Shale Daily / NGI All News Access

Shale Revolution 'Late,' But Helping Advance NGVs

As several natural gas advocacy organizations urge the federal government to extend proposed economic incentives for electric vehicles (EV) to natural gas vehicles (NGV) and other alternative fuel transportation, one gas supporter believes the incentive disparity exists because the shale gas revolution came three years too late.

"Quite simply, it's timing," American Gas Association's Kathryn Clay, who also is executive director for the Drive Natural Gas Alliance, said at a press conference Monday in Washington, DC. "We peaked just a little bit too late. If the shale gas revolution had occurred perhaps three years earlier, would we be talking about NGVs as much today as we are talking about EVs? I think the answer is probably yes."

The U.S. Environmental Protection Agency (EPA) plans to amend the Clean Air Act to include a requirement that average greenhouse gas (GHG) emissions for fleet vehicles adhere to a 163 grams per mile standard. Also, the National Highway Traffic Safety Administration (NHTSA) wants to tighten the traditional miles per gallon (mpg) corporate average fuel economy standard for fleet vehicles to 49.6 mpg by 2025. To meet those goals, both the EPA and NHTSA plan to modify an existing incentive program to automakers from 2017 and 2025.

"We know that these national goals are extremely challenging," Clay said. "We are quite simply going to need every tool in our toolbox to achieve them, and that includes using NGVs."

Clay compared the current regulatory landscape for NGVs to the economic climate of early 2009, when Congress passed the stimulus package known as the American Recovery and Reinvestment Act (ARRA).

"I think you would have seen the same kind of funding put into NGVs as we had going to EV battery manufacturing and charging infrastructure [under the ARRA]," Clay said. "We just weren't part of the national conversation in the same way in 2008 and 2009. But we're here now."

Greg Staple, CEO of the American Clean Skies Foundation, a long-time advocate for the natural gas industry, urged federal regulators to create "a level playing field" for NGVs. At issue is a divisor for GHGs from both dual-fuel and dedicated NGVs, set to expire after 2015. Staple said the EPA's new GHG standards contain EV-only incentives.

"The EV-only incentive program that exists in the proposed rules doesn't make rational sense when you look at it in terms of the end goals of these new rules," Staple said. "And moreover, we think that the incentive program, as currently drafted, is just out of sync with the [Obama] administration's general policy of putting more natural gas to work in the transportation sector" (see Shale Daily, Jan. 26).

Staple said advocates for NGVs would like to see a "technology-neutral" pool of alternative fuel vehicle incentives. If one were created, he said roughly 1.5 million vehicles, about 10% of the vehicles that are estimated to be sold in 2017, could qualify.

"We're talking about an eight-year period when tens of millions of vehicles will roll off our assembly lines," Staple said. "If we get the incentives right, it could have a very large impact on the type of fleets that are available for Americans to drive. We think that this kind of [plan] could really drive change in the automobile fleet and would be the most cost effective for consumers."

Tom Hassenboehler, vice president of policy development and legislative affairs for America's Natural Gas Alliance, said there is bipartisan support in Congress for making changes to support NGVs.

"We've got lots of allies in Congress, both on the Republican side and the Democratic side, who recognize the benefits of natural gas and want to help promote the use of it to increase our energy security," Hassenboehler said.

Stephen Yborra, director of market development for NGVAmerica, told members of the Pennsylvania Independent Oil and Gas Association (PIOGA) last week that the natural gas industry can be its own best customer when it comes to NGVs.

"You're getting that gas out of the ground and you've got a great opportunity... to actually be users of the fuel," Yborra said at the PIOGA winter meeting on Feb. 7.

Yborra added that under new regulatory changes, diesel fleets will be able to retrofit and convert to running on natural gas, thereby avoiding the "chicken and egg" debate over infrastructure that natural gas supporters fret about. "It's not chicken or egg. It's a chicken-egg omelet: you do it at the same time," Yborra said.

PIOGA President Lou D'Amico said the organization would likewise convert some of its focus from gas policies to gas markets and, by extension, the production of NGVs.

"We have to do what we can to encourage the market for natural gas to develop," D'Amico said. "We're going to be focusing on those markets, trying to find a place for that gas: burn it, use it, get our prices up."

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