Natural gas is emerging as the alternative transportation fuel (ATF) most likely to help curb U.S. mobile source air pollution and oil import dependence.
Heightened concern about U.S. air quality and national energy security has revived calls for substituting ATFs for gasoline as quickly and in as many places as possible.
But with deadlines drawing near to implement many federal, state, and local motor fuel use mandates, no ATF is considered best suited for all applications.
Meantime, competition among alternatives is beginning to heat debate beyond the flashpoint.
At stake are shares of transportation markets in and around U.S. cities with the most serious air pollution, as well as potential markets for new alternative fuel vehicles (AFVs), AFV conversions, and development of an AFV refueling network. Market shares captured by ATFs will vary regionally. One American motorist in three lives in a region covered by one or more ATF related governmental regulatory initiatives.
FUELS DEBATE
Proponents of a handful of legally acceptable ATFs occupy the front lines of the fray where the focus of debate shifts because of legislative or regulatory mandates. When the main issue is protecting the environment, debate tends to dwell mostly on the cleanliness of competing ATFS. When talk turns to backing out U.S. oil imports, the greater questions become which ATF could replace the largest volume of imported oil and how fast.
Most observers acknowledge that gas offers the best package of environmental benefits, and propane often is said to be capable of backing out more imported oil because of its comparatively extensive refueling system. But dissent is voiced - often loudly - to even those conclusions.
Meanwhile, many other equally important questions - about the efficiency, cost, or safety of ATFs and AFVS, for example - defy easy answers because of complex lacking, or conflicting data.
Ultimately, the success of any ATF in capturing shares of U.S. transportation markets will depend on how government policies are implemented, the supply of government funds for alternative fuel vehicle (AFV) purchases, the ability of various ATFs and AFV engine technologies to achieve emissions mandates, economic competitiveness, the number of refueling stations, and customer needs and preferences.
REGULATORY INITIATIVES
Whatever the relative merits of competing ATFS, there likely would be little stir over future U.S. transportation fuel markets without the impetus provided by government mandates and incentives.
The Gas Research Institute (GRI), Chicago, reckons the U.S. has the most extensive list of publically funded programs supporting ATF use.
GRI has budgeted about $12 million/year for natural gas vehicle (NGV) research and development. Including cofunding from industrial partners, GRI manages and directs NGV R&D with a budget of $20-30 million/year.
Federal Clean Air Act (CAA) amendments of 1990 set up a clean fuel fleet program that affects most centrally fueled fleets of 10 or more vehicles operating in 21 U.S. urban areas with excessive ground level ozone. CAA included Denver fleets in the requirements because of the city's excessive carbon monoxide.
About 75 million persons live in areas covered by CAA's clean fuel fleet requirements.
CAA requires operators of affected fleets to begin buying these percent-ages of clean fuel vehicles:
- 30% of fleet passenger cars in 1998, 50% in 1999, and 70% thereafter.
- 50% of fleet vehicles with gross vehicle weights of 8,501-26,000 lb in 1998.
Each state is to determine what percentage of fleet light duty trucks and vans must be clean fuel vehicles as part of its plan to comply with CAA ozone requirements. While not tying the use of particular alternatives to gasoline, the act set emissions from mobile sources by 2001 at levels so low they would be difficult to reach without widespread use of ATFS.
In addition, CAA set up a low emission vehicle pilot program in California, administered by the California Air Resources Board (CARB), with still more strict emissions targets for fleet and private vehicles. CARB's program phases in four emissions reduction levels, culminating in 1998 with introduction of zero emission vehicles (ZEVs).
Other states with severe ozone problems are allowed to voluntarily, adopt California's motor vehicle air quality standards.
The U.S. Environmental Protection Agency says some states may adopt its inherently low emission vehicle (ILEV) model, which retains some of CARB's more stringent requirements while eliminating the mandate for ZEVS.
CURBING OIL IMPORTS
In contrast to CAA, provisions of the Energy Policy Act of 1992 (Epact) require purchases of AFVs in 125 urban areas as a way to curb U.S. dependence on imported oil.
The act sets a national goal of displacing by 2010 with nonpetroleum-derived fuels at least 30% of the petroleum content of fuels for light duty vehicles. Epact's short list of replacement fuels includes gas, methanol, ethanol, propane, electricity, hydrogen, coal-derived liquids, and biological materials. At least half the gross volume of replacement fuels must come from domestic sources.
Epact requires these operators of light duty fleets, in sequence, to buy AFVs in increasing percentages during several years: federal fleets; fleets operated by ATF producers, distributors, and marketers; state and local government fleets; and private fleets.
Until President Clinton in April 1993 issued Executive Order 12844, the act required federal fleet operators to buy a total of 7,500 AFVs this year and 10,000 AFVs in 1995, increasing to 25% of the fleet in 1996, 33% in 1997, 50% in 1998, and 75% in 1999 and beyond. Order 12844 directed federal agencies to exceed Epact AFV purchase requirements this year and next-to 11,250 in 1994 and 15,000 in 1995-subject to availability of funds and in consideration of life cycle costs.
AFV purchases by ATF providers and state agencies are to begin phasing in 1996.
Epact allows economic incentives, until phased out in 2004, for AFV purchases and development of AFV retail service stations. A federal tax deduction of as much as $2,000 is allowed on purchases of light duty vehicles, $5,000 for medium duty vehicles, and $50,000 for large trucks and buses.
In addition, the Clinton administration's Domestic Natural Gas & Oil Initiative in December 1993 contained further provisions aimed at removing obstacles to NGV market growth. Also, more than 30 states offer rebates, tax credits, or other incentives designed to promote the use of ATFS.
CLEANEST ATF
If competition among ATFs for shares of U.S. transportation markets were decided solely on emission, gas would have a decided edge.
Among all production AFVS, NGVs have achieved the lowest emissions measured on California certification testing for nitrogen oxides, carbon monoxide, and nonmethane hydrocarbons.
GRI said some U.S. automotive engineers speculate that further emissions reductions not only are possible but could achieve emissions levels that approach or even exceed the error limits of measurement equipment. If such low emissions levels are achieved, NGVs possibly could displace some future electric vehicle (EV) sales to private users.
While more NGV technological advances are needed, EVs are much more costly and their capabilities significantly constrained. In California, where mandated EV sales could begin as early as 1998 to meet state ZEV standards, Ford Motor Co. has forecast a loss of $20,000 on each EV sold through 2003.
Meantime, a GRI sponsored study released last April by Energy International Inc. (Ell), Bellevue, Wash., found that NGV emissions under U.S. and California environmental rules are comparable to EVs when the full fuel cycle (FFC) of production, distribution, and use are considered.
EII used the U.S. case as a benchmark to compare each ATF studied based on aggregate U.S. data. The California analysis served as an example of a regional analysis in which much of the electrical fuel cycle occurs outside the region, therefore not contributing to the region's pollution.
NGV FFC NOx emissions were lowest in the U.S. and California, followed by EVs in both surveys. EVs, on the other hand, achieved the lowest FFC reactive organic gas and CO emissions, followed by NGVS.
GRI Pres. and Chief Executive Officer Stephen D. Ban said proposed ZEV standards should be changed to consider emissions related to the FFC, not just tailpipe emissions.
Added Louis A. Lautman, GRI product manager for NGVS: "An expanded ZEV definition that considers FFC emissions and allows EV-equivalent certification of AFVs would provide manufacturers an incentive to develop and market vehicles with emissions levels significantly below California's ultralow vehicle emissions standards."
EFFECTS OF INITIATIVES
Based on third party data, the U.S. Energy Information Administration estimates that more than 250,000 AFVs were operated in the U.S. in 1992 by public and private fleet owners, including more than 220,500 powered by propane, nearly 24,300 by compresses natural gas (CNG), 2,768 by a gasoline/methanol mix known as M-85, and 1,690 by electricity.
EIA found federal fleets accounted for only 2,240 AFVs and state and local governmental fleets for 18,934 units.
While not a direct comparison, fleet data compiled by Dwights Energy Research, Denver, indicates the growth of the U.S. AFV population is under way.
William A. Gilbert, Dwights manager of research and consulting, says a tally of information in Dwights national fleet vehicle database found more than 377,750 AFVs in operation by mid-1994 among a total fleet population of more than 11.28 million vehicles.
The database's operator and fleet files include information on 173,000 government and private fleets in the U.S. with 10 vehicles or more.
AFV growth among fleets listed are projected through 2010, allowing Dwights clients to target the best sites in specific counties to offer AFV conversions and services or build AFV refueling stations.
"For every county and vehicle type in each year through 2010, we can model how many fleet vehicles are there, how many will be burning alternative fuels, and what kind of fuel they'll be burning," Gilbert said.
By basing its conclusions on multiple sources of vehicle registrations, annual telephone surveys, and on-the-ground proprietary studies for specific clients, "we can make our models pretty close," he said.
GAS TRANSPORTATION
Like EIA data, Dwights fleet database shows that propane currently is American's favored ATF, accounting for 79% of AFVs in use and 66% of the ATF refueling network. Gas, by comparison, fuels about 13% of U.S. AFVs and accounts for 32% of ATF refueling sites.
By 2010, propane's shares of ATF markets and AFV populations will be swept aside by a wave of NGVs and NGV refueling points. Dwights' model shows the number of NGVs in operation in the U.S. by 2010 will increase to more than 2.29 million 57% of all AFVs on the road-from about 49,660 this year. The number of propane fueled vehicles, meantime, will grow to 1.2 million in 2010 from about 299,300 as the percentage of propane vehicles in the AFV population drops to 31%.
The shift in ATF infrastructure by 2010 will be affected similarly, with gas refueling points accounting for 59% of all U.S. AFV stations, while propane's share of infrastructure declines to 36%.
GRI's counts of other AFVs and ATF refueling points also reflect substantial growth, but the market outlook for gas is especially promising.
including NGV fleet vehicles, fleet resales of NGVs to companies and individuals unaffected by ATF mandates, purchases of new NGVs by regulated and unregulated motorists, and NGV conversions, GRI estimates more than 4.7 million NGVs will be in operation in the U.S. by 2010.
Taking into consideration the mix of NGVs likely to be on U.S. roads in that year, GRI estimates U.S. transportation demand for gas by 2010 could be more than 4.6 bcf/year.
MORE GROWTH POSSIBLE
Compared with estimates by others, GRI's transportation outlook for gas seems conservative.
A study released in June 1993 by the Natural' Gas Vehicle Coalition (NGVC), Arlington, Va., estimated that as many as 5.5 million NGVs could be operating in the U.S. by 2000 and as many as 20 million NGVs by 2010, or about one in 10 U.S. cars and trucks.
However, those conclusions were based on an assumed gas/gasoline price differential of 85cts/gal. NGVC said the unusually hefty spread was in line with industry projections that gasoline prices will climb to about $2/gal by 2000 because of increased federal and state taxes and rising costs of complying with a host of government clean air rules.
In fact, NGVC claimed the study's conclusions were conservative because its model did not include effects of available state and federal tax credits and incentives for AFV conversions. Whether NGVC's findings stand the test of time, incentives purposely omitted from the association's analysis undoubtedly shave the economic barrier against NGV market growth.
GRI says an average California motorist can buy a dedicated original equipment manufacturer NGV for about $670 more than a gasoline powered counterpart when all available economic incentives are applied. Lower fuel costs could allow the extra cost of an NGV in California to be recouped in 2-3 years.
The private transportation market potential for NGVs could expand even more with new NGV leasing programs in which rental fleet operators would package NGVs with home fueling systems at a monthly cost. Gas transportation proponents say there are many reasons in addition to relatively low cost that gas is the premier ATF for U.S. markets.
Last March, John J. Cuttica, GRI's vice-president of end use R&D, in testimony before the U.S. House technology committee, said gas is a strong contender for U.S. ATF markets because of its natural advantages.
"The supply of gas is abundant, and more than 95% of gas used in the U.S. is produced in North America," Cuttica said. "Natural gas vehicles have some of the lowest tailpipe emissions ever measured.
"The higher octane of gas - 130 vs. 87 - 95 for gasoline - provides high efficiency and better performing vehicles, and the safety of gas as a fuel is much better than its competitors. Natural gas is lighter than air, so any fuel leaks result in gas dissipating in the air rather than puddling like liquid fuels waiting to be ignited."
NGV SAFETY
Earlier this year the safety of NGVs was called into question when pressurized gas cylinders ruptured on three pickup trucks fueled by CNG.
There were no critical injuries, and only one accident resulted in a fire. In the other two cases, gas dispersed without igniting, but cylinder fragments caused minor damage and injuries.
Vehicles involved in two of the incidents were General Motors CNG pickups. GM responded to the incidents by offering to repurchase or convert to gasoline power about 2,500 similar CNG pickups.
Based on investigations by the Southwest Research Institute, Arlington, Va., and preliminary findings of GRI's accelerated cylinder evaluation program, GRI concluded that exposure to battery acid in both cases contributed to the tank failures. GRI also recommended that CNG cylinder manufacturers change designs of stone shields to prevent cylinder immersion in trapped liquids and improve cylinder design by using acid resistant coatings.
"While some vehicle and cylinder manufacturers have begun implementing the recommended design changes, it is worth observing that several cylinder designs now is use have performed without incident for more than a decade," said Stephen K. Takagishi, GRI executive technology manager of NGVS.
"The performance of these cylinders should send a clear message that proper installation, treatment, handling, and monitoring of cylinders should minimize - if not eliminate - failures."
SAFETY RECORD
A study by the American Gas Association, Arlington, Va., of more than 8,300 NGVs that traveled more than a combined 278.3 million miles supported Takagishi's confidence.
AGA found that the per mile injury rate for NGVs was 37% lower than that of gasoline fleet vehicles and 34% lower than the injury rate of the entire population of registered gasoline vehicles. AGA also found that no deaths resulted from accidents involving the 8,300 NGVs surveyed, while accidents involving gasoline fleet vehicles averaged 1.28 deaths/100 million vehicle miles traveled (VMT and 2.2 deaths/100 million VMT for all U.S. vehicles.
NGVs in AGA's survey averaged 2.9 fires/100 million VMT, but only 1 fire/100 million VMT occurred as a result of a CNG system failure. Fire incident data were not available for gasoline powered vehicles.
Meantime, the Natural Gas Vehicle Producers Association (Ngvpa), Washington, is sponsoring a series of crash and durability tests with a test fleet of Ford F Series CNG pickup trucks. The tests, to be concluded by fourth quarter 1994 at Ford Motor Co.'s Dearborn, Mich., crash test site, were designed and the vehicles prepared by Automotive Support Group LLC, Dearborn, to generate data for single and dual fuel NGVS.
"We're crashing CNG vehicles to see if the tanks and fuel systems hold up," said Wayne J. Smith, Ngvpa managing director. "That is key to meeting federal motor vehicle safety standards."
After conclusion of Ford F Series pickup testing, similar tests are to be conducted on test fleets of Ford E Series vans, Ford Crown Victorias, and Ford Contour autos to be introduced in 1995. Test results are to be available early in October.
Because perceived safety of NGVs will have a profound effect on NGV sales, gas transportation proponents acknowledge it is imperative to assure and communicate NGV safety to fleet operators and the general public.
JUMP START FOR NGVS
Addressing a session of the World Gas Conference last June in Milan, Italy, GRI's Ban said private transportation markets for NGVs could add significantly to the vehicle stock forecast by GRI.
"Economic competition with reformulated gasoline and other alternative fuels will be an important factor in the extent to which NGVs penetrate regulated markets and expand into nonregulated markets," Ban said.
GRI's outlook for NGV transportation market growth is based on the idea that regulated markets for ATFs in general will jump start NGV use among private or nonfleet motorists once the latter become familiar with the fuel's attributes.
Dwights' Gilbert isn't so sure. While conceptually a good idea to use gas as a transportation fuel because it's relatively clean, cheap, and produced domestically, Gilbert emphasizes that emerging markets for AFVs or NGVs would not exist if it were not for government edicts.
"The hope in the industry is that fleet mandates and incentive programs will help build enough infrastructure and force enough fleets into the marketplace that private motorists can take advantage of it,' he said. "But the focus of incentive programs is on fleets. Our data indicate average consumers will not have an NGV any time in the near future."
Ban says the key to displacing gasoline as the fuel of choice among U.S. motorists lies in developing a convenient system of NGV refueling stations, a stable gas supplier network, and further advances in NGV storage to reduce costs and increase driving range.
"The competition is not standing still," Ban said in Milan. "Reformulated gasoline, propane, and other clean liquid fuels, combined with advances in conventional engine technology, will create a moving target for gas and other fuels.
"But given the emphasis on environmental quality throughout North America - and with continued successful consortia development, research success, and deployment of new technology - today's niche markets for NGVs can blossom into mass markets tomorrow."
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
