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Report Int

  1. 1. IGU – International Gas Union WORKING COMMITTEE 5 – UTILISATION STUDY GROUP 5.3 – NATURAL GAS VEHICLES (NGV) Report on Study Group 5.3 “Natural Gas for Vehicles (NGV)” FINAL REPORT Publishing this report or its parts before IGU 24th World Gas Conference (WGC 2009) in 5-9 October 2009 is prohibited June 1st 2009
  2. 2. S.G 5.3 STUDY GROUP MEMBERS AND PARTNERS Davor Matic – OMV Gas Adria – Croatia - S.G 5.3 - Chairman Eugene Pronin – Gazprom / NGVRUS - Russia – S.G 5.3 - Vice-chairman Study Group members and partners (in alphabetical order): Dinara Baisheva – Gazprom - Russia Peter Boisen – NGVA Europe - Sweden Olivier Bordelanne - GDF SUEZ – France Jovica Budimir – Srbijagas - Serbia Osvaldo Casagrande – Inflex - Argentina Gerco Van Dijk – Gasunie - Netherlands R. Fernandes – Praxair / ALGNV – Brazil Jorge F. G. de Figueiredo – APVGN - Associação Portuguesa do Veículo a Gás Natural – Portugal Trevor Fletcher – Hardstaff (and NGVA Europe) – United Kingdom Juan Carlos Fracchia – Inflex / IANGV Björn H. Halldórsson - Metan Ltd – Iceland Garth Harris – IANGV (retired) – New Zealand Ekatarina Kravetskaya – Gasunie (Moscow office) - Russia Manuel Lage – NGVA Europe / Iveco – Spain Izina Malenkina – Vniigaz - Russia Flavio Mariani – ENI Gas & Power – Italy Robert Mellema – Gasunie - Netherlands Nuno Nascimento - Galp Energia - Portugal Pavel Novak – Czech Gas Association – Czech Republic B. Ochani - NIGC - National Iranian Gas Company – Iran Hasin Parvez - Green Fuel CNG conversion center - Bangladesh Jonathan Parcer - PT. Wendell - Indonesia Juan Plana – Gas Natural – Spain Gracjan Ramut – PGNiG - Poland Thierry Renaudie - GDF SUEZ – France Mike Sato - Tokyo Gas – Japan Guan Saw - Cummins Westport - China Martin Seifert – SVGW - Switzerland Peter Seidinger – OMV Gas & Power – Austria Jeffrey Seisler – Clean Fuels Consulting – United States Vasiliy Shashukov – Gazprom - Russia Ton Smit – Aardgasmobiel - Netherlands Alexander Stroganov - Gazprom – Russia -2-
  3. 3. Study Group members and partners (in alphabetical order) – continue: Lee Giok Seng – Petronas / ANGVA - Malaysia Henk Verbeek – Rolande LNG - Netherlands Svetlana Videnova – Avtometan – Bulgaria Mkrtychan Yakov – Vniigaz - Russia Koen Wiersma – Gasunie - Netherlands M. Haikal Zubir – Petronas – Malaysia -3-
  4. 4. ACKNOWLEDGEMENTS Chapter 3.2.2. Summary of technology development and an overview of NGV industry today Special thanks to John Baldwin (CNG Services Ltd.), Peter Boisen (NGVA Europe), Jeff Seisler (Clean Fuels Consulting), Eugene Pronin (Gazprom / NGVRUS) and Rich Kolodziej (NGV America / IANGV) for providing summaries of technology development and overviews of the NGV industry today. Chapter 3.3.1. Description of major markets today Special thanks to Jeff Seisler (Clean Fuels Consulting), Peter Boisen (NGVA Europe), Manuel Lage (NGVA Europe / Iveco), Rich Kolodziej (NGV America / IANGV) and Eugene Pronin (Gazprom / NGVRUS) for providing descriptions of major NGV markets today. Furthermore, many thanks to Lee Giok Seng (ANGVA / Petronas), Juan Carlos Fracchia (Inflex) and R. Fernandes (Praxair) for providing verifications related to their respective markets. Chapter 3.3.2. Technical and Commercial Data Base Replies to the distributed questionnaire were kindly provided by: • Peter Boisen (Target 2010 Partners – Sweden) • Osvaldo Casagrande (Argentoil–Inflex – Argentina) and R. Fernandes (ALGNV – Latin America Natural Gas Vehicles Association, Brazil) • Trevor Fletcher (Hardstaff Group - United Kingdom) • Jorge F. G. de Figueiredo (Portuguese Natural Gas Vehicle Association – Portugal) • Davor Matic (OMV Gas Adria – Croatia) and Dino Novosel (EIHP – Croatia) • Flavio Mariani (ENI – Italy) • Pavel Novak (Czech Gas Association – Czech Republic) • Rich Kolodziej (NGV America – United States) • Jonathan Parcer (PT. Wendell Indonesia – Indonesia) • Joan Plana (Sedigas / Gas Natural S.D.G. S.A. – Spain) • Eugene Pronin (Gazprom – Russia) • Gracjan Ramut (PGNiG – Poland) • Thierry Renaudie and Olivier Bordelanne (GDF SUEZ – France) • Shigeyoshi (Mike) Sato (Tokyo Gas - Japan) • Guan Saw (Cummins Westport - China) • Martin Seifert (SVGW – Switzerland) • Peter Seidinger and Franz Marschler (OMV Gas & Power, Austria) • S.H. Taheri and B.Ochani (IFCO (Iranian fuel conservation company) • Henk Verbeek and Erik Buthker (NGV Holland / Dutch4 – Netherlands) • Svetlana Videnova (Avtometan - Bulgaria) • M Haikal Zubir (Petronas – Malaysia) -4-
  5. 5. Chapter 4.1. Identified (potential and promising) new technologies and assessment of new technologies chances Special thanks to Jeff Seisler (Clean Fuels Consulting) and Shigeyoshi (Mike) Sato (Tokyo Gas) for providing contribution regarding identified (potential and promising) new technologies and assessment of the new technologies chances. Thanks to Peter Seidinger for distributing information on ionic compressors technology. Many thanks to Ian Patterson for providing information on Radio Frequency Identification (RFID) system. Chapter 5. Case studies We would like to express our gratitude to: • Peter Boisen (NGVA Europe) and Mats Ekelund (Taxi Stockholm – Member of the Board) for providing case of OEM (bio) CNG taxis in Stockholm – Sweden. • Olivier Bordelanne and Thierry Renaudie (GDF SUEZ) for preparation of the Lille (natural gas – biomethane buses) and Paris (natural gas garbage trucks) cases. • Ollie Clark on the great audit on Adelaide Metropolitan Passenger Bus Fleet (and to experts he interviewed: Mr Alan Castree, Manager, Fleet and Depot of the SA Government’s Dept for Transport, Energy and Infrastructure and Messrs Doug Lamont, General Manager and Mr Dave Sharrad, Workshop Manager, of Torrens Transit, Morphettville). • R. Fernandes (Praxair) for delivering text on airplane fuelled by natural gas demonstrated in the South of Brazil • Jorge F. G. de Figueiredo (APVGN - Portuguese Natural Gas Vehicle Association) for providing case and auditing experts of Companhia Carris de Ferro de Lisboa, SA (public transport system operator in Lisbon – Portugal): Mr. Eng. Alberto Lage (responsible for warranty management); Eng. José Roseiro (responsible for maintenance contracts); Eng. Vasco Matos (responsible for exploration fleet management and drivers evaluation); Eng. Chaínho (former responsible for maintenance fleet), Mr. Joaquim Belo (traffic coordinator); Mr. Luís Filipe (maintenance coordinator) and the Development and Innovation-Director, Eng. Jorge Nabais. • Trevor Fletcher, C/O, The Hardstaff Group for providing case on Hardstaff Dual Fuel LNG/CNG trucks. • Garth Harris (IANGV) for preparing New Zealand case (interviewing: Craig Worth, Fleet Manager, GoBus, Hamilton, New Zealand). • Katie Kim, Secretary Team and to Kevin Park, NGVI,INC for the interview on Chuncheon – Korea bus fleet as well as to (interviewed) Suk won Lee, Manager of Managing Maintenance Dept. • Manuel Lage (NGVA Europe, Iveco) for providing case on OEM garbage truck fleet in Madrid – Spain and for the case on natural gas off- road airport applications in Madrid airport – Spain. • Hamilton Street Railway’s Don Hull, Director of Transit, and Mark Selkirk, Supervisor of Fleet Maintenance, were interviewed by Alicia Milner, President of the Canadian Natural Gas Vehicle Alliance. • Yuri Panov (MADI University, Moscow) and Eugene Pronin (Gazprom, Russian NGV Association) for preparing case on OEM natural gas buses in Moscow, Russia. • Lee Giok Seng (ANGVA / Petronas - Malaysia) and to Punnachai Footrakul (PTT Public Company Ltd, Bangkok, Thailand) for providing case of CNG ferries in Thailand. • Cindy Slinn (HSR) for providing HSR CNG Transit Photos. • M Haikal Zubir (Petronas – Malaysia) for providing case on Sunlight Taxi Sdn Bhd CNG taxi fleet (using converted vehicles) from Kuala Lumpur – Malaysia. Editing Special thanks to Jeffrey Seisler (Clean Fuels Consulting) for his time and efforts spent in providing overall editorial support in preparing the final versions of this document. -5-
  6. 6. CONTENT S.G 5.3 STUDY GROUP MEMBERS AND PARTNERS ........................................................................ 2 ACKNOWLEDGEMENTS........................................................................................................................ 4 1. SUMMARY .......................................................................................................................................... 8 2. INTRODUCTION ............................................................................................................................... 11 3. MARKET DEVELOPMENT AND PRESENT MARKET SITUATION ................................................ 13 3.1. MARKET DATA, SHARE OF GAS, TRENDS............................................................................. 13 3.1.1. NGV statistics, total number of vehicles and share of NGVs............................................... 13 3.2. THE OVERALL GAS (NGV) MARKET TODAY – WHAT ARE THE APPLICATIONS? ............. 17 3.2.1. Total estimated NGV consumption, total World gas consumption and share of NGVs....... 17 3.2.2. Summary of technology development and an overview of NGV industry today.................. 19 3.3. MARKET PROFILE ..................................................................................................................... 29 3.3.1. Description of major markets today...................................................................................... 29 3.3.2. Technical and Commercial Data Base................................................................................. 35 3.3.2.1. Analysis by country and by application – state of the art .................................................. 35 4. TECHNOLOGY STATE OF THE ART .............................................................................................. 36 4.1. IDENTIFIED (POTENTIAL AND PROMISING) NEW TECHNOLOGIES AND ASSESMENT OF THE NEW TECHNOLOGIES OPPORTUNITIES ........................................................................... 36 5. CASE STUDIES ................................................................................................................................ 39 5.1. CASE STUDIES ON NEW PROJECTS...................................................................................... 39 5.1.1. Off-road applications ............................................................................................................ 39 5.1.1.1. Airport applications – case Madrid .................................................................................... 39 5.1.1.2. Airplane fuelled by natural gas has been demonstrated in the South of Brazil ................ 43 5.2. REAL LIFE EXPERIENCES........................................................................................................ 44 5.2.1. OEM natural gas buses........................................................................................................ 46 5.2.1.1. Europe............................................................................................................................... 46 5.2.1.1.1. Natural gas – bio-methane buses in France (Lille) ........................................................ 46 5.2.1.1.2. The NGVs Experience of "Carris de Lisboa" – Lisbon (Portugal).................................. 47 5.2.1.2. Russia ............................................................................................................................... 51 5.2.1.2.1. OEM natural gas buses in public transport in Moscow .................................................. 51 5.2.1.3. Asia-Pacific region ............................................................................................................ 52 5.2.1.3.1. OEM passenger bus fleet in the City of Adelaide, South Australia................................ 52 5.2.1.3.2. OEM passenger bus fleet in Hamilton - New Zealand ................................................... 56 5.2.1.3.3. OEM passenger bus fleet in Chuncheon - Korea .......................................................... 57 5.2.1.4. North America ................................................................................................................... 58 5.2.1.4.1. Hamilton Street Railway – The World’s First CNG Transit Fleet ................................... 58 -6-
  7. 7. 5.2.1.5. Conclusion on real life experiences using OEM natural gas buses.................................. 63 5.2.2. Dual Fuel LNG/CNG trucks in long distance haulage.......................................................... 65 5.2.2.1. Case of Hardstaff Dual Fuel CNG-LNG trucks ................................................................. 65 5.2.3. OEM garbage trucks ............................................................................................................ 68 5.2.3.1. CNG trucks in urban garbage collection in Paris - France................................................ 68 5.2.3.2. CNG trucks in urban garbage collection in Madrid - Spain............................................... 71 5.2.4. Natural gas taxi fleets........................................................................................................... 73 5.2.4.1. Large taxi fleet using converted vehicles in Kuala Lumpur - Malaysia ............................. 73 5.2.4.2. Taxi fleet using (bio) CNG OEM vehicles in Stockholm - Sweden ................................... 77 5.2.5. Natural gas ships ................................................................................................................. 77 5.2.5.1. CNG ships ......................................................................................................................... 77 5.2.5.1.1. CNG ferries in Thailand.................................................................................................. 77 6. THE FUTURE FOR NGVs AND POTENTIAL IMPACT OF NGV TECHNOLOGIES ....................... 79 6.1. PROGNOSIS OF REGIONAL NGV MARKET DEVELOPMENT ............................................... 79 6.2. WHAT ARE THE PRINCIPAL CHALLENGES AND OPPORTUNITIES? ................................. 87 7. CONCLUSIONS & RECOMMENDATIONS ...................................................................................... 88 APPENDIX – NGV Technical and Commercial Data Base................................................................... 91 NGV Original Equipment Manufacturers (OEMs) .......................................................................... 91 Average conversion costs breakdown ............................................................................................. 104 Extra costs related to NGVs (i.e. cylinder inspection, gas system examination, additional road tax etc.)............................................................................................................................................... 109 Subsidies and/or tax exemptions for NGVs (equipment, conversions and OEMs, natural gas as vehicle fuel, filling stations) .......................................................................................................... 113 Filling station CNG prices breakdown .......................................................................................... 121 Standards, codes and regulations for vehicles and filling stations .............................................. 124 TABLES ............................................................................................................................................... 140 FIGURES............................................................................................................................................. 142 -7-
  8. 8. 1. SUMMARY S.G 5.3 report provides a global analysis as well as a regional view, to the best extent possible, of the past, present and expected future of natural gas (or “methane”) use in transport sector, based on those countries that provided analyses and case studies as well as on detailed desk research. Regions covered in this report are: Africa, Asia-Pacific, Europe, Middle East, North America, Latin America and the Caribbean and Russian Federation & the Commonwealth of Independent States (C.I.S). The overview of the present situation (state of the art) is supplemented with a summary of technology development, an overview of NGV industry today, and a profile of the major markets. Total NGV parc grew from around 3.2 million vehicles in 2003 to 9.44 million vehicles by the end of 2008 with significant changes in regional NGV market structure. In 2003, Latin America had the highest share: 56% of the total NGV market. But the rapid growth in the Asia-Pacific region represents, by far, the strongest market growth generator. By 2008 the market shares of Latin America and Asia- Pacific region were almost equal, with the Asia-Pacific region representing 37% share and Latin America representing 40% of the global market share. The NGV market in Latin America doubled in 2003-2008 period while the Asia-Pacific region increased by a factor of five. The NGV worldwide share of total vehicle parc in 2008 is approximately 1%. This represents 0.6% (2007) of the total worldwide natural gas consumption. Share of personal cars and similar light duty vehicles in total NGV parc decreased from 94% in 2004 to 87% in 2008, partially due to two fold increase in the heavy duty NGV sector (trucks and buses). IGU S.G. 5.3 established the IGU NGV Technical and Commercial Data Base. This Data Base provides not only an overview of technical standards and codes used in the countries surveyed, but also has practical commercial information covering in detail the costs (CAPEX & OPEX) of various state of the art OEM/conversion products (light duty vehicles (LDVs) and heavy duty vehicles (HDVs)). Also the costs and standards related to the NGV filling stations, as well as fiscal and other supportive measures for NGVs and filling stations are included. Database was developed through direct detailed questionnaire survey conducted among Study Group members and partners from 21 countries worldwide. There has been a dramatic increase in the numbers of models of OEM NGVs in the worldwide vehicle market though numbers of OEM NGVs compared to converted vehicles is relative small. This trend is likely to continue and OEM NGVs will, at some point, become dominated by OEM product. An internal survey, “Key questions and problems in each region for further development of the NGV market” conducted among S.G 5.3 members and partners indicated that one of the main problems related to using NGVs in fleets are responding to requests of fleet operators for information about everyday real life experiences gained from other NGV fleet operators. Therefore, in order to fill this need, IGU S.G. 5.3 collected numerous cases on real life experiences from existing fleet operators already using NGVs about maintenance and life-cycle costs, repair intervals, fuelling time and flexibility, safety, additional technical and infrastructure requirements, feedback from drivers, users, mechanics and overall business efficiency compared to liquid fuels. Initially starting with OEM NGV bus fleets (as opposed to diesel bus fleets), the scope was extended to include garbage truck fleets, taxi fleets, dual-fuel CNG/LNG trucks in long distance haulage and also off-road applications (airport buses and machinery and ferries). The scope was further extended to include bio-methane powered OEM buses. Outcome of numerous audits (interviews of fleet operators conducted by S.G 5.3 members and partners) leads to conclusion that natural gas vehicle technologies are available and proven for a wide range of on-and-off-road vehicle applications including cars, trucks, buses, and marine applications. Comparative reports of NGV maintenance experiences shows a positive influence of a ‘learning curve’ related to improved ‘best practices’ and the development of second generation technologies. Furthermore, some countries have been successful in organising cooperation among NGV stakeholders: OEMs; conversion companies; governments (local, regional, national). This relatively successful approach could be repeated in other countries to increase NGV penetration. -8-
  9. 9. In addition to the analysis of customers and operators using existing technologies, an overview of possible “breakthrough” technologies and improvements of existing technologies that can change the shape of the market has been performed. A wide variety of natural gas vehicle engines, fuel storage, fuelling systems, and vehicles are now in operation worldwide. Some of the technologies are relatively basic while others follow the sophistication of the best available technologies (OEM vehicles and fuel storage). The level of sophistication of the NGV systems will continue to improve, particularly as improvements made in current automotive and truck technologies spread worldwide. Besides traditional road vehicles, developments are registered in a number of off-road applications (like LNG turbine locomotives, CNG agriculture machinery and light aircrafts). New developments such as high pressure direct injection and turbo charging should increase efficiency, vehicle range, and reduced emissions. Increasingly more of these new technologies are coming into the country or regional markets. With more stringent emissions standards and new generation of vehicles with these technologies are likely to move into the other regions in parallel with the development of more stringent national and local standards. Anticipated increase in oil prices up to US$120 per barrel in 2020 to $150 in 2030 (consistent with International Energy Agency crude oil price scenarios) indicate a potential growth of NGVs to approximately 50 million in 2020; and to just over 100 million in 2030 according to the mathematical model (developed by IGU WOC 5 S.G 5.3). That would account for the estimated share of NGVs in the worldwide vehicle parc of 4.5% in 2020 and just over 7% in 2030, representing up to 106 bcm annual gas consumption in 2020 and up to 207 bcm annual natural gas consumption in 2030. Some of the market development potential through 2030 is linked to more dramatic growth of NGVs in the Asia- Pacific markets (expected 44% share in the total market) followed by growth in Latin America (26% share) and the Middle East markets (17% share). In order to achieve sustainable NGV market growth, appropriate and competitive fuel pricing relative to petrol and diesel can be created on the basis of energy equivalencies, based upon fuel margins desired, or ‘artificially’ created through favourable taxation that supports cleaner, more environmental fuels. Gas utilities should make a positive business case to the suppliers of traditional petroleum fuels who potentially could profit from integrating CNG/LNG into their retail mix. Government incentives for NGVs (and clean fuels generally) should be linked to the relative share of market growth; when market share is low incentives need to be higher and then adjusted over time to reflect increased market penetration. Furthermore, governments need to be convinced that more financial resources for NGV R&D could dramatically improve the future potential contribution of NGVs environmental benefits (including: biomethane; energy efficiency; increased focus on natural gas / biomethane powered hybrid solutions); and contribution to overall energy security (i.e. through fuel diversification and efficiency). Efforts to continue harmonization of worldwide standards and regulations is needed to make NGVs more competitive (and reliable) in the market. Also, issues associated with fuel quality/composition and the sale units of CNG (LNG) at the fuel pump will be important considerations into the future, among other things, in order to make customers more familiar with understanding the economic advantages (in particular) of using natural gas as a vehicle fuel compared to other alternatives. The natural gas industry should further evaluate the opportunities for biomethane as a renewable resource as part of their overall fuel supply portfolio. This would be consistent with many government policies oriented to take advantage of the potential for natural gas and biomethane to reduce CO2 emissions, improve fuel diversity in the transportation sector, enhance energy efficiency and improve the overall security of supply. Additionally, NGVs would contribute to raising the environmental profile in a positive way for the natural gas industry as a whole. -9-
  10. 10. Finally, emerging technologies and natural gas-based fuels are showing strong future potential and should be encouraged for further study and development. This should include, but not be limited to: liquid natural gas as a fuel; use of hydrogen within natural gas; dual fuel heavy duty engines; radio frequency identification (RFID) systems that contribute to safety when used to identify on-board CNG cylinders at the fuelling station (and increase accountability and data base development of NGVs within a country), L-CNG fuelling opportunities; and biomethane development for direct use in vehicles and introduction into the existing pipeline network. - 10 -
  11. 11. 2. INTRODUCTION The aim of this report is to provide an overall view of the past, present and expected future of natural gas (or “methane”) use in transport sector. This report provides a global analysis as well as a regional view, to the best extent possible, based on those countries that provided analyses and case studies as well as on detailed desk research. Regions covered in this report are: Africa, Asia-Pacific, Europe, Middle East, North America, Latin America and the Caribbean and Russian Federation & the Commonwealth of Independent States (C.I.S). The overview of the present situation (state of the art) is supplemented with a summary of technology development, an overview of NGV industry today, and a profile of the major markets. The NGV share of the total automotive sector and is gas consumption also was calculated. As its permanent activity IGU S.G. 5.3 works on the establishment and maintenance of the IGU NGV Technical and Commercial Data Base. This Data Base provides not only an overview of technical standards and codes used in the countries surveyed, but also has practical commercial information covering in detail the costs (CAPEX & OPEX) of various state of the art OEM/conversion products (light duty vehicles (LDVs) and heavy duty vehicles (HDVs)). Also the costs and standards related to the NGV filling stations, as well as fiscal and other supportive measures for NGVs and filling stations are included. In total, 21 country members responded to a questionnaire distributed worldwide, providing a good geographical representation of NGV activities. The countries include: Argentina, Austria, Brazil, Bulgaria, China, Croatia, Czech Republic, France, Indonesia, Iran, Italy, Japan, Malaysia, Netherlands, Poland, Portugal, Russia, Spain, Sweden, Switzerland and the United Kingdom. The Technical and Commercial Data Base provides a good basis (data inputs) for economic and financial models (calculation of payback periods, internal rate of return, costs savings etc.) for the above-mentioned countries and for: private light duty vehicles owners (OEMs or converted); heavy duty vehicles owners (OEMs or converted; 100% natural gas or dual-fuel); and for filling stations owners. An internal survey, “Key questions and problems in each region for further development of the NGV market” conducted among S.G 5.3 members and partners indicated that one of the main problems related to using NGVs in fleets are responding to requests of fleet operators for information about everyday real life experiences gained from other NGV fleet operators. Therefore, in order to fill this need, IGU S.G. 5.3 collected numerous cases on real life experiences from existing fleet operators already using NGVs about maintenance and life-cycle costs, repair intervals, fuelling time and flexibility, safety, additional technical and infrastructure requirements, feedback from drivers, users, mechanics and overall business efficiency compared to liquid fuels. Initially starting with OEM NGV bus fleets (as opposed to diesel bus fleets), the scope was extended to include garbage truck fleets, taxi fleets, dual-fuel CNG/LNG trucks in long distance haulage and also off-road applications (airport buses and machinery and ferries). The scope was further extended to include bio-methane powered OEM buses. - 11 -
  12. 12. In addition to the analysis of customers and operators using existing technologies, an overview of possible “breakthrough” technologies and improvements of existing technologies that can change the shape of the market has been performed. Finally, to look into the future, the Study Group 5.3 prepared scenarios of regional market development in order to quantify and qualify, to the best extent possible, a projection of how many NGVs and anticipated “methane” consumption could be achieved by 2030. This prognosis includes the expected number of “equivalent” NGVs, and the corresponding natural gas consumption. This report has a somewhat linear structure starting with an analysis of the past trends and development of the NGV share as a function of the total automotive parc as well as of the share of NGV consumption relative to the total global natural gas consumption. Finally, these factors were evaluated considering different possible crude oil prices scenario. - 12 -
  13. 13. 3. MARKET DEVELOPMENT AND PRESENT MARKET SITUATION 3.1. MARKET DATA, SHARE OF GAS, TRENDS 3.1.1. NGV statistics, total number of vehicles and share of NGVs Complete NGV statistics on NGV (vehicles and filling stations) growth is compiled from various sources (IANGV, GVR, etc.) and grouped into respective regions. The overall number of NGVs (all categories) between 2003 and 2008 is presented below, indicating that the total number of NGVs worldwide has tripled in last six years. Table 1 – Total NGV parc in 2003 – 2008 period Natural gas vehicles 2003 2004 2005 2006 2007 2008 (total, all categories) 3 201 969 3 834 758 4 636 146 5 352 834 7 546 170 9 442 529 Africa 48 513 55 453 61 743 69 561 81 667 98 964 Asia-Pacific 694 311 863 011 1 121 721 1 514 753 2 403 012 3 479 512 Europe 431 228 426 659 437 965 479 013 555 705 759 749 Middle East 1 000 15 000 63 779 148 427 499 014 846 474 North America 152 505 153 542 153 542 152 553 162 053 115 177 Latin America and the Caribbean 1 795 612 2 190 465 2 629 916 2 807 239 3 490 019 3 752 201 Russian Federation & C.I.S. 78 800 130 628 167 480 181 288 354 700 390 452 Source: GVR, IANGV, et al. It is interesting to note the changes in the regional structure of the NGV market during this five year period. In 2003, Latin America had the highest share: 56% of the total NGV market. But the rapid growth in the Asia-Pacific region represents, by far, the strongest market growth generator. By 2008 the market shares of Latin America and Asia-Pacific region were almost equal, with the Asia-Pacific region representing 37% share and Latin America (including the Caribbean region) representing 40% of the global market share. The NGV market in Latin America doubled in 2003-2008 period while the Asia-Pacific region increased by a factor of five. Total NGV car parc 10 9.44 9 7.55 Russian Federation & C.I.S. 8 Latin America and the Caribbean Million NGVs 7 5.35 North America 6 4.64 Middle East 5 3.83 Europe 4 3.20 Asia-Pacific 3 Africa 2 Total: 1 0 2003 2004 2005 2006 2007 2008 Figure 1 – Total NGV car parc growth in 2003 – 2008 period At the same time, the share of the total European NGV market fell from 13.5% in 2003 to 8% in 2008. The North American market decreased from about 5% to 1.2%. The Russian Federation and C.I.S. grew from 2.5% to 4.1%, and Africa went from 1.5% to 1% market share. - 13 -
  14. 14. The largest specific growth occurred in the Middle East, predominantly due to the Iranian national strategy to convert all road transport to natural gas. This was done in order to save crude oil for export instead of being used domestically while using natural gas for domestic vehicles. The Iranian market grew dramatically from only one thousand units in 2003 to 846.5 thousand units in 2008, an increase in its share of the total NGV market from almost zero in 2003 to 9% in 2008. Regional NGV market shares in total NGV market 56% 57% 57% 60% 52% 50% 46% Latin America and the Caribbean 40% Africa 40% Asia-Pacific Europe (%) 37% 30% Asia-Pacific region Middle East 32% 28% North America 20% 24% Latin America and the Caribbean 22% 23% Russian Federation & C.I.S. 10% 0% 2003 2004 2005 2006 2007 2008 Figure 2 – Regional NGV market shares in total NGV market Distribution among the different vehicle market segments - personal cars, buses, trucks, and ‘other’ - compiled from the same data sources but only from 2004 to 2008 is presented below. (2003 data was unavailable.) Table 2 – NGV Parc in 2004 – 2008 for Personal Cars and Other Light Duty Vehicles (LDVs) Natural gas vehicles 2004 2005 2006 2007 2008 (personal cars / LDVs) 3 605 616 4 372 527 5 039 758 6 975 847 8 238 988 Africa 55 303 55 306 58 555 58 590 96 319 Asia-Pacific 771 692 1 015 271 1 350 509 2 105 670 2 650 717 Europe 415 287 423 548 461 335 542 374 727 822 Middle East 15 000 62 194 145 919 496 361 840 262 North America 139 191 141 342 137 913 147 413 99 037 Latin America and the Caribbean 2 190 465 2 629 916 2 807 239 3 466 539 3 661 760 Russian Federation & C.I.S. 18 678 44 950 78 288 158 900 163 071 Source: GVR, IANGV et al. Table 3 – NGV parc in 2004 – 2008 for Medium and Heavy Duty Vehicles (MDVs/HDVs) and Buses Natural gas vehicles 2004 2005 2006 2007 2008 (MDVs / HDVs - buses) 111 092 135 244 120 361 163 263 255 897 Africa 150 5 019 5 367 5 373 1 204 Asia-Pacific 54 247 67 581 56 432 74 584 164 771 Europe 5 226 6 780 7 328 9 205 10 331 Middle East 0 1 584 2 494 2 641 6 200 North America 11 869 10 200 10 240 10 240 11 240 Latin America and the Caribbean 0 0 0 13 820 13 820 Russian Federation & C.I.S. 39 600 44 080 38 500 47 400 48 331 Source: GVR, IANGV et al. - 14 -
  15. 15. Table 4 – NGV parc in 2004 – 2008 – Medium and Heavy Duty Vehicles (MDVs/HDVs) - trucks Natural gas vehicles 2004 2005 2006 2007 2008 (MDVs / HDVs – trucks) 92 291 102 935 99 926 134 526 157 254 Africa 0 1 418 3 356 3 356 704 Asia-Pacific 11 398 13 924 20 122 30 569 44 622 Europe 6 061 7 142 9 936 3 529 15 630 Middle East 0 1 12 12 12 North America 2 482 2 000 2 000 2 000 2 500 Latin America and the Caribbean 0 0 0 9 660 9 660 Russian Federation & C.I.S. 72 350 78 450 64 500 85 400 84 126 Source: GVR, IANGV et al. The “others” category (Table bellow) includes other NGVs like 3-wheelers - tuk-tuk – popular in some Asian countries as well as agriculture machinery (natural gas tractors) popular in Russia and C.I.S. countries, and all other non-specified categories. Table 5 – NGV Parc in 2004 – 2008 – Other Natural gas vehicles 2004 2005 2006 2007 2008 (others) 25 759 25 440 92 789 272 534 790 390 Africa 0 0 2 283 14 348 737 Asia-Pacific 25 674 24 945 87 690 192 189 619 402 Europe 85 495 414 597 5 966 Middle East 0 0 2 0 0 North America 0 0 2 400 2 400 2 400 Latin America and the Caribbean 0 0 0 0 66 961 Russian Federation & C.I.S. 0 0 0 63 000 94 924 Source: GVR, IANGV et al. Although slightly decreasing lately (especially in 2008) personal cars and LDVs in general are still representing major share in total global NGV parc. Share of personal cars / LDVs in total NGV parc 96% 94% 94% 94% 94% 92% 92% Personal cars / LDVs (%) 90% 87% 88% 86% 84% 82% 2004 2005 2006 2007 2008 Figure 3 – Share of personal cars / LDVs in total NGV parc in 2004 – 2008 period - 15 -
  16. 16. The NGV share of total road vehicles was calculated based on the available NGV and road vehicles market statistics. Results show that the current share of NGVs is now about one percent of the total road vehicle population worldwide. Share of NGVs in total vehicle parc (regional and total) 14% Russian Federation & C.I.S. 12% Latin America and the Caribbean North America 10% Middle East Europe (%) 8% Asia-Pacific 6% Africa Total: 4% 2% 0.79% 0.38% 0.44% 0.51% 0.58% 0.97% 0% 2003 2004 2005 2006 2007 2008 Figure 4 – Share of NGVs in total vehicle parc population (regional and total) Growth would not be possible without natural gas filling stations to fuel the vehicles. In the respective period, the number of natural gas filling stations for vehicles grew from around 6.6 thousand in 2003 to around 14.3 thousand in 2008. Table 6 – Total Number of Natural Gas Filling Stations 2003 to 2008 Filling stations- total 2003 2004 2005 2006 2007 2008 (private + public) 6 580 7 840 8 964 10 252 12 218 14 338 Africa 81 90 96 108 121 123 Asia-Pacific 1 341 1 768 2 062 2 346 3 515 5 319 Europe 1 160 1 436 1 641 1 749 1 971 2 317 Middle East 3 30 96 327 296 639 North America 1 526 1 528 1 568 1 828 1 704 925 Latin America and the Caribbean 2 034 2 479 2 996 3 323 3 879 4 212 Russian Federation & C.I.S. 435 509 505 571 732 803 Source: GVR, IANGV et al. Summary: The number of natural gas filling stations doubled and total number of NGVs tripled in between 2003 and 2008. - 16 -
  17. 17. 3.2. THE OVERALL GAS (NGV) MARKET TODAY – WHAT ARE THE APPLICATIONS? 3.2.1. Total estimated NGV consumption, total World gas consumption and share of NGVs The total NGV gas consumption by region has been estimated using statistical data on average specific consumption per equivalent NGV for each region. These average specific consumption figures were calculated using NGV consumption data in countries within each region based upon the reported number of NGVs. Natural gas consumption figures are as follows: • Africa: 4 103 m3 per equivalent NGV annually; • Asia-Pacific: 2 858 m3/eq. NGV; • Europe: 1 262 m3/eq. NGV; • Middle East: 1 927 m3/eq. NGV; • 3 North America: 6 408 m /eq. NGV; • 3 Latin America and the Caribbean: 1 642 m /eq. NGV; and • 3 Russian Federation & C.I.S. 3 282 m /eq. NGV. • 3 The world average is 2 078 m per equivalent NGV. The relatively high natural gas consumption per equivalent NGV in North America is explained by the local situation in the U.S. market. The U.S. NGV inventory is comprised roughly of 18-20% HDVs, 15-18% MDVs and 62-67% LDVs, many of which are used in utility and local, state and federal government fleets. The transit sector remains the largest niche application with nearly 11 000 buses and shuttles (about 12% of the market) accounting for nearly 70% of U.S. NGV fuel consumption. The next largest sector is airports (8% of NGV fuel consumption), where 26 airports now use NGVs and/or require their use by commercial vehicles operating on the premises. The steadily growing refuse sector also comprises 8% of the fuel consumption in the U.S. NGV market and is growing steadily. There are nearly 2 500 garbage collection vehicles roll-off and transfer trucks and privately operated sanitation fleets. The remaining NGV fuel consumption includes government (5%), schools (3%) and ‘other’ (4%) including fuel consumed by personal NGVs. The total consumption by natural gas vehicles, using inputs described above is at about 21 billion cubic meters (bcm) in 2008. Table 7 – Estimated Natural Gas Consumption for the NGV Sector in 2003 – 2008 Estimated Natural Gas 2003 2004 2005 2006 2007 2008 Consumption by NGVs (bcm) 6.91 8.27 9.99 11.69 16.80 21.12 Africa 0.20 0.23 0.25 0.29 0.34 0.41 Asia-Pacific 1.98 2.47 3.21 4.33 6.87 9.94 Europe 0.54 0.54 0.55 0.60 0.70 0.96 Middle East 0.00 0.03 0.12 0.29 0.96 1.63 North America 0.98 0.98 0.98 0.98 1.04 0.74 Latin America and the Caribbean 2.95 3.60 4.32 4.61 5.73 6.16 Russian Federation & C.I.S. 0.26 0.43 0.55 0.59 1.16 1.28 Source: GVR, et al. - 17 -
  18. 18. Estimated natural gas consumption by NGVs 18 16.80 16 Russian Federation & C.I.S. 14 11.69 Latin America and the Caribbean 12 9.99 North America bcm 10 8.27 Middle East 8 6.91 Europe Asia-Pacific 6 Africa 4 Total: 2 0 2003 2004 2005 2006 2007 Figure 5 – Estimated Natural Gas Consumption by NGVs by Region Share of NGVs in total natural gas consumption (%) 8% Russian Federation & C.I.S. 7% Latin America and the Caribbean 6% North America Middle East 5% Europe (%) 4% Asia-Pacific Africa 3% Total: 2% 1% 0.41% 0.57% 0.27% 0.31% 0.36% 0% 2003 2004 2005 2006 2007 Figure 6 – Share of NGVs in Total Natural Gas Consumption by Region in (%) Based on the available data of the overall natural gas consumption in respective regions (BP Statistical Review of World Energy, June 2008) the share of natural gas consumption by NGVs of the total natural gas consumption for all sectors is calculated for the 2003 – 2007 period (natural gas consumption data for 2008 were not available at the time of writing this report) and in 2007 was a bit below 0.6%. It must be emphasized that part of the NGV consumption, especially in Europe, is attributed to bio-methane. - 18 -
  19. 19. 3.2.2. Summary of technology development and an overview of NGV industry today The previous IGU S.G. 5.3 report for the 2003 – 2006 triennium provided a comprehensive overview and analysis of existing fuels and technologies covering: petrol and diesel automotive technologies: state of the art; hybrid vehicles; natural gas vehicles and power-trains; compressed natural gas (CNG) technology; on board storage and filling; liquefied natural gas (LNG); bio-methane; synthetic fuels produced from natural gas; hydrogen produced from natural gas; and off-road applications. This chapter presents a chronological overview of NGV technology development in last 1 decade . Since the advent of NGVs in Italy in the 1930s, natural gas vehicle technology has made steady improvements and, in some cases, technological ‘leaps’ as they have begun to penetrate world country markets. Most of the improvements and subsequent “generations” of NGVs have, however, mirrored the dramatic changes experienced in the standard gasoline and diesel engines and vehicles. Manufacturers of gasoline and diesel vehicles/engines typically have used NGVs as the benchmark for ‘what is a clean vehicle?’ The most recent diesel engines with selective catalytic reduction (SCR) systems are being touted as ‘cleaner than natural gas’ but, in reality, considering all the regulated and unregulated pollutants, NGVs still are ‘cleaner’ then the best diesel technologies. And so it has been that improvements in the basic gasoline and diesel systems, when natural gas is adapted into these technologies, continue to produce superior emission improvements and at a performance level similar to gasoline engines and that is closing in on that of diesel internal combustion engine technologies. The IGU Report (Study Group 5.3) for the 2003-2006 triennium, “Global Opportunities for Natural Gas as a Transportation Fuel for Today and Tomorrow” presented the various generational changes in the basic retrofit NGV systems: • First generation with completely mechanical fuel system (carburettor vehicles without catalytic converter); • Second generation with basically mechanical fuel system with electronic feedback control or electronically controlled fuel system without feedback control (closed-loop carburettor and throttle body injection / single port injection engines (corresponding to Euro 1 / 2 standard); • Third generation with multi-point fuel injection, electronic control and feedback (closed-loop multi point gaseous injection system engines with group injection or continuous injection (corresponding to Euro 2 / 3 standard)); and • Fourth generation which is as third generation but with OBD capabilities; closed-loop and lean- burn sequential multi-point gaseous injection system engines. It is these systems that have correspondingly over time been used in standard OEM gasoline vehicles, with the fourth generation, OBD compatible system the one of choice for the most highly developed, currently available gasoline engines. CNG cylinders, in parallel, also have seen new ‘generations’ as the need for lighter weight and increased fuel capacity was driven by customer requirements. The all-steel cylinder is the ‘first’ generation (excluding the historical rubber-lined canvas bags as ‘first’ type of non-pressurized gas storage container). The development of the fibreglass, hoop wound aluminium cylinder can be considered a ‘Second Generation’ departure from the all-steel cylinder that began in 1982/1983 in the US. The move to Type 3 fully wrapped metal liner cylinder is a further development from the Type 2 hoop-wrapped cylinder. The development of the 100% full composite CNG cylinders that emerged from aeronautic technology represents a third ‘generation’ of CNG storage. Further refinement of these Type 4 cylinders so far have been refinements of this third generation fuel storage technology. However, Type I cylinders generally are the most popular ones due to their lower prices compared to other types of cylinders. 1 Information for Europe provided by John Baldwin (CNG Services Ltd.), Peter Boisen (NGVA Europe) and Jeffrey Seisler (Clean Fuels Consulting). State of the art in Russian NGV market is described in detail by Eugene Pronin (Gazprom / NGVRUS). In depth review of U.S. development has been provided by Rich Kolodziej (IANGV / NGV America). - 19 -
  20. 20. Table 8 - Chronological Overview of NGV Technologies Development (emphasis on Europe) Period State of the art 1st generation NGVs, petrol conversions, tanks (cylinders) in boot of the car. In 1997 – < 2000 2000 period: first generation factory built Volvo S70/V70 with cylinder in luggage space. In 1998 factory built Fiat Multipla with under floor cylinders. 2001 2nd generation factory built Volvo S80 / V70 / S60 with under floor cylinders. nd 2002 2 generation factory built VW Golf and Opel Astra with under floor cylinders. Factory built Fiat Punto and Doblò with cylinder in luggage space. various French cars 2003 with cylinders in luggage space (Citroën Berlingo, Peugeot Partner, Renault Kangoo, Citroën CX3). Factory built Merceded Benz E 200 NGT with compressor engine, but still with cylinders 2004 in luggage space. nd 2 generation factory built Opel Zafira and Combo with under floor cylinders. nd 2006 2 generation factory built VW Caddy and Touran with under floor cylinders. 2007 Factory built Fiat Panda with under floor cylinders. Factory built Mercedes Benz E 170 NGT with under floor cylinders. Opel Zafira, 1.6 litre turbo engine, 150 hp. 2008 rd 3 generation, Passat TSI, 1.4 litre, twin compressor plus turbocharger , > 450 km range, 150 bhp, 0 – 60 in 9.5 sec, ~120 g/km CO2 4th generation – adding of stop-start technology, add regenerative braking, lower CO2/km 2012 to <100 g/km, range now 550 km. Source: John Baldwin (CNG Services Ltd.) and Peter Boisen (NGVA Europe) The offer of light duty NGVs in Europe (EEA - European Economic Area) can be split into four categories2: 1. OEM sales of light duty cars and vans with a European Whole Vehicle Type approval. Such vehicles are accompanied by a CoC (Certificate of Conformity) and registration of such vehicles must be approved by the national road authorities in all EU countries and also other countries accepting EC type approvals. 2. QVM (Qualified Vehicle Modifier) conversions of brand new vehicles with the explicit support of the OEM vehicle manufacturer. Such conversions would normally be made in line with the ECE R115 regulation and the customer will have all normal warranties (some directly from the manufacturer, and some from the QVM). German offers of Ford cars and vans, also Volkswagen vans, follow this model. 3. Same as (2) above, but without the explicit support of the concerned OEM. In these cases it is important for the customer to determine to what extent the OEM warranties and product liability are still valid. 4. Aftermarket retrofitting of conversion solutions, sometimes in line with ECE R115, sometimes in line with other older national regulations (depending upon country). The OEMs will usually not accept any warranty or product liability claims for failures, which can directly or indirectly be attributed to the conversion. 2 according to P. Boisen - 20 -
  21. 21. When listing European NGV offers it is important to make a distinction between: (A) light duty natural gas vehicles with a European Whole Vehicle Type approval; (B) medium/heavy duty natural gas vehicles with a European or national type approval arranged via the OEM; (C) QVM conversions of new natural gas vehicles made with the approval of the OEM; (D) QVM conversions of new natural gas vehicles made without the approval of the concerned OEM; and (E) other conversions of new or used vehicles. For MD/HD vehicles OEMs may, on a voluntary basis, issue whole vehicle type approvals but the normal procedure is to have the engines certified according to the EC regulations and then have a national type approval of the complete vehicle. There is obviously a clear distinction between natural gas vehicles directly supplied from an OEM and vehicles using converted engines. In Europe the vast majority of new NGV registrations now consist of OEM products, or QVM conversions made with the approval of the concerned OEM. Looking at LPG powered vehicles the situation is quite different. Here the market is mainly based on retrofitting of light duty gasoline powered vehicles. Outside Europe retrofitting solutions make up the bulk of the NGV volumes but with a gradually increasing share of OEM offers. OEM products also are being developed outside Europe to meet the growing Asian demand for vehicles. Though still dominated by a wide range of different quality retrofit systems, various OEMs have light, medium and heavy duty NGVs, though they currently tend to be Euro 3, with some at the Euro 4 quality vehicles, since the Asian emissions standards tends to be one or two steps behind emissions levels being produced in Europe, Japananese and Korean NGVs. TATA in India is providing the light duty Xenon, Magic Van, Winger, and Ace. Ashok Leyland produces the Viking CNG BS-III. (Tata also produces three separate CNG bus models and one ton, five, and eight ton vehicles designed for passenger and commercial applications). In the U.S market there are OEM light duty sedans (American Honda Civic GX) as well as Small Vehicle Manufacturers (SVM) sedans (Ford 4.6L Crown Victoria, Lincoln Town Car and Mercury Grand Marquis (BAF), Chevy Impala 3.5 and 3.9L V-6 dedicated (Natural Drive) Ford Focus 2.0L bi- fuel and dedicated Ford Focus (Altech-Eco) and SVM light trucks and vans (commercial work trucks and vans): Chevy G1500/2500/3500 Series vans with 6.0L engine (Baytech, IMPCO), Chevy G4500 cab+chassis with 6.0L, Chevy C/K1500/2500/3500 series pick-ups with 6.0L engine (Baytech, IMPCO), Ford F150/250/350 (BAF, FuelTek), Ford E350 series vans with 5.4L (BAF)). In the heavy duty segment (vehicles above 12 tonnes) current OEM offers in Europe include buses with a typical engine size of around eight litres. Engines are available from Daimler, Iveco, MAN, Scania, Tedom (a relatively small Czech manufacturer), and AB Volvo, leaving DAF as the only European HD engine manufacturer currently without a gas engine offer. Bus chassis including engines, often also bodies, are sometimes offered directly from the OEM or sometimes from independent bus manufacturers. Daimler buses sometimes are marketed as Evobus or sometimes as Mercedes Citaro. MAN products are under both the MAN name and as Neoplan. Buses with Iveco engines are marketed in the Iveco brand and are in, Irisbus or Karosa buses. Scania has not been very active concerning natural gas powered buses within Europe (a few buses in Iceland and also in the Swedish town of Eskilstuna) but has sold many buses in Australia (a right hand drive market). RVI (Renault Vehicules Industrielle) now is part of the AB Volvo group (also including American Mack and Japanese Nissan Diesel). Within Europe engines up to the eight litre size are manufactured in France, and larger in Sweden. The French bus manufacturer Heuliez usually uses RVI engines. Renault trucks also have an agreement with Russian GAZ group subsidiary RusPromAuto to supply common rail direct injection (cDi) engines. - 21 -
  22. 22. Ekobus, a small Czech bus manufacturer, uses Cummins Westport gas engines imported from America. Russia (re)started development and production in OEM Heavy Duty segment: trucks and buses. Kamaz manufactures dedicated natural gas chassis which is used for different types of general and special purpose vehicles. Powered with an 11.76 litre 260 HP gas engine KAMAZ vehicle can 3 drive up to 500 kilometres with one filling. The engine takes 29.1 normal m per 100 kilometres. According to customer request the on-board gas storage may have different volume. Figure 7 – Kamaz 65116-40 CNG (OEM, range approx. 400 km) Source: Gassuf 2008 exhibition, Moscow, Russia Kamaz company has a separate bus division named Nefaz which also markets OEM NGVs. The Nefaz 30-31 bus carries the same dedicated natural gas engine as the Kamaz truck. Natural gas 3 is stored in high pressure cylinders for 197 normal m . It is sufficient enough to drive 560 kilometres 3 with one filling. Gas consumption equals 35 normal m per 100 kilometres. There are two more gas bus original manufacturers today in Russia: Liaz and Paz companies. Both companies use dedicated natural gas engines from Cummins. These buses are extensively used in Moscow and Togliatti. Daimler is offering Econic natural gas trucks using the same engines as the Evobus/Citaro buses, and the Iveco Stralis trucks use the same engines as Iveco/Irisbus/Karosa buses. Volvo also may offer trucks using the same engines as in Volvo bus models. In the United States, the heavy-duty and medium-heavy segments have received the most marketing focus from the NGV industry. In 2008, Westport Innovations introduced their high-pressure, direct injection LNG ISX-G engine. Based on the Cummins ISX diesel engine with cooled engine gas recirculation, the LNG version of the engine offers the same horsepower, torque, and efficiency as the base diesel engine it is replacing. The Westport LNG system is certified to 0.8 g/bhp-hr NOx and 0.01 g/bhp-hr PM. The Westport GX 15L engine is available with 400 and 450 horsepower ratings and up to 1 750 lb-ft torque for heavy-duty port, freight and vocational applications. - 22 -
  23. 23. LNG fuel tanks can be configured to suit customer range requirements. The Westport GX is currently available in factory assembled Kenworth T800 LNG and Peterbilt 386, 387, and 367 models, and is offered for use in various applications including port drayage trucks, heavy-haul trucks, refuse transfer, dump trucks, roll-offs, line-haul, and other vocational applications. Cummins-Westport, a partnership between Cummins Engine Company and Westport Innovations, produces the ISL G. The ISL G engine is available in ratings from 250 to 320 horsepower, and already meets the strict U.S. EPA 2010 emission standards (0.2 g/bhp-hr NOx and 0.01 g/bhp-hr PM). The engine combines Cummins exhaust gas recirculation technology with a three-way catalyst to offer improved efficiency and lower costs. The ISL G is specified for the following heavy-duty vehicles: trash collection trucks (Crane Carrier LET, Autocar Xpeditor, ALF Condor, Peterbilt LCF 320 and Mack TerraPro); Buses, shuttles and trolleys (NABI, New Flyer, Orion, Thomas, ElDorado, Blue Bird, variety of shuttle/trolley upfitters using FCC MB55 chassis); street sweepers (Elgin, Tymco, Schwarze, Allianz-Johnston); and work /vocational trucks (Sterling L series transition to Freightliner M2 tractor, then straight truck; Freightliner Custom Chassis MT45/55; Ottawa; Capacity yard hostlers). A third company, Emissions Solutions, produces a “drop-in” replacement engine for the very popular Navistar (International) diesel DT466 and MaxxForceDT engines. The DT466 replacement engine (the Phoenix NG 7.6L) produces 175-265 hp and 460-820 lb-ft of torque. The MaxxForceDT replacement (the Phoenix NG 9.3L) produces 350 hp and 1200 ft-lb torque. Both are dedicated spark- ignited engines. The Emissions Solutions engines are repower options for food/beverage delivery trucks; refuse trucks, school buses, and utility/public works trucks. In the medium-duty market, Cummins Westport offers its 5.9L B Gas Plus engine. This engine is factory available from Freightliner Custom Chassis in their MT 45 and MT 55 walk-in van chasses and MB55 bus chassis. These chasses are used in a wide range truck and shuttle bus applications. In addition, aftermarket conversion system manufacturers (e.g., Baytech Corporation BAF Technologies IMPCO [FSS], Natural Drive) offer aftermarket conversion for a range of medium gasoline-powered trucks and shuttle bus chasses, including: the Chevy W3500/W4500 and Isuzu NPR and NPR HD COE with a 6.0L engine; the Chevy C6500/7500/8500 Topkick work trucks with a 8.1L engine; the Chevy G3500 Series cutaways with a 6.0L engine; the Chevy G4500 series cutaway with a 6.0L; the Ford E450 series cutaways with a 6.8L engine; and the Chevy C4500/5500 cutaways with a 8.1L engine. In addition to the above-mentioned products (globally) there also is a considerable interest in dual fuel conversions offered by Clean Air Power [CAP], the Hardstaff Group, and others. (See Chapter on real life experiences). From a technical point-of-view medium and light duty vehicles could be fitted with dual fuel conversions systems. Vehicles in the weight class 3.5 - 12 tonnes are defined as medium duty vehicles. Many of these vehicles are in the 3.5 - 6 tonne range with the same vehicle available in three different configurations - vans, trucks, or small buses. Iveco Daily and Mercedes Sprinter are two typical examples of OEM offers, both available with natural gas engines. There also are other vehicles with this type of configuration that usually belong in the light duty class (up to 3.5 tonnes), but sometimes in the medium duty class (above 3.5 tonnes). Fiat Ducato is one example. Other vehicles in this class are Volkswagen Transporter and Ford Transit, both offered as QVM conversions approved by the vehicle manufacturer. In France this class can be found in the Boxer and Jumper models, both from Citroën and Peugeot respectively, and in the Renault Master. - 23 -
  24. 24. Figure 8 – Eurocargo CNG (OEM, source: Iveco) Available OEM natural gas technology already offers superior emissions often below environmentally enhance vehicle (EEV) limits. Emission comparison based on Iveco Cursor 8 CNG engines far below the EEV limit, as presented in Figure below. 6 5.45 5.00 Euro 3 (2001) 5 Euro 4 (2006) 4.00 4.00 Euro 5 (2009) 4 3.50 EEV Emission g/kWh Iveco 3.00 3 2.00 2.00 2 1.60 1.55 1.10 1.10 1 0.78 0.50 0.65 0.50 0.40 0.53 0.16 0.03 0.03 0.02 0.01 0.008 0.0022 0 CO NMHC CH4 NOx PT Figure 9 – Emissions of Iveco Cursor 8 CNG engine vs. present and future Euro limits (Source: Iveco) - 24 -
  25. 25. Furthermore, NOx emission is compared with existing diesel technology, but also with fuel cells technologies and conventional fuel hybrids. 6 Euro 3 5 Diesel 4 Euro 4 g/kWh 3 CNG lean EEV limits Euro 5 2 Hybrid 1 Fuel cell CNG Iveco stoich. 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 Figure 10 – NOx Emissions Comparison : Diesel Versus Alternative Technologies Source: Iveco China represents the single most actively growing OEM market worldwide for vehicles and engines and their manufacturers are actively selling products domestically and in other Asian markets, with numbers of them seeking to penetrate new markets in South America, Eastern Europe and elsewhere. Though more expensive than domestically produced natural gas engines, both Cummins and Iveco have presence in China and are selling engines for HDV and bus applications, in particular. Other international equipment suppliers and European NGV conversion systems manufacturers also are doing business in China. In 2007, 58 vehicle manufacturers in China produced 347 NGV models (including independent chassis but not types of vehicles), covering buses, cars, trucks and utility vehicles. Eighteen engine manufacturers offered 98 types of NGV engine models with the power ranging from 64 kW to 250 kW. More domestic LDV and HDV OEMs are entering the market with a wide variety of equipment. Liquefied natural gas vehicles (L-NGVs) fleet use is expanding and LNG use will become increasingly significant as part of the NGV mix in the future. Another exciting aspect of the “NGV opportunity” is that natural gas can be used in almost any type of petroleum-fuelled engine for almost any application including marine and railway vehicles. Experimental airplanes and helicopters also have been developed as ‘proof of concept’ NGVs. Dual-fuel diesel/natural gas engines first appeared in the early 1980s (almost in parallel in the U.S, Italy and Russia) based on a simple fumigation principle that added natural gas into the intake airstream. Today these environmentally ‘unreliable’ systems have become electronically controlled and a variety of new developments, including high pressure direct injection will create new opportunities for long-haul and other large, heavy duty vehicle applications. The addition of liquefied natural gas (LNG), borne into NGVs as the need for additional fuel capacity and vehicle range emerged is yet another very positive development for vehicular natural gas applications. Increasing demands by government emissions and environmental regulators will continue to help and positively influence NGV development in the future. In future, OEMs will apply their technical skills to adapting their gasoline and diesel engines for superior performance and emissions running on natural gas. But it is unlikely that the OEMs will produce the natural gas vehicle components. - 25 -
  26. 26. As increasingly more OEMs develop and produce NGVs, the upcoming challenge for the NGV industry will be to supply the OEMs with the highest quality ‘zero-defect’ components in the quantities that many developing NGV markets will demand. If this can be done, even by a handful of highly dependable equipment suppliers with worldwide distribution then, ultimately, NGVs will move away from retrofit dominance in the market to become a true fuel alternative. The industry welcomes the improvements of gasoline and diesel engines because the better these technologies become, the better it is for NGVs since a ‘better’ fuel typically will make for a better engine, running on natural gas. It is clear today that off-road applications of natural gas within the transportation sector will expand. In-door natural gas forklifts have been around for several years. They are popular in indoor production and storage facilities in a number of countries. The agricultural sector is another very promising market for NGV technologies. This sector consumes a lot of diesel fuel, which is a factor of the high cost of the end product. In a number of Russian agricultural cooperatives farmers have converted their diesel tractors to use natural gas. Although dual-fuel technologies for ICE are less efficient both economically and environmentally (compared to dedicated natural gas systems), they offer at least 25% fuel cost savings. The very recent breakthrough in the NGV technologies was achieved in Russia in 2009. The use of natural gas for rail-road locomotives has bee investigated for decades now. Positive results have been achieved in Russia, USA, Germany, and Peru. However the real success came with installation of a gas turbine to drive the locomotive's power generator. The GT-1 locomotive has one NK gas turbine with rated power of 8 300 kW and carries 17 tons of LNG. In January 2009 the GT-1 locomotive has set a new world record for a single rail-way engine: it was successfully tested with a load of 15 200 tons. Compared to a conventional diesel locomotive, the LNG GT-1 saved 30% of the fuel cost. Figure 11 – CNG QVM forklift Source: Gazprom, Kazan', Russia - 26 -
  27. 27. Figure 12 – CNG QVM Belarus tractor Source: NGVRUS, Omsk, Russia Figure 13 – LNG gas turbine GT-1 locomotive Source: Russian Railways, Moscow, Russia - 27 -
  28. 28. Hydrogen is not forgotten by the NGV community. A Russian prototype vehicle equipped with a small on-board converter which generates hydrogen from natural gas and adds it (7 – 15%) to the fuel mixture is shown in Figure bellow. This addition of a small amount of hydrogen helps improve the environmental performance and operation of the NGV. An advantage of this technology is that there is no need to separately store hydrogen on-board. Figure 14 – Natural Gas-Hydrogen blend vehicle Source: NGVRUS Railways, Moscow, Russia - 28 -
  29. 29. 3.3. MARKET PROFILE 3.3.1. Description of major markets today Natural gas vehicle markets in many parts of the world have experienced dramatic growth in the past 10 years, in particular (see also chapters: “Market data, share of gas, trends” → “NGV statistics, total number of vehicles and share of NGVs” in this report). The motivation for this growth is due to a combination of concerns about improving the environment, improving energy security through the substitution of petroleum in the transportation sector, and economics, where natural gas can provide a 30-50% reduction in fuel expenditures for private, commercial and public-sector vehicles. The beginning development of bio-methane as a renewable fuel brings another dimension to NGV market development as more governments create targets, legislation and regulations aimed at reducing the use of fossil fuels. The increased focus on LNG in the worldwide energy market is another positive development for NGVs. The growth of LNG production and distribution from markets with excess gas to markets nearly fully depending on imported LNG means that the availability of the fuel should result in larger numbers of L-NGVs as LNG appears in more locations in more countries. EUROPE The European benchmark ‘model’ of NGV development that has occurred slowly and steadily is the Italian experience, starting in the 1930s when gasoline was expensive and domestically-sourced natural gas was available and cheap. The Italian NGV sustainability, even at relatively low penetration levels compared to gasoline and diesel (less than 5% of the overall vehicle market), has been built upon a combination of long term support from the natural gas industry, the strength of the Italian natural gas supply network, government cooperation/support (at different times in various ways over history), the favourable price differential between natural gas and petroleum, and the long term support of the Italian NGV equipment supply community for both vehicles and compressors. The Italian market NGV development started as a pure retrofit market, giving birth to a parallel development of the NGV’s components industry in Italy, today the strongest in the world. In the last 10 years or so, the NGV’s Italian market is changing from the retrofit to the OEM options particularly due to the high commitment of Fiat that has put in the market a wide offer of modern cars, all available as CNG from the factory. In September 2008 Fiat announced the company policy of offering all their models with the CNG option. By the end of 2008 Italy had 523 000 units in operation, with a record year of 86 000 vehicles registered. Fiat sold 30 000 Pandas in 2007 and 43 000 units in 2008. There are some ‘shining star’ European NGV country markets where the combination of success factors found in Italy have manifested themselves, despite the different national ‘flavour’ and approaches. The well-organized, highly focused German stakeholders market is a valuable model of NGV development. The success of the developing German NGV market has been built upon a strategy involving the various stakeholders – gas industry, government and the vehicle manufacturers – who have focused targets for vehicle and fuelling station growth. The number of CNG filling stations in Germany is now the highest in Europe with more than 800, but the number of vehicles in service is still less than expected, with some 76 000 units. Sweden, with its ‘municipality-up’ approach to NGV development (as opposed to national policy leadership ‘down’) is based in large part on renewable bio-methane, which provides another variation and lesson of NGV market development. Roughly 58% of the gas used in transportation in Sweden comes from biomethane. The city of Stockholm is going to have an additional source of natural gas from a new LNG terminal that will allow the municipality to replace the existing diesel buses with 800 new CNG units (in two phases, with 400 vehicles in each phase) in the upcoming years. - 29 -
  30. 30. Although the ratio between fuelling stations and vehicles in Europe still is far below the economically sustainable 600-1000 vehicles to stations, NGV customers can now drive from Italy through Austria, Switzerland, Germany and into Sweden (albeit not with the ease and facility as with a gasoline vehicle). In other countries like France, Spain, Netherlands and Portugal the NGV development is focused on the fleets of heavy urban vehicles: buses and garbage collection trucks. These fleets offer great advantages for NGV development, since a larger number of vehicles depend on a single organisation’s decision. Large, high polluting vehicles offer the advantage of reducing emissions in big cities where pollution is worst and more people are exposed. On the other hand fleets have their own filling stations, totally independent of the public CNG distribution network, which is not available in these countries. Case of the city of Madrid is one example of this, where all the garbage collection and city cleaning trucks (650 units) are CNG fuelled. In the same way, 35% of the urban bus fleet will be, by the end of 2010, replaced with CNG which accounts for approximately 700 CNG buses, with the intention to reach 50% of the total in the years to come. Similar approaches are followed in other cities like the Hague, Paris, Barcelona, Rome, Porto, etc. Other typical urban services like food distribution and parcel delivery are starting now with new and specifically designed CNG medium and heavy vehicles. The use of heavy vehicles running on LNG is another important development. The Iberian Peninsula, (Spain plus Portugal), already has seven large LNG terminals around the coast. Another has been authorised in the north of Spain (nearly 70% of the gas used in the peninsula comes via LNG, later re-gasified and injected into the grid). Other LNG terminals are in Marseille (France) and near Genova (La Spezia) and in Trieste (Italy), offering the potential for the development of a Mediterranean LNG Blue Corridor. LNG costs less than CNG (no need for compression) and provides an acceptable energy-to- volume-to-weight ratio for long distance trucks. The growth of the OEM development in Europe should provide the long term sustainability for NGV markets so long as the growth of fuelling stations continues steadily and unabated. The markets will be fuelled by concerns of CO2 and emissions reductions as well as energy security, particularly as Europe looks to diversify its energy sources. The realization of the European NGV market potential will be, as highlighted in the 2003 European Commission report, Market Development of Alternative Fuels, due to a ‘European’ approach to both vehicle sales and fuelling station growth. It is likely, however, that the development of the heavy vehicle fleet market will be independent from the public fuelling stations growth. Thus far, however, despite individual country successes, an overall European approach remains lacking. The focus on European climate change and environmental policies, coupled with stronger interest in renewable fuels and energy security should help create a positive environment for NGV development in the longer term. Eastern Europe and Former Soviet Union (FSU) In Eastern Europe first NGVs and CNG filling stations were tried tested in the 1930s in the Former Soviet Union (FSU). This market was rising and falling several times during the recent 80 years, but generally preserved the positive trend. Today NGV markets in Eastern Europe and Former Soviet Union keep growing again, although average rate of growth is not as impressive as for instance in Germany. Dismantling of the command system in the FSU after 1991 led to collapse of the national NGV program that had been launched and implemented in 1980s. Demand for CNG fell ten times within a short period of time. The lack of national NGV politics and economic incentives accompanied by a very small price differential between CNG and gasoline/petrol could not make natural an attractive transportation fuel. - 30 -
  31. 31. Global growth of oil prices since the turn of the XXI century translated into revival of NGV markets in the Former Soviet Union and Eastern Europe. The leading nations are Ukraine (120 000 NGVs), Russia and Armenia (over 100 000 NGVs each), Bulgaria (60 000 NGVs) and Uzbekistan (almost 50 000 NGVs). Czech Republic is showing very positive trend which, if continued, will lead that country to 60 000 – 70 000 NGVs in ten years. FSU is the second largest NGV market in Europe after Italy. Compared to 1990, the aggregate number of NGVs rose 15% and passed the 460 000 level. There are now 890 CNG filling stations in this part of the world which is 2.5 times more then 20 years ago. A 12% growth of natural gas consumption is registered in 1990 through 2008, which is proportional to the growth of natural gas vehicles. The key NGV market driver is the fair price of CNG which is at least 50 percent cheaper than gasoline and diesel. For many years FSU / Eastern Europe used to be a large conversion market. Situation is changing: more and more customers would prefer an OEM gas vehicle but the offer is very limited yet. Mostly heavy and medium duty vehicles are converted to use natural gas. Light duties NGVs are not that popular for they do not show fast payback. Beyond conventional on-road vehicles other types of transportation means are being successfully experimented on: airplane, watercraft, agricultural tractors and rail-road locomotives. In a short future one may expect the emergence of other-than-on-road-vehicles commercial market. These vehicles will use both compressed and liquefied methane gases natural and biological (CNG/LNG, CBM/LBM). FSU / Eastern Europe is a very promising territory for the expansion and development of national NGV markets. This development associated with the growth of natural gas transmission systems in Europe, Middle East, Africa, and specifically in Asia will mature into a continuous non- interrupted ocean-to-ocean AfroEurAsian system of Blue Corridors for natural gas vehicles instead of gasoline and diesel ones. These AfroEurAsian Blue Corridors will become an infrastructural basis for Green Corridors for biomethane vehicles – BMVs (by 2020) and White Corridors for hydrogen vehicles – H2Vs (by 2030). International corridors for gas-powered vehicles may become a reality in the very near future provided the key players of the European NGV market (oil & gas and automotive companies) jointly develop the filling and servicing infrastructure. The international EuroAutoMetan consortium could become an efficient instrument to implement this idea. NORTH AMERICA The NGV market began in the United States in the early 1970s when Italian retrofit systems began being used by the Southern California Gas Company – primarily to address the growing urban pollution problem. In 1990, the federal government-passed Clean Air Act and, in 1992, the Energy Policy Act. These included favourable incentives and mandates for expanded use of NGVs that boosted enthusiasm for NGV developments. Growing numbers of gas companies embraced NGVs, and began to install NGV fuelling stations for their own vehicles and a growing fleet of non-utility vehicles. OEMs began their development programs in the early 1990s for pickup trucks and vans, aimed initially at the utility fleet market and NGV equipment suppliers formed a core of business activity that supported continued growth of fleet NGVs. Unfortunately, a number of factors conspired to significantly retard the growth of NGVs in the US during the late 1990s and early 2000s: the difference in fuel prices was not sufficient to stimulate substantial demand for NGVs, the performance of NGVs (including reliability) at that time was not yet comparable to gasoline and diesel technology, key mandates in federal programs were either not enforced or not implemented, the regulatory environment changed for gas utilities, which shifted managements’ focus from market growth to cost cutting, the natural gas fuelling station network was very inadequate (there are about 180 000 gasoline fuelling stations in the US and there was no way in which the NGV industry could even come close to matching that infrastructure), the OEMs began to - 31 -
  32. 32. face economic pressures (which, in turn, caused them to re-evaluate “marginal” product lines), there was growing political and auto maker support for the use of corn ethanol and finally there was a political concern that the US natural gas resource base was not adequate to supply the residential, commercial, industrial and power generation markets AND a growing NGV market, too. Because of all of these reasons, demand for NGVs was not strong enough by the early 2000s, and fuelling station growth was insufficient on a large, country-wide basis. Consequently, the auto companies (other than Honda) discontinued the development and production of NGVs in favour of ethanol vehicles (in the short term) and hydrogen fuel cell vehicles (in the long-term). Hybrid vehicles also were added as a near- and mid-term technology solution, partly driven by the success of the Toyota Prius. During this slow period, US cylinder manufacturers, compressor station suppliers and other equipment suppliers significantly expanded their markets internationally, thus providing a base to enable the US NGV market to survive until the market began to expand again. Meanwhile, while growth in the light-duty NGV market was slowing, the NGV equipment and service suppliers were shifting their focus to high fuel-use, urban fleet vehicles, such as transit and school buses, shuttle buses, trash trucks, urban goods delivery trucks, airport and water port vehicles, and taxis. Natural gas was less expensive that gasoline and diesel, and high fuel-use fleets could achieve significant savings through the use of NGVs. As gas utilities were backing out of the NGV fuelling station business, other (non-utility) companies began entering the NGV fuelling business. The combination of good economics, the societal benefits of NGVs (e.g., lower urban pollution, lower greenhouse gases, reduced petroleum use) and much more aggressive (and effective) marketing by suppliers resulted in growing interest in NGVs by the medium and heavy-duty OEMs, and an increasing number of NGVs began to be offered by those OEMs (see technology section of this report). The light-duty market also began to receive more attention - not from the automakers, but from conversion system manufacturers (referred to a “small volume manufacturers (SVM)”). Slowly during the mid-to-late 2000s, more companies began entering the light-duty conversion system market. This entailed significant expense since the process of receiving approvals for such systems by the US Environmental Protection Agency and the California Air Resource Board was (and is) quite burdensome and costly. However, receiving such approvals is required in order for NGV conversion systems to be legally sold in the US. Beginning in 2005, a number of events began occurring that have set the stage for a possible renaissance in the US NGV industry: in late 2005, the federal government significantly expanded economic incentives for NGVs (for the purchase of NGVs, the use of natural gas as a fuel and the installation of NGV fuelling stations) and first slow and then sharp rise of gasoline and diesel prices from 2005 and 2008 (although those prices have decreased significantly from their highs in late 2008, larger gasoline and diesel fuel users – primarily fleets – understand that, once the worldwide recession is over, demand for petroleum will again exceed supply, and gasoline and diesel prices will once again increase sharply). Furthermore, two major national advertising and public relations campaigns in support of NGVs were implemented – one by oil and natural gas tycoon Boone Pickens and the other by Chesapeake Energy – on of the largest natural gas producers in the US with a heavy focus on gas production from gas shale formation. Gas from shale was another major “event”. The US has enormous quantities of natural gas trapped in shale formation. Over the last decade, that technology has evolved, so that, today, gas from shale can be produced at prices that existed prior to the recession of late 2008 and 2009. As a result, analyses have supported the claim that the US has adequate natural gas resources to supply the US needs (at current consumption levels) for over 110 years. The US Energy Information Administration has forecast that, partially because of the advent of gas from shale, the US will be producing 98 percent of the natural gas used through 2030. - 32 -

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