Natural Gas Vehicle Technology Forum 2008 Meeting Summary

A Natural Gas Vehicle Technology Forum (NGVTF) meeting was held November 19-20, 2008, at Southern California Gas Company's Energy Resource Center in Downey, California. The meeting, the first since 2005, heralded a renewed interest in natural gas for transportation fuel. NGVTF assembled a diverse group of natural gas vehicle (NGV) stakeholders to share information and leverage resources, particularly in California. The California Energy Commission (CEC), which cosponsored the meeting, is using the results of this and subsequent meetings to inform its decisions about NGV funding priorities. Over 90 people were in attendance.

Following are some of the key messages discussed at the meeting. For details, see the agenda and download presentations.

A Strong Case for NGVs

The traditional arguments in favor of NGVs--advantages over petroleum-fueled vehicles in energy security, public health, and environmental quality--remain strong today. With projected increases in the supply of unconventional natural gas (e.g., coalbed methane, tight sandstones, and gas shales) and completion of the Alaska natural gas pipeline, the United States is expected to meet 90% of its natural gas demand through domestic and Canadian sources in the decades to come. In contrast, net imports of petroleum fuels are expected to remain above 50%, including substantial amounts from the volatile countries that hold much of the world's petroleum reserves. Fuel costs, although highly volatile recently, are expected to favor natural gas in the long term.

Today's cleanest vehicles are powered by natural gas. The U.S. Environmental Protection Agency (EPA) has called the natural gas Honda Civic GX the cleanest internal-combustion vehicle on Earth. For heavy-duty vehicles, the Cummins Westport ISL G engine already meets EPA 2010 emissions standards. Most heavy-duty diesel engines are not expected to achieve these levels by 2010. NGVs also produce lower greenhouse gas emissions than conventional vehicles, which is particularly important in light of emerging state and federal greenhouse gas regulations.

Additional developments on the horizon could make NGVs even more attractive. Toyota unveiled a compressed natural gas (CNG) hybrid sedan at the 2008 Los Angeles Auto Show, thus combining the inherent advantages of NGVs with the improved fuel economy and consumer appeal of hybrids. Landfill-derived natural gas and other sources of renewable "biomethane" are being developed, promising cost advantages and greatly reduced lifecycle greenhouse gas emissions. Many stakeholders believe that biomethane can compete with ethanol as a renewable biofuel. Increased availability of liquefied natural gas (LNG) is making natural gas a more viable option for long-distance heavy-duty vehicles; Clean Energy recently opened an LNG production plant in California. Natural gas also continues to be seen as a step toward using hydrogen as a vehicle fuel.

Challenges and Opportunities

Despite the many benefits of NGVs, significant barriers must be overcome to enable greater market penetration. The dominance of and widespread confidence in petroleum-based fuels pushes many fleets and consumers toward gasoline and diesel vehicles. For example, some transit fleets are choosing hybrid-electric diesel buses, even though these buses cost more and use a less mature technology than CNG buses while using a fuel that is likely to cost more than natural gas. Consumers also have embraced hybrids. This suggests an area for further study: behavioral research on public perceptions about and decision making related to advanced vehicle choices. How might enhanced marketing strategies create an image of NGVs in the public mind with the same appeal enjoyed by hybrids and fuel cell vehicles?

Practical "chicken-and-egg" problems are also paramount. To reach more markets, NGVs must be available in a broader range of applications--including high-horsepower heavy-duty (and EPA 2010 compliant) vehicles and off-road vehicles--but there must be a market for these applications before they can be produced in large numbers. Producing vehicles in large numbers would in turn lower their unit cost and make them more attractive to potential buyers. The same can be said of natural gas infrastructure. Natural gas fueling stations are limited outside of a few regional clusters, most notably Southern California. Expanded fueling infrastructure would increase the appeal of NGVs, and larger numbers of NGVs would increase the appeal of building infrastructure. Thus, market transformation efforts are of vital importance to the expansion of NGV use.

International opportunities and challenges also exist. It was reported that there are nine million NGVs worldwide. International market drivers include the price advantage of natural gas over conventional fuels, oil displacement (e.g., countries such as Iran fuel vehicles with domestic natural gas so they can export oil), and government petroleum and greenhouse gas reduction programs. Highly variable fuel, safety, and emission standards are a major challenge in international markets. Additional efforts to harmonize standards would improve the global NGV market. On the technological side, developing a robust natural gas composition sensor would enhance the viability of NGVs in countries with poor and variable gas composition.

Onboard fuel tanks are another technology that generated considerable discussion. Cutting the cost of CNG and LNG tanks would reduce the incremental cost of NGVs substantially. However, there is a cost-weight tradeoff: less expensive tanks weigh more, with implications for vehicle performance. Additional R&D in this area would be beneficial.

State and Federal RD&D Funding

Currently, federal funding for NGVs is available through the U.S. Department of Energy's Clean Cities Program, which provides grants for infrastructure projects, education and outreach, and the incremental cost of alternative fuel vehicles. There is potential under the new administration for increased funding of Clean Cities as well as funding dedicated to NGV R&D. NGVAmerica is promoting increased federal funding through various legislative avenues: tax, energy, climate change, highway/transit reauthorization, and appropriations.

In California, funding is available through the CEC's PIER Program and AB 118 Alternative and Renewable Fuels and Vehicles Program. Some solicitations are already out, and others are being released at the end of 2008 and beginning of 2009. The South Coast Air Quality Management District also has various clean fuel funding programs. In addition, California has numerous state and local air-quality and greenhouse gas standards that encourage and sometimes essentially require alternative fuel vehicle use. Two programs especially promising for NGVs are the Port of Los Angeles and Port of Long Beach Clean Truck Programs.

Stakeholder leveraging is critical to all funding efforts. For example, the CEC estimates that $100 billion must be spent over 20 years to accomplish its advanced transportation goals, but it plans to fund only $1 billion over 7 to 8 years. Thus, these California funds must be leveraged by a factor of 100.

Stakeholder Action List

Meeting attendees were encouraged to do the following to position themselves for potential funding opportunities and to better understand California's alternative fuel programs:

Next Steps

A webcast has been scheduled for January 2008 to further detail the CEC's AB118 Program. A biomethane summit is being planned for February 2009.

Feedback from this NGVTF meeting will be used to confirm or refine the CEC's NGV R&D priorities. This task will continue via the formation of smaller stakeholder working groups dedicated to specific R&D activities. Information will be posted on this Web site when available.

Contact the NGVTF if you have comments about this meeting or related issues.