1. Századvég Economic Research Institute
14th SG MEETING OF PA2 INSTITUTE FOR FOREIGN AFFAIRS AND TRADE Budapest, 13 July 2017
Assessment of the alternative road fuels infrastructure and the development pathway to interoperability
Szabolcs Vágvölgyi
Energy Advisor
Századvég Economic Research Institute

2. Reliance on fossil fuels Congestion mitigation
International best practices for promoting the development of alternative fuels infrastructure Why and how to support?
Alternative fuels relate to the three major challenges in the transport sector 1
GHG emissions
Reliance on fossil fuels
Congestion mitigation
Some branches of the alternative transportation sector are already fully competitive 2
Industrial applications of electric vehicles
CNG public transport
LPG in personal transport 3
Other sectors are hindered by obstacles that are either real or perceived
Actual cost differences - ICEs vs AFVs
Cost perceptions
Technological conservatism
Technological performance
Unfamiliarity, lack of knowledge
Perceived risk of investments 4
In order for policy to overcome the above stated challenges, the following goals should be pursued
Facilitate socio-technical transitions
Overcome cost barriers
Increase competitiveness of AFVs and infr. 2

3. Comparative advantage
International best practices for promoting the development of alternative fuels infrastructure Preferred alternative fuels in various non-EU states
Country
Goals
Preferred technology
Policies
Incentives
Comparative advantage
Brazil
Mitigate emission levels, utilization of inland production factors
Biofuels, primarily bioethanol
Stations obligated to sell ethanol
Setting blending mandate ( %), Fuel price control, tax reduction, credits
High supply of domestic raw materials
Japan
Reduce oil dependency, improve efficiency
EVs and Fuel Cell
R&D programmes on batteries and HFVs
Incentives for FCVs and infrastructure development
Need for compact solutions
USA
Lower emission levels
All, except LPG
Loans for EV development, pilot projects for next generation EVs
PHEV tax credit, rebates for ZEVs
Technological comparative advantage
Iran
Decrease dependency on oil (sanctions)
Natural gas
Ban imports on natural gas vehicle technologies
Price of natural gas significantly below that of gasoline
Availability of domestic resource
Iran commenced natural gas fuel for transportation in 2000 and developed the industry with phenomenal speed. From nothing, the natural gas vehicle population grew to more than 3 million by end 2012 and Khaki reports the national fleet has now exceeded 3.5 million. 3

4. International best practices for promoting the development of alternative fuels infrastructure Cross-analysis of different alternative fuel technologies and technological scope of study 1
Certain alternative technologies may compete with each other. Support schemes often target to mitigate GHG emissions and therefore are technology neutral, further suggesting that competition across alternative technologies will be prevalent.
E-mobility offers significant potential in terms of its climate change mitigation potential
Large opportunity for European industry
Shows strong coherence with European mobility requirements and infrastructure
Natural gas is promoted to be used on the road and in the shipping sector
The benefit for emission reduction remains low
In the short-term it is the only cost-effective solution for the transportation sector
Biofuels are 100% compatible with the current transport paradigm
Biofuel feedstocks are grown in the Danube region in large quantities
However, the EU-wide support of liquid first generation biofuels is questionable especially after 2020
Hydrogen is still rather a long-term option
There is not a satisfactory amount of business cases for hydrogen vehicles
Strong financial commitment is required 4

5. Challenges for e-mobility: Variances in emission intensities of electricity generation
The ’climate competitiveness’ of e-mobility differs greatly across the region.
Countries that have a large share of imports or coal fired generation in their portfolio have excessive carbon emissions per MJ.
Based on our initial results, the well-to-wheel emissions of e-mobility of some countries are inferior to conventional gasoline and diesel. 5

6. Challenges for CNG: Lack of gas infrastructure in certain countries and the likely direction of alternative transport policy
CNG is performing well on both „sides” of the region, lacking infrastructure in the middle
As a result, it could be a promising fuel for the region, from the perspective of interoperability
One of the challenges is the lack of gas infrastructure in some countries, which can be overcome by SSLNG
Also, many countries in the region seem to be committed to e-mobility, large scale investment into CNG could be questionable 6

7. Initial recommendations
From a climate policy perspective, e-mobility is superior to all technologies in almost all Danube region countries 1
However, the age structure of the vehicles in Eastern-European and non-EU member Danube region states suggests that alternative fuels are a long way 2
Depending on the objectives, various scenarios could be envisaged, how cooperation should unfold
If the goal is interoperability, then e-mobility infrastructure should be promoted, though the generation portfolio is not always appropriate A
If climate policy objectives are the priority, then even first generation liquid biofuels are on the table for non-EU Danube Region states. B
If costs and climate policy objectives are equally important, then CNG should be developed, however, some countries lack gas infrastructure. C
Regardless of objectives, the LNG sector should be developed as there are not other alternatives in freight transport, both on road and water. D 7

8. Distance from LNG truck loading terminals capable of truck loading
With the current infrastructure in place, it is indeed the Danube Region that is the most inaccessible (or expensive) to transport LNG to be used in long-haul goods transport

9. Distance from LNG truck loading terminals capable of truck loading – with planned truck loading facilities
With the Krk terminal, a large part of the Danube region enjoys favourable transport costs
Considering the planned annual deliveries (2 bcm), only the to be built road SSLNG infrastructure in HU, HR, SI would present a 0,9% demand increase
Most importantly though, this demand would translate to EUR 300,000 additional income only through truck loading (500 EUR/loading)

10. Thank you for your attention!
Szabolcs Vágvölgyi