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Amy Myers Jaffe: How to Beat OPEC — Take the Highway to Natural Gas-Powered Trucking

With OPEC defending its oil market share, the U.S. should lock in the advantages of a healthy natural gas sector. Piloting corridors for LNG-fueled trucking would be a promising start.

 

The United States has been enjoying an oil and gas renaissance that has created jobs and enhanced its global competitiveness. But oil and natural gas prices have plummeted since July — a decline accelerated by the Organization of Petroleum Exporting Countries’ (OPEC) decision to favor a market-share approach rather than defend prices — causing a drop in drilling activity in the United States and layoffs in the oil and gas sector.

While the U.S. economy benefits from falling oil and gas prices overall, policy makers might want to consider ways to lock in the benefits of a healthy U.S. domestic natural gas sector from the negative fallout from the OPEC price war.

One way to help U.S. natural gas producers beat OPEC would be to nurture natural gas as a fuel for the U.S. heavy-duty trucking fleet. While launching a national network for liquefied natural gas (LNG) fueled trucks might be difficult and expensive, an initial small-scale natural gas transportation network for heavy trucking could be launched in U.S. regions situated near high-volume travel corridors.

In a report we just published with the Institute of Transportation Studies at the University of California Davis and Rice University, we lay out how California, the Great Lakes and the mid-Atlantic are well positioned to serve as pilot networks due to their proximity to trucking corridors. The U.S. Department of Energy tried a corridor approach to biofuels use in the 1990s, but natural gas is likely to have more compelling economics.

Switching from diesel fuel to natural gas may even hold advantages for the U.S. heavy-duty trucking fleet. California’s high-volume I-5 truck corridor would be a commercially optimal location to target initial investments. In California, we calculate that a profitable LNG fueling network could be launched for less than $100 million and could eventually link to other regional markets over time as demand for new natural gas trucks grows. Such a network could also help the state enable a faster transition to renewable natural gas, biogas and waste-to-energy pathways — though it would require significant policy intervention to reap climate change benefits.

Utilizing natural gas for heavy trucking would also improve energy security and weather-related resiliency by diversifying the geographic fuel supply, while potentially improving U.S. economic competitiveness by lowering costs along national freight supply chains.

But stricter efficiency standards for LNG-fueled heavy-duty trucks and stronger regulations of methane leakage along the natural gas supply chain are needed for natural gas to advance low-carbon-fuel goals. To date, the long-haul trucking industry has favored less-expensive spark ignition (SI) engine technology that has lower levels of climate performance.

The U.S. Environmental Protection Agency (EPA) is moving forward with stricter limitations on methane leakage from wellhead operations in the U.S. oil patch and considering new regulations for distribution systems. To maximize climate benefits,such measures would need to be combined with cost reductions and greater deployment of the high-pressure direct injection (HPDI) engine for LNG fuel to offer carbon reductions compared to efficient diesel fuel heavy vehicles.

The current environment of low oil and gas prices presents an opportunity to explore more sustainable energy and transportation solutions. Piloting LNG-fueled trucking would steer us in the right direction.

(Top image: Courtesy of David McNew/Getty Images)

 

Amy Myers Jaffe is the executive director for energy and sustainability at University of California Davis and a GE Ecomagination Advisory Board Member.

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