March 13, 2012

China Shifts Gears to Natural Gas in Transportation

Today we announced the unveiling of China’s first engine with Westport HPDI technology during the China National People’s Congress. The introduction of this engine fills an important gap in China’s natural gas engine market for heavy-duty trucks, as demand for natural gas increases along with the support of alternative fuels for a variety of uses – including transportation - by the Chinese government. It’s encouraging to see China take an interest in natural gas as a cleaner alternative to coal, which has traditionally been the country’s main fuel source.
China Is In The Market For A New Energy Resource
With coal supplying roughly two thirds of the country’s energy needs, China’s emissions of greenhouse gases are some of the world’s highest. As a result, the Chinese Central Government has created an international campaign to develop and explore shale gas as part of China’s energy strategy, with a particular focus on natural gas.
As China’s energy consumption increases (it’s now second only to the United States), the shift to cleaner fuel sources is notable. Preliminary findings (conducted by the United States) show that shale gas resources in China might be 100 trillion cubic meters, the same level as the United States.  Although China doesn’t yet produce shale gas commercially, the Ministry of Land and Resources announced its shale gas production goal as equal to 8-12 percent of the total annual domestic natural gas output. By incorporating shale gas into the National Energy Strategies Toward 2030 the country aims to triple its use of natural gas by 2020 to 10 percent of energy consumption in an effort to curb pollution. The 2011 International Energy Agency special report, Are We Entering a Golden Age of Gas? predicted that Chinese gas demand would increase by as much as 50 percent by 2035 to match that of the 27-nation European Union. Natural gas will allow China to use its large domestic natural gas reserves, reduce the country’s dependency on foreign oil and coal, and improve air quality while reducing greenhouse gas emissions. The economic benefits of using a domestic resource, coupled with the lower price of gas versus oil offer added incentive for the Chinese to focus on this alternative energy.

China’s Need for Natural Gas Transportation Solutions
Given China’s clear goal of reducing its greenhouse gas emissions, improving air quality, and shifting to alternative fuels that are abundant domestically, the Chinese transportation sector is experiencing a significant shift. Currently there is an estimated 600,000 natural gas vehicles in China and over 2,100 refuelling stations to support those vehicles. Weichai Westport has seen significant growth in the China markets and Weichai Power’s most recent Annual Report showed that Weichai holds approximately 40 percent of the heavy duty truck engine market for trucks over 14 tonnes. According to Weichai's August 2011 Interim Report, they sold over 200,000 heavy-duty engines for the six months ended June 30, 2011. In 2010, heavy duty truck sales in China exceeded one million units, according to the Weichai Power August 2011 Interim Report.
Note the marked increase of engine sales of Weichai Westport engines

HPDI Engine Technology Enters the Chinese Market
This marks the first use in China of natural gas engine technology that isn’t spark-ignited, and a significant advance in heavy-duty and long-haul trucking. What makes HPDI technology stand out is that it allows a diesel engine to run, primarily on natural gas without having to change the main parts of the engine. HDPI works by using a small amount of diesel to ignite the natural gas, a process that would normally require a spark, thus allowing the engine to stay largely unaltered. Since the pistons and engine body remain unchanged, the engine is able to deliver torque at low speeds and deliver increased efficiency at the higher end.

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