In the US, the MIT report notes, only 0.15% of natural as is used as a vehicle transportation fuel; 32% of consumption is in the industrial sector, and 35% is in the residential and commercial sectors. Globally, natural gas vehicles are a small fraction, on the order of 1%, of the close to 900 million vehicles in the vehicle parc. The IEA report notes that natural gas vehicles (NGVs) presently account for less than 1% of total world road-fuel consumption and less than 1% of total world gas demand. More than 70% of all NGVs and one-half of all fuelling stations can be found in just five countries: Pakistan, Iran, Argentina, Brazil and India.

MIT: leaning toward conversion for light-duty vehicles. The MIT report finds that the penetration of natural gas into the transportation sector in the US offers the possibility for substantial energy security and environmental benefits. About 2 Tcf of natural gas per year—slightly less than 10% of current US consumption—could displace approximately 1 million bpd of oil—about 5% of current US consumption.

The CNG vehicle market segments in the US that are likely to offer an attractive payback period in the near term involve high mileage use, the MIT report finds. These include short-range, heavy-duty vehicles (e.g., urban buses, delivery trucks) and high mileage light-duty vehicles, primarily fleet vehicles (such as taxis, business and government vehicles).

Total natural gas penetration in these segments would represent consumption of 2.5 Tcf/year, equivalent to 1.3 million bpd of oil.

For light passenger vehicles, even at 2010 oil-natural gas price differentials, the high incremental costs of CNG vehicles lead to longer payback times for the average driver, so significant penetration of CNG into the passenger fleet is unlikely in the short term, the report finds. Payback periods could be reduced significantly if the cost of conversion from gasoline to CNG could be reduced to the levels experienced in other parts of the world such as Europe.

Using optimistic cost estimates for CNG vehicles, the carbon policy scenario...projects a 20% penetration into the private vehicle fleet by 2040 to 2050. Recently enacted state low-carbon fuel standards (e.g., California) might provide additional motivation for the market penetration of NGVs.

—“The Future of Natural Gas”

The MIT report finds that the potential for natural gas to reduce oil dependence could be increased by conversion into room temperature liquid fuels that can be stored at atmospheric pressure. Of these fuels, the report says, methanol is the only one that has been produced for a long period at large industrial scale. Methanol has the lowest cost and lowest GHG emissions, but requires some infrastructure modification and faces substantial acceptance challenges. On the other hand, natural gas derived gasoline and diesel have the advantage of being drop-in fuels, but carry a higher conversion cost.

Natural gas to fuel conversion processes. The one that has been operated at large industrial scale over a long period, with well-established costs, is methane-to-methanol conversion, mainly as a feedstock for chemical production. With the energy loss during conversion of natural gas to methanol taken into account, the well-to-wheels CO2 emissions from using natural gas derived methanol is slightly lower than gasoline. GHG emissions could be somewhat higher than gasoline if methane emissions are included. The production cost of natural gas conversion to diesel fuel is projected to be around 30% higher than methanol on an energy-equivalent basis. In addition, GHG emissions would be increased by more than 50% relative to natural gas derived methanol. Source: MIT. Click to enlarge.

The report recommends that the US government carry out a transparent comparative study of natural gas derived diesel, gasoline and methanol, and possibly natural gas derived ethanol, mixed alcohol and DME, with each other and with oil-derived fuels and biofuels. The study should include cost analysis, vehicle requirements, infrastructure requirements and health and environmental issues. It also should include discussion of R&D needs for more efficient and lower-cost production.

IEA: benefits of conventional natural gas vehicles. The IEA cites a number of benefits for natural gas vehicles, including fuel-cost savings, reduced greenhouse-gas emissions and local air-quality improvements, noise reduction and, in some cases, improved energy security. Specific benefits, and their value, the report stresses, depend on the national or local circumstances.

CNG vehicles may emit less CO₂ per km than electric vehicles (EV) and plug-in hybrid vehicles (PHEV), depending on the fuels used to produce electricity. In 2020, CNG cars are expected to emit less CO₂ per km than PHEVs in all the regions shown in Figure 3.7, assuming 10% of the vehicle-kilometres of PHEVs is electrically driven. They also emit less CO₂ per km than EVs in China, because of heavy reliance there on coal to produce electricity. In India, CNG vehicles and EVs emit about the same amount of CO₂/km, while in the United States EVs emit slightly less CO₂/km on average than CNG vehicles.

By contrast, CNG vehicles in the European Union emit twice as much CO₂/km as electric vehicles. This is because of the low carbon intensity of electricity generation in that region, which is projected to fall to 235 kg CO₂ per MWh by 2020 in the GAS Scenario, driven by the European Union’s efforts to curb CO₂ emissions. This compares with electricity generation carbon intensities of 480 kg CO₂/MWh in the United States, 605 kg CO₂/MWh in China and 675 kg CO₂/MWh in India.

—“Are We Entering a Golden Age of Gas?”

There are important barriers limiting the growth of NGVs, the IEA says, of which the lack of refuelling infrastructure is probably the most significant. Another barrier is the higher purchase price or conversion cost.

The IEA expects the uptake of NGVs to remain limited unless there is a significant increase in the availability of refuelling infrastructure. The most likely source of demand growth is notably in non-OECD Asia and Latin America. The IEA does see natural gas is seen as a potentially viable alternative to gasoline and diesel in North America, where abundant supplies of unconventional gas are expected to hold gas prices down in the coming years.

Like the MIT report, the IEA sees the greatest scope for deployment of NGVs in commercial, freight and public vehicle fleets, since provision of the necessary refuelling infrastructure can be more easily accommodated for fleets such as urban buses. Furthermore, the higher usage of fleet vehicles improves the economics of ownership of an NGV, provided that a pricing differential exists between gas and gasoline or diesel. A combination of government policies and lower wholesale gas prices could result in around 70 million NGVs in the world fleet in 2035, the report finds.

A high-impact, low-probability (HILP) analysis in the report assumes that NGVs account for 10% of total vehicle sales worldwide by 2035, up from only 1.1% today and 1.9% in 2035 in the New Policies Scenario. The HILP conditions result in an increase in NGV vehicle sales from an estimated 1.3 million in 2008 to around 17 million in 2035. As a result, the global stock of all NGVs would reach around 186 million vehicles in 2035, up from 31 million in the New Policies Scenario.

The change in NGV penetration has a significant impact on fossil-fuel demand and a lesser impact on emissions. Demand for natural gas increases by around 320 bcm in 2035, compared with the New Policies Scenario, and oil demand decreases by 5.7 mb/d, more than 12% of global oil demand in the road-transport sector in 2035. As a result, CO₂ emissions from that sector would drop by 165 Mt in 2035.

—“Are We Entering a Golden Age of Gas?”

Resources

• The Future of Natural Gas (MIT)

• Are We Entering a Golden Age of Gas? (IEA)