Nat Gas Could Fuel Half of Heavy Trucks by 2050, Petroleum Industry Study Says

This story appears in the Feb. 11 print edition of Transport Topics.

WASHINGTON — Natural gas-powered heavy trucks could represent a 40% to 50% market share by 2050 if the fuel retains its significant price advantage over diesel, according to an update of a two-year National Petroleum Council study.

With fewer than 2,000 Classes 7-8 trucks fueled by natural gas on the road today, natural gas-powered trucks represent less than 1% of the market, said Michael Gallagher, senior adviser to Westport Innovations, a Canadian natural-gas technology company. He is also a former president of Westport, which has partnered with engine maker Cummins Inc. to design heavy-duty natural-gas engines.

“These are pretty robust findings, particularly as you get into the out-years of the study,” Gallagher said during a Jan. 30 session at SAE International’s 2013 Government/Industry Meeting here. “It certainly shows a strong economic potential for natural-gas trucks over time.”

However, that growth of natural-gas trucks is dependent on the fuel remaining cheaper than diesel, Gallagher said. Other challenges facing natural-gas heavy trucks range from scarce refueling infrastructure to technological improvement, but they were not perceived by study participants as “deal breakers,” Gallagher said.

During the week of Jan. 28, average compressed natural gas sold for $2.26 per diesel gallon equivalent, and liquefied natural gas sold for $2.92, compared with $3.93 a gallon for diesel, according to Clean Energy Fuels Corp., Seal Beach, Calif.

Although no one can predict with certainty the future price of any of the fuels, the abundance of natural-gas fuel is expected to keep its price stable, said Kathryn Clay, executive director of The Drive Natural Gas Initiative, a membership-based,collaborative effort of natural-gas utilities and producers.

Gallagher led the group that worked on the study on the future of alternative and diesel fuels, including biofuels, electric, and hydrogen cell fuels.

The study, which was commissioned by the Department of Energy, included more than 300 organizations from the oil industry, trucking, manufacturing sectors, and energy policy experts, Gallagher said. The full report of the study, expected to be 1,000 pages, is not yet available, but a summary can be found on the National Petroleum Council’s website.

Gallagher said the study participants were asked to “essentially write the bible on today’s knowledge” of alternative and petroleum-based fuels and project the growth and promise of them through 2050.

Diesel probably will remain the dominant heavy-truck fuel for several decades, but natural gas could be the “new bridge to the future,” he said.

The study, Gallagher said, estimated that, by 2050, the extra cost of a natural-gas heavy truck could decrease by $28,000 to $42,000 more than a diesel truck, down from the current $50,000 to $75,000 cost differential.

“The cost is expected to come down pretty significantly, due to scale economies as the industry develops from a few thousand trucks today to tens or potentially hundreds of thousands over time,” Gallagher said.

Jim Bruce, vice president of corporate public affairs at UPS, said his company currently operates about 100 heavy liquefied natural gas tractors.

UPS operates trucks using a number of alternative fuels that give the company a “rolling laboratory,” Bruce said.

What makes natural gas attractive to UPS, he said, is the fact that its price is less volatile, it burns cleaner, and it even gives the company a competitive advantage when it bids on contracts.

Because heavy over-the-road longhaul trucks use more fuel, they are good candidates for using cheaper, alternative fuels, Bruce said.

“Liquefied natural gas looks particularly attractive for Class 8 tractors,” he said, “but I should say that all of the alternative fuel vehicles require financial assistance from the government — state or federal — to meet our required internal rate of return.”