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Toyota to Enter Natural Gas-Powered Vehicle Market

The day of the commercially viable natural gas-powered vehicle (NGV) may be on the horizon: Toyota Motor Sales USA Inc. (TMS) will display a compressed natural gas (CNG) Camry Hybrid concept vehicle at the Los Angeles Auto Show in November, the company said.

"With the combination of plentiful long-term supplies in North America, improved and more efficient recovery methods, favorable pricing and clean-burn/low-emissions characteristics, CNG has become a prime energy-source for the future," said TMS spokesman Irv Miller. "With this concept we are confirming our interest in pursuing CNG within our broad and comprehensive R&D [research and development] scope."

Toyota had marketed a CNG-powered sedan to fleet customers in California in 1999 but relatively cheap gasoline, the vehicle's need for special refueling techniques and a limited refueling infrastructure led to the program's demise a year later. The company did not say when the CNG-powered Camry will be available.

The only currently available natural gas vehicle in the United States is the Honda Civic GX. The vehicle is sold only in California and New York, and refueling it can take up to 16 hours using "Phill," an appliance that users connect to home gas lines. The vehicle's natural gas fuel tank provides a driving range of approximately 225-250 miles.

There are only about 1,000 CNG refueling stations nationwide, with fewer than half open to the public, according to Toyota. The latest directory of natural gas fueling stations published by the California Natural Gas Vehicle Coalition lists 123 stations in California, eight in Arizona and seven in Nevada.

Despite the hurdles, the idea of using natural gas as a transportation fuel seems to be gaining some traction within the automobile industry. Last month General Motor's (GM) Larry Burns, vice president of research and development, cited natural gas' abundance, affordability and relative cleanliness in a GM FastLane blog entry (see NGI, Aug. 11).

"In the near term, we can use [CNG] in internal combustion engines," said Burns. "Mid term, we can leverage natural gas to create electricity for [GM's] Volt and future variants. In the long term, natural gas could be an excellent source for making hydrogen for fuel cell vehicles, either at the filling station or in people's homes."

GM already has experience with NGV, Burns noted. GM's Opel Zafira CNG is "among the leaders in Europe, where gasoline and diesel fuel are costly, and we are exploring a dual-fuel approach with natural gas and gasoline for U.S. customers. While we are not ready to commit to a future production plan, we are taking a serious look at natural gas in the U.S. as yet another way to diversify our portfolio of affordable and sustainable transportation energy solutions."

In a report issued last week, Barclays Capital analysts said the domestic NGV market requires a jumpstart. Of the estimated 8.4 million NGVs operating worldwide, only about 120,000 are in the United States and only about 1,500 of those are used by nonfleet American consumers, they said.

"Demand for NGVs and current NGV sales in the U.S. point toward a modest growth from a very small base. Even with this expansion, NGVs will remain but a footnote in the U.S. energy equation for some time. To change the growth trajectory, an accelerant of some sort would be needed, and promoters are hoping Washington is just the place to find it...while we believe NGVs are on a steady but modest growth path, legislation could kick the technology into a much faster growth trajectory," the Barclays' analysts said.

Legislation has already been introduced that would increase the number of natural gas fueling stations and NGVs, but the analysts said the industry needs a more ambitious proposal, which should include NGV sales targets. "This would put the NGV market into overdrive and potentially move the needle on natural gas demand by the transportation sector," they said.

Oilman T. Boone Pickens has been promoting a plan to convert the transportation sector to the use of natural gas while at the same time moving to more electricity produced from wind and other renewable sources (see NGI, July 14). Chesapeake Energy Corp. CEO Aubrey K. McClendon, who has also been bullish on the idea of using natural gas for transportation (see NGI, Aug. 4), last week said that Chesapeake is concerned about the "possibility of an emerging U.S. natural gas surplus" in advance of increased demand from the U.S. transportation sector (see related story).

"We remain confident that natural gas is the single best solution to meeting America's energy, transportation and environmental challenges in the years ahead and we will continue our industry-leading efforts to increase both supply and demand for clean, affordable and abundant American natural gas," McClendon said.

Pickens, who said he drives a Civic GX, said he would "only be happier if [Toyota's] announcement was coming from an American automaker.

"General Motors makes 18 models of NGVs, yet none are sold domestically...Natural gas is the only immediate answer to replace oil as a transportation fuel. It's cleaner, it's cheaper, it's abundant, and it's ours. I hope that Toyota's decision to pursue CNG will send a message to Detroit."

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