Analysis of CNG and LNG Infrastructure in North America

America’s Natural Gas Alliance (ANGA) has recently released a report on the analysis of the US and Canadian Gas Vehicle Market. The results showed that although broader use of CNG and LNG vehicles can come with huge costs and infrastructure challenges, the industry cannot ignore the increasing market demand for natural gas vehicles. Using 2009 numbers, analysis have shown that natural gas demand for transportation is 3.2 billion cubic feet, which is equivalent to 27.7 million gallons of gasoline.

More information: NGV Global News item on CNG and LNG Infrastructure in North America and on ANGA’s website.

Netherlands Sets 2015 Goals for LNG-Fuelled Transportation

The government of The Netherlands, along with several Dutch companies, are finding ways to to accelerate the introduction of liquefied natural gas (LNG) as a transportation fuel, for both land and marine activity.  The declared goal is to have at least 50 barges, 50 ships and 500 heavy-duty trucks powered by LNG by 2015.  An initial assessment shows an abundant demand for natural gas and well diversified stocks, with a stabilizing effect on prices as a result.  The plan will commence by focusing on two areas: the Wadden Sea-North Sea and the Rhine region from Rotterdam to Basel, Switzerland.

See NGV Global News for more details about the LNG transport in Netherlands initiative.

Hungarian NGV Association Joins NGVA Europe

MGKKE, a Hungarian NGV-related interest group has joined NGVA Europe in helping increase the public acceptance of NGVs.  MGKKE particularly focuses on raising the share of gas powered vehicles in urban public transport to help improve local air quality and reduce noise levels in Hungarian cities.  One of their main objectives is to help build CNG filling stations throughout the country and today, Hungary has 3 public and 14 private CNG stations. MGKKE’s first ever Hungarian NGV conference held last November 24, 2011 was also a huge success.

To find out more about, visit the Magyar Gázüzemű Közlekedés Klaszter Egyesület website at www.mgkke.hu or read NGV Global’s report about the Hungary NGV association joining NGVA Europe.

China’s NGV Growth Accelerating

Media reports from China indicate that in the year April 2011 to May 2012, natural gas vehicle numbers increased by 378,000. More than 60% of the increase happened in the January to May period of this year.

The increase reportedly brings China’s total NGV population to 1.104 million with 98.9% of those operating on compressed natural gas (CNG).

More information: NGV Global News item on China’s NGV Market and CVWorld.

Bi-fuel Toyota Hilux for Thailand

Thai motorists now have a choice of a CNG/petrol bi-fuel version of the Toyota Hilux Vigo Champ when shopping for pickup trucks. The 2.7 litre vehicle is factory fitted and carries a full OEM warranty.

Buyers can choose between a single cab or dual cab version. In both cases the CNG cylinders are located in a purpose built compartment in the cargo bed.

Toyota also supplies a bi-fuel Corolla sedan in Thailand.

More information: NGV Global News item on CNG Toyota Hilux in Thailand.

Italian Concessions Improve Prospects for NGVs

The Italian government has enacted laws introducing concessions favourable to increasing the number of natural gas vehicles on Italy’s roads.

The concessions include relaxed restrictions on the location and operational requirements for natural gas refuelling stations, including the ability to operate self-serve CNG facilities, and increased weight allowances for heavy-duty vehicles operating on natural gas.

More information: NGV Global News item on Italian NGV policy changes; NGV Italy homepage.

2011 Natural Gas Vehicle Statistics Published

  • Natural gas vehicle growth statistics 2011Data as at Dec 31 2011
  • 15 million natural gas vehicles operating around the world
  • Almost 20,000 natural gas fueling stations
  • Sales for 2011 exceed projections

We have just released updated industry statistics as at the end of 2011 on our main NGV statistics data page.

The stats indicate there are more than 15 million natural gas vehicles running around the world.

Though currently lagging behind projections made in 2006, higher than expected sales in 2011 (2.576 million actual vs 2.495 million projected) resulted in a slight closing of the gap. The increase was more than twice the increase of 2010 (1.249 million), indicating a strong recovery from the slump caused by global financial conditions.

Data is collected from a variety of industry sources and should be taken as approximate only.

Figures indicate that Iran now has the highest number of natural gas vehicles, with 2.859 million on the road, slightly ahead of Pakistan at 2.85 million.

Data currently excludes marine vessels and off-road vehicles at this stage but these will be added in future years. Updates and corrections are welcome via email.

 

Brazil – Country Profile

NGV Industry History

The search for alternative fuels in Brazil was first initiated in the 1940’s, becoming more intensive in the early 1970s, when the country faced the impact of the first oil shock. At that time, limited data was available on oil and gas reserves in the country, and Brazil start producing automotive fuel in large scale, from biomass. Today, the gasoline sold in every fuelling station in the country is oxygenated with 25% sugar cane ethanol.

Natural gas was first used as a fuel in light vehicles in 1996. This was a result of a new law that extends this application, previously authorized only to metropolitan buses, to all type of vehicles. Starting slowly, the natural gas vehicle (NGV) industry has progressed to a point where close to 1 million vehicles are on Brazil’s roads, a remarkable number in only 9 years. Most of these vehicles are aftermarket converted taxicabs or commercial medium duty vehicles.

Policy

In some large metropolitan areas, like Sao Paulo or Rio de Janeiro, the government has been planning to promote programs to displace diesel with natural gas in the city buses. Strategies are being developed to resolve issues such as technology, price differentials to diesel engines and fuel, taxation, and operating and maintenance practices used today, to make natural gas attractive to fleet operators. This is a niche that is expected to grow significantly in coming years.

Another interesting project in discussion, to be developed in the south cone of South America are the ‘Blue Corridors’. When implemented, this will interconnect some cities such as Rio de Janeiro and Sao Paulo, with Buenos Aires (Argentina), Montevideo (Uruguay), and Santiago (Chile). These corridors are routes where natural gas is or would be available to fuel NGVs and enhance existing conditions to improve export-import transactions and political integration among nations in that region.

Current Status

  • 1,577,373 million NGVs (July 2008)
  • 1633 stations in most of the key cities (July 2008)
  • NGV penetration is close to 5% of the light national vehicles fleet
  • Government support to displace diesel from metropolitan buses

Fuel Supply

As at 2005, Brazilian natural gas proven reserves was 316 billions cu.m and new discoveries are estimated to be 419 billion cu.m. The projected demand for 2010 has been estimated as 100 million cu.m/day, assuming the country would be capable to import 30 million cu.m/day from Bolivia. The recent political crises in Bolivia has generated some concerns, requiring a review of existing efforts and investments on the Brazilian side, to eliminate the possibility of a potential shortage in the future. Total consumption is 39 million cu.m/day. NGVs consumption represents 13% of this total.

The production and transportation of natural gas in the country is handled by Petrobras, and delivered at city gates to different gas companies in every state, which has the responsibility of distributing the fuel to their customers, including thermal generating plants, industrial customers, residential customers, fueling stations, etc.

In 2008, natural gas consumption for the transportation industry in Brazil is in the range of 6.7 to 6.9 million cubic meters per day.

Refuelling Infrastructure

Brazil is a recent arrival in the natural gas arena. This was partially due to the fact that a great portion – 44% – of country’s primary energy requirements comes from renewable sources, mainly hydroelectric. Second, for a long time the known gas reserves of the country were located in the Amazon region, very far from the consumption market. Just recently, with the help of new developed technologies applied to deep ocean exploration, it has become possible to identify large gas reserves, close to the consumption points. As a result of that, the natural gas distribution network is still in construction in a large portion of the country. NGV fuelling stations have been a powerful feasibility instrument to justify the construction of pipelines in areas that otherwise may not have been viable.

In the last two years, where a pipeline is not available, a “mother-daughter” system has been developed, which is operational in several areas within a radius of 150-200 km from a pipeline source. Right now, there is an LNG plant under construction in the Southeast region, planned to start-up next year, which will be of great help in hauling liquid natural gas to remote locations.

The country today has more than sixteen hundred stations spread throughout most key cities. Most of these facilities are multiple fuel filling stations, where the natural gas has arrived later. However, space availability and other constraints mean that this is not always possible.

Vehicle Availability

The majority of global automakers have industrial plants in the country. Their total capacity has been disclosed as three million vehicles per year. Sales last year were close to two million internally, plus some exports.

The big successes today are ‘flex-fuel’ cars. These units are different models re-designed to run with gasoline or ethanol, or a mix of both in any proportion, using a single fuel tank. In April (2005), the industry sold approximately 50,000 flex-fuel vehicles in Brazil. The technology to make vehicles capable of running with a third fuel, natural gas, is available, as developed by Bosch and Magnetti-Marelli, called tri-fuel. The picture shows a tri-fuel VW Polo 1.0. However, OEMs are concentrated in producing the flex-fuels, which are sold at the same price as a regular gasoline vehicle, while the tri-fuel vehicles are more expensive.

Quality, safety and fuel availability are key issues in customer’s decision to utilize natural gas in their vehicles, and this favors the OEMs products.

Industry Regulators and Current Standards

Aftermarket conversions are subject to two sets of regulations. The first is related to the quality and safety, issued by Inmetro, and the other is the environmental set of rules applied to NGVs, issued by Ibama . Both Inmetro and Ibama are government entities with responsibilities in those areas. A recent report from Ibama has demonstrated the environmental benefits of the aftermarket converted NGVs in comparison with a 2004 gasoline engine.

Local Associations

IBP (Instituto Brasileiro de Petróleo, Gás e Biocombustíveis) : The Brazilian Institute of Oil and Gas is a private non-profit organizations, founded on November 21, 1957, which today has over 200 member companies, and focuses on promoting the development of national industry oil, gas and biofuels, seeking a competitive, sustainable, ethical and socially responsible industry.

 

US Federal Incentives

The following summary of US Federal Incentives is current as a Sept 2006.

New Federal Tax Incentives Favor Market Growth

NGVAmerica’s refers to the new federal tax incentives signed into law last August (2005) as a “three-legged stool” comprising vehicle tax credits, motor fuel excise tax credits and station tax credits. The incentives include:

Federal Alternative Fuel Vehicle Tax Credits
Federal Motor Fuels Excise Tax Credits
Fueling Station Equipment Tax Credit

Federal Alternative Fuel Vehicle Tax Credits

Under a provision of the Energy Policy Act of 2005, buyers of a new dedicated alternative fueled vehicle placed in service after December 31, 2005 are eligible for a tax credit of 50 percent of the incremental cost of the vehicle, with an additional 30 percent “bonus” credit for vehicles meeting the most stringent applicable EPA or California Air Resources Board (CARB) emission standard. If the buyer of the vehicle is a tax-exempt entity, such as a school district, transit agency or municipality, the tax credit may transfer to the seller of the vehicle. The amount of pass-through tax credit is a negotiating point between the buyer and seller to be reflected in a lower purchase price.

The amount of the available tax credit is based on four gross vehicle weight rating (GVWR) groupings that have total incremental cost caps ranging from a $5000 for light duty vehicles (up to 8,500 lbs.) to $40,000 for heavy duty vehicles (more than 26,000 lbs.). For example, a dedicated natural gas-powered light-duty pick-up that meets a lesser EPA emission standard could qualify for up to $2,500, while a Honda Civic GX, which meets CARB’s more stringent SULEV standard, could qualify for up to $4,000 in federal tax credits. Heavy-duty natural gas powered vehicles with GVWR over 26,000 pounds, such as a transit bus or utility crew truck, could qualify for up to $32,000 if the engine meets the strictest emission standard in place for heavy-duty engines.

Federal Motor Fuels Excise Tax Credits

Natural gas’ historical cost advantage over gasoline and diesel fuel will improve substantially due to the new federal motor fuels excise tax credit contained in the Energy Policy Act of 2005. Beginning October 1, 2006, the federal government will pay the seller of vehicular alternative fuel 50 cents per gallon of LNG or gasoline-gallon-equivalent (gge) of CNG. For CNG, the motor fuels excise tax credit is not generated until the gas is compressed for vehicular use.

While one highway bill provision provides this new tax credit, another provision raises the CNG federal tax from its current 6 cents per gge to 18.3 cents per gge, making it equivalent to the federal tax paid per gallon of gasoline, and it also raises the LNG tax from 11.9 to 24.3 cents per gallon, making it equivalent to the federal tax paid per gallon of diesel fuel. For private companies like investor-owned utilities, the net difference after the “rebate” is about 38 cents per gge of CNG and nearly 64 cents per dge of LNG.

NGVAmerica is still awaiting IRS guidance on the fuel credit including how it defines the word “seller.” The highway bill’s language is clear that a fleet operator who buys natural gas and compresses it for use in his/her own fleet is considered the “seller” of the fuel, even though no monetary transaction has taken place. Less clear, however, are cases where the purchase of natural gas and the ownership, operation and maintenance of fueling equipment is shared between the end-use fleet operator and a fuel service provider, such as a utility or independent fuel supplier.

Fueling Station Equipment Tax Credit

The third leg of the stool, is the energy bill provision that allows for an income tax credit equal to 30 percent of the cost of any qualified alternative fuel vehicle refueling property used in a trade or business and placed into service after December 31, 2005. The credit is capped at a maximum of $30,000 “per property” per year. As with the vehicle purchase tax credit, the fueling infrastructure tax credit can be taken by the equipment seller if the purchaser is a tax-exempt entity. The same provision repeals an existing $100,000 tax deduction for fueling stations. The new measure remains in effect until December 31, 2009.

The legislation also permits carrying forward of tax credits if the total allowable credit exceeds the taxable entity’s tax liability for that year. As of late-June when this article was written, final IRS guidance was still being developed. Of particular interest is whether the IRS will define individual pieces of equipment as “property” as it does in regulations pertaining to depreciable assets, thus allowing multiple pieces of “property” per fueling station, or if it will take a more restrictive interpretation and define “property” as the entire refueling facility.

The provision also includes a 30 percent credit for home refueling appliances with a maximum credit of $1,000.