Let’s get one thing straight right up front. A booming domestic energy economy producing and using more domestic oil and natural gas is a good thing. The potential for expanded supply of these fuels is important for jobs, economic growth and our collective future.
The question is what role natural gas will play in the future of trucking, which is today dominated by diesel fuel.
While the nation’s truckers will ultimately be the ones to answer that question, according to international and U.S. energy and transportation experts, the future of America’s heavy-duty trucking industry is very clear – diesel is going to remain the overwhelmingly dominant growth fuel in transportation for several decades to come.
ExxonMobil, the world’s largest publicly traded international oil and gas company, predicts diesel will surpass gasoline as the number one global transportation fuel by 2020, with diesel demand accounting for 70 percent of the growth for all transportation fuels through 2040. Natural gas will remain only a small share of the global transportation fuel mix, at four percent by 2040, up from today’s one percent.
Royal Dutch Shell, the second largest company in the world in terms of revenue, predicts that although there will be an uptake in alternative fuel sources in the next few decades, conventional fuels — like diesel — and the internal combustion engine will continue to power the world’s vehicles for decades. In 2050, two-thirds of vehicles on the road will still use conventional fuels and conventional engine technology.
The National Petroleum Council, an oil and natural gas advisory committee to the U.S. Secretary of Energy, predicted in its 2012 report Advancing Technology for America’s Transportation Future: “Diesel engines will remain the powertrain of choice for HD (heavy-duty) vehicles for decades to come because of their power and efficiency.”
These are just a few of the numerous unbiased studies and reports that forecast diesel power as the best and most efficient energy source for heavy-duty transportation.
Ten to twenty years ago the main conversation about natural gas and diesel was an environmental one, but not today. The environmental gains in clean diesel technology have enabled it to be considered as a clean choice alongside other alternative fuels. In fact, many new diesel engines emit almost the same level of criteria pollutants – particulate matter and oxides of nitrogen – as a comparable new natural gas engine. The widespread availability of ultra-low sulfur diesel fuel, beginning in 2006-2007, ushered in new engine and after-treatment technologies to significantly reduce these criteria pollutants and achieve these milestones. A truck manufactured after 2007 emits 98 percent less pollutants than a truck made in 1988.
And the diesel is making gains in energy efficiency as well, three to five percent greater fuel efficiency in the current generation trucks, saving owners of new clean diesel Class 8 trucks $3,500 in fuel costs each year. Those savings translate into conserving 21 barrels of crude oil, 875 gallons of fuel and eliminating 8.9 tonnes of CO2. All Class 4-8 trucks on the road today with new clean diesel engines save 13.3 million barrels of crude oil, 560 million gallons of fuel and eliminate 5.7 million tonnes of CO2. Nearly 15 percent of all Class 3-8 trucks registered today – 1.29 million of 8.8 million trucks – are now equipped with 2010 and later model year engines, according to new data compiled by R.L. Polk and Company.
This increasing penetration rate is a reflection of the confidence that truckers have in new clean diesel engines, particularly during the last recessionary period, when there was a lower demand for trucking services. Diesel also provides a stable and proven technology platform suitable for expanded use of hybrid powertrains and lower-carbon renewable fuels – both strategies for reducing GHG emissions in the future.
Costs in Question
Today the debate is really about the cost of the two fuels and technologies. While natural gas enjoys a per-gallon equivalent savings over diesel today, chances are that advantage will be significantly reduced in the future. Energy companies also want to sell that domestic natural gas on the global energy market. Here the seesaw nature of natural gas price fluctuations – not typically seen in on-road diesel fuel prices – means more unpredictability for fleet managers and truck owners to prepare for the future. Opaque pricing will only add to future ups-and-downs in natural gas prices making any planning for the future even more difficult.
Fracking activities to extract the shale gas will be subject to many more federal, state and local regulations, which in turn translate into higher costs. Natural gas suppliers have smartly offered substantial long-term contract deals on gas pricing, which, along with substantial federal and state subsidies, vehicle incentives and special options, clouds a “true cost of ownership” analysis. Transparency here is needed because someday soon, those and other costs will be borne fully by users and not shared by governments or taxpayers.
Even in California, with several decades of government subsidies and some might say a preferential regulatory environment for natural gas, the recent California Air Resources Board’s 2020 Vision plan notes that … “Natural gas has an important niche role to play in contributing to California’s air quality and GHG emissions goals in the transportation sector.” (emphasis added).
Compressed natural gas is not the only game in town. Some predict more gas-to-liquid technology that will render a clean burning, low-sulfur, highly low-emissions “neat” diesel fuel. First and second generation high quality renewable biodiesel fuels will also factor more in the future as a greater player in alternative fuel and technology choices.
Truckers always want lower fuel costs, but are smart enough to know the lowest cost isn’t always the best choice. Diversification of fuels and technologies is in our future, and we need to approach it based on more transparent facts. But one thing is clear. Virtually every U.S. and international energy and transportation agency has said that diesel will remain the overwhelming transportation energy source beyond 2050.
Allen Schaeffer is executive director of the Diesel Technology Forum.