IS METHANE GAS REALLY A CREDIBLE ALTERNATIVE IN THE ROAD TRANSPORT SECTOR?

Peter Boisen
Chairman of European Natural Gas Vehicle Association (ENGVA) peter@boisen.se

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ENGVA, 2004

5.3 MILLION NGVs WORLDWIDE

Russia: 46,000 Canada: 20,500 Europe: 441,000 Ukraine: 67,000 Armenia: 47,700 USA: 146,900 Iran: 128,700 Egypt: 67,100 China: 127,100 Japan: 28,000 Korea: 9.000

Pakistan: 1,000,000 Bangladesh: 42,200 India: 222,300 Thailand: 11,200 Malaysia: 18,300

Venezuela: 44,100 Colombia: 100,000 Indonesia: 6,600 Brazil: 1,117,900 Bolivia: 45,000 Australia: 2,100 Argentina: 1,459,300 New Zealand: 500

120,000 buses, 100,000 trucks, 5,100,000 cars

Source: The GVR, July 2006

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ENGVA, 2004

METHANE LD/MD VEHICLES ON THE EUROPEAN MARKET

OEM offers: Citron Berlingo/C3 Fiat Dobl/Ducato/Multipla/Panda/Punto Iveco Daily MB 200E NGT/Sprinter Opel (Astra)/Combo/Zafira Peugeot Partner Renault Kangoo Volkswagen Caddy/Crafter/(Golf)/Touran Volvo S60/V70/(S80)
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Some QVM offers: Ford Focus Jolly Skoda Octavia Smart

WORLDWIDE USE OF NG BUSES

Air quality problems and high oil prices have accelerated the use of NG buses all around the world. According to the best available statistics the total NG bus fleet now exceeds 140,000 units:
China 32,400, Ukraine 30,500, India 10,100, USA 10,000, Armenia 9000, Korea 9000, Russia 8000, Egypt 5400, Mexico 3000, Iran 2400, France 2000, Italy 1800, Germany 1300, Japan 1100, Bangladesh 1000, Canada 1000, Australia 900, Sweden 700, Spain 400, Portugal 250, Slovakia 200, Bulgaria 150, Turkey 150 and a long range of countries with somewhat smaller fleets.

Together these buses consume as much fuel as 2 million passenger cars.

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WORLDWIDE USE OF NG TRUCKS

The world fleet of NG trucks is around 100,000 units, most of them MD trucks using CNG tanks, but also some HD trucks using LNG tanks. For city operated vehicles like garbage trucks CNG vehicles are chosen to help reduce air quality problems, but in the commercial sector total operating costs is the decisive factor which is favouring dual fuel LNG trucks. Existing larger fleets of NG trucks include:
Russia 35,000, Ukraine 29,500, Armenia 14,000, Japan 14,000, Germany 6700, Myanmar 3600, Egypt 3400, USA 2000, Australia 1100, Spain 500, UK 400, Poland 400, France 400, Latvia 300, Italy 500, and Sweden 300

Together these trucks consume roughly as much fuel as one million passenger cars.

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ENGVA, 2004

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ENGVA, 2004

GAS FILLING STATIONS IN SWEDEN

Source: Fordonsgas

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ENGVA, 2004

MARKET GROWTH IN SWEDEN (Million Nm3)

Methane now accounts for 0,50 % of the Swedish road fuels. This figure would grow to 2 % in 2010 with an annual growth of 35 %.
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THE HISTORY OF BIOGAS

Biogas used already two thousand years ago in China Principles described by Volta in 1776 Pasteur in 1884 described how biogas from animal by-products could replace the coal based town gas Manure used as feedstock for some 2 million small domestic biogas plants in India - providing both fuel and fertilizer

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ENGVA, 2004

EU-15 THEORETICAL BIOMETHANE POTENTIAL 1200 TWH. THE TOTAL USE OF ROAD FUELS IS ABOUT 3200 TWH OR 275 MTOE)

The German Wuppertal institute in January 2006 released an estimate that up to 20 % of all road fuels by 2030 could be replaced by biomethane
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SOURCES FOR PRODUCTION OF BIOMETHANE

Syngas from forest industry waste Syngas from salix grown on set-aside land Biogas from energy crops grown on set-aside land Biogas from manure Biogas from other agricultural waste Biogas from organic municipal waste Biogas from sewage sludge Biogas from food industry waste Biogas from park and garden waste Landfill gas
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EXAMPLES FROM THE CITY OF GTEBORG (0.5 MILLION POPULATION)

New upgrading plant in 2007 able to produce 14 million Nm3 of biomethane annually from sewage water New gasification plant in 2011 using forest waste able to produce 88 million Nm3 of biomethane annually (>70 % conversion efficiency) The total annual Swedish use of methane in road transports as a comparison is currently around 40 million Nm3 - enough to support 1000 HD vehicles and 9000 LD vehicles.

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ENGVA, 2004

Yields MWh/ ha from crop based biofuels

(data from recent German and Austrian studies)
MWh/ha

Ethanol (wheat)

Methane (maize)

MWh/ha

RME (rape)

10

15

20

25

30

35

40

45

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ENGVA, 2004

BIOMETHANE POTENTIAL (% of all vehicle fuels)

Conventional organic waste, use of currently set-aside land, assumed 8 % of annual forest growth
Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxemburg Netherlands Portugal Spain Sweden United Kingdom 0,0
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waste

set-aside forest

10,0

20,0

30,0

40,0

50,0

60,0

70,0
ENGVA, 2004

Source: Peter Boisen, Target 2010 Partners, May 2003

ADVANTAGES WITH BIOMETHANE

Landfilling of organic waste must be phased out in Europe by 2016 Biogas production offers an approved and efficient method for biological waste treatment Reduction of fossil carbon dioxide emissions Biomethane results in lower net greenhouse gas emissions than any other vehicle fuel Reduced air quality problems Less harmful emissions than any other fuel (except H2 produced from renewable resources) Security of supply Large domestic waste potential in all countries, higher fuel output per hectare of land than competing crop/forest based biofuel options Nutrients recycled, reduced eutrophication NPK (nitrogen, phosphorus and potassium) returned to the soil, thus reducing the use of artificial fertilizers
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URBAN AND RURAL WASTE NOT A PROBLEM, BUT A RESOURCE

Substantial oil replacement potential Raw materials available both in cities and rural areas Process provides both gas and fertilizer Biogas can be used to generate electric power, but the heat produced is then often wasted Gas upgraded to a quality on par with natural gas can be transported via the natural gas grid, and used to substitute natural gas as a vehicle fuel

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ENGVA, 2004

METHANE ON THE ROAD TO BECOME A SIGNIFICANT FUEL ALTERNATIVE

Methane today accounts for 0,5 % of all fuel used in Swedish road transports Biomethane accounts for 50 %, natural gas 50 % of the gas volumes used for road transports The total annual use of methane in road transports is currently around 40 million Nm3

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CO-DISTRIBUTION OF BIOMETHANE (UPGRADED BIOGAS) AND NATURAL GAS

Cycle of raw material for production of biogas
Restaurant

sludge

sludge

Digestion tank (sludge)

Raw biogas 55-65% methane

MSW

Digestion residues to municipal parks etc. Raw biogas 55-65% methane

Purification plant

96-98% bio-methane

Metals Glass Electronic devices

Waste for combustion

Biodegradable organic waste

Digestion tank
(non-contaminated organic waste)

Digestion residues back to agricultural land

Green gas principle

Natural gas

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ENGVA, 2004

THE GREEN GAS PRINCIPLE

Biomethane Households Industry Natural gas

Vehicles

The possibility to inject produced biomethane into the natural gas grid, and then withdraw a similar volume at another point on the grid provides essential synergies and economic advantages. Whether the methane molecules used in the car are of fossil or renewable origin makes no difference in the engine.
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CONNECTING THE BIOGAS ISLANDS

Sweden now has some 15 cities relying on biomethane for their NG vehicles with many more cities in the pipeline Four regional distribution companies cooperate regarding new stations in white spots To cover wide areas of Sweden yet without either biomethane or natural gas supplies LCNG filling stations are now proposed. These stations would supply LNG for dual fuel trucks in long distance traffic, but also be able to refuel conventional CNG vehicles. The LCNG stations will be supplied by 21 tonne LNG trailers using imports, local liquefaction of high pressure pipeline gas at pressure reduction stations, or cryogenic purification and condensation of biogas. Making LNG available for dual fuel HD vehicles also means a fast growth potential for this type of vehicle, and a very significant oil replacement potential.
ENGVA, 2004

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CONCLUSIONS IN A RECENT SWEDISH STUDY

There is a possibility, considering technology as well as economics, to replace a large portion of todays use of vehicle fuels (petrol and diesel) with biomethane and natural gas supplied in the form of LNG. LNG is an attractive alternative for heavy duty vehicles which could simultaneously support the distribution of biomethane and natural gas in the form of CNG. LNG can be produced both from biogas and natural gas. The infrastructure could be developed in steps based on supply from the natural gas grid, or from local biogas production. For HD trucks in long distance traffic a network of 24 well located LCNG filling stations would be sufficient in order to provide a nation wide coverage in Sweden.
Quote from recent study made by Vattenfall Power Consultant
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INVESTMENTS REQUIRED FOR AN LNCG INFRASTRUCTURE

LCNG infrastructure with annual sales of 2.4 TWh LNG
(240 million Nm3, or about 3 % of total Swedish road fuels)

LNG production facilities in Malm 27 MSEK ( 4.9 MM AUD) LNG production facilities in Gteborg 80 MSEK (14.4 MM AUD) 20 LNG trailers 54 MSEK ( 9.7 MM AUD) 24 LCNG stations 89 MSEK (16.0 MM AUD) TOTAL (2,4 TWh LNG) 250 MSEK (45.0 MM AUD)

Specific investment costs

(when operating at full capacity)

0,1 SEK/Nm3 (0,018 AUD/Nm3)

(1 SEK ~ 0.18 AUD) Quote from recent study made by Vattenfall Power Consultant
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50 % REDUCTION OF FOSSIL CO2 EMISSIONS

Cars using natural gas instead of petrol have 25 % lower CO2 emissions Cars running on biomethane have zero emissions of fossil CO2 With a 50 % share of biomethane, and with 10 % petrol use in bi-fuel cars, the net emissions of fossil CO2 are currently on average reduced by 53 % Dedicated NGVs totally relying on biomethane, e.g. bus fleets in 14 Swedish cities, of course, completely eliminate fossil CO2 emissions
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LESSONS LEARNT CONCERNING FUEL SUPPLY AND DISTRIBUTION

Moisture or oil entering the vehicle gas tanks would sooner or later result in serious mechanical problems thus important to control the dispensed gas quality Underdimensioned CNG refuelling stations could result in overheating, and gasified compressor oil entering the vehicle tanks. The refuelling station status must be continually supervised (usually via remote control), but also via regular replacement of filters. Customers expect round the clock availability of refuelling, and easy payment via standard credit cards (in addition to any local cards used) Essential with 24-hour maintenance preparedness to minimize refuelling station downtime. Early adapters are often fleet customers that will not tolerate frequent and lengthy unavailability of the fuel. As backup against maintenance downtime on biogas purification units LNG tanks holding several days supply is a cost efficient solution Use economy of scale i.e. standard solutions rather than starting from scratch at every new biogas production plant, purification unit, or refuelling unit.
ENGVA, 2004

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LESSONS LEARNT CONCERNING VEHICLES

Conversion of light duty petrol engines may result in increased engine wear unless suitable changes are made to valves, valve seats and cylinder heads. Technical problems in HD bus fleets are often caused by the use of unsuitable lube oils, or by ignoring maintenance requirements.

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ENGVA, 2004

BASIC TECHNICAL CONDITIONS FOR MARKET GROWTH IN EUROPE

Standards covering fuel quality, fuel distribution facilities and vehicle specifications HD engine certification rules and national type approvals LD vehicle certification rules and European whole vehicle type approval system Regular inspections of vehicles and refuelling facilities ensuring that the fuel supplied will perform as intended in different vehicles (a task for the national authorities)

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OTHER FACTORS AFFECTING MARKET GROWTH

Available refuelling structure will determine vehicle use and fuel sales (a joint task for government and various stakeholders) Large investments (infrastructure/vehicles) require stable conditions over a 15 year period (a task for national governments) Inconveniences suffered by early adapters must be compensated via adequate incentives (a task shared by national, regional and municipal government) Offered alternatives must be efficient, sustainable, limit air pollution and reduce GHG emissions

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HOW LONG DOES IT TAKE TO DEVELOP THE MARKET?

In 1995 Sweden had 1 bus filling station and 1 public station Sweden, with 9 million inhabitants, now has some 25 refuelling stations reserved for buses and other municipal vehicles, and another 80 public refuelling stations. The number of public stations grows by 35-40 % annually, as does the fuel sales volume. The vehicle fleet right now is around 10,000 units. Germany with 84 million people has over a four year period added 500 new stations, and now has a total of some 700 stations. The transition from natural gas to biomethane could be made step by step. Austria and Germany both plan a 20 % biomethane share by 2020 latest. Sweden has already reached a 50 % share, Switzerland lies somewhere in between. Modern factory built NG vehicles are available from most European OEMs. To provide RHD versions of existing LHD vehicles is no big deal once the market demands the vehicles.
ENGVA, 2004

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INCENTIVES
The Swedish taxes on vehicle fuels are: - petrol 0,552 SEK/kWh (AUD 0,099/kWh or 0.87/l) - diesel 0,368 SEK/kWh (AUD 0,066/kWH or 0.65/l) - NG 0,112 SEK/kWh (AUD 0,020/kWh or 0.20/Nm3) - biomethane 0 (meaning AUD 0.20/Nm3 less than NG) NGVs from 2006 enjoy a slight annual road tax advantage over petrol vehicles, which in turn have a significant advantage vs diesel vehicles Concerning income tax payable by users of company cars NGVs and hybrids from 2006 enjoy a 40 % reduction (E85 cars a 20 % reduction) of the taxable value, but max 16000 SEK, which in practise means an annual tax reduction by 8000 SEK ( 870) The doubled company car tax benefit for NGVs in 2006, in combination with a continually improved refuelling infrastructure, about 30 % lower fuelling costs, and the exemption from the Stockholm congestion tax, has meant booming sales. Flex fuel (E85) cars, NGVs, and hybrids together now account for 15 % of the new car sales in Sweden! On the second hand car market NGVs disappear as fast as they are offered for sale. In this context lower fuelling costs, avoided congestion tax in Stockholm, and free parking benefits in many cities are the three main drivers.
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OTHER GOVERNMENT SUPPORT

The national government provides a 30 % subsidy on approved investments in alternative fuel refuelling infrastructure and biofuel production facilities Gteborg in 1998 made a commitment that 50 % of all municipally used vehicles inside five years would be environmental vehicles. Other municipalities followed. Today the municipal or regional targets are often 90 %. Also the national government now has a procurement policy which demands that a certain share must be environmental vehicles. At the end of 2005 the target was raised from 50 to 75 % (certain exemptions for the police, military demands, ambulances etc). Leadership by example is slowly advancing also on the national level (meaning that also ministers have now started to use environmental vehicles). On the municipal level this change took place years ago. The mayor in a city with local production of biomethane would normally use a bi-fuel CNG car.
ENGVA, 2004

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CRITICAL SUCCESS FACTORS BEHIND BOOMING SWEDISH MARKET FOR ENVIRONMENTAL CARS
European strategies for reduced oil dependance via biofuels and other alternative fuels Local action driven by national, regional and municipal initiatives Leadership qualities among different stakeholders government, fuel distributors, car industry, and NGOs

Biogas Cities is a Swedish initiative allowing cities to share experiences in a search for best practise. BiogasMax is a new EU project 2006-2009 where experiences from many countries are shared.

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ENGVA, 2004

WINDOW OF OPPORTUNITY
The EU target for 20 % alternative fuels in 2020, with some 15 % made up of gaseous fuels, means a need for 45-50 million specially adapted vehicles (on average 3 million/year) . Over the next 15 years we would in Europe need average annual sales exceeding 3 million vehicles of all different types to realize this ambition. Continued fast NG infrastructure development is required in order to realize the alternative fuel targets. Large NG filling stations could also reform methane into hydrogen used in hythaneTM or for use in hydrogen powered ICE or FC vehicles. Strong new suppliers of NGV components will also be the suppliers of gas system components used in future H2/FC vehicles. The development of a large market for methane powered vehicles with a gradually increased share of biomethane will thus, in contrast to bioethanol and biodiesel, support future offers of fuel cell vehicles.

Thank you for your attention!

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