,http://ssrn.com/abstract=927012. SwedishEnergyAgency(2010),ProduktionochAnvndningavBiogasr2008, www.gasforeningen.se/upload/files/publikationer/rapporter/produktionavbiogas2008.pdf. Yarime,M.(2009),PublicCoordinationforEscapingfromTechnologicalLockin:ItsPossibilities andLimitsinReplacingDieselVehicleswithCompressedNaturalGasVehiclesinTokyo,Journal ofCleanerProduction,Vol.17,No.14,pp.12811288. Yeh,S.(2007),AnEmpiricalAnalysisontheAdoptionofAlternativeFuelVehicles:TheCaseof NaturalGasVehicles,EnergyPolicy,Vol.35,Elsevier,pp.58655875.

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The Contribution of Natural Gas Vehicles to Sustainable Transport

InternatIonal energy agency

INTERNATIONAL ENERGY AGENCY

OECD/IEA, 2010 International Energy Agency

The Contribution of Natural Gas Vehicles to Sustainable Transport

InternatIonal energy agency

Anotherperspectiveistolookattheshareofnaturalgasconsumptioninthetotaldomesticfuel consumptionfortransport.Therearecurrently17countries6wherethisshareis1%orgreater. ThecountrieswiththemostsignificantsharesareincludedinFigure6.

Thebenefit thatNGVs haveoverdieselandgasolineinterms ofemissions isclosingas standardsbecomeincreasinglystringent,buthowfuturetechnologicaldevelopmentswill playoutexactlyinthelightofincreasinglystringentemissionnormsisunsure.

250 200 150 100 50 0 0 200 400 600 800 1000

CO(mg/km) CNG diesel gasoline

0.15 0.1 0.05 0 0 0.5 1 CO(g/kWh) CNG Diesel 1.5 2

LiteratureprovidescategorisationofpolicyinstrumentsforNGVs,butnoevidenceonthe effectivenessofvariouspolicies.GovernmentscanstimulateNGVsdevelopmentatmany differentlevelsandcoordinateanintegratedapproachwithallstakeholders.

Note:Thenumbersfornaturalgasrefertoresidentialconsumers;whenusedasafuelfortransportation,naturalgasisoftentaxed differently,inmanycaseslower. Source:IEA.

Notes:Dataaretakenatvariouspointsintimeandcanthereforevaryfromdataelsewhereinthisdocument;gasolinerefersto regulargasoline,exceptforPakistan(onlypremiumavailable). Source:NGVEurope.

1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00

) 30 % ( V 25 D L e r 20 a h s t e 15 k r a M 10 5 0 2003 2004 2005 2006 2007 2008 2009

Diesel Ethanol Flexfuel NGV

Number vehicles 290 000 191 000 600 3 900 80 000

507 402 0.7 11 55

0.42 0.49 0.62 0.53 0.61

AdministrativePricingMechanism,thepricingsystemunderwhichtheGovernmentofIndiadirectlycontrolsprices forpetroleumproducts. 18 Basedonthisnumber,theR/PratiofornaturalgasinIndiaequals23years.

*dieselvaluesforthreewheelersrefertoenginedisplacement<500CC **dieselvaluesforcarsrefertoenginedisplacement<1600CC Source:ARAIinCSE,2010.

EnergyTribune,PushingtheGasPedal:TehranMakesNGVsTopPriority,13March2009: www.energytribune.com/articles.cfm?aid=1434). 23 IRR=Iranianrials. 24 ThissectiondrawsheavilyonPakistanscountryreporttothe2010IANGVconferenceinRome. 25 About74%oftheseareonindependentsites.

2,500 2,000 1,500 1,000 500

Asaresultofgovernmentincentives,NGVaccountedfor6.9%ofnewcarregistrationsoverthefirsthalfyearof 2009,ofwhich6.2%wereOEMvehiclesand0.7%retrofit:www.ngvaeurope.eu/averagemonthlyngvpassenger carregistrationsinitalynow14200vehiclesoralmost7ofthetotalmarket.

Europe,mostnotablySwedenandGermany,iscurrentlyseeinganincreasingnumberof projectsaimedspecificallyattheproductionofbiogas,itsupgradingtobiomethaneand useinvehicles,eitherdirectlybysupplyingfuelstationsorindirectlybyallocatingthegas throughcertificates.

DFBZpresentationBiomethaneasfuel,Berlin1October2009: www.fnrserver.de/cms35/fileadmin/allgemein/images/veranstaltungen/biofuelconference/S3_3_MuellerLanger.pdf. 33 Howmuchneedstobeaddeddependsonthecommongasqualityinthecountry. 34 Duetothehighermethanecontent,nottotheorganicsource.

80 300 110 230 140 245-560 275 510 600-1 930

120 -40 -30 -10 -5 30-55 60 105 80-205

NGV gas demand

Thisillustratesthatwhilebiomethaneisverysuitableasafuelfortransportation,thereiswork tobedonebypolicymakers,regulatorsandthebiogasindustrytoremovebarriersforfullscale marketpenetration.

Theseregionsarelocatedin10countries:Austria,Bulgaria,CzechRepublic,Germany,Lithuania,Poland,Slovenia, Spain,SwedenandtheUnitedKingdom. 37 SwedenhasthelowestcarbonintensityofenergysupplyamongIEAcountries(IEACountryReviewSweden,2008).

Groningen gas post-2000 post-2005 1996-2000 post-2000

Biomethane 174* 132* 129**

Bio-LNG 78/58 n/a 149 131

Caloric value (MJ/m ) Energy content in fuel tank (MJ/l)

<1 000 1 000-1 400

Accordingtoa2007reportbytheworkingcommitteeEnergieTransitiePlatformNieuwGas, 10%ofDutchgasconsumptioncouldbebiogasby2020,increasingto50%in2050.TheDutch governmentadoptedthesevaluesastargets.

IGUsforecastsarebasedonanassumedoilpriceofUSD120in2020andUSD150in2030. Thewordequivalentisimportanthereasitmeansthatonetruckorbuscountsas1015cars. 44 IGU(2009)mentionsashareof7%basedonadifferentassumptiononthetotalamountofvehicles.

Share regional gas demand (%)

IEA(InternationalEnergyAgency)(2005),AlternativeFuels:AnEnergyTechnology Perspective,IEA/ETOWorkingPaper,IEA,Paris. IEA(2006),IEABioenergyTask37,EnergyfromBiogasandLandfillGas,BiogasUpgradingto VehicleFuelStandardsandGridInjection,IEA,Paris.

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