NGV Tipping Point

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Don't uncork the champagne, but the NGV tipping point may be coming into view

By Matthew I. Slavin

The North American NGV space is on a roll. It's much too early to pop champagne corks. But to anyone who's been reading NGV Today for the past year, the signs of the upward trajectory are unmistakable. Let's take a back of the envelope look at some of the pluses racked up:

• NGVs are being taken seriously: You know this is true when you attract the attention of the Wall Street Journal, New York Times, and Financial Times. All have all run feature articles highlighting the fuel cost savings and tailpipe emissions benefits of using natural gas as a transportation fuel. Reuters energy columnist John Kemp opined late last year (p. 3) that within two to three years NGVs should near "a tipping point...enough for natural gas to establish a major beachhead in the transport market, pitting crude oil in direct competition with natural gas." These news features highlight trend-setters in freight transport like UPS and Frito-Lay making the move to NGVs, boosting the visibility of natural gas transportation, and that all of the Big Three automakers are producing NGVs; Ford now offers a CNG option throughout its commercial truck line (p. 1). These articles did not dismiss the hurdles that still need to be overcome, but it's a good sign when news on NGVs moves from trade publications to the world's most influential news outlets.
• Low natural gas prices are here to stay: The at-the-pump price-spread advantage natural gas enjoys over diesel is the single most important driver of NGV deployment (p. 1) decisions by fleet managers. Concern about possible price volatility in natural gas markets ranks high after NGV incremental costs and access to fueling stations as a barrier to accelerated adoption of vehicles fueled by natural gas. Growing evidence shows that natural gas will continue to enjoy a significant pricing advantage over petroleum fuels for years to come. Most recently, global energy consulting firm IHS-CERA reported that North America's plentiful supplies of natural gas from unconventional resources means that the price spread advantage natural gas enjoys over petroleum fuels is sustainable through at least 2035 (p. 1). This should increasingly dispel concerns about natural gas price volatility as an impediment to purchasing NGVs.
• Upward NGV sales trajectory: Navigant Research projects that annual sales of natural gas trucks and buses will almost quadruple by 2022 (p. 2), to 36,700 from 10,000 in 2013. Sales of Ford's CNG trucks grew from zero in 2008 to 15,000 last year. UPS ordered 900 LNG tractors last year, setting the pace in the growing heavyduty NGV truck space. Forty percent of all refuse trucks entering service are natural gas fueled and CNG buses account for between 25 and 30 percent of new bus deliveries to transit agencies; ready mixer trucks (p. 4) and potentially, school buses (see page 1), offer routes for significant additional NGV deployments. Natural gas as a transportation fuel is poised for growth in marine (see page 4), rail (p. 3), and mining truck (p. 4) propulsion. To meet growing demand, Navigant says that almost 1,700 natural gas fueling stations will be built through 2022, which will more than double the number open today.
• States are getting it: A growing number of state governments are embracing the benefits of seeing more NGVs on their roads is growing. Twenty-three governors have signed on to an agreement to aggregate NGV purchasing for their fleets aimed at lowering NGV purchase costs (p. 8). At least 28 states now offer grants, rebates, loans, or tax credits as an incentive to purchase/convert NGVs, build NGV fueling stations, or buy natural gas for transportation fueling. The past couple of years saw Indiana, Wyoming, West Virginia, New York, Oregon, and Mississippi enact programs aimed at growing the number of NGVs (and other alternative fueled vehicles) operating on their roads, andOhio may join them this year with an NGV tax credit (p. 5). Most of the state incentive programs don't equate to the millions of dollars in grants or rebates to spur the NGV market offered by Florida, Pennsylvania, California, and Texas; a club Colorado will soon join with $30 million for grants (p. 1) to seed NGV purchases and fueling infrastructure development. But more states now provide such incentives than at any time in the past. A bill in the Utah Legislature aims to convert half of all passenger vehicles in the state's fleet to CNG vehicles (p. 6) while a move is underway in the Oklahoma legislature to provide millions to bring NGVs and CNG stations to every county in the state (see page 6). That more states, the "Laboratories of Democracy," are championing natural gas transportation shows that they "get it," a big plus, particularly with the federal government's seeming inability to get behind a sustained program to grow the nation's NGV space.