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Natural Gas Vehicles: A Feasibility Study Steven C. Agee, Ph.D. Shouro Dasgupta, B.S.B. Alexis Caron, B.S.B.

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Presentation on theme: "Natural Gas Vehicles: A Feasibility Study Steven C. Agee, Ph.D. Shouro Dasgupta, B.S.B. Alexis Caron, B.S.B."— Presentation transcript:

1 Natural Gas Vehicles: A Feasibility Study Steven C. Agee, Ph.D. Shouro Dasgupta, B.S.B. Alexis Caron, B.S.B.

2 Introduction: Natural Gas Vehicles Dedicated natural gas vehicles are designed to run on natural gas only, while dual-fuel or bi-fuel vehicles can also run on gasoline or diesel. Dual-fuel vehicles allow users to take advantage of the wide- spread availability of gasoline or diesel but also uses a cleaner, more economical alternative when natural gas is available. Natural gas used as a transportation fuel is called compressed natural gas because the gas is compressed to a pressure of about 3,600 pounds per square inch (psi) and stored in a fuel cylinder aboard the vehicle. CNG flows into the engine's combustion chamber and is ignited to create power to drive the vehicle. It is estimated that there are 9.6 million natural gas operated vehicles in the world (December 2009)

3 Advantages and Disadvantages of Natural Gas Vehicles AdvantagesDisadvantage Nearly 87% of U.S. natural gas used is domestically produced, while in 2008 53% of the petroleum/crude oil consumed in US was imported 60-90% less smog-producing pollutants* 30-40% less greenhouse gas emissions Less expensive than gasoline Using CNG is also considered to be better for engines, as cylinder wear and oil contamination is reduced. Also, spark plugs stay cleaner for longer. Limited vehicle availability Filling stations are less readily available than gasoline and diesel Fewer miles on a tank of fuel Less trunk space for dual-fuel autos. * Depending on the type of vehicle

4 Worldwide Natural Gas Vehicle Statistics RankCountryNatural Gas VehiclesRefueling Stations 1Pakistan2,000,0002,941 2Argentina1,745,6771,801 3Brazil1,588,3311,688 4Iran1,000,000500 5India650,000463 6Italy580,000700 7China400,0001,000 8Colombia280,340401 9Bangladesh190,381502 10Thailand127,735303 11Ukraine120,000224 12USA110,000224 Source: International Association of Natural Gas Vehicles, 2009 Table 1: Number of Natural Gas Vehicles by Country

5 The Technology Typical CNG Components in a Natural Gas Vehicle

6 The Technology (cont.) 4 th Generation CNG System

7 Conversion Costs (Gasoline to Natural Gas) A specially designed Conversion Kit is required consisting of cylinders to be fixed in the trunk of the car with associated equipment to allow the natural gas to flow into the engine and all cars can be converted irrespective of make or model. CountryConversion Cost (50 liter tank)Conversion Cost (90 liter tank) Bangladesh$750 - $800$850 - $ 900 Pakistan$ 200 - $230$ 245 - $285 Argentina$ 200 - $400*$420 - $515* Brazil$100- $175$ 200 - $400 Iran$50*$80* India$700 - $800$950 - $1,000 Thailand$1170 - $1400- Malaysia$875 - $1100- USA$1450-$3000 *Government subsidized Table 2: Conversion Cost Comparison by Country

8 Fuel Price Comparison Average Price in Gasoline Gallon Equivalents ($) Average Price in Diesel Gallon Equivalents ($) Average price in Dollars per Million Btu ($) Gasoline2.652.9622.99 Diesel2.572.8722.26 CNG1.852.0716.07 Ethanol (E85)3.363.7529.13 Propane4.134.6135.81 Biodiesel (B20)2.703.0223.44 Biodiesel (B99-B100)3.543.9530.67 CNG is about 80 cents less than gasoline on an energy-equivalent basis, while E85 is about 28 cents less per gallon than gasoline. Source: US Department of Energy (January 2010) Table 3: Fuel Price Comparison

9 Emission Standards Light-Duty Vehicle Emissions: CNG vs. Gasoline Reduces carbon monoxide emissions 90%-97% Reduces carbon dioxide emissions 25% Reduces nitrogen oxide emissions 35%-60% Potentially reduces non-methane hydrocarbon emissions 50%- 75% Emits fewer toxic and carcinogenic pollutants Emits little or no particulate matter Eliminates evaporative emissions Source: U.S. Environmental Protection Agency

10 Savings from CNG Vehicles As a vehicle fuel it is about 30-50% cheaper than gasoline. This is due to a combination of: – The cost of natural gas on an energy equivalent basis relative to petroleum fuels and – fuel taxes, the current pre-tax price of Russian H-gas (the assumed marginal source for NG used in Europe) delivered in the form of CNG is, per lower heating value energy unit, only 63 % of the current price of petrol. CNGGasoline Rate 1.91/kg$2.67/liter Average 16.80 km/kg12 km/liter Running cost/km $ 0.114$0.225 Save/100km$ 7.82 ($12.59/100 miles)Nil Table 4: Saving Chart between CNG and Gasoline (Asia) Source: International Association of Natural Gas Vehicles, 2009

11 Savings (cont.) Natural GasRate Price per kg Consumption/100 km Cost per 100 km 0.79 ($1.02 USD) 7 kg (15.4 pounds) 5.53 ($7.17 USD) Regular GasolineRate Price per liter Consumption/100 km Cost per 100 km 1.23 ($1.59 USD) 10 liters (2.6 gallons) 12.30 ($15.95 USD) Savings 6.77 /100 km ($14.13/100 miles) or 55 percent Table 5: Saving Chart between CNG and Gasoline (Europe) Source: International Association of Natural Gas Vehicles, 2009

12 Predicted Savings in USA Source: US Department of Energy (April 2010) Based on the mileage information from a 2005 Honda Civic and gasoline and CNG prices data from the Midwest region (CNG-$1.41* & Gasoline $2.73), it is projected that for a 100 miles trip a CNG run vehicle will save; $3.71 in the city area and $2.14 in the highway Estimates do not include additional savings from lower maintenance costs from reduced wear and tear of the engine, less frequent oil changes and tune-ups. * Average price as of 3rd May 2010 in OKC GasolineCNG MPG (City) 3230 MPG (Highway) 3834 Requirement for 100 miles (City) 3.12 gallons3.33 gallons Requirement for 100 miles (Highway) 2.63 gallons2.94 gallons Cost per 100 miles (City) $8.12$4.41 Cost per 100 miles (Highway) $6.84$4.70 Savings from using CNG (City) $3.71 Savings from using CNG (Highway)$2.14 Table 6: Savings in USA

13 Savings from Maintenance and Performance Some fleet operators have reduced maintenance costs by as much as 40 percent by converting their vehicles to CNG. Intervals between tune-ups for natural gas vehicles are extended 30,000 to 50,000 miles. Intervals between oil changes for natural gas vehicles are dramatically extended--anywhere from 10,000 to 25,000 additional miles depending on how the vehicle is used. CNG has an octane rating of 130 and has a slight efficiency advantage over gasoline. Because CNG is already in a gaseous state, NGVs have superior starting and drivability, even under severe hot and cold weather conditions

14 Tax Rate Comparison CountryTax on GasolineTax on CNG Germany68.7 % + 19.0 % VAT0.0% India52.0%8.0% * Pakistan38.57%0.0% Italy63.1%0 – 5% ** Oklahoma12.93% 11.48% * Currently only in the states of Maharashtra and Uttar Pradesh ** Depending on the size of the vehicle Federal tax of 18.4 cents/gallon plus state tax of 17 cents/gallon as a percentage of average gasoline price in OKC of $2.737 (04/29/2010) Federal tax of 18.3 cents/gallon plus state tax of 16 cents as a percentage of average CNG prices in OKC of $1.41 (05/03/2010). However, a state tax waiver permit for CNG can be purchased from Oklahoma Tax Commission at a cost of $ 100 per year. In order to recover the $100, a person would have to purchase ($100/0.16) 625 gallons of CNG. At an average tank size of 23 gallons, a person would have to fill up their car approximately 27 times a year or drive approximately 17,500 miles a year. Otherwise it is better off to pay taxes during CNG purchase.

15 Incentives for Natural Gas Vehicles The state of Oklahoma offers the following incentives – a one-time income tax credit for 50% of the cost of converting a vehicle to operate on an alternative fuel or – for 50% of the incremental cost of purchasing a new Original Equipment Manufacturer AFV – The state also provides a tax credit for 10% of the total vehicle cost, up to $1,500 Federal Qualifying vehicles are also eligible for a federal income tax credit of up to $4,000. For Consumers: Oklahoma

16 Oklahoma provides a tax credit for up to 75% of the cost of installing alternative fueling infrastructure. Beginning January 1, 2010, a tax credit is also available for up to 50% of the cost of installing a residential CNG fueling system (not to exceed $2,500). Federal A 30% tax credit (not to exceed $30,000) is available for equipment placed into service before January 1, 2009. For equipment placed into service after January 1, 2009, the credit amount is up to 50% (not to exceed $50,000). For Fuel Retailers : Oklahoma Incentives for Natural Gas Vehicles

17 Contact Information Steven C. Agee, Ph.D. Professor of Economics and Director Economic Research & Policy Institute Meinders School of Business Oklahoma City University 2501 N. Blackwelder Oklahoma City, Oklahoma 73106 USA sagee@okcu.edu (405) 208-6111


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