As policymakers, stakeholders and industry players all try to rethink the domestic natural gas landscape, the use of gas in transportation continues to raise expectations for robust growth in the next few years. A report from Colorado-based energy research firm Pike Research LLC reiterated the growth scenario, but not without some caveats.
The Pike report, originally released in the first quarter, stresses that globally there are wide variations in the acceptance and application of natural gas vehicles (NGV) — either compressed natural gas (CNG) or liquefied natural gas (LNG) versions.
Among four key drivers — economics, environmental benefits, energy security and availability — both economics and availability can be problematic in the North American market, according to the report authored by Pike senior analyst David Hurst.
In North America demand is restricted mostly to fleet vehicles, and in the U.S. even these markets vary greatly among states, with some — including California, New York, Utah and Oklahoma — being far ahead of others because they have paid more attention to fueling infrastructure. “Refueling infrastructure remains a key challenge to the NGV market,” Hurst said.
Among the four key drivers, both economics and availability are important elements for fleet operators, according to Pike. “Because NGVs have an incremental cost above traditional vehicles, the fuel either has to be less expensive such that the owners break even quickly, or government incentives have to be available for purchase,” the report said.
Related to that, the fuel, vehicles and repair technicians all must be readily available or the market will not grow, according to the report. “This is the key reason the consumer market has failed to launch in North America.”
Besides North America, the report assesses Argentina and Brazil, Western Europe (mostly Italy), Eastern Europe (mostly the Ukraine), Asia Pacific and the Middle East/Africa. Some 28% of the current 12.6 million NGVs globally are operated in Argentina and Brazil. Pike’s report forecasts that global growth will be about 8% annually in the next five years, reaching nearly 20 million vehicles by 2016.
“Natural gas refueling development [globally] is not expected to achieve the same growth rate, but will reach nearly 26,000 stations worldwide by 2016,” the report said. NGVs remain an industry with “highly regionalized” demand. A little under 2,000 stations will be in North America in 2016, according to the report.
While it assumed some form of federal incentives that have yet to materialize, the report projected a growth rate of 25.4% during the 2010-2016 period, resulting in 32,619 NGVs being sold in 2016 in the U.S. market.
With the failure of any gas fueling incentives to emerge in Congress, Hurst reexamined his forecasts on a Pike blog last Wednesday, declaring that “our forecasts hold steady for the moment. Assuming petroleum fuel costs continue to rise (a safe assumption…), then the financial benefit of NGVs for truck fleets will continue. Passenger cars, which have never been a large part of the market, will continue to see benefit in fleets but will remain a niche product in the consumer market.”
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