One Year Later - What's Changed Since the Pivotal NPC Study on America's Transportation Future

Last August, the National Petroleum Council (NPC) released Advancing Technology for America’s Transportation Future, the result of a two-year study compiled by more than 300 participants. The study began when then-U.S. Secretary of Energy Stephen Chu sought advice from the NPC on “accelerating U.S. alternative fuel-vehicle prospects through 2050 for passenger and freight transport.”

Westport’s CEO David Demers is a member of the NPC; Karen Hamberg, Vice President of Sustainable Energy futures and Senior Advisor Mike Gallagher all contributed to the report, particularly to Chapter 14: Natural Gas.

The report has five recommendations including advising the government to promote sustained resources to twelve Priority Technology areas, how to better evaluate greenhouse gas (GHG) emissions, and encouraging streamlining of permitting and regulatory processes to promote faster infrastructure growth.

In the year since its release, the report has invigorated public discussion around natural gas vehicles (NGVs).

“The NPC study itself has become the Bible for people interested in the future role of natural gas in the transportation sector,” said Mike Gallagher, who has been invited to present at over 20 different conferences and forums over the past year, from Mexico City to Israel.

“It’s been fascinating to see this broader interest from people who we didn’t consider as stakeholders – people interested in energy security and energy in general,” he said. “Often times after I speak, I’m literally swarmed by dozens of people who want to know more.”

He says a large part of the broader awareness, buy-in and realization of the potential for natural gas vehicles in the heavy duty truck segment is a result of the ISX12 G engine from Cummins Westport.

“Keep in mind, it’s only been five years since we put the first heavy duty natural-gas powered truck on the road,” he said.

The refuse sector is a big supporter of natural gas vehicles, comprising up to 50 per cent of the market share in North America. Other vehicles, such as school buses and cement trucks, are also starting to use natural gas as their primary fuel.

Globally, China has outpaced any other country. A recent report by Sanford C. Bernstein & Co estimates that the number of vehicles fuelled by liquefied natural gas (LNG) in China will rise tenfold to 800,000 by 2020. Not surprisingly, China’s Policy 2012 (the 12th five year plan) outlines specific measures to encourage the development of natural gas and specifically LNG vehicles. It includes air quality considerations, incentive schemes, and priority deployment areas.

A North American “pump to wheels” study on the impacts of methane leakage from the well to end-uses along the fuel chain was initiated by the Environmental Defense Fund (EDF) and is being conducted by the Center for Alternative Fuels, Engines and Emissions (CAFEE) at West Virginia University.

The study is co-sponsored by fuel producers, providers, manufacturers and fleet operators ­– including Westport – and will measure methane leakage along the natural gas value chain for commercial and heavy duty on-road transportation (see our March post about the study).

“This is a newly emerging industry,” said Karen Hamberg. “The study should focus on and identify those areas where improvements to both technology and operating practices can be made. GHG emission reductions are needed in the transport sector but we must also look at other benefits like enhanced economic competitiveness and energy diversification.”

President Obama’s Blueprint for a Clean and Secure Energy Future, released in March, includes commitments to partner with the private sector to adopt natural gas and other alternative fuels in the trucking fleet.

The sustainability impacts of natural gas as a vehicle fuel are critical, Hamberg says, but the viability of the industry depends on other factors including: original equipment manufacturer vehicle offerings, increased refuelling infrastructure and policies to encourage adoption.

“We are witnessing a shift in each of these areas,” she said.

Challenges to wider adoption of RNG for transportation

In the fifth and final post in our series on renewable natural gas (RNG), we look at some of the challenges to the widespread use of RNG for transportation.

There are promising developments in Europe and the United States that show tremendous potential for RNG in transportation. Several challenges exist, though, to commercial-scale use of RNG fuelled vehicles – including reliable feedstock availability, cost/economics of RNG production, the regulatory and policy structure, and infrastructure/fuel specification uncertainties. The first three challenges are highly interrelated, and each affects the others.

The availability of biomass feedstock is critical to expanding the use of RNG. In Europe, key factors for future supply are availability of land for RNG production[1], regulatory structures that either stimulate or inhibit growth in supply (e.g. regulations for waste water treatment and landfills), sustainability requirements (e.g. limits on land use conversions), and shifting supply-demand dynamics.[2] Competing demands for RNG, such as meeting renewable electricity generation targets, can also affect the availability and price of RNG for transportation.

The economics of RNG are driven by a number of factors, not least because RNG is a relatively new fuel type for transportation with a small market share. On the supply side, production and delivery costs to the pipeline can make it more costly than compressed natural gas (CNG), although still cheaper than gasoline and diesel, according to the analysis (below) of the California market.[3]

Source: National Petroleum Council, 2012

Without incentives, like tax treatment (e.g. Germany’s RNG processing bonus or Sweden’s energy tax deduction for CO₂ neutral vehicles and RNG producers)[4], and/or some form of greenhouse gas (GHG) emissions pricing that recognizes RNG’s environmental benefits, it’s challenging to develop RNG compared to lower-cost non-renewable fuels. 

The third area, regulation and policy, also has a large impact on both availability of the feedstock and the cost of producing and selling RNG. But most policies in the U.S. on renewable and low-carbon transport fuels favour liquid biofuels.  And the renewable portfolio standards (RPS) in roughly 30 U.S. states (along with other incentives for renewable power) tend to direct RNG to electricity generation instead of transportation.  Europe has a clear path for developing renewable sources over the long term via its Energy and Transportation Roadmaps, and countries such as Germany and Sweden have taken the lead in deployment. In the U.S., the gaseous fuels renewable fuel standards together with liquid biofuels (federally, only liquid biofuels are included in the Environmental Protection Agency’s “RFS2”[5]), can help develop RNG as a transportation fuel.  

Policies such as California’s GHG offset protocol for methane capture from livestock projects can be adopted in other states – either for voluntary or compliance purposes - to help meet the challenges of limited and costly RNG.[6] In Europe, policies such as the European Union’s (EU) Directives on renewable energy, recycling and landfills, together with National Renewable Action Plans help focus activities and resources toward meeting the EU target for 20% renewables by 2020.

The final challenges to the wider use of RNG for transportation are more technical and relate to quality and common standards:

• Can RNG be injected into natural gas pipelines? Barriers include lack of a universal definition of trace gases/impurities permitted (RNG composition is dependent on the makeup of the feedstock), and a lack of quality assurance that RNG for transportation use is sufficiently upgraded from biogas.
• Can RNG or a blend power my natural gas vehicle? Barriers include lack of a common gas specification standard for RNG for transportation (i.e. a vehicle engine standard that clearly identifies allowed or disallowed trace compounds that can affect engine performance and life).[7]
• The last challenge is practical: how to get the upgraded RNG to the pipeline network, when the best sources for transportation (landfills and livestock) may be far from access points? Here, a combination of incentives and connection standards or obligations can encourage distribution networks and RNG producers to establish cost-effective connections. 

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[1] Non-energy crop sources including agricultural waste, landfill gas, and new approaches such as “power to gas” from wind etc. can have considerably smaller footprints.
[2] Floris van Foreest, “Perspectives for Biogas in Europe,” The Oxford Institute for Energy Studies, NG 70, December 2012.
[3] National Petroleum Council, Renewable Natural Gas for Transportation: An Overview of the Feedstock Capacity, Economics, and GHG Reduction Benefits of RNG as a Low-Carbon Fuel. Topic Paper #22, NPC Future Transportation Fuels Study, August 1, 2012, p. 13. Accessible at http://www.npc.org/FTF_Topic_papers/22-RNG.pdf.
[4] van Foreest, “Perspectives for Biogas in Europe”, Figure 12.
[5] Environmental Protection Agency, http://www.epa.gov/otaq/fuels/renewablefuels/regulations.htm.
[6] GHG-emitting firms who need to reduce their footprint are thereby encouraged to invest in these offset projects.
[7] An example of a standard that can assist customers and fuel providers alike to understand engine requirements for RNG may be found on the Cummins Westport website – technical bulletin at bottom of page. http://www.cumminswestport.com/biomethane.

Westport Participates in National Petroleum Council Study

In June 2010, Westport was asked by The National Petroleum Council (NPC) to participate in a national transportation energy study.  Dr. Steven Chu, the U.S. Secretary of Energy had asked the NPC to identify what mix of alternative fuels and vehicles could be possible in 2050 to shift the transportation sector towards better reliability, security, independence and lower carbon, along with a 50 percent greenhouse gas emission reduction.  

The NPC is a U.S. federal advisory committee established in 1946 to advise the Secretary of Energy on oil and gas related matters. Since its formation in 1946, the Council has prepared over 200 reports, which deal with virtually every aspect of oil and gas operations.

More than 400 people representing all areas of industry and government have participated in the study to date. Mike Gallagher (Westport Senior Advisor and former President of Westport) recruited and chaired a 60-person natural gas team with representatives from OEMs, major oil and gas companies, fuel supply/demand, academia and non-governmental organizations, and led the draft of a comprehensive chapter addressing the natural gas fuel supply chain and engines/vehicles. Mike sees Westport participation in the study as an excellent opportunity to influence the thinking and policy of the US Administration on transportation alternative fuels and natural gas. An added benefit: “Westport is also gaining visibility with a large array of major oil companies, and other key stakeholders in the US energy system,” he says.

In addition to her role at Westport, Karen Hamberg (Westport Vice President of Sustainable Energy Futures) was seconded to the study as a core member of four teams: i) natural gas, ii) GHG emission reductions, iii) heavy duty economics, and iv) report integration. As the study moves toward completion, she is heavily involved in the report editing team to finalize the remaining chapters.

“The study is greatly raising understanding and credibility of the natural gas transportation industry among a wide array of thought leaders in government, industry, and academia,” Karen says. “There is currently a gap in the literature specific to natural gas for transportation.  The quantitative and analytical phase of the study evaluates how the different fuels and vehicle technology streams would compete and integrate under a range of economic scenarios.  Significant market shares for LD and HD vehicles will further support the economic competitiveness and environmental performance of natural gas vehicles.”

The study is grounded in technology and economics, and has been separated into two phases. In the first phase, each of the five fuel teams (natural gas, electricity, biofuels, hydrogen and liquid hydrocarbons) determined what contribution that particular fuel or vehicle technology could make to the greenhouse gas emissions targets and what economic, technical or regulatory barriers need to be overcome in order to reach those targets.  Phase two was a lengthy analytical process to evaluate how different fuels and technologies would compete and integrate under differing economic scenarios. This resulted in detailed projections of the adoption of new technologies in the transport sector.