Proponents of natural gas vehicles (NGVs) told a US Senate committee that they’re seeking equal, not special, treatment under federal law. NGVs provide comparable environmental and energy security benefits as their electric counterparts and deserve similar federal support, they maintained.
“The Obama administration is working now to finalize the second round of its fuel economy and greenhouse gas standards for light duty vehicles, which will apply from 2017 to 2025,” American Gas Association Pres. Dave McCurdy told the Senate Energy and Natural Resources Committee.
Calling it “a critical, once-in-a-decade opportunity to get the policy right,” he said the gas industry has asked the administration to include the same manufacturing incentives for NGVs that it proposed for electric-drive vehicles.
“Equal incentives make sense because both alternative technologies provide the same energy security and environmental benefits,” McCurdy said. “It is vital for the success of the natural gas and alternative fuel sector that this rule expands consumer choice, rather than being weighted to favor one technology.”
Two federal tax code changes could remove barriers for the NGV market to grow, he continued. Each gallon of LNG sold incurs an effective tax rate of 41¢ per diesel gallon equivalent vs. 24.3¢ for diesel because LNG has a lower energy density, but the tax is applied on a gallon basis, McCurdy said. The discrepancy has been removed for the sale of compressed natural gas, but not for LNG where it provides unfair discrimination, he indicated.
Heavy duty trucks, which run on gas, cost $30,000-60,000 more than diesel models, McCurdy said. When the federal excise tax’s 12% rate is imposed, it creates an additional $3,600-7,200 cost premium toward a gas-powered heavy duty truck, he said.
Technology advances
Michael Gallagher, former president of Vancouver, BC-based natural gas engine company Westport Technologies and chairman of the natural gas group in the study of future transportation fuels that the National Petroleum Council plans to release Aug. 1, said NGVs are generating a lot of good news in the alternative transportation energy arena. “Technology and innovation are exploding in natural gas transportation, with hardly a week passing without another new announcement from a major industry participant,” he maintained.
Westport has formed heavy duty engine partnerships with Cummins, which has sold thousands of natural gas bus and truck engines in the last 10 years and recently began exports from a factor in North Carolina to bus manufacturers; Peterbilt, which has put gas-powered trucks to work at the ports of the Los Angeles and Long Beach in the last 4 years; and Volvo in Europe and Weichai in China, according to Gallagher.
“We know there is a big opportunity for both light duty and heavy duty NGVs based on the lower cost of natural gas relative to diesel and gasoline fuels,” he said. “We have also concluded that there are relatively few technological barriers to market entry and expansion for either LD or HD natural gas vehicles.”
Reg Modlin, regulatory affairs director for Chrysler LLC, said the automaker consciously reentered the CNG vehicle market recently when it began to produce the dual-fueled Ram 2500 heavy-duty pickup truck that switch to an 8-gal gasoline reserve providing an additional 112 miles after its CNG is used over 255 miles. Production has begun, and vehicles will begin arriving at dealers for fleet customers in August, he told the committee.
Chrysler supports technology-neutral policies, and would like to see incentives for natural gas-powered trucks equal to those for other alternative-fueled vehicles, Modlin said. “For example, if Congress modified the definition of ‘dedicated CNV vehicle’ to include ‘range-extended CNG vehicle,’ customers would be able to take advantage of nonfinancial opportunities offered in some regions, such as access to high-occupancy vehicle lanes,” he said.
Barriers to growth
But another witness testifying at the July 24 hearing said natural gas has less energy than gasoline and diesel and costs more to store onboard a vehicle as CNG or LNG. “Existing studies indicate that a minimally acceptable refueling infrastructure for passenger cars and light duty trucks would require the equivalent of 10-20% of the over 150,000 gasoline stations in existence today,” David Greene, a corporate fellow at Oak Ridge National Laboratory in Tennessee, told the committee.
The US Department of Energy and Energy Information Administration’s alternative fuel data center reports that there are about 1,000 natural gas refueling stations domestically, with only half open to the general public, he said. “There is little doubt that fuel availability is important, particularly for vehicles with limited range, and that the existing low level of fuel availability is an enormous barrier to market acceptance of NGVs,” Greene said.
“While shale gas provides an enormously important new resource for the US, it is not large enough to supply even a large fraction of transportation’s energy use in addition to expanding traditional uses in other sectors,” he continued. “And although natural gas produces lower tailpipe GHG emissions than petroleum, those emissions are not low enough to meet the reductions that will be required in the future to protect the global climate.”
Paul N. Cicio, president of the Industrial Energy Consumers of America, said IECA’s members do not oppose gas’ use for transportation, but are concerned about possible incentives—direct or indirect—that would increase gas demand and raise prices.
“The favorable economics and environmental advantages between natural gas and transportation fuels such as diesel and gasoline is driving the market toward greater use of natural gas in the transportation sector,” Cicio told the committee. “The market is working and government legislation and incentives are not needed.”
Contact Nick Snow at [email protected].