Document

The Compelling Case for Natural Gas Vehicles The Compelling Case for Natural Gas Vehicles in Public and Private Fleet Applicationsin Public and Private Fleet Applications

Advanced Vehicular Fleet FuelsAdvanced Vehicular Fleet Fuels August 6, 2008August 6, 2008

Bill McGlinchey

Signs of the TimesSigns of the Times

Market Drivers for NGVsMarket Drivers for NGVs• AQ Goals, NAAQS and EPA Vehicle Emissions Requirements

– Clean Air Act and Amendments drive local/regional governments to reduce criteria emissions (NOx, PM, etc)

– EPA and CARB vehicle/engine emissions requirements and their impact on OEMs’ product offerings, vehicle performance and fuel economy

1998 Stds1998 Stds

2002/2004 Stds2002/2004 Stds

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0.02

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0.10

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0.0 1.0 2.0 3.0 4.0 5.0NOx (g/bhp-hr)

PM

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2010 Std (.20 g/hp-hr NOx)

2007 “Compromise” Std

1.2 g/hp-hr NOX +NMHC

•Fuel economy and performance trade-offs for diesel to achieve 2004 and 2007 emissions benchmarks

•Complex exhaust after-treatment technologies are expensive and maintenance intensive

•2010 NOx target will require SCR with urea for most diesels…$$$!

Market Drivers for NGVsMarket Drivers for NGVs

• The Environmental, Energy Security and Economic– Issue is quickly gaining traction internationally and here

– California Adopts Low-Carbon Fuel Standard

– Additional states are likely to follow as they have done with vehicle emissions standards (11 states have adopted CARB, 13-15 considering adoption)

• Natural gas vehicles reduce greenhouse gases between 20-29%

– For LDVs, about 20-23%; for HDVs, 26-29%

– Depends on comparative vehicles and duty cycles

Market Drivers for NGVsMarket Drivers for NGVs

• Global Energy Demand and the Impact at the Fuel Pump– US = 5% of pop., 25% of oil use, 55+% of oil is imported, 66+% for transp.

– Global demand growth is outpacing new discoveries

– Existing refining capacity is at or near peak and new capacity is lengthy process

– Cost ratio of natural gas MCF to BBL oil was 6-1, now 13-1, gap is growing!!

• Gasoline Gallon Equivalent (GGE) of CNG = $1.95-2.35 + fed/state taxes– Basis: $10.75MCF @ city gate, $.10 LDC transportation fee, $.12kWh/gge

compression, $.25/gge maintenance, $.45/gge capital equipment amortization LESS $.50/gge FEDERAL EXCISE TAX CREDIT (even to excise tax exempts!)

• NGVs are proven and reliable – About 7 million NGVs in use worldwide – About 100,000 operating on US roads– Fleets are best application:

• 11,000+ transit buses (1 in 5 on order), 2500 refuse trucks, 3000 school buses, 10-12,000 MDVs in shuttle and wide variety of work truck applications, est. 20,000 fleet LDVs

• NGVs are lower in emissions– HC, CO, NOx, PM all documented.

• NGV life-cycle costs are lower– Fuel costs are far lower!– Maintenance costs are =/< than gasoline or diesel vehicles– Life-cycle cost advantage improves with new federal tax credits

Benefits of NGVsBenefits of NGVs

NGVs Are a “Good Fit” for Many Fleet ApplicationsNGVs Are a “Good Fit” for Many Fleet Applications • Local/State Government

– All Depts.

• Airports– Terminal Buses, Hotel/Parking Shuttles,

Taxis, Door-to-Door

• Refuse– Collection/Transfer

• Transit– Buses, Maintenance, Supervisors

• School Districts– Buses, District personnel, Maint.

• “Short-Haul” Delivery– Food & Bev., Port-Rail, Linen Svc,

• Utilities– Gas/Electric/Water, Communications

Natural Gas Powered Engines and VehiclesNatural Gas Powered Engines and Vehicles

• American Honda –Civic GX

• BAF Technologies (Ford)– 4.6L (Crown Vic/Gr. Marquis/Town Car)

– 5.4L (E350 passenger and cargo vans; F150/250/350 certificates expected soon)

– 6.8L (E-450 cutaway)

• Baytech Corporation (GM)– 6.0L L/M/HD (Pick-ups, vans, cutaways,

W3500 CF, Isuzu NPR, NPR HD, Workhorse W42)

– 8.1L (HD pick-ups, C4500/-8500 Topkick; W4500, Workhorse W62

• FuelTek (Ford)– 5.4L F250/350 bi-fuel

• IMPCO (GM)• 6.0L Bi-fuel pick-ups, vans)

• Cummins Westport– 5.9L “B Gas Plus” – 195-230hp

(Shuttles, sweepers, work trucks)

– 8.9L “ISL-G” – 250-320hp (Refuse, bus and work trucks)

• Emission Solutions Inc.– 7.6L Phoenix NG – 175-265hp

(re-power for Int’l DT466: buses and trucks)

– 9.0L 300-330Hp engine certs are in process, due in 2008

• Westport Innovations Inc– 15L “ISX-Gas” – 400/450hp

CNG Station Development andCNG Station Development andOwnership-Operations OptionsOwnership-Operations Options

• Station Location Options:– Offsite – use existing public access station (either

full public access or limited public access); development usually driven by anchor fleet

– Onsite - private access only– Onsite - with public access “outside the fence”

• Ownership & Operations Options:– Fleet owned & operated station– Fleet owned/leased station but contracted out

operations for a fee (usually on a GGE basis)– Outsource station O&O entirely via independent

fuel provider and contract gas price

CNG Station Design ConsiderationsCNG Station Design Considerations

• Station Type– Time-Fill, Fast-Fill, Combo Fill

• Station Size and Design Considerations– Number of vehicles per day– Fueling pattern of vehicles– Maximum daily flow– Maximum hourly flow– Available back-up fueling, redundancy?– Metering/Data/Payment needs– Amount of space available– Funding available

NGV Tax Incentives and Grants for NGV Tax Incentives and Grants for Vehicles, Stations and FuelVehicles, Stations and Fuel

Federal Tax Credits andFederal Tax Credits andHow to Take Advantage of ThemHow to Take Advantage of Them

• Three-Legged Stool–Fuel Station Tax Credits (little impact)–Vehicle Tax Credits (good impact)–Motor Fuels Excise Tax Credits (most impact)

Fuel Station Tax CreditFuel Station Tax CreditIRS Form 8911IRS Form 8911

• Equal to 30% of cost of alt refueling equipment placed in service that year, up to $30,000

• Credit may be taken by seller if buyer is tax exempt entity (tax exempts should leverage this in negotiations)

• Credit is effective on equipment placed in service after December 31, 2005 and expires on December 31, 2009 (legislation extending)

• Credits range from $2,500 to $32,000 depending on GVWR

– $2,500-$4,000 for vehicles under 8,500 lbs. – $5,000-$8,000 for vehicles between 8,500-14,000 lbs. – $12,500-$20,000 for vehicles between 14,000-26,000 lbs. – $20,000-$32,000 for vehicles over 26,000 lbs.

• Credit is effective for vehicles placed in service after December 31, 2005 and currently set to expire on December 31, 2010. (Note: Extensions of this credit are in various bills currently before Congress)

• “Conversions” qualify, if retrofit/re-power was done after 12/31/05

VVehicle Purchase Tax Incentiveehicle Purchase Tax Incentive

Motor Fuels Excise Tax CreditMotor Fuels Excise Tax Credit

• The Volumetric Excise Tax Credit for Alternative Fuels (VEETC) – JOBS Act of 2004 created VEETC for ethanol and biodiesel

– SAFETEA-LU (“Transportation”) Act of 2005 made CNG, LNG, LPG, and hydrogen eligible when those fuels are used in on-road vehicles (and some off-road vehicles, such as forklifts)

• A 50 cent motor fuels excise tax credit is paid to the seller:– Per GGE of CNG or per liquid gallon of LNG

• The credit is applied/paid to eligible recipients without regard to the amount of excise tax paid, if any (including tax exempts)

(continued)

Natural Gas Vehicle IncentivesNatural Gas Vehicle Incentives

Federal Tax Incentives

Federal Grants:• DOT Congestion Mitigation & Air Quality (CMAQ) grant• DOE State Energy Program (Clean Cities) grants• EPA

– SEP/(“penalty fund”) project grants

– Diesel Emission Reduction Program grants – Although referred to as “Nat’l Clean Diesel Campaign,” NGV projects qualify

– State Grants: Work with your Clean Cities Representatives

Passenger van for LimoPassenger van for Limo

• GVWR: 9300-9600 lbs.

– Ford E-350 passenger van

– Chevy/GMC 3500 passenger van

• MPG: 10/12 City/Hwy, 50K miles/year• Fuel Use: 9-12 gge/day; 4100-4500gge/yr • CNG Premium: $15,500

(before fed tax credit)

• Fed Tax Credit: $8000 (>8500#, <14000#)• Simple Payback: 1.1 -1.3 years

(based on $1.55/gge savings @ retail station: $2.45/gge ($4.00 gas)

• Life-cycle cost advantage: $18-23K(depending on use and mpd, cost differential)

Step VanStep Van• Sample Applications

– Pkg. Svc, Bakery/Snack Food, Linen

• GVW-14,000-19,000 lbs.– Workhorse (GM 8.1L), FCC MT45/55 (CWI 5.9L B Gas)

• MPG: 4.0 – 6.5, 75-90mpd x6 days/wk, 26K/year• Fuel Use: 13-19gge/day; 4050-5800gge/yr • CNG Premium: $28,000 / $50,000 (before fed tax credit)

• Fed Tax Credit: $20,000 / $32,000• Simple Payback: 1.1 - 1.5 years

(based on 1.55 savings/gge @ retail station : $2.45/gge ($4.00 gas)(based on 2.10 savings/dge @ retail station: $2.75/dge ($4.85 diesel)

• Life-cycle cost savings: $40-50,000+ !!!!

Utility Crew Cab/Work TruckUtility Crew Cab/Work TruckBeverage Delivery TruckBeverage Delivery Truck

• GVW - 26,000+++ lbs.– Int’l 4000 Series, Sterling L, GMC 7500/8500

• MPG: 3.5 – 4.75 (depending on application)

• Fuel Use: 14-25 dge/day; 5000-6800 dge/yr • CNG Premium: $53,000 (before fed tax credit)

• Fed Tax Credit: $32,000• Simple Payback: 1.5 - 2.0 years

(based on $2.10 /dge savings for retail: $2.75/dge ; 4.85 diesel)

• Simple Payback: 1.2 – 1.75 years(based on 2.50/dge savings for O&O station: $2.35/dge; $4.85 diesel)

• Life-cycle cost savings: $60,000-70,000+!!!

Refuse TruckRefuse Truck• GVW - 26,000+ lbs.

– Sterling L Series, Crane Carrier LET, Autocar Xpeditor, Peterbilt LCF 320 , ALF – Condor (all with CWI ISL-G engine)

• MPG: 2.5 – 3.0 (lots of idle and PTO time)• Fuel Use: 35-40gge/day; 8500-10,000dge/yr • CNG Premium: $55,000 (before fed tax credit)

• Fed Tax Credit: $32,000• Simple Payback: 1.25 years

(based on 2.10 savings /dge @ retail: $2.75 /dge (4.85 diesel)

• Life-cycle cost savings: $85,000 - $95,000• (based on 8-year life)

Still only a 3.2 year payback if no tax credit available!!

SummarySummary

• Environmental, energy security and economic market drivers are favorable to fleets’ use of NGVs

• Many light-, medium- and heavy-duty NGVs are available• Variety of fueling options available• New federal tax credits further improve NGVs’ already

favorable life-cycle advantages• Resources are available to help you investigate your options

For more information please contact:

NGVAmerica

Stephe YborraDirector of Marketing & Communications

[email protected]@cleanvehicle.org

(301) 829-2520

Bill [email protected]

(740) 205-2107

Questions?Questions?

Thank you for your time and interest!Thank you for your time and interest!