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NPC: Let Market Decide Future of Transportation Fuels

In a report issued last Wednesday, the National Petroleum Council (NPC) did not pick any winners or losers for future alternative fuel vehicle technologies. It concluded that there was a "great deal of uncertainty" as to which individual fuel-vehicle system would overcome technology hurdles to be economically and environmentally attractive in the years ahead.

In the meantime, the NPC, an energy advisory committee to Energy Secretary Steven Chu, urged the federal government to be technology-neutral and let market dynamics drive commercialization. In 2009 and 2010, Chu asked the council to examine the alternative fuel-vehicle prospects through 2050 for passenger and freight transport vehicles.

"If the technology and infrastructure barriers identified by this study can be overcome, plug-in hybrid, fuel cell, battery electric and natural gas-powered passenger vehicles, and natural gas heavy-duty (HD) vehicles could come into widespread national use over the coming decades. The scale of this effort will be enormous," the NPC stated.

However, "even with sustained investment in technology and infrastructure, these fuel and vehicle advances are not assured. They will be driven by the combined effects of economics, technology, environmental and other policies, and consumer demand," it said.

In a separate report also issued last Wednesday, the American Clean Skies Foundation -- a nonprofit natural gas advocacy group -- projected that the federal government could save more than $25 billion through 2025 if just 20% of its third-party transportation providers were required to adopt the same alternative fuel targets, efficiency standards and reporting practices used by federal agencies' fleets (see related story).

The NPC study, "Advancing Technology for America's Transportation Future," paints a favorable picture for natural gas as a transportation fuel. "If the lower cost of natural gas (relative to petroleum) persists, and if fuel infrastructure is available and fully utilized, CNGVs [compressed natural gas vehicles] are most competitive with conventional liquid ICE [internal combustion engines] for LD [light-duty] vehicles under a broad range of conditions, primarily because fuel costs and vehicle technology hurdles are both relatively low."

Assuming the fueling infrastructure is available, "liquefied natural gas and compressed natural gas (CNG) could become cost-competitive options for HD and MD [medium duty vehicles], respectively, although diesel will remain the primary HD fuel," the council said.

Infrastructure challenges must first be overcome for wide-scale commercialization of advanced fuel systems, according to the NPC report.

"It is difficult but essential, therefore, that vehicles and associated fueling infrastructure be deployed concurrently. There are strategies that can help mitigate this issue, each with different costs and benefits.

"For example, natural gas vehicles can be deployed first in HD vehicles that travel highway freight corridors, enabling more targeted fueling station deployment. Plug-in hybrid electric vehicles can be refueled using the existing electricity supply system, and can also use gasoline if a charging station is not within range. Flexible/bifuel vehicles, such as...gasoline/CNG bifuel vehicles, allow the use of gasoline and varying amounts of alternative fuels while infrastructure is being installed and not yet widely available."

Chu, who spoke to the NPC, noted that Royal Dutch Shell plc is investing an estimated $300 million to construct natural gas liquids filling stations for trucks. California-based Clean Energy Fuels Corp., the largest provider of natural gas fuel for transportation in North America, last week said that it has completed 19 gas fueling stations with Pilot Flying J, the nation's largest operator of truck stops.

These efforts are "[diversifying] our reliance on just a single source of transportation energy, which is very important," said Chu. He further noted that Italian auto manufacturer Fiat had planned to introduce a bifuel natural gas/gasoline vehicle a few years ago, and even though the proposal never came to fruition, the plan indicated that the technology is possible (see NGI, Dec. 6, 2010).

"I would be surprised if they [advanced fuel technologies] won't be here in 10 or 15 years," Chu said. "All the technologies that I've talked about from fracking [hydraulically fracturing] gas, shale oil technologies" to advanced fuel technologies "are all technologies that the United States is well poised to be a leader in the world.

"We should be the leader and are going to be the leader of the world to show other countries how to develop...resources in an environmental responsible way."

With respect to fracking, Chu said, "I think it is a good thing. It doesn't mean the energy problem is over...We still have a volatility issue...I still worry about greenhouse gas emissions." But for the first time, "North America is looking like it could be oil neutral...It's a mixed bag. But it's a good bag. It means the United States is exporting less money," he said.

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