Natural Gas Vehicles

2010

WO R K I N G PA PE R

The Contribution of Natural Gas Vehicles

to Sustainable Transport

InternatIonal energy agency

MIchIel nIjboer

INTERNATIONAL ENERGY AGENCY

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The views expressed in this working paper are those of the author(s) and do not necessarily reflect the views or policy of the International Energy Agency (IEA) Secretariat or of

its individual member countries. This paper is a work in progress, designed to elicit comments and further debate;

thus, comments are welcome, directed to the author at: [email protected]

The Contribution of Natural Gas Vehicles

to Sustainable Transport

InternatIonal energy agency

MIchIel nIjboer

OECD/IEA2010 Thecontributionofnaturalgasvehiclestosustainabletransport

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AcknowledgementsEfforts from several people, both within and outside the agency have been critical to thisworking paper. The author of this document, Michiel Nijboer, gas analyst at the EnergyDiversification Division, would like to express gratitude to anyone who has in any waycontributedtothisproject.

DataandfeedbackfromanddiscussionswithseveralparticipantsintheNGVindustryaddedsignificant value to the analysis. Inparticular, gratitude goesout to Jeffrey Seisler (CleanFuels Consulting), Davor Matic (OMV) and Brett Jarman (NGV Global) for providinginformationandcontacts,discussing ideasand reviewingpartsof thisworkingpaper.Thecasestudies in thispaperwouldnothavebeenpossiblewithout the informationprovidedby Felipe Dias (IBP, Brazil), Mr. Fernandes (Techsource, Brazil), Alireza Rahnama (Iran),AnumitaRoychowdhury(CSE,India)andMuazzamHussain(OGRA,Pakistan).Variouspeoplehave provided information for the analysis or feedback on the draft version, including:Jeanet vanDellen (IGU,Norway),Anneli Petersson (SwedishGas Center), Peter SeidingerandFranzMarschler (OMV,Austria),RoyMoojen (Aspro,TheNetherlands),Dag Lilletvedt(Liquiline, Norway), Erik Bthker (CNG Net, The Netherlands), Guido Wember (E.ON GasMobil, Germany), Ita Soerijanto (NGV Communications Group), Lee Giok Seng (ANGVA,Malaysia),Hien Ly (CFS,Australia) andMurielDesaeger (Toyota,Belgium).Gratitude alsogoesout toNGVGlobal forprovidinguswith theopportunity topresentourworkat the12thWorldIANGVConferenceinRome,June2010.

Input and guidance from the following IEA colleagueshavebeen veryhelpful indifferentstages of the process: Sun JooAhn,AlexanderAntonyuk, TorilBosoni, Pierpaolo Cazzola,AnneSophie Corbeau, Ian Cronshaw, Francois Cuenot, Ellen Dalland, Anselm Eisentraut,Catherine Foureix, Lew Fulton, Dagmar Graczyk, Timur Gl, Ghislaine Kieffer, KazunoriKojima,FrankMatthew,AnneMayne,BertrandSadin,ChristopherSegar,MarilynSmithandEditaZlatic.

Theauthor remains fully responsible for thecontentof thisworkingpaperandanyerrorsoromissionsaresolelyhisresponsibility.

Asaworkingpaper,thisdocumentreflectsworkinprogress;input,suggestions,correctionsorcommentsfromreadersareappreciated.Pleasesendcommentstonaturalgasinfo@iea.org.

Thecontributionofnaturalgasvehiclestosustainabletransport OECD/IEA2010

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TableofcontentsAcknowledgements........................................................................................................................3

Executivesummary........................................................................................................................7

1.Introduction..............................................................................................................................11

2.CurrentstatusofNGVmarketsandtechnology......................................................................13

2.1DevelopmentofNGVfleetsandretailinfrastructure.....................................................13

2.2Technologyandperformance..........................................................................................18

3.EnvironmentalperformanceofNGVs......................................................................................23

3.1Greenhousegasemissions..............................................................................................23

3.2Localairquality................................................................................................................26

3.3Noise................................................................................................................................31

4.Economicsandpolicy...............................................................................................................35

4.1Fuelprices........................................................................................................................35

4.2CompetitivenessofCNG..................................................................................................37

4.3TheoryonNGVpolicy......................................................................................................38

4.4LocalfactorsforNGVpolicy............................................................................................39

5.Casestudies..............................................................................................................................41

5.1Brazil................................................................................................................................41

5.2India.................................................................................................................................45

5.3Iran...................................................................................................................................51

5.4Pakistan...........................................................................................................................53

5.5UnitedStates...................................................................................................................55

5.6Europe.............................................................................................................................59

6.SustainablepathwaysforNGVs...............................................................................................61

6.1Potentialforbiogasuseintransport...............................................................................62

6.2BiomethaneprojectsinEurope.......................................................................................65

6.3NGVs:Apathwaytohydrogen?......................................................................................71

7.Conclusionandoutlook............................................................................................................73

Abbreviationsandacronyms.......................................................................................................76

References....................................................................................................................................77

Listoffigures

Figure1:TotalnumberofNGVsworldwide.................................................................................13

Figure2:Compositionoffleets.....................................................................................................14

Figure3:GrowthofNGVfleetinselectedcountries....................................................................14

Figure4:EstimatedannualnaturalgasconsumptionbyNGVs....................................................17


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Figure5:EstimatedshareofNGVsindomesticnaturalgasconsumption...................................17

Figure6:EstimatedannualnaturalgasconsumptionbyNGVs....................................................18

Figure7:Relativeemissionsofvehiclesintypeapprovalanalysis...............................................27

Figure8:Lightdutyvehicle(car)emissions..................................................................................28

Figure9:Lightcommercialvehicleemissions...............................................................................29

Figure10:Heavydutyvehicleemissions:NOxandPM................................................................30

Figure11:Heavydutyvehicleemissions:HCandCO...................................................................30

Figure12:CostsofCNGversusgasolineindifferentscenariosofgriddevelopment..................37

Figure13:NumberofNGVsinBrazil.............................................................................................42

Figure14:MarketshareofalternativestogasolineinBrazilianLDVmarket...............................43

Figure15:FuelpricesandconversionstoNGVs...........................................................................44

Figure16:GasinfrastructureinBrazil...........................................................................................45

Figure17:NaturalgasinfrastructureinIran.................................................................................52

Figure18:CNGconsumptioninPakistan......................................................................................54

Figure19:PriceofnaturalgascomparedtootherroadfuelsintheUnitedStates.....................56

Figure20:NaturalgasstationsbyState(asof2010)...................................................................57

Figure21:InterstateCleanTransportationCorridor,California...................................................58

Figure22:Swedishgasinfrastructure...........................................................................................67

Listoftables

Table1:MarketshareofNGVintotalfleetincountrieswithatleast1%NGVmarketshare.....15

Table2:NumberofNGVfuellingstationsinselectedcountries.....................................................15

Table3:Countrieswithatleast600NGVsperfuellingstationonaverage.................................15

Table4:Welltotankemissions....................................................................................................25

Table5:TaxesaspercentageofenduserfuelpricesinOECDcountries2009............................35

Table6:Enduserpricesforroadfuels.........................................................................................36

Table7:NumberofNGVstationsinBrazil200610.....................................................................43

Table8:FivecitiesinIndiawithmostdevelopedNGVmarket....................................................46

Table9:CO2emissionsfromvehiclesinIndia..............................................................................49

Table10:TypicaleconomicsofaLNGVtruckintheabsenceoftaxcreditsandsubsidies.........56

Table11:CO2savingsfromdifferentusesof100m3/hbiogasproduction..................................63

Table12:Greenhousegasabatementcostsacrossdifferenttechnologies.................................64

Table13:BioSNGpotentialversusNGVgasdemandin2030.....................................................64

Table14:CompositionofvarioustypesofbiogascomparedtofossilgasinTheNetherlands...70

Table15:ExpectedregionalNGVgasconsumption.....................................................................74

Listofboxes

Box1:Storageofnaturalgasfortransportation..........................................................................20


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ExecutivesummaryKeymessages:

Thenumberofnaturalgasvehicles(NGVs)andfuelstationshasgrownverystrongly inthe past decade and continues to do so, although it is still a nichemarket, from theperspectiveoftransport (lessthan1%ofworldroadfuelconsumption)andnaturalgasmarkets(lessthan1%ofworldgasdemand).

Naturalgascanplayasignificantrole incuttingvehiclecarbondioxide(CO2)emissions,butoverthelongtermtherewillneedtobeacommitmenttotransitiontoverylowCO2gassources,suchasbiogasorbiosyntheticgas.NaturalgasmaybeespeciallyimportantforcuttingCO2emissions fromheavydutyvehicles (HDVs),sinceotheroptionssuchaselectrificationappeartobelimited.

Vehicleand fuel technology fornaturalgas isavailable todayand relativelyaffordable,particularlyincomparisonwithotheralternativefuelvehicles(AFVs).

Dependingonthecontext,NGVcanhavestrongbenefitsindifferentcountriesincluding:improving air quality and reducing noise in urban areas; diverting oil from domesticconsumption toexport; improvingenergy security;and reducinggovernment spendingon road fuel subsidies. Governments should carefully consider the role of NGVscompared tootherAFVs, suchaselectric, fuel cellandbiofuelvehicles,andweigh thecostsandbenefitsofeach fordifferentmodesof transport. In this context, itappearsthatNGVsmaycomparefavourablyinmanybutperhapsnotallnationalcontexts.

Natural gas can be competitive visvis gasolinewhere transmission and distributiongridsarepresent;incountrieswherethisisnotthecase,thereisoftenanopportunityforsimultaneous gas market development and increasing NGV market share. Whileinvestmentsinvehiclesandretailinfrastructurecangeneratepositivereturns,temporarygovernmentsupportmayberequiredtoestablishanNGVmarket.Withoutsuchsupport,many countries are unlikely to achieve selfsustaining NGV markets with substantialpenetrationlevels.Investmentsingridsarelikelytotakeplaceonlywhereothersectorscanalsobenefitfromnaturalgassupply.

Marketdevelopment

Although in the past decade the worldwide market for use of natural gas in vehicles hasdevelopedstrongerthaneverbefore,thistechnologyremainsanichemarketasthecurrentshareofnaturalgas inroadtransportation isstillvery limited inallbutafewcountries.ThecountrieswiththehighestlevelofmarketdevelopmentareArgentina,Brazil,India,IranandPakistan.

While retrofit is still applied, especiallyoutside Europe, there is a general tendency towardsoriginalequipmentmanufacturer(OEM)vehiclesandmoreOEMmodelshavebecomeavailableoverthepastyears,althoughtheavailabilityvariesfordifferenttypesofvehiclesonacountrytocountryorregionalbasis.Theequipment tobuild fuelstations forNGVs iswidelyavailableandtechnologycontinuestoimprove.

RoleofNGVinalowcarbonfuture

NGVprogrammesareusuallydrivenbyothergoals thangreenhousegas reduction,althoughNGVs can certainly contribute todecarbonising transportationandas such shouldbepartofplans tomove towards sustainable transport.Onaverage,a25% reduction incarbondioxide


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equivalent(CO2eq)emissionscanbeexpectedonawelltowheel(WTW)basiswhenreplacinggasoline by lightduty vehicles (LDVs) running on compressed natural gas (CNG). While thetechnology for biosynthetic gas is not fully developed yet, biogas could provide significantquantities of a lowcarbon fuel in the longer term at low or even negative greenhousegasabatementcosts.Europeiscurrentlyseeinganincreasingnumberofprojectsaimedspecificallyatthe production of biomethane and its use in vehicles. In principle, NGVs can also provide apathwaytohydrogenbutmoreresearchisrequiredtoassesshowandtowhichdegreethiscanbeaccomplished.Forvariousreasons,thepotentialtoreducegreenhousegasemissionsbyreplacinglargequantitiesofdieselfuelconsumptioninHDVsbynaturalgashasbeenunderutilised.

NGVpolicy

NGV programmes are driven by a variety of factors, including the improvement of local airqualityindenselypopulatedareas,freeingupmorevaluableoil(products)forexports,reducinggovernment spending on subsidies, stimulating economic development by promoting localproduction of vehicles, improving security of supply by replacing an imported fuel with adomesticallyabundantfuel,andoverallgasmarketdevelopment.

Governments can stimulate NGV development at many different levels and coordinate anintegratedapproachwithallstakeholders.AnynationalorregionalNGVstrategyneedstotakeintoaccountanumberof local factors to tailorgeneralprinciples to thecontext.There isno"onesizefitsall"approach.

Casestudies

Brazils remarkableaverageannualgrowthofalmost60% innumberofNGVduring thepastdecadehasrecentlysloweddownduetocompetitionfromethanolflexfuelvehiclesandsupplyconstraints. On the latter point, new gas discoveries/developments will lead to a markedimprovementofthedemandsupplysituation.Amajorpotentialsourceofgrowthofnaturalgasconsumption in Brazilian transport, notably heavyduty transport, is very dependent ongovernment policy. The country currently lacks strong government policy or initiatives fromotherstakeholdersthatcouldchangethissituationinthenearfuture.

IndiacouldbecometheworldslargestNGVmarketifitcanmanagethepolicyandsubstantialinvestment challenges for grid development, fuel price (de)regulation and enforcement ofqualityandsafetyregulations. Intercitybusesandtruckshavesofarremainedanunexploitedpotential.AnotheruncertaintyisthepotentialforIndiatoreplacenaturalgasbybiogasorbiosyntheticnaturalgas(bioSNG).

Iran initiatedanambitiousCNGprogrammetoalleviatepressureongovernmentbudgetsandcopewithashortageofrefinerycapacityinthefaceof(possiblefurther)internationalsanctionsbyusingadomesticallyavailablefuel.Thissetthecountryonapathofdramaticgrowth,whichcouldcontinueinthefutureiftheHDVsegmentwillbeincludedintheprogramme.

Driven by energy security, theGovernment of Pakistan has stimulated the introduction andgrowthofCNGuseintransportationbyseveralpolicymeasures.ThishasresultedinthelargestNGV fleet in theworld,overtwomillionvehicles,consuming2.5billioncubicmetres (bcm)ofnaturalgasperyear.

TheUnitedStatescurrentlyhasveryfewNGVsand limited infrastructure.Thismaychangeaspolicy support isgrowing,prospects forgas supplyhave improveddramaticallyover thepasttwoyears,vehicleavailabilityisimprovingandtheeconomicsareattractiveforfleetowners.A


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strategy aimed at HDV fleets would also mean that retail infrastructure costs can be keptrelativelylowwhilestillcoveringwideareas.

EuropewouldneedstrongpolicysupportforNGVstoplayasignificantroleinthetransportfuelmix,butastheworlds largestcarmarket, itcertainlyhaspotential.Dependingonhowfuturetechnologicaldevelopmentsplayout in relation toEuropes increasingly stringentnorms, thebenefitof lowerpollutantemissionscoulddriveNGVgrowth.However,themajor impetusforgrowthislikelytobegreenhousegasreductionbyusingbiomethane,particularlyinHDVs.

Futureoutlook

Ingeneral, intermsofpollutantemissionscomparedtocurrentdieselvehicles,NGVsperformwell,particularly in theHDVsegment.WhileOECDcountriescouldsee thisgapclosing,manynonOECDcountrieshaveadoptedstandardsthatwerethenorminEuropeortheUnitedStatesten ormore years ago. Therefore, improving air quality is likely to be a stronger driver fornatural gas in the nonOECD countries than in the OECD countries. The simultaneousdevelopmentofgasmarkets,public transportationand theeconomy ingeneral inmanynonOECD countries couldprovidemomentum forNGVprogrammes.Asa result, the IEAexpectsthattheregionsthatarecurrentlyleadinginNGVs,AsiaPacificandLatinAmerica,arelikelytocontinuetodoso.

While liquid fuels are taxed at least to some extent in allOECD countries,many nonOECDcountrieshave low tax ratesor subsidy schemes inplaceonenergyprices ingeneraland fortransportation fuels inparticular.Disregarding theeffectofsubsidiesor taxation, IEAanalysisindicatesthatnaturalgascancompetewithgasoline inallscenarios inwhichgastransmissionanddistributiongridsarepresent.

Somecountrieswillneedtoinvestheavilyinvehicles,retailinfrastructure,andtransmissionanddistributiongridstoaccomplishtheprojectedgrowth.While investments invehiclesandretailinfrastructurecangeneratepositivereturnsinmanycases,temporarygovernmentsupportmayberequiredtoestablishamarket,asmanycountriesareunlikelytoachieveselfsustainingNGVmarketswith substantialpenetration levelswithout it. Investments ingridsare likely to takeplaceonlywhereothersectorscanalsobenefitfromnaturalgassupply.Taxandsubsidypoliciesneedtobesustainableinthelongruninordertofacilitatetheseinvestments,notwithstandingthe fact that governments have a variety of instruments at their disposal to supportdevelopmentofNGVmarkets.


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1. IntroductionThis IEAworking paper evaluates the potential costs and benefits of using natural gas as avehicle fuel for road transportation,aswellas thepolicy related to itsmarketdevelopment.Therearegoodreasonstoanalysetheuseofenergy intransportationandtoexplorewaystodecarbonise thesectoras transportationneedscontinue togrow inmanypartsof theworld.The transport sector is currently responsible for 23% of energyrelated CO2 emissions, andtransport associated CO2 emissionswillmore than double by 2050 according to the EnergyTechnologyPerspectives2010(ETP2010)BaselineScenario(IEA,2010a).

Whereasimprovingenergyefficiencyremainsofparamountimportance,alternativefuelsneedtobeevaluatedtoreducetheimpactofgrowingenergyuseintransportation.Evenwithlowerenergyandcarbon intensity, transportationwillcontinue tohave (potential)negative impactsonhealth,safetyandenvironment.

There are several alternative fuel technologies, including natural gas, biofuels, full or hybridelectricvehicles(EVs)andhydrogenfuelcellvehicles.Naturalgasisthefocusofthispaper,bothfromfossiloriginaswellasrenewablegasintheformofbiomethane.Naturalgascanbeusedina compressed (CNG) or liquid (LNG) state in several modes of transport, including roadtransportation,offroad,rail,marineandaviation.1

Notwithstanding the potential for natural gas in other modes of transport, road transportdominates the total use of energy inworld transport and as suchwill be the scope of thisworking paper. This includes LDVs (passenger cars, light commercial vehicles), as well asmediumduty vehicles (MDVs) suchas vansorheavyduty vehicles (HDVs) suchasbusesandtrucks. Potential benefits of using natural gas in transportation include cost reduction,greenhousegas emissions savings, local air quality improvements, noise reduction, revenueincreasesfromoilproductsandenergysecurityenhancement.ThecasestudiesinthispaperwilldiscusstherolethesebenefitsplayinBrazil,India,Iran,PakistanandtheUnitedStates,aswellasreviewgovernmentspolicyinstrumentsusedandthestakeholdersthatplayedanimportantroleinmarketdevelopment.

Considering the future potential of biomethane to substantially decrease greenhousegasemissionsofroadvehiclesatlowornegativeabatementcosts,onesectionisdedicatedtovariousaspectsofthisfuel.Thissectionfeaturesageneraldiscussionofitsproductionprocess,costsandfuturepotential,andfocusesondevelopmentsinEuropebydiscussingtwopanEuropeanprojectsandpresentingcasestudiesonbiomethaneinSweden,Germany,AustriaandtheNetherlands.

ThefinalchapterevaluatesthefuturepotentialofNGVs.However,thepurposeofthispaperisnottoproducenewprojectionsonthenumberofvehicles,theirgasconsumptionand/orshareofthemarket,butrathertodiscusstherequirementsintermsofinvestmentsandpolicybasedonexistingprojections.

Thispapermakesseveralreferencestospecificproductsdevelopedbycertaincompanieswiththeaimofhighlightingkeytechnologies.ThisdoesnotsuggestanIEAendorsementofanygiventechnology; rather it seeks toacknowledge innovationandavoidpossible confusion.The IEAcannot,however,beexhaustiveinitsmarketsurveyandmaynotbeawareofothercompaniesthat offer similar products.Any such companies are invited to bring theirwork to the IEAsattentionforfuturereference.

1AccordingtotheInternationalGasUnion(IGU),ModerntechnologiesmakeitpossibletoflyonLNGtomostofthemajorairportsintheworld.


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2. CurrentstatusofNGVmarketsandtechnologyKeymessages:

Althoughtheworldwidemarketforuseofnaturalgas invehicleshasclearlydevelopedmorestronglythaneverbefore,thistechnologyremainsanichemarket,asthecurrentshareofnaturalgasinroadtransportationisstillverylimitedinallbutafewcountries.ThecountrieswiththehighestlevelofmarketdevelopmentareArgentina,Brazil,India,IranandPakistan.

While retrofit is still applied, especially outside Europe, there is a general tendencytowards OEM vehicles for both LDVs and HDVs. More OEM models have becomeavailableoverthepastyears,buttheavailabilityvariesfordifferenttypesofvehiclesonacountrytocountryorregionalbasis.

The equipment to build fuel stations for NGV is widely available and technologycontinuestoimprove.

2.1DevelopmentofNGVfleetsandretailinfrastructureThissectionpresentsthepastdecadesdevelopmentsintermsofNGVfleets,useofnaturalgas2asatransportfuelandinfrastructureforNGVsinselectedcountriesandregions.

Although theuseofnatural gas for thepropulsionof vehicles is certainlynotnew, thepastdecade is the era inwhich globalNGVdevelopmenthasdemonstrated its strongest growth.Starting fromavery lowbaseof littlemore than one million vehicles, thishas increasedtoacurrentestimateofjustover11millionvehicles.

TheglobalfleetofNGVsconsistslargelyofpassengercars/LDVs,althoughthereare some regional differences in thecomposition (Figures 1 and 2). Fortyfourpercentofallpassengercars/LDVsare inLatinAmerica.Almosttwothirdsof allMD/HD natural gas buses are intheAsia/Pacificregion,while53%ofalltrucksareintheRussianFederationandCIS,andAsiaPacificisleadingwith78%of all other vehicles on natural gas(threewheelersandtuktuks).

2Unlessanexplicitdistinctionismade,referencestonaturalgasasatransportfuelcanbegasfromeitherfossilororganicorigin.

Figure1:TotalnumberofNGVsworldwide

0

2

4

6

8

10

12

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Millions

Source: NGVGlobal,NGVCommunicationsGroup.


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Figure2:Compositionoffleets

Source:InternationalGasUnion(IGU)(2009).

Some countries inparticularhave shown a remarkable growth in recent years, albeit from asmallbase(Figure3).Iranisthecountrythathasexperiencedbyfarthehighestaverageannualgrowth intheNGVfleetoverthepastfiveyears.Startingoutfromanegligiblefleet,numbershavegrowntoalmosttwomillions.

Figure3:GrowthofNGVfleetinselectedcountries

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Pakistan

Iran

India

China

Source:NGVGlobal,NGVCommunicationsGroup.

CurrentmarketshareofNGV

Despitethestronggrowthinthepastdecade,thetotalnumberof11millionNGVsstillpalesincomparisontoatotalworldwidenumberofaround780millionlightdutypassengervehiclesin2007(ETP2010).FewcountriesworldwidehaveattainedanNGVpenetrationratehigherthan1%(Table1).BangladeshhasbyfarthehighestmarketshareofNGVs,albeitwithaverylimitednumberofNGVs,almost180000asof2009(NGVGlobal).3

3www.iangv.org/toolsresources/statistics.html


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Table1:MarketshareofNGVintotalfleetincountrieswithatleast1%NGVmarketshare

Country NGV market share (%)

Country NGV market share (%)

Bangladesh 61 Tajikistan 5

Armenia 30 India 5

Pakistan 26 Egypt 5

Bolivia 26 Kyrgyzstan 3

Argentina 24 Ukraine 3

Colombia 24 Bulgaria 2

Iran 14 Italy 2

Malaysia 11 Moldova 1

Myanmar 8 Trinidad & Tobago 1

Peru 7 China 1

Brazil 5

Source:NGVAEurope,NGVCommunicationsGroup.

ThestockofNGVsisnotdistributedevenlyacrosscountriesandregionseither.Morethan70%of allNGVs and almost half of all fuelling stations are to be found in only five (nonOECD)countries: Argentina, Brazil, India, Iran and Pakistan. The total number of vehicles in OECDcountriesislessthanonemillionandoverhalfoftheseareinItaly.

DevelopmentofNGVretailinfrastructure

Therearecurrentlyalmost17000fuellingstationsforNGVsworldwide.Overhalfofthesearelocatedinjustfivecountries(Table2).

Thesefivecountriesalsorepresentthemostremarkablegrowthintermsofnumberoffuellingstationsinrecentyears,althoughcountriessuchasArmenia,Bulgaria,PeruandThailandshouldalso be mentioned. Europe has almost 3500 stations, of which around 900 are located inGermanyand800inItaly.

One of the indicators for measuring the development of NGV markets is the number ofvehiclesperfuelstation.Averylownumberofvehiclesperfuelstationshasanegativeimpacton theeconomic sustainabilityof the fuelling stations;whereasa veryhigh ratiomay implyqueues forming which, in thelongerterm,canbedetrimentaltothegrowthoftheNGVfleet.Adrawbackofthisratioisthatit does not account forgeographical spread of fuellingstations and vehicles, in otherwords the proximity of thestations and the vehicles.Unfortunately, there is noregionaldataavailable.

Table2:NumberofNGVfuellingstationsinselectedcountries

Country Number of fuelling stations

Argentina 1 851

Brazil 1 771

China 1 339

Iran 1 260

Pakistan 3 000

Source:NGVCommunicationsGroup.


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According to IGU (2009), 600 to 1 000 vehicles4 per fuelling station is an economicallysustainable ratio forpublic fuel stations.While theworldwideaverageof672 iswithin theselimits, there are few countries within this range (Table 3). Some countries exceed the1000vehicles/stationratio,whichcould indicatetheneedformorestations inordertoavoidqueues.However,asmentionedabove, in reality this is verydependenton thegeographicalspreadof stationsand vehicles,aswellas the typeof vehicles (as the refuelling timedifferssubstantiallyfordifferenttypesofvehicles).

Table3:Countrieswithatleast600NGVsperfuellingstationonaverage

Country Number of fuel stations Cities with

fuel station(s) Vehicles per fuel station

Argentina 1 851 330 976

Bolivia 128 6 959

Brazil 1 704 295 912

Bulgaria 76 36 793

Colombia 485 79 618

Egypt 119 16 1 027

India 500 8 1 400

Iran 1 079 611 1 607

Italy 770 150 803

Kyrgyzstan 6 n/a 1 000

Myanmar 37 n/a 617

Pakistan 3 000 50 750

Peru 94 2 922

Singapore 5 1 900

Ukraine 283 n/a 707

Uzbekistan 63 n/a 746

Source:NGVCommunicationsGroup,NGVAEurope.

Fuelconsumption

Whilethenumberofnaturalgasvehiclesandtheirshareinthetotalfleetcertainlygiveanideaofthecountries inwhichNGVsplayasignificantrole, inordertomeasurethe impactsoftheuseofNGVs, it isalso important to lookat the totalamountofgas consumedbyNGVs, theshareof this gas consumption in totaldomestic gas consumption and the share in total fuelconsumptionfortransport.

In total, theestimatednaturalgasconsumptionbyNGVs in2008was21.12bcm (IGU,2009),comparabletotheannualgasconsumption incountries likeBelarusorQataror0.7%ofworldgasconsumption.WhileLatinAmericaisstillleadingintermsofnumberofvehicles,mostofthenaturalgas (9.94bcm) isconsumedbyNGVs in theAsiaPacific,most likelydue to thehighershareofbusesandtrucks.Figure4illustratesthedevelopmentinestimatedannualnaturalgasconsumption5inselectedcountries(currentlyusingatleast1bcm/y).

4Carequivalents;thisfiguremaybemuchlowerfordepotbasedstations.5Thesenumbersshouldbetreatedwithsomecautionastheestimatedannualconsumptionisderivedfrommonthlygas consumptiondata; theavailabilityandqualityof thisdatadiffer from country to countryand canbehighlyinconsistent,incompleteordelayed.


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Figure4:EstimatedannualnaturalgasconsumptionbyNGVs

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2006 2007 2008 2009 2010

NG

con

sumptionfortransport

(bcm

)

Argentina Brazil China Iran Ukraine Note:DottedlineindicatesunavailabilityofdataforIranfor2008and2009.Source:IEAanalysisbasedonNGVCommunicationsGroupdata.

Theshareofnaturalgasuse for transport in totalnaturalgasconsumption in thesecountries isplottedinFigure5.Twocountries,BoliviaandColombia,wereaddedsincetheirabsolutenumberofgasusefortransportisnotremarkable,unliketheirshareinthetotaldomesticgasconsumption.

Figure5:EstimatedshareofNGVsindomesticnaturalgasconsumption

0%

2%

4%

6%

8%

10%

12%

14%

2006 2007 2008

Argentina Brazil China Iran

Ukraine Bolivia Colombia Source:NGVCommunicationsGroup,IEAdataandanalysis.

Anotherperspectiveistolookattheshareofnaturalgasconsumptioninthetotaldomesticfuelconsumptionfortransport.Therearecurrently17countries6wherethisshareis1%orgreater.ThecountrieswiththemostsignificantsharesareincludedinFigure6.

6Thesecountriesare:Argentina,Belarus,Bolivia,Brazil,Bulgaria,Colombia,Egypt,Georgia,India,Iran,Italy,Korea,Moldova,Pakistan,Russia,ThailandandUzbekistan.


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Figure6:EstimatedannualnaturalgasconsumptionbyNGVs

0 10 20 30 40 50 60

Argentina

Brazil

India

Pakistan

Fuelconsumption roadtransport(Mtoe)

Other

Naturalgas

3%

4%

Source:IEAdata.

2.2TechnologyandperformanceExperimentswithnaturalgasuseinenginesfortransportationstartedasearlyasthe1930s,butthefirstperiodthatsawanysignificantactivitybeganinthe1970s,whennaturalgaswasseenasasecurefuel intheaftermathoftheoilcrisis.Sincethatperiod,NGVshaveenteredandexitedthestageofseveralcountries/regionsindifferentperiods,whiletechnologycontinuedtoevolve.

Somerelevantcharacteristicsofnaturalgasthathaveconsequencesforitsuseasafuelforroadtransportationinclude:

itslowcarboncontentduetothecomposition(themainsubstance,methane,hastheleastnumberofcarbonatomsperhydrogenatominamoleculeofallhydrocarbons);

the lowenergydensityatatmosphericpressureandtemperaturecomparedto liquidfuels,whichmeans compression (CNG) or liquefaction (LNG) is needed to reach an acceptablevehiclerange;

thehighoctanenumberof130,reflectingthehighdetonationresistance,whichallowshighcompressionratios,reducesenginenoiseandeliminatestheneedfortoxicadditivessuchasaromatichydrocarbons (usuallyused to improve theoctanenumberofgasoline); thehighoctanenumberalsomakes the fuel require ignitionby sparkplugsor injection ina sparkignitedengineor,inacompressionignitionengine,thelowcetanenumbermakesitrequireapilotfuelforignition;

thepowerlossthatisaresultofairinthecylinderbeingreplacedbyfuelvapour; the fact that it is lighter thanair,which incaseof leakagecauses thegas todispersewith

sufficientventilation;

itisonlyexplosiveinarangeof5%to15%mixture(byvolume)withair.Thissectionfocusesonthecurrentstateoftechnology,discussingtheavailabilityofenginesandpowertrain components forNGVs,OEMmodels ofNGVs aswell as the retrofit option. Thesectionthenfeaturesabriefdiscussionofinfrastructuretechnology.Finally,drawingonexistingstudies and data, the environmental performance of various types of NGVs in terms ofemissionsandnoisewillbeevaluated.


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Availablevehicletechnology

Naturalgascancoveralmostthewholespectrumofvehicles,rangingfrommotorcycles,tuktuks,cars,vans,buses,trucks,offroadvehicles,shipsandtrains,includingevenairplanes.Asmentionedearlier, thisworkingpaper focuseson themost common formofuse: road transportation.Thissectiondiscusses the stateof technologyof lightdutyvehicles (LDVs),aswellasmediumdutyvehicles(MDVs)andheavydutyvehicles(HDVs).NoexplicitdistinctionismadebetweenvehiclesrunningonCNGandvehiclesrunningonLNG.Generally,CNG ismorecommonlyusedforLDVswhileHDVsrequiremoreenergytorunandtendtouseLNGtomaintainanacceptablerange.Notwithstanding the differences between CNG and LNG in terms of gas supply, retailinfrastructureandonboardfuelsystems,thispaperdiscussesNGVsatagenericlevel.

Lightdutyvehicles

ThedevelopmentofNGVmarketshas inthepastreliedheavilyonretrofit inmanycountries.While retrofit is still applied, especiallyoutside Europe, there is a general tendency towardsOEMvehiclesforbothLDVsandHDVs.TheoverallavailabilityofOEMLDVsonnaturalgashasimprovedoverthepastyearswithvehiclemanufacturerssuchasFiat,Volkswagen,MercedesBenz,Opel,Renault,Citron,Peugeot,aswellasseveralAsianmanufacturersaddingCNG(bifuel)modelstotheirproductrange.Availabilityofmodelsvariesfromcountrytocountry/regiontoregion,asillustratedinmoredetailinInternationalGasUnion(IGU,2009).

ThedifferenceinbetweentheretailpriceofanOEMLDVrunningonnaturalgasversusasimilarmodel runningon petrolordiesel is an importantparameter in themarketdevelopmentofNGVs. InmanycountrieswithsuccesfulNGVmarkets,thepricedifferentialforconsumershasbeen reduced through subsidies, tax exemptions, etc.While thepremium for anNGV varieswidely from countrytocountry, based on data obtained through the IGU questionnaires in2009,thereisanaveragepricedifferenceofEUR1956foranNGVversusitspetrolequivalent.Forthepurposeofcalculatingabatementcosts,the2006studybyTNO,IEEPandLATassumedvalues for the additionalmanufacturer costsofUSD2000 (EUR1450) for small,USD2350(EUR1750)formedium,andUSD2750(EUR2050)forlargeNGVsinthe200812timeframe,which corresponds to additional retailpricesofUSD2800 (EUR2090) for small,USD3400(EUR2520)formediumandUSD4000(EUR2950)forlargevehicles.

Mediumandheavydutyvehicles

Inmostcountriesandregions,theavailabilityofMD/HDNGVs isno longerabottleneck inthemarketdevelopmentofNGVs.Busesoperatingonnaturalgasarewidelyavailable,andrecentdevelopments (e.g. highpressure direct injection dualfuel engines) have improved theavailability of natural gas trucks. Manufacturers currently offering natural gas HDVs includeMercedes,Iveco,Ford,Volvo,MAN,Isuzu,NissanaswellasnumerousChinesemanufacturers.

HeavydutyapplicationsofNGVsincludealargevarietyofvehicles,suchasbuses,trucks,garbagetrucks,portvehicles,offroadvehicles,forklifts,tractorsandotheragriculturalvehicles,andevenexotic applications such as ambulances, fire trucks and 150 tonne roadtrains for longhaultransportintheAustralianoutback.Themostcommonapplicationdiffersfromregiontoregion:busesinAsiaandEurope;agriculturalvehiclesonnaturalgasinRussiaandtheCIS.Mediumdutyvehicles(3.512tonnes)includedeliveryvansandsmallerversionsofbusesandtrucks.

Althoughdataonpricedifferences isscarce,thetypicaladditionalcostforanHDVrunningonnatural gas in comparison to its diesel counterpart lies in the range of EUR30000 to


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EUR35000, although this varies from countrytocountry. Conversion costs varywidely, buttendtobeintheorderofmagnitudeofhalfofthepricepremiumonanOEMvehicle.

Dualfuel7technologyisnotinandofitselfarecentdevelopment,buttherecentpasthasseencomputerised optimisation of engine performance. The principle of dualfuel technology issimple,yetpromising.Dueto itschemicalcomposition, i.e.thepropertiesofmethane,naturalgasnormallyrequiressparkignitionandisthereforeusedinenginesthataredesignedtorunongasoline.Dieselenginesareinherentlymoreefficient,butusecompressionignitionratherthanspark ignition.Thismeansthattheengineusestheheatgeneratedbycompressionto initiateignition toburn the fuel. Indualfuelengines,a certainamountofdiesel is stillused for thispurpose.However,therestofthedieselfuelcanbereplacedbynaturalgas8whichisignitedbythe diesel (called pilot fuel). The high compression ratio that gives diesel engines theiradvantageinthermalefficiencycanbemaintainedduetothehighoctanenumberofmethane.

The degree towhich dualfuel engines actually replace diesel by natural gas depends on theamountofenergyrequiredergothe loadoftheengine.Whentheengine is idling,onlyasmallamount of energy is required,which can be fully provided by the pilot fuel. In this case, nonaturalgasisconsumed.Astheloadincreases,theenergyconsumptiongoesupandthedegreeofdieselthat isreplacedbynaturalgasaswell.Asaconsequence,anurbancycle(stopandgooperation)wouldhavealowerdisplacementofdieselduetothe,onanaverage,lowerloadthanisthecaseforintercitytransportorlonghaultrucking(overtheroadoperation).Thismeansthattransit buses, urban delivery trucks and refuse trucks may be less likely candidates for thistechnology,althoughtherearecertainlyexamplesofthis latterapplication(e.g.seesectiononSweden).Adifferentmethodology isusedbyHighPressureDirect InjectionenginesdevelopedbyWestport,whichhaveaquantityofpilotfuelthatismoreorlessfixedacrosstheenginemap.

Box1:Storageofnaturalgasfortransportation

Aproblemfacingdualfueltechnologyisthelackofformalrecognition;whileUNECERegulation110allowsthesimulataneoususeoftwofuelsinoneengine,countrybycountrycertificationisrequiredandEuropean typeapproval isnotyetpossible,because the technology isyet tobedefniedwithinEuropeanregulationsandaformaltestfuelisdifficulttoidentifyconsideringthe

7Not tobemistakenwithbifuel technology;abifuelvehicle runsoneitherof twodifferent fuels (usually tobeselectedbythedriver),whereasdualfuelvehiclesrunontwofuelssimultaneously.

8Eithercompressedorliquefiedandofeitherfossilororganicorigin.

Atatmosphericpressureandtemperature,naturalgashasanenergycontentofaround40MJ/m3or50MJ/kg,ascomparedtogasoline35(MJ/L)anddiesel(39MJ/L).Inordertoreachanacceptablerange,gasneedstobestoredinawaythatincreasestheenergydensity.Therearecurrentlythreetechnologies for this. Themost common are CNG and LNG. CNG is gas that is compressed to apressureofusually200bar,afterwhichitisstoredincylinders.LNGisgasthathasbeenliquefiedbycooling ittobelow itsboilingpointof 163C (atatmosphericpressure)andsubsequentlystored.TherearetwostandardsfordispensingLNG:saturatedLNG(8barand130C)orcoldLNG(3bar150C).Anewandpromising technology that isnotcommercialisedyet isAdsorbedNaturalGas(ANG).Throughtheadditionofamicroporousmaterial(e.g.activatedcarbon)intothetank,eitherthevolumecanbeincreasedatthesamepressure(whichresultsinahigherrange)orthevolumecanbemaintainedatalowerpressure(whichmeanslowercostsforrefuellingandamoreoptionstoshapethefueltank).ANGpotentiallyoffersahigherstoragecapacitythanCNGwithlowercostsandcomplexitythanthoseassociatedwithLNG,buttherearestillsometechnologicalbarriersthatrequirefurtherRD&D.


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continuouslyvaryingmixtureofdiesel/naturalgasintheengine(ENGVA,2007b).Itisexpectedthatcertificationproceduresfordualfuelheavydutyenginesshouldbeinplacewithinthenextseveralyears(CleanFuelsConsulting,2010).

An emerging technology for HDVs is a natural gas/electric hybrid vehicle. This is seen as apromising technologybymanufacturersofHDVs,but recognitionwithin thebodyof EuroVIregulationsisrequired(ENGVA,2007b).

Retrofit

WhileOEMvehiclesmaybepreferablefortheirqualitycontrolsystems,reliability,andengineoptimisation, retrofitcancertainlybeagood solutionaswell.OEMvehiclesare facedwitharangeofchoiceswhenitcomestoAFVandalsohaveinvestedmassiveamountsinconventionalfuel technology.Thismeans thatwhile they are innovative, they can alsobe conservative intheirinnovationprocessandtheuncertaintiesassociatedwithanewmarketmaycausethemtodirectR&Dandproductdevelopmentand/ormarketingeffortsmoretowardsconventionalfueltechnologies.Intheabsenceof,orwhenfacedwithlimitedvariety/availabilityofOEMvehicles,retrofitcancreateamarketthatthenactsasademandpulltowardsOEM.

Using natural gas in an internal combustion engine means that some form of ignition isrequired.While the sparkignited gasoline engine seems to be themost obvious option forconversion to natural gas, natural gas can also be used in diesel engines despite thecompression ignition principle. Besides the aforementioned dualfuel technology, a dieselenginecanalsobeconverted to runonnaturalgasby replacing thediesel injectorsby sparkplugs. It is very important that this conversion is carried out by skilled personnel, as thecompressionrationeedstobereducedandenginemanagementneedstobeoptimised.Whileaccidentswithretrofittedvehiclescertainlyhavehappened,thetechnologyandknowledgeareavailable to ensure proper after market conversion of vehicles to run on natural gas. ThistechnologyandknowledgeneedstobedisseminatedandtheNGVindustrystrivestoensureitsapplicationthroughstandardisation,certification,trainingandregulation.

Infrastructuretechnology

The equipment to build fuel stations for NGVs is widely available and technology is stillimproving (e.g. ionic compressors). Although components for fuel stations are fairlystandardised and available, the design of a station needs to be tailored to each specificsituation.The investmentrequiredtobuildafuelstationdependsonanumberofsitespecificfactors,including:

inlet capacity of the station: since CNG needs to be delivered to the vehicle at 200 bar(usually),thehighertheinletpressure,thelessstagesofcompressionareneeded;

thesizeandtypeofthestation:apublicstationdiffersfromaprivatestationintermsofpeakcapacity,numberofdispensers,redundancyincompressors,slowfillversusfastfill,etc.;

planning:with careful planning of the fuelling process of different types of vehicles, theinvestment can be substantially reduced (e.g. by limiting the required peak capacity andthereforethenumberofcompressorsneeded);

dedicatedCNGstationorCNGdispenser(s)addedtoexistingmultifuelstations; requiredbackupcapacity/redundancy; connectiontothenaturalgasandelectricitygrid:thiscanbequitecostly,particularlyifthe

stationislocatedfaraway.


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Aspartoftheresearchforthisstudy,theIEAcollecteddataoninfrastructurecostsfromvarioussourceswiththeassistanceofNGVGlobal.Thesedatawereusedfortheeconomicanalysis.Theindividualdata cannotbepublisheddue to their commercially sensitivenature.Roughly, therangeof investment for apublic station serving aneconomically feasible amountof vehiclesvaries fromUSD200000 toUSD500000.Costs innonOECDcountriesare likely tobe in thelowerendofthisrange,whereascostsinOECDwouldtendtobemoreinthehigherendoftherange.Therangefordedicatedstationsforfleetownersvarieswidelyaswell.Costsrisewiththesize(intermsofcapacity,expressedincubicmetresperhour(m3/hr),althoughtherecertainlyareeconomiesofscale.

BesidesCNGstations,thereisalsotheoptionforLNGorLCNG(liquefiedtocompressednaturalgas)stations.ThesestationsaresuppliedwithLNGratherthanpipelinegas,whichmeansthatthenearvicinityofapipelineisnotarequirement,butitalsomeansthattheadvantageoflessroadtransportofthefuel itself(whichcandiminishcongestion incertaincircumstances)doesnotapply.ThesestationseitherdistributeLNGorbothLNGandCNG (inwhichcase theyarereffered to as LCNG stations). Since LNG is kept just below its boiling point, the gas can bepressurised with no need for compressors. Cost estimates for these types of stations areEUR101/kgofgasoutputperhourforaLNGstationandEUR1100/kgofgasoutputperhourforaLCNGstation.9WhileHDVscancertainlyrunonCNGaswell, inmanycasesLNGmaybepreferableduetothelongerrangethehigherenergydensityofLNGprovides.

9 This excludes land purchase and permit costs. Based on a LCNG stationwith gas output of 800Nm3/hour or574kg/hour.A gas stationwith this capacity can refuel about 50cars per hour. Source: Cryostar inAsianNGVCommunicationsnewsletter,December2008.


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3. EnvironmentalperformanceofNGVsKeymessages:

Onaverage,a25%reductioninCO2eqemissionscanbeexpectedonaWTWbasiswhenreplacinggasolinebyLDVsrunningonCNG.ComparisonstogreenhousegasemissionsofdieselvehiclesorcomparisonsbetweenHDVsarelesscommonlymadeandappeartobemoredependentonthetypeofvehicle.

Assessing benefits of NGVs in terms of local pollutants requires detailed analysis. Ingeneral,NGVsperformwellcomparedtocurrentdieselvehicles,particularlyintheHDVsegmentandwhenlookingatthetotalofHCandNOxemissionsaswellasPM.

ThebenefitthatNGVshaveoverdieselandgasoline intermsofemissions isclosingasstandardsbecomeincreasinglystringent,buthowfuturetechnologicaldevelopmentswillplayoutexactlyinthelightofincreasinglystringentemissionnormsisunsure.

ManynonOECDcountrieshaveadoptedstandardsthatwerethenorminEuropeortheUnitedStatestenormoreyearsago.ThismeansthatNGVshavehigherrelativebenefitsin this regard in nonOECD countries. As a result, improvement of local air quality isexpectedtobeastrongerdriverforNGVsinnonOECDcountriesthaninOECDcountries.

InindividualcasesNGVbusesandtruckscanhavesignificantbenefitsinnoisereduction,although currently in general this cannot be demonstratedwith substantial data setsacrossawiderangeofvehicles.

The use of natural gas as a fuel for transportation is associated with several potentialenvironmentalbenefits,mostnotablyairemissionsandnoise.Drawing fromexisting studies,this chapter will evaluate the environmental impact that NGVs can have and compare thebenefitsagainstalternativemeanstoreduceemissions.

Ofallhydrocarbons,methanethemaincomponentofnaturalgashas the lowestcarbon tohydrogen ratio.Thismeans that,comparedonanenergyequivalentbasis toconventional roadfuelssuchasgasolineanddiesel,lesscarbondioxideisreleasedintotheairwhenitisburned.Thisdoesnottakeintoaccounttheefficiencywithwhichthefuelisusedintheengine.Thecycleofadieselengineismoreefficientthanthatofasparkignitionengine,whichpartlycounterbalancesthelowercarbonintensityunlessnaturalgasisusedinacompressioniginitionengineusingdieselasapilot fuel (seesectionondualfuel technology).Theneteffecton the tanktowheel (TTW)emissionswillbediscussedinthissection.NotwithstandingthefactthatthelargestproportionofgreenhousegasemissionsonaWTWbasisoccurintheTTWpartofthechain,theimpactoftheoriginofnaturalgasisofsomesignificanceasisillustratedinvariousstudies.

3.1GreenhousegasemissionsThegreenhousegas involved inacomparisonbetweengasoline,dieselandCNG/LNGareCO2,CH4andN2O,thoughmostlycomparisonsarebasedonCO2equivalents.ThissectionfocusesonCO2emissionsfromnaturalgasoffossilorigin(biomethane,which isa loworzerocarbonfuelona lifecyclebasis, isaddressed inaseparatechapter).SeveralstudiesonthegreenhousegasemissionsofNGVs incomparisontoconventionaloralternative fuelswillbediscussedbeforereachingaconclusion.10

10Notethatemissionfiguresmentioned inthissectionarebasedondifferentreferencevehicles,enginesizes,testcycles,etc.Werefertotheoriginalsourcesforadetaileddescriptionoftestmethodologies.


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EngererandHorn(2010)citeastudybyPriceWaterhouseCoopers,whichisbasedonCOPERTandCONCAWE,reportingCO2emissionsonaWTWbasisofjustover120g/kmforCNGversus160g/kmfordieselandjustover190g/kmforgasoline.Theonlyfuelsperformingbetterinthisanalysis are ethanol (110 gCO2/km) and bio diesel (90 gCO2/km). The authors claim thatsubstantial future emission reductions of diesel vehicles will happen at the expense ofefficiency, thereby increasing theCO2 reductionofCNGversusdiesel.Theyconclude that thetransition to CNG vehicles could, therefore, contribute to the attainment of the EuropeanUnionsgoaltoreachemissionsof130gCO2/kmonaveragefornewcarsby2015.

A 2005 IEA study by Gielen and Unander (IEA, 2005) calculated a WTW CO2 reduction of12kgCO2/GJto22kgCO2/GJ(or17%to26%)versusconventionalgasoline.CNGisoutperformedbyethanolandFTgasoline/dieselfrombiomassandhydrogen,dependingonthesourceofelectricity.

A2006studybyTNO,IEEPandLATonbehalfoftheEuropeanCommission,basedontheCONCAWEstudyandaTNOstudyfrom2003,concludedthefollowingonCNGregardingCO2emissions:

IncludingthedirectemissionsofCH4andN2O,thereductionindirectgreenhousegasgases(onaTTWbasis)fromCNGunderrealworlddrivingconditionsamountto18%comparedtogasolineand7%compared todiesel.According toCONCAWE (2006), the reduction is23%compared togasolineand17%compared todiesel.For thepurposeof the study,authorsassumedaTTWgreenhousegasreductionof22%versusgasoline.

TNO subscribes to the view that direct injection technology and associated technicalmeasures have a higher efficiency improvement potential when applied to natural gasenginesthantopetrolengines.

Welltotank(WTT)emissionsareprovidedfromCONCAWE(2006)andrangefrom8.4gCO2eq/MJto21.7gCO2eq/MJofCNG,dependingtheoriginandthereforethetransportdistanceofthenaturalgas.NotethattheseresultsarespecifictoEuropeangassupplyoptions.

Assumingmarginal gas demand to be supplied from the Middle East or Southwest Asia,transportedoveradistanceof4000km,thetotalWTWgreenhousegasemissionsofCNGaredeemedtobe144.2gCO2eq/km,83%ofthegasolinelevel.

NGVA Europe claims 20% to 25% CO2 reduction in cars running on natural gas over similargasolinevehicles,whereasCO2savingsofHDNGVsareabsentornegligiblecomparedtodieselvehicles(NGVAEurope,2009b;ENGVA,2007a).DualfuelHDVs,retainingtheefficiencyofthedieselcyclebyrunningonamixtureofnaturalgasanddiesel,havearound20%CO2advantagecomparedtonormaldieselvehicles.Ina2003report,theformerENGVA11statedthatby2010sparkignitedNGVsareexpectedtoemitabout13%lessCO2thanHDVsrunningondiesel(duetoa lossofefficiency indieselvehicles,resultingfroman increasingamountofequipmentforemissionssuchasNOxandPM).

AstudyoftheactualTTWgreenhousegasemissionsintheurbanuseofrefusecollectiontrucksinMadrid(Lpezetal.,2008)comparesCNG(inasparkignitedengine)toB30(30%biodiesel)anddiesel.Theresultsshowthatthereducedefficiency(4%)oftheOttocycleversusthedieselcycle is compensated by the chemical composition of the fuel (the higher proportion ofhydrogentocarboninmethanecomparedtodiesel),resultinginanobservedTTWreductionof13%inCO2eq/km.CombinedwithWTTemissionsdatafromaGeneralMotorsstudy,assuminganEuropeangasmix,theWTWemissionsreductionofCNGversusdieselamountstoaround400gCO2eq/kmor17%.

11TheEuropeanNaturalGasVehiclesAssociation (ENGVA)wassucceededby theNaturalGasVehiclesAssociationEurope(NGVAEurope)in2008.


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Aseriesof2009reportspreparedfortheCaliforniaAirResourcesBoardwithinthecontextoftheLowCarbonFuelStandardset thecarbon intensityofgasoline (95.06gCO2eq/MJ)andultralowsulphurdiesel(94.71gCO2eq/MJ).ThegreenhousegasemissionsoftheuseofCNGinanHDVat68gCO2eq/MJindicateareductionof29%and28%respectively,althoughthelatterwillbelowerin termsofgCO2eq/kmsincetheenergyconsumptionofadieselvehicle is lowerthan thatofaCNGvehicle.ForLNGthepictureisdifferent:thecarbonintensityisdeterminedtobeintherangeof72gCO2eq/MJto93gCO2eq/MJ,dependingontheoriginofthegas.Thismeansareductionof1%to22%(again,thisdoesnottakeintoaccounttheenergyefficiencyofthevehicle).

DatafromtypeapprovalsbytheGermanKBAshowsthatforLDVs,comparedtogasoline,theaverageCO2reduction is20%.Comparedtodiesel,thepicture isdiverseonacarmodelbasis.Overall,theaverageCO2emissionisthesamefortheselecteddieselmodelsandtheNGVs(bifuel and dedicated), 142 g/km. For the LCVs, NGVs emit on average 17% less than similarmodelsrunningongasolinewhereastheyemit10%morethansimilardieselmodels.TheKBAdoesnotprovidedataonCO2emissionsforHDVs.

Theoverallpicturethatemergesisanaverage25%reductioninCO2eqemissionsonaWTWbasiswhenreplacinggasolinebyLDVsrunningonCNG.Comparisons togreenhousegasemissionsofdieselvehiclesorcomparisonsbetweenHDVsarelesscommonandappeartobemoredependentonthetypeofvehicle.Insomecasesasignificantreductioncomparedtodieselseemsattainable,butinothercasesdieselvehiclesemitsignificantlylessCO2thanNGVs(e.g.LCVs).

In any case, the origin of the natural gas and the steps in the supply chain are of obviousimportancefortheWTTemissions(Table4),whereastheTTWemissionsaredeterminedbythefueleconomyofthevehicleandthecarboncontentofthefuel.TheshareofothergreenhousegasthanCO2appearsfromvariousstudiestobemarginal(TNO,2006;Lopzetal.,2008).Thismeans that the higher total hydrocarbon emissions of NGVs due to the tailpipe methaneemissions or the higher N2Oemissions of diesel vehicles do notsubstantially influence the totalgreenhousegas emissions in termsofCO2equivalents.

Hydrocarbons(HC)areinsomecasesregulated on the basis of totalhydrocarbons (THC); in other cases,only nonmethane hydrocarbons(NMHC) limits are set. Methane isneithertoxicnorreactive,butwithaGWPof21 it isastronggreenhousegas.Thiscanbeseenasanargument tomanage itasagreenhousegasratherthanapollutantemission,eventhoughitisaHC.TheformerENGVAhasmadeacase(ENGVA,2007b)formanagingTHCandNMHCseparately,arguingthatonesingleTHC limit could impair the NGV industrys ability to meet the future EUROVI norms atacceptablecosts ifthis limitweretobedecreasedsignificantly. Inthispaper, italsocallsthelongtermHClimitstheemissionstofocuson,indicatingthatbothlowerHCfromtheengineaswellasaftertreatmentwithcatalystsmayberequired,wherethe latteroption isexpectedtoincreasethecostsofNGVpowertrains.

TheEuropeancarmarket is the largest in theworld. InDecember2008, theEuropeanUnionintroducedarequirementonmanufacturerstoreduceTTWCO2emissionstobelow130g/kmby 2015 with a gradual phasein from 2012 onwards. A longterm target has been set at95gCO2/km in 2020. This agreement applies to cars only; a similar proposal to reduce CO2emissionsfromLCVsto175g/kmby2014and135g/kmby2020metresistancefromseveralEU

Table4:Welltotankemissions

Fuel WTT CO2-emission (gCO2/MJ fuel) Petrol 12.5

Diesel 14.2

CNG EU-mix 8.4

CNG transported over 4000 km 14.0

CNG transported over 7000 km 21.7

Source:TNO,IEEPandLAT,2006.


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member countries earlier this year.12 The targets for cars are based on CO2 emissions only.Alternatively,theycouldbebasedonCO2equivalentemissionsratherthanjustCO2emissions,whichwouldmeanthatmethaneandnitrousoxideemissionsarealsoincluded.Thiscouldmakesensesincetheoverallintentionofthisagreementistoreducegreenhousegasemissionsfromthetransportsector,whereastheEUROnormsareaimedat improvingairqualitybyreducinglocalpollutants. Ifmethaneemissionswere tobe included in theACEAagreement, limitsonhydrocarbonsundertheEUROemissionnormscouldbebasedonNMHC.TheACEAtargets(andfines)could thenworkasastimulus for theNGV industry to reducemethaneemissions fromvehicles,dependingonhowchallengingthetargetsareandwhatthemostcosteffectiveoptionistolowervehiclegreenhousegasemissions.

3.2LocalairqualityTransportationimpactslocalairqualitythroughtheemissionofseveralgasesandparticles.Manyof theseare regulated, suchas carbonmonoxide (CO),particulatematter (PM),nitrousoxides(NOx)andhydrocarbons(HC).Theseemissionshavevariousdetrimentalimpactsonpublichealthandtheenvironment,especiallyindenselypopulatedurbanareaswithhightrafficintensity.

TheframeworksforemissionlimitsinEuropeandtheUnitedStatesarefairlysimilar,whilemostnonOECDcountriesadoptolderversionsof thesenorms.The frameworksevolvenotonly inthelimitvalues,butalsointhetestcyclesandthetypesofemissionsincluded.Asisdiscussedinthe IEA Working Paper Deploying Renewables in Southeast Asia Trends and potentials,particularlyindevelopingcountriestheseverityoftheproblemscreatesasubstantialpotentialeconomicvaluefortechnologiesaimedatimprovingairquality.TheexposuretoPMalonehasbeen estimated to cause 3.4 billion life years lost in 2005 in India, China and Europe. Thissectionwillbelookingintothebenefitsthatnaturalgascanhaveinthisregard.

A2009studybyVTTTechnicalResearchCentreofFinlandcomparedemissionsfromfivebuses.TwobusesrepresentedEuroIVemissionlevels;theotherthreerepresentedenhancedenvironmentallyfriendlyvehicle(EEV)13emissionleveltechnologies.ThetestedNGVwasastoichiometricCNGbus.Thisbuswas theonlyvehicle to fallwellwithinEEV limitsonPMandNOx (forPMevenwithinproposedEuroVIlimits).ItdidshowsignificantlyhigherCOemissionsthandieselbusesequippedwithExhaustGasRecirculation (EGR)orContinuouslyRegeneratingTrap (CRT),butwellwithinproposed Euro VI limits. Unburned methane also caused the CNG bus to emit much morehydrocarbonsthanthedieselbuses,atalevelequaltoorjustaboveproposedEuroVIlimits.

PollutantemissionsanalysisbasedonEuropeantypeapprovaldata

Thenumberofdifferentvehiclesavailable indifferent categories (in termsofemission limitssuch as EURO IV, EEV etc) and the number of different types of emissions require carefulconsideration,whichmeans thata comprehensive studyon this issuewill inevitablygetverydetailedandtechnical,andassuchwouldbebeyondthescopeofthisworkingpaper. Indeed,an analysis of type approval emissions data from the German Kraftfahrt Bundesamt (KBA)illustratesthecomplexityofsuchatask.

12HetFinancieeleDagblad,BlokkadetreftaanscherpingCO2normenbestelwagens,16March2010.13 Enhanced environmentally friendly vehicle, an EU norm for HDVs in the M2 and M3 category which is morestringentthanEuroVbutlessstringentthanEuroVI.


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Figure7:Relativeemissionsofvehiclesintypeapprovalanalysis

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Note:Foreachpollutant ineachcategory (LDV,LCV,HDV)the index issetat100 forthe leveloftheaveragedieselvehicle.Thismeansthatlevelsofpollutantemissionscannotbecomparedbetweencategoriesofvehicles,onlyconclusionsabouttheeffectsoffuelcanbedrawnfromthisgraphforeachcategoryseparately.

Source:IEAanalysisbasedonKraftfahrtBundesamtGermany.

Whilemany data are available, the question iswhich vehicles are comparable and how theimpacts of different powertrain options, tyres, engine configurations, test gas qualities, etc.shouldbeincludedintheanalysis.FortheanalysisofLDVsandLCVs,vehiclesrunningonnaturalgas (eithermonofuelorbifuel)were identifiedandgasolineanddieselversionsof thesamemodelwereselected.Wherepossible,modelsmeetingdifferentEUROstandardsandequippedwithandwithoutparticulatefilterswereused.ComparisonofHDVsislessstraightforward;herecomparablevehicles intermsofenginesizeandpowerwerechosen.TheselectionofvehiclesherealsoincludesvehiclesunderdifferentEUROnorms,includingEEV.

Different testing cycles exist and are used to determine the emissions of HDVs for typeapproval,includingtheESC(Europeanstationarycycle)andtheETC(Europeantransientcycle).For compression ignition engines (diesel), both ESC and ETC are used with the limits onemissionsdifferingbetweenthem,whereasforpositive ignitiongasengines,onlyETC isused.This means that no data is available for natural gas engines for HDVs based on ESC and acomparison could only bemade on the basis of ETC. It should be noted that emissions arehigherunderETCthantheyareunderESC,butsinceenginesarecomparedonthebasisofthesamecyclethisdoesnotinfluencetheoutcomesoftheanalysis.

For diesel vehicles, no separate data for HC emissions are available, but numbers for NOxemissionsandthetotalofHCandNOxareavailable.ThereasonforthisisthatthetradeoffindieselvehiclesbetweenHCemissionsandNOxemissionshas led the industry to focuson thetotal of these two types of emissions. To reduceworkload in type approvals,measuringHCemissionsseparatelyisnotrequired.Fornaturalgasvehicles,PMlevelsareoftennearorbelow


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detection levels and lower than for diesel vehicles, even when equipped with a PM filter.EmissionsdataforHDVsareexpresseding/kWhratherthan(m)g/km.

ThedatafromtheKBAalsofacilitatecomparisonsbetweenmonofuelCNGvehiclesversusbifuelNGVs runningonnaturalgasorbifuelNGVs runningongasolineversus theirmonofuelgasoline counterparts. The results for these comparisons will be discussed in the followingsections. Figure 7 summarises the average values of all emissions for LDVs, LCVs andHDVs,expressedinanindexnumber.

Lightdutyvehicles

TheanalysisofLDVs includes62vehicles,19ofwhichareNGVs(fourdedicatedand15bifuelgasoline),24dieselvehiclesand18gasolinevehicles.

AsbecomesclearfromFigures7and8,NGVstendtohavesomewhatlowerCOemissionsthangasolinevehicles,butdieselvehiclesoutperformNGVsonCOemissions.OnHC+NOxemissions,the situation is reverse:NGVs perform better than diesel vehicles, butworse than gasolinevehicles(onbothhydrocarbonsandNOx).Aspointedoutearlier,though,mostofTHCemissionsfrom NGVs are methane emissions, which are neither toxic nor reactive and in that senseincomparabletootherpollutantemissions.Unfortunately,forLDVsnoseparatedataonNMHCemissionsareavailablefromthissource.TheemissionsofPMarenotspecifiedforNGVsnorforgasoline vehicles, whereas diesel LDVs emit on average 6mg/km, up to38 mg/km. Whenequippedwithafilter,thisisreducedto0.32.8mg/km.

Figure8:Lightdutyvehicle(car)emissions

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Asnoted,mostoftheNGVs inthisanalysisarebifuel.Whilethisallowsfora longerrange, interms of emissions themonofuel CNG vehicles tend to perform better than a bifuelNGVsrunningonCNG.Also,abifuelNGV runningongasoline tends toemitmore thanagasolinevehicle.Thisillustratesthatsomesacrificeshavetobemadeintermsofengineoptimisationtoallowfortheflexibilityofusingtwofuelsinonevehicle.

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Lightcommercialvehicles

TheanalysisofLCVs includes41vehicles,13ofwhichareNGVs(twodedicatedand11bifuelgasoline),18dieselvehiclesand10gasolinevehicles.

Figure9:Lightcommercialvehicleemissions

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LCVsrunningonnaturalgasemitsubstantiallylessCOthandiesel,whilecomparedtogasolinethedifferenceismuchlesspronounced(Figure9).ThesameapplieswhencomparingNGVsandgasolinevehiclesonHCandNOxemissions:theyeachperformbetterthantheotherinasimilarnumber of comparisons. Again, the picture is much clearer in comparison to diesel: NGVsoutperformdiesel inallcomparisonsofsimilarvehiclemodels.As isthecasewithLDVs,thereare no data on PM emissions for gasoline and NGVs. Diesel LCVs emit PM in a range of2080mg/km,butthisisreducedto1mg/kmwithafilter.

Witha limitednumberof vehicles to compare, it ismoredifficult todeterminewhether theflexibility of bifuel comes at a cost of higher emissions. There are only two dedicated CNGvehiclesintheLCVcategoryandthereisnosimilarbifuelversionforthesemodels.ComparingthebifuelNGVstosimilargasolinemodelsresultsinamixedpicture,withtheNGVsgenerallyemittingmoreCOandNOxbutlessHC.

Heavydutyvehicles

TheanalysisofHDVs includes28vehicles,12ofwhichareNGVs(11dedicatedandonebifuelgasoline)and16dieselvehicles.

TheselectedNGVsintheanalysisemitonaverage34%lessCO,24%lessNOxand79%lessPMthan theirdieselcounterparts (Figures10and11).However, theyemit28%moreNMHCandwhenmethaneemissionsareadded,totalHCemissionsaresixtimeshigheronaveragethanfordieselvehicles.Thewiderangeofmethaneemissions fromNGVs (0.02 foravehiclewithEEVclassificationto1.19foraEUROIIIvehicle)suggeststhattechnologyinthisrespectisadvancingand available. It should also be noted that N2O is (obviously) not included in the NMHCmeasurements since itsnotaHC,butnevertheless it isapowerfulgreenhousegas thatalsocontributestothedepletionoftheozonelayer(Ravishankaraetal.,2009).

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Figure10:Heavydutyvehicleemissions:NOxandPM

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CNG Diesel Note:OneobservationforadieselHDVwithextremevalueswasexcludedfromthegraph(PM0.13g/kWh,NOx4.8g/kWh).Source:IEAanalysisbasedonKraftfahrtBundesamtGermany.

A 2007 position paper by ENGVA (ENGVA, 2007b) provides some useful insights into thetechnical options available to carmanufacturers tomeet EUROVI limits in several scenarioswith natural gas. In this document, NOx and HC emissions are considered to be the mostchallengingtomeet.Thereportstatestheexpectationthatthe industrywillbeabletomeetCOandPMemissionlimitsfairlycomfortablywithexistingtechnology.Itconcludesbymentioningthatallproposed setsofheavydutyEuroVIemissions limitvaluescanbe reachedwithnaturalgasvehiclesusingalreadyavailablestoichiometrictechnologiesandalsothatcostsarenotexpectedtodifferverymuchfromthoseinmakingheavydutydieselvehiclesmeettherespectiveemissionslimitvaluesforCO,HCandNOx,althoughthereissomeuncertaintyregardingmethanesensitivecatalyticequipment.Leanburntechnologymayprovideaddedbenefits,suchaslowerexhaustgastemperaturesandhigherefficiency,butrequireexperimentalresearch.

Figure11:Heavydutyvehicleemissions:HCandCO

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NOx(g/kWh)


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Unregulatedemissions

Sofar,thediscussionofvehicleemissionshasconcentratedonregulatedemissions.However,regulatory systems differ from countrytocountry and from regiontoregion, so what isregulated inone country/region isnotnecessarily regulated in adifferentpartof theworld.Naturally,thedegreetoorthemannerinwhichacertaintypeofemissionisregulatedcanalsovary. It is recommendable that thehealtheffectsofvehicleemissions thatare currentlyunregulatedarestudiedinordertorevisesomesystemsofemissionlimitsaccordingly.

As this is a highly technical subject on which data are (unsurprisingly) scarce, it requires adetaileddiscussionofthecausesandconsequencesofdifferentcompounds.However,suchadiscussionwouldbebeyond the scopeof thisworkingpaper. Since it is relevant forpoliciesrelated toNGVs, though,reference ismade to theaforementioned2009studybyVTT,whichshows that theCNGbusoveralloutperformeddiesel vehiclesonunregulatedemissions.Themostnotabledifferencesarefoundinaldehydes,nitrousoxides,sulfates,nitrates,polyaromatichydrocarbons(PAH)andmutagenicityofparticles.

TheCNGbusinthestudyemitted0.29g/kmofammoniawhereasthisisnegligibleforthedieselvehicles.TheproposednewEuroVInormforHDVsincludesNH3(ammonia)normsforthefirsttime (10ppm limit).Whiletherehavebeenreportsofhightestvalues forNGVs,the industryattributes this to calibration issues combined with catalyst selection and does not seem toexpectNGVstoencounteranyproblemsinmeetingthisstandard.

Discussion

The benefit that NGVs have over diesel and gasoline in terms of emissions is diminishing incountries and regions with the most stringent emissions standards, Gbut given that alltechnologiesareconstantlyevolving,itisunsurehowfuturetechnologicaldevelopmentswillplayoutexactly.Thisdoesgiverisetothequestionifmajorinvestmentsinnaturalgasasanalternativefuelcanbejustifiedonthebasisof localairqualityand/orgreenhousegasemissions,at least incountries or regions where the current vehicle stock is based on fairly recent norms. ManynonOECDcountrieshaveadoptedstandardsthatwerethenorminEuropeortheUnitedStatestenormoreyearsago.Thismeans thatthebenefitsofNGVsaremuchmorepronounced, ifatleastfairlyrecentNGVtechnologyisused.Whileusingthenewestvehiclesbasedonconventionalfuelswouldobviouslyalsohelpcombatairpollutionproblems,NGVsmayinthesecircumstancesbeamore costeffectiveoptionas thebenefitsofNGVsweremuchmorepronounced for theslightlyolderthanlatesttechnology.Thecurrentandexpectedfuturegrowthinthenumberofvehicles inthesecountriesandtheiruse indenselypopulatedareascreatesagoodpotentialforthedevelopmentofNGVmarkets.Leapfroggingtothenextgenerationtechnologycanbetoobigofastepinmanyofthesecountries,meaningthatnaturalgascanbeatransitionfuelforalongerperiod of time. As a result, natural gasmay be playing a role in awider range of modes oftransportinnonOECDcountriesandregionsthaninOECDcountriesandregions.

3.3NoiseNoisereductionisnotoftencitedasoneofthemainadvantagesofNGVs,butinsomecircumstancestheuseofNGVscanhelptoreducenoiseinareaswhereitmatters.Indevelopedcountries,normsoftenexistwhichmayimposelimitsonforexampleovernighturbandeliveryortheconstructionofnewbuildingsinacertainarea.Indevelopingcountries,noisereductionmaynotbethefirstprioritywhencopingwithrapidgrowthoftransportandnormsdonotalwaysexist.ThekeyquestionsforthisbriefdiscussionofpotentialbenefitsNGVscanhaveintermsofnoisereductionare:


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Whyisnoiseaproblemthatshouldbeaddressed? TowhatextentcanNGVscontributetosolvingthisproblem?Noisefromtraffic ismorethananuisance, itsarealanddifficulttoavoidproblem indenselypopulatedareas.Asa2007 studybyCE (CE,2007)mentions: noise is very costly to society[and] shouldbe taken as seriously asother formsofpollution, as it is similarlydamaging tohuman health.Various studies show that noise (or in some cases vibration/pulsation) fromtrafficcannegativelyimpacthumanhealthandwellbeing,aswellastheconditionofstructuressuch as buildings, roads, tunnels and bridges.More specifically, a study by theWHO (2008)showsthatsevereannoyanceandsleepdisturbancecanalreadyoccuratlevelsaslowasabout40dB(A).According to this study, the effects forwhich sufficient evidence ispresent for anassociationwithroadtransportrelatednoiseexposureinclude:annoyance,sleepquality,sleepdisturbance, insomnia, hypertension and ischemic heart disease and reduced cognitivefunctioning.While the studyprovidesa framework fornoise, rather thananoverviewof thestatusof transportrelatednoiseproblems, itdoesgive someguidanceby stating that50or55dB(A) (Lden,outdoors)couldbeusedasa thresholdvalue forhealth impactassessment forsevereannoyanceandseveresleepdisturbance.TheaforementionedCEstudymentionsthatin2000about44%ofthepopulationoftheEU25(over210millionpeople)wereexposedtoroadtrafficnoiselevelsabove55dB(A).

While there is awide arrayofpossibilities fornoisemitigation, includingnoisebarriers, lowerspeed limits, lownoise road surfaces, nogo zones for HDVs, optimisation of traffic flow, tiredesignetc,theengineremainsanimportantsourceoftrafficnoisethatcanbecombateddirectly.AstheCEreportstates:Themostcosteffectivemeasuresarethoseatthelevelofvehicles.Thiscanbedonebyshieldingthesourceofnoise,butalsotoaddresstherootoftheproblem.

Notwithstanding recent technical developments, diesel engines are inherently noisier thanpetrolandnaturalgasvehicles.Thisisduetothepressurewaveinthecylinderwhichiscausedby the sudden ignition. While substantial sets of data from independent research into thecomparativenoiseproduction fromNGVs relative todieselvehiclesare scarce, there is someinformationavailable.

Agoodsource is thedata from theaforementioned typeapprovalsby theGermanKraftfahrtBundesamt.ForLDVs,NGVsdonothaveanadvantageovereithergasolineordieselvehiclesintermsofnoiseproduction.Vehiclesrunningongasolineanddieselactuallyproducedlessnoiseinmostcomparisons.Havingsaidthis,LDVsonaverageemitsignificantly(9dB)lessnoisethanHDVs.LCVsonaverageproduceslightlymorenoisethanLDVsandagain,NGVsdonothaveaclearadvantage.Instationarymode,NGVstendtobenoisierthandieselvehiclesbutlessnoisythangasolinevehicles.Whereas inmotion,NGVs tend toproduce lessnoise thandieselsandperformsimilartogasolinevehicles.ForHDVs,onlydieselvehiclesareavailableforcomparison.ThedataillustratestheimportanceoftakingintoaccountvariouselementsinthepowertrainofanHDV(exhaust,transmission)asthesecanmakeadifferenceofupto10dB.Thedatadoesnot support the statement thatHDVs runningonnatural gasproduce lessnoise thandiesel,althoughthis isthecase ina limitednumberofcomparisons. Inmostcasesthere iseithernodifferenceorNGVsproduce1dBto3dBmore.Intwocases,theNGVproduces2dBand3dBless.TheaverageHDNGVproduces89dB instationarymodeand79dB inmotion,whiletheaveragedieselproduces90dB(stationary)and79dB(inmotion).

In conclusion, the typeapprovaldata from theKBA indicates thatwhileNGVsdonothaveapronounced overall advantage of producing less noise than diesel or gasoline vehicles, inindividualcasestherecanbesignificantadvantages.Thisisconfirmedwhenindividualexamplesareconsidered,suchasaspecific Ivecotruck.ThistruckrunsonLNGor liquefiedbiogas(LBG)


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andisthefirsttobecertifiedformeetingthePIEKlightnormintheNetherlands,whichsetsa72dBmaximumtoreducenoisefromurbandelivery.

ThecaseofgarbagecollectioninMadrid(NGVAEurope,2009a)alsoillustratesthebenefitsthatNGVscanhave innoisereduction. In thiscasethere isanextraneed forsilentvehicles,sincegarbagecollectioniscarriedoutatnight,whileinhabitantstendtoleavewindowsopen.Whilenotarequirementforhomologation,noisehasbecomepartofmunicipaltenders.NoisefromCNGvehicleswasfoundtobealmosthalfthatofdieselvehicles(5dB(A)).

Severalothercasesconfirmthat in individualcasesNGVbusesandtruckscanhavesignificantbenefits, although currently this cannotbedemonstratedwith substantialdata sets across awiderangeofvehicles.


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4. EconomicsandpolicyKeymessages:

DataonenduserpricesshowthatwhileliquidfuelsaretaxedatleasttosomeextentinallOECDcountries,manynonOECDcountrieshave lowtaxratesorsubsidyschemes inplaceonenergypricesingeneralandfortransportationinparticular.

IEAanalysis indicatesthatnaturalgascancompetewithgasoline inallscenarioswheregastransmissionanddistributiongridsarepresent.

LiteratureprovidescategorisationofpolicyinstrumentsforNGVs,butnoevidenceontheeffectivenessofvariouspolicies.GovernmentscanstimulateNGVsdevelopmentatmanydifferentlevelsandcoordinateanintegratedapproachwithallstakeholders.

Any national or regionalNGVs strategy needs to take into account a number of localfactorstotailorgeneralprinciplestothecontext,thereisnoonesizefitsallapproach.

The additional costs for vehicles and investments required for infrastructure have beenaddressed in the chapter on technology. In this chapter, differences in prices as a result ofdifferentregimes fortaxationand/orsubsidieswillbediscussedanddifferentregionalpricingsystemsfornaturalgaswillbeoutlinedbriefly,lookingathowtheserelatetooilpricesaswell.Also,theoutcomeofananalysisofgreenhousegasabatementcosts,basedontheIEAMobilityModel,willbepresented.SincetheeconomicaspectsofNGVsareheavilyinfluencedbypolicyand regionalpricing systems forgas,manyof theseaspects cannotbediscussedonaglobalbasisbutshouldbeaddressedatanationalorregional level.For thisreason, thissectionwillstartwithsomebriefgeneralcommentsaboutthetheoryofpolicyrelatedtoNGVs,butinthenext chapter lookmore closely at thepractical side andeconomics in anumberofdifferentNGVsmarketsinOECDaswellasnonOECDcountries.

4.1FuelpricesOneofthemostsignificantparamterswhenintroducinganewfuelforuseinroadtransport,orincreasing its market share, is the relative prices of fuel and the regimes for taxation andsubsidies.Itwouldbebeyondthescopeofthisworkingpapertoprovideacompleteoverviewof subsidies and taxation on road fuels in place worldwide. Rather, some key data will beprovidedandanumberof countrieswillbediscussedmore indepth in chapter5with casestudies.Onaverage,itisclearthattaxestendtobealargeportionofenduserpricesforfuelsinOECDcountries(Table5).

Table5:TaxesaspercentageofenduserfuelpricesinOECDcountries2009

Minimum Maximum Average

Diesel 0.4% 64.4% 42%

Gasoline 17.2% 72.6% 57%

LPG 7.8% 48.5% 25%

Natural gas 4.8% 51.1% 18%

Note:Thenumbersfornaturalgasrefertoresidentialconsumers;whenusedasafuelfortransportation,naturalgasisoftentaxeddifferently,inmanycaseslower.

Source:IEA.


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Dataonenduserpricesalsoshowthat,whileenergypricesaretaxedatleasttosomeextentinallOECDcountries,manynonOECDcountrieshavelowtaxratesorsubsidyschemesinplaceonenergyprices ingeneraland for transportation inparticular.This leads to largedifferences inendusepricesbetweencountriesandbetweenfuels(Table6).

Naturally, CNG prices before subsidies and/or taxation differ from country to country andparticularly, fromregion toregion,aswellasaresultofdifferentregionalpricingsystems fornaturalgas.Amoredetaileddescriptionofthistopic is included inMediumTermOilandGasMarkets(IEA,2010b),thissectionprovidesabriefoverviewofthethreemainsystems.

TheNorthAmericanmarket(Canada,MexicoandtheUnitedStates)isverymuchaspotbasedmarket. Natural gas prices are the result of gastogas competition on various hubs in thisregion,whereverysubstantialvolumesaretraded.TheUnitedStateshasbyfarthemostliquidspotmarketfornaturalgasworldwide.WhiletheoptionofLNGimportsand(toalesserextent)exports imply that prices in nomarket can be set in complete isolation from other regionalmarkets, the NorthAmerican market is driven mostly by regional demand and supply,notwithstandingtheeffectthatchangesinothervariables(suchascoal,powerandCO2prices)canhaveongassupplyanddemand.Thiswas illustratedby theeffect that theproductionofshalegasplaysanda1.7%declineindemandhadonprices.Forexample,ontheHenryHub(themostliquidofUShubs)theaveragespotpricein2009wasUSD4/MBtuorhalfthelevelin2008.

Table6:Enduserpricesforroadfuels

Country/Region Diesel (USD/lge) Gasoline (USD/lge) CNG (USD/lge)

OECD Europe 1.32 1.39 0.74

OECD North-America 0.57 0.59 0.30

OECD Asia 1.39 1.79 0.62

Argentina 0.56 0.63 0.26

Bangladesh 0.42 0.67 0.22

Brazil 0.89 1.25 0.71

China 0.62 0.77 0.42

Egypt 0.19 0.16 0.07

India 0.65 1.04 0.33

Iran 0.01 0.10 0.04

Malaysia 0.57 0.63 0.22

Pakistan 0.70 0.93 0.49

Notes:Dataaretakenatvariouspoints intimeandcanthereforevary fromdataelsewhere inthisdocument;gasolinereferstoregulargasoline,exceptforPakistan(onlypremiumavailable).

Source:NGVEurope.

ThesecondregionalpricesystemisEurope,whichisahybridmarketinthesensethatwhiletheconventional system of longterm oilbased contracts is still in place, spot markets areincreasingly influencingnaturalgasprices.TheUKhub,NationalBalancingPoint (NBP) is themost liquidhubandhubs in continentalEurope tend to followNBPprices ina fairlynarrowbandastheUnitedKingdom isemergingasatransitcountry forEuropeangasdueto itsLNGterminals and pipelines (IUK and BBL14) connecting the United Kingdom with continentalEurope.Sincedemandstartedtodrop inmid2008asaresultoftheeconomicdownturnandtheUnitedStatesmaintainedhighproductionlevels,spotpriceshaveremainedverylow,while14AlthoughstrictlyspeakingnophysicalorvirtualflowispossibleyetthroughBBLfromtheUKtotheNetherlands.


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oilpricesrecovered.ThishasresultedinagapofonaverageUSD5/MBtuin2009,whichleavesmanyexpertsquestioningthesustainabilityoftheoilbasedpricingregime.Someadjustmentsweremadetolongtermcontractsearly2010.Itremainstobeseenwhethertheseadjustmentswillbeextendedbeyond2012.

The third regional pricing system is the Asian or Pacific price system, which is mostlycharacterisedbyAsiancountriessituatedat thePacificbasinand importing/exportingLNG toandfromeachotherandtheMiddleEast.LNGpricesareoilindexedanddespiteadropinmid2009have remainedmuchhigher than spotprices inNorthAmerica and Europeanmarkets,whilealsoincreasinglydeviatingfromEuropeanoilbasedprices.15

In othermarkets (such as the FSU,MENA and LatinAmerica), prices are often regulated bygovernmentsasisdiscussedinWorldEnergyOutlook2009(WEO2009)(IEA,2009).Therefore,whenassessingrelativeCNGprices,itisimportanttorecognisetheregionalgaspricingsystem,aswellasnationalregimesforfueltaxesandsubsidies.

4.2CompetitivenessofCNGToassessthecompetitivenessofCNGwithcurrentfuels,ananalysiswasmadetocomparethevariable costs and fixed costs forCNG indifferent scenariosof transmission anddistribution(T&D)griddevelopment.Thepurposeofthisanalysis istoconcludeatwhat levelsofT&Dgriddevelopmentnaturalgasasatransportation fuelcancompetewith themostcommonlyusedfuel today,gasoline.Calculationsweremadeusing the IEAMobilityModeland inputonCNGretailinfrastructurehasbeenobtainedfromvarioussourcesintheNGVindustry.AtanoilpriceofUSD80/bblanaturalgaspriceofUSD9/MBtuwasassumed,whichcorrespondsroughlytoaverage prices for the past five years under oillinked contracts in Europe or Asia/Pacific.NaturalgascancompetewithgasolineinallscenarioswhereT&Dgridsarepresent(Figure12).

Figure12:CostsofCNGversusgasolineindifferentscenariosofgriddevelopment

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Thisanalysisisbasedonresourcecostsandassuchdoesnotreflectanyinfluencefromtaxesorsubsidies,whichmeans that incaseswherenaturalgas ischeaperperunitof fuel (scenariosDG)this isaresultofthedifference incostsonly.What isalsoclearfromthisanalysis isthattheinfr

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