The British Columbia provincial government on Wednesday made changes to its greenhouse gas (GHG) emissions reduction regulations to encourage increased use of natural gas vehicles (NGV) and marine vessels. Canadian utilities operating in BC now will be able to offer more incentives to fleet operators to switch to NGVs.
With industry and government leaders applauding the move, BC incentives for compressed natural gas (CNG) and liquefied natural gas (LNG) use in transportation will permit shifts in the allocation of incentives and investments within previously approved spending caps. The idea is to promote continued development of the provincial natural gas transportation market, according to a Ministry of Energy and Mines spokesperson.
"Natural gas is cheaper and cleaner than traditional fuels, reducing transportation costs and GHG emissions," said Bill Bennett, BC minister of energy and mines. "We're updating the GHG reduction regulation to give utilities like FortisBC more flexibility to expand incentives to fleet operators to convert their trucks, buses and ferries to natural gas."
The specific steps taken by the provincial government include:
Extending the existing BC incentive program one year to March 31, 2018;
Permitting utilities to spend up to $5 million on pilot programs to convert diesel engines to medium- and heavy-duty vehicles to run on natural gas;
Removing an $11 million cap on LNG-fueled marine engines to allow the incentive amounts to be applied to all eligible vehicles, including marine;
Easing the eligibility criteria for grant and loan structures aimed at switching out diesel engines; and
Facilitating more construction of NGV fueling infrastructure.
BC in 2012 introduced incentives for NGVs and LNG marine transport as a way to reduce GHG emissions, along with diversifying the domestic market for the province's abundant natural gas supplies. These included grants and zero-interest loans, fleet operator incentives to switch out vehicles and incentives to build, operate and own CNG and LNG fueling stations.
Last year, the United States and Canada agreed to cooperate on efforts to promote the use of NGVs, a plan that received the support of the Canadian Gas Association and the Canadian Natural Gas Vehicle Alliance (see Daily GPI, Sept. 9, 2014).
Fortis, the largest investor-owned distribution utility in Canada, has begun a $400 million expansion to increase its natural gas liquefaction capacity at the Tilbury LNG facility to meet future domestic transportation and export demand, including LNG supply to BC ferries. It signed a 10-year contract with the province ferry operator last February to supply LNG for three new dual-fuel ferries capable of running on LNG or diesel.
In that deal, Fortis provided BC Ferries with a $6 million incentive under the provincial clean energy programs.
Fortis CEO Michael Mulcahy said the utility is "committed to growing the natural gas for transportation market in BC. NGVs can save between 25% and 50% on fuel costs compared to diesel, and it also burns cleaner."
BC Minister of Natural Gas Development Rich Coleman said building a natural gas transportation market in the province "creates jobs and economic development by making it easier for the transportation sector to use natural gas."