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NatGas: From Niche Player to Mainstream Contender

I’ve been to many State of the Union speeches and know first hand how powerful a policy driver they can be. That’s why I was particularly pleased to hear President Obama in his latest address call on Congress to “help by putting people to work building fueling stations that shift more cars and trucks from foreign oil to American natural gas.”

Lawmakers from both sides of the political aisle and leaders in every sector of our economy are embracing natural gas because it offers real savings, real stimulus, and real solutions. While natural gas vehicles produce 20 to 30 percent lower emissions at the tailpipe on a well-to-wheels basis than a similar diesel or gasoline-powered vehicle, what is ultimately driving an increase in adoption of natural gas in the transportation sector is the price.

In January, the American Gas Foundation and IHS CERA unveiled a study called “Fueling the Future with Natural Gas: Bringing it Home,” which found that the domestic market for natural gas can be greatly expanded beyond its current use to provide new growth prospects for many sectors of the economy.

 

Today, retail costs for gasoline and diesel fuel are about double the costs of natural gas fuels. The Fueling the Future report projects the price advantage of natural gas over oil that we see today will continue through at least 2035. This means we have a real opportunity in this country for natural gas to grow from a niche player to a mainstream contender.

IHS CERA expects the volume of natural gas used as a transportation fuel in the U.S. to triple by 2020. We are already seeing significant investments in natural gas vehicles (NGV) for return to base fleets such as garbage trucks, taxis, buses, and delivery vehicles. Typical payback times for the initial costs of these vehicles are three to five years, and the more a vehicle is driven, the faster the payback. Class seven and eight long-haul trucks can see a payback period of less than three years.  And a natural gas car will save you an average of $4,500 in fuel costs over five years compared to a gasoline vehicle. Several major automobile manufacturers have announced that they will offer natural gas powered vehicles in the U.S. consumer market in the next few years.

Natural gas utilities are supporting this evolution, contributing to a 60 percent growth in our national CNG refueling infrastructure since 2009. Several of them are working with General Electric‘s LNG and CNG In A Box systems. We see an incredible opportunity on the horizon with the development of an affordable in-home natural gas refueling unit, and we look forward to seeing what developments arise in this area.

This incredible growth is driven by powerful economics, not by government mandates. In addition to the technological innovation transforming the market for natural gas transportation, we see room for policy innovations that can drive this transition.

Many of the laws surrounding natural gas were developed during a time when the gas was perceived to be scarce. In order to make such opportunities a reality, we must update these policies to recognize the full potential of our natural gas abundance. We look forward to working with leaders in the private sector and every level of government to make natural gas transportation part of a clean and secure energy future for our nation.

Dave McCurdy is president and chief executive officer of the American Gas Association.

NatGas: From Niche Player to Mainstream Contender was originally published on Ideas Lab

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