With 35 states having created various levels of incentives for using natural gas in transportation and the Energy Information Administration (EIA) predicting gas use in transportation will grow 100% by 2017, the latest Barclays analysis of U.S. gas broke down some of the metrics and concluded that natural gas vehicles (NGV) on the road will have to swell 12-fold between 2011 and 2017 to meet the EIA prediction.
If NGV demand for gas effectively doubles by 2017, Barclays analysis said that the daily volume is still relatively small in the larger gas demand picture, equating to about 170 MMcf/d. Nevertheless, the trade group NGVAmerica contends that with strong regulatory support natural gas could displace 6-20% of the EIA’s forecasted 51 billion gasoline gallon equivalent diesel-fuelled commercial vehicle market by 2017.
Barclays said without strong regulatory support there won’t be any “meaningful support” of national demand from natural gas in transportation. Natural gas is cheaper than diesel, but the NGVs cost a lot more than the equivalent diesel-equipped vehicle, Barclays pointed out.
“Diesel-fuelled commercial vehicles [buses, freight trucks, commercial light-duty trucks] are the largest potential market for NGV penetration,” said Barclays analyst Shiyang Wang. In 2010, Wang said, diesel-fuelled commercial vehicles consumed the equivalent of 13 Bcf/d or about 20% of the nation’s total natural gas demand.
Theoretically, NGVAmerica is correct, if natural gas could displace all the diesel-fired commercial vehicles on the road, the natural gas load would approach 20% of the nation’s total gas demand.
Barclays points out that compressed natural gas (CNG) continues to account for most of the natural gas transportation market (89%), but liquefied natural gas (LNG) has a lot of momentum in back of it, particularly in long-haul trucking. LNG’s 11% is likely to grow, given current plans in place to add another 300 LNG fueling stations nationally (there are 32 now, compared to nearly 600 CNG fueling stations).
A separate report by Energy Vision, “Tomorrow’s Trucks: Leaving the Era of Oil Behind,” analyzed the expanded use of NGVs among refuse/recycling truck fleets in the New Jersey, New York City, Long Island area, noting five factors as promoting growth of NGVs in the area’s 10,000-truck refuse truck market.
Those factors include local government mandates; the “power of example”; public/private sector educational outreach and technical assistance; expanded choice of NGVs for communities; and federal/state economic support from which the New York-New Jersey area has benefited in the past five years.
Ultimately, Energy Vision, a New York-based nonprofit, said there is also an increased desire among fleet operators and communities to be what it called “green leaders.” And the diesel-to-natural gas switch has some power carbon emission reduction advantages, the report said.
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