U.S. and Canadian Natural Gas Vehicle Market …...Industries 416, New Flyer Xcelsior, Orion VII...

Heavy-Duty VehicleOwnershipand Production

Final Report

U.S. and Canadian Natural Gas Vehicle Market Analysis:

I

Legal Disclaimer

This report was prepared by TIAX for America’s Natural Gas Alliance on terms specifically limiting TIAX’s liability. Our conclusions are the result of the exercise of our best professional judgment based in part upon materials and information provided to us by our subcontractors and others.

TIAX accepts no duty of care or liability of any kind whatsoever to any third party, and no responsibility for damages or loss, if any, suffered by any third party, as a result of decisions made, or not made, or actions taken, or not taken, based on this document.

This report may be reproduced only in its entirety and only with the prior written consent of TIAX.

Copyrighted items are the property of the respective copyright owners.

II

Table of Contents

1 Introduction

3 Overview of Key Heavy-Duty NGV Applications and Vehicle Types3.1 Heavy-Duty Buses3.2 Vocational and Refuse Trucks3.3 Local-, Regional-, and Line-Haul Trucks3.4 Heavy-Duty Off-Road Vehicles3.5 Marine and Ferry Boat Applications

2 Background on North American Heavy-Duty NGV Production and Use2.1 Diesel Baseline for OEMs and End Users2.2 Urban Air Pollution as the Historical Driver for NGV Deployments2.3 Fuel Cost as a Driver for NGV Deployments

AbbreviationsLower Heating Value Energy Conversion FactorsPrefaceExecutive Summary

Chapter 1

Chapter 3

Chapter 4

Chapter 2

4 Supply Side: Manufacturing and Production of Heavy-Duty NGVs4.1 Current Natural Gas Engine Offerings4.2 Onboard Fuel Storage for Heavy-Duty NGVs4.2.1 CNG Fuel Tank Offerings4.2.2 LNG Fuel Tank Offerings4.2.3 Size and Weight of Natural Gas Fuel Storage Systems4.2.4 Common Onboard CNG and LNG Fuel Systems for HDVs4.2.5 Manufacturer Targets for Heavy-Duty NGV Range4.3 Industry Business Drivers: Profitability and Sales Volumes4.3.1 Heavy-Duty NGVs OEMs4.3.2 Heavy-Duty Engine Manufacturers4.3.3 Heavy-Duty Vehicle Installers/Upfitters4.3.4 CNG and LNG Tank Manufacturers4.4 Other Drivers: Regulatory Compliance and Corporate Responsibility4.5 Manufacturers’ Views on Key Challenges and Barriers4.5.1 Incremental Costs of Heavy-Duty NGVs

and Components4.5.2 Customer Payback Period4.5.3 Refueling Infrastructure4.6 Technology Limitations and Manufacturing Issues4.6.1 Durability/Reliability/Warranty4.6.2 Service, Maintenance and End-of-Life Issues4.7 Manufacturers Views on Future Market Opportunities

III

5 Demand Side: Heavy-Duty NGV Ownership and End Use5.1 Tandem Drivers for End Users: Regulations and Incentive Programs5.2 Other Drivers: Corporate Policies and Green Image5.3 Reduced Lifecycle Costs of HDV Ownership5.4 Payback Period as a Determinant for Fleet Purchase Decisions5.5 Innovative Financial Programs for End Users5.6 End User Operational Considerations5.7 End User Fueling Logistics5.8 Vehicle Procurement Cycles and Near-Term Procurement Choices5.9 Examples of Successful End User Deployments in North America5.9.1 LNG Drayage Trucks at the Ports of Los Angeles and Long Beach5.9.2 CNG and LNG Refuse Trucks5.9.3 CNG and LNG Transit Buses5.9.4 CNG School Buses5.9.5 Canadian Corridors for Heavy-Duty NGVs5.10 Challenges for Expanded Heavy-Duty NGV Deployments5.10.1 Need for Expanded Offerings of Heavy-Duty Natural Gas Engines5.10.2 Competition with Hybrid and Battery- Electric Technologies5.11 Opportunities for Expanded Heavy-Duty NGV Deployments

6 Actions and Opportunities Appendix: Industry and End User Questionnaires

Chapter 5

Chapter 6

Table of Contents

IV

AFV

AGA

ANGA

ATA

BWI

CNG

CARB

CTP

DGE

DOE

DOT

EIA

EPA

GHG

HDV

LNG

NAAQS

NGV

NO

O&M

OEM

PM

PSI

PTO

ROI

SCAQMD

SVM

Diesel

Gasoline

LNG

Natural gas

Alternative Fuel Vehicle

American Gas Association

America’s Natural Gas Alliance

American Trucking Association

BTIC Westport, Inc.

Compressed natural gas

California Air Resources Board

Clean Trucks Program

Diesel gallon equivalent (=131.7 cubic feet of natural gas)

Department of Energy

Department of Transportation

Energy Information Administration

Environmental Protection Agency

Greenhouse gas

Heavy-duty vehicle

Liquefied natural gas (1 gallon LNG = 0.58 DGE)

National Ambient Air Quality Standards

Natural gas vehicle

Oxides of nitrogen

Operation and maintenance

Original equipment manufacturer

Particulate matter

Pounds per square inch

Power take-off

Return on investment

South Coast Air Quality Management District

Small volume manufacturer

129,488 BTU/gal

113,602 BTU/gal

74,720 BTU/gal

983 BTU/cubic foot (=131.4 BTU/gal of volume)

Abbreviations

Lower Heating Value Energy Content Conversion Factors

Source: Argonne National Laboratory, “Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation,” 1.8c

V

The TIAX team has conducted a thorough and independent assessment of the NGV market, with the primary objective of identifying the most productive and effective means to increase the use of natural gas vehicles (NGVs) in the U.S. and Canada, the TIAX team has conducted a thorough and independent assessment of the NGV market. To highlight the major opportunities to spur the market’s development and expansion, this assessment examines the key technical, economic, regulatory, social, and political drivers and challenges that shape this market. TIAX has partnered with The CARLAB, Clean Fuels Consulting, the Clean Vehicle Education Foundation, Jack Faucett Associates, the Natural Gas Vehicle Institute, and St. Croix Research to provide perspective and insights into the development of the future NGV market.

• Segmentation of the vehicle market

• Identification of market decision drivers

• Assessment of market development actions

• Analysis of competing technologies

• Analysis of market scenarios

• Integration of overall market development opportunities

The market perspectives for which decision drivers and opportunities have been identified and assessed are: light- and medium-duty vehicle ownership and production; heavy-duty vehicle ownership and production; compressed natural gas infrastructure; liquefied natural gas infrastructure; and government. Drawing on the respective expertise of each team member, TIAX presents an integrated assessment of the U.S. and Canadian NGV market in a collection of eight reports.

Each report is capable of standing alone while integrating the data, ideas, and themes of the other seven reports. The collection of reports in this TIAX analysis of the NGV market is supported by America’s Natural Gas Alliance and is intended to be transparent and accessible to a broad audience.

A Comprehensive and Independent NGV Assessment

TIAX’s overall approach relies on six key stages

Preface

VI

Executive Summary

The Heavy-Duty NGV Opportunity

Heavy-duty natural gas vehicle (NGV) deployments are a success story for energy diversification of the North America transportation sector (Figure ES-1). Thousands of natural gas fueled HDVs have been put into commercial fleet service, millions of gallons of diesel fuel have been displaced, and major improvements in urban air quality have been realized. The greatest success has been with high fuel use, return-to-base applications, such as transit buses, refuse trucks, vocational trucks, local and regional delivery trucks, and to a lesser extent, school buses. It is difficult to overstate the important role played by air quality based regulations and incentive programs in these heavy-duty NGV deployments.

Major opportunity exists to expand such deployments, including into heavy-duty off-road vehicle sectors. A major advantage of natural gas as a heavy-duty transportation fuel is its relatively low price compared to diesel fuel on an energy-equivalent basis. Moreover, a large “fuel cost differential” between natural gas and diesel has been forecast by the U.S. government over the next two decades. This means heavy-duty fleets should continue to have strong motivation to switch tonatural gas. While regulations and incentive programs have been strong drivers for heavy-duty NGV deployments, these dynamics are evolving. Regulations will need to be restructured towards realization of societal benefits that have not yet been

significantly monetized, such as reduced greenhouse gas emissions and lessoned reliance on conventional fuels from geopolitically unstable regions of the world. Ultimately, however, the sustainability of heavy-duty NGVs depends on their ability to compete “head-to-head” with diesel HDVs and provide low lifecycle costs with a relatively short payback period. This appears achievable given the forecasted fuel cost differential. Additional drivers for fleets to deploy heavy-duty NGVs − in the form of regulations − will further enhance this potential.

To realize the full potential for heavy-duty NGVs, certain challenges must be addressed. Based on input from the North American heavy-duty NGV industry and a limited number of end users across five basic HDV sectors, four general areas of challenge and/or opportunity are identified in this report: 1) vehicle costs, 2) infrastructure costs/access, 3) vehicle performance/ operations, and 4) vehicle/engine availability. However, it is the first two that present the most formidable challenges for expanded commercialization and deployment of heavy-duty NGVs.

Specifically, industry representatives and end users are concerned about the much higher capital costs of heavy-duty NGVs compared to similar diesel HDVs. Onboard natural gas fuel systems contribute 50 to 75 percent of these higher costs.1 To some extent, higher manufacturing volumes for fuel tanks can reduce such price premiums. However, much of the cost premium is inherent to the complex nature and components of onboard natural gas fuel tanks relative to diesel fuel tanks. In addition, responses from industry representatives and many end users indicate high levels of concern that heavy-duty fleets face high costs to build onsite fueling stations, or don’t haveadequate access to offsite fueling stations.

Clearly, strong potential exists to deploy much larger numbers of heavy-duty NGVs in North America; they can provide end users with low life-cycle costs, while also delivering compelling societal benefits. To meet this potential, innovative ways are needed to 1) further reduce deployment costs for end users, accelerating their payback period, and 2) help ensure that end usershave affordable, convenient access to natural gas fuel.

VII

1 According to questionnaire responses from CNG and LNG fuel storage systems; see Section 4.5.1 for details.

Figure ES-1

Heavy-duty NGVs are commercially offered for a wide array of vehicle sectors, although some sectors (e.g., mining equipment) essentially remain 100 percent fueled by diesel. This report highlights ways in which heavy-duty NGVs are manufactured and used in North America, and applications that have the best potential for expansion.

VIII

Heavy-DutyApplication

Example Natural Gas

Vehicles

CommonRefuelingLocations

Typical DailyRange

Average Age at First

Replacement

Package Delivery Car

Freightliner customchassis (recently

discontinued)Fleet Yards 65 Miles

20 Years/Drive to Scrap

Telecom/UtilityTruck

International 4300 with Emissions Solutions DT466

Conversion, Freightliner M2-112 with OEM Equipped

Cummins ISL-G

Fleet Yards 50 Miles Varies

Flat/Stake Beds,Beverage, Vans,

and Other

International 4300,Freightliner M2-112, FordE-450, Chevrolet Express

Fleet Yards,Public Fueling

Stations55 Miles Varies

School BusThomas Built Type D,

Blue Bird Type DFleet Yards 30 Miles Varies

Transit BusNorth American Bus

Industries 416, New FlyerXcelsior, Orion VII

Fleet Yards 130 Miles12 Years/

Drive to Scrap

RefuseAutocar Xpeditor, Mack TerraPro, Heil RapidRail,

Peterbilt 320Fleet Yards 85 Miles

10 Years/Drive to Scrap

Local/RegionalPickup and

Delivery

Freightliner M2-112,Peterbilt 384, Kenworth

T800


Stations(Truck Stops)

200 Miles

6 years for NewTrucks, Drive to Scrap for Used

Trucks

Long HaulPeterbilt 386, Kenworth

T800 (limited service)


Stations (Truck Stops)

300+ Miles 4 Years

Ground SupportEquipment

Autocar Xspotter Terminal Tractor, Toyota

8-Series forkliftFleet Yards

8 Hours-12Hours of

OperationDrive to Scrap

Locomotives:Switchers or

Specialty

Custom Built viaAftermarket/Upfitters

Rail Yards8+ Hours ofOperation

TBD (Operate to Scrap for

Diesel Switcher)

Construction/Mining

EquipmentNone (Currently) Job/Mine Sites Varies Drive to Scrap

1 Introduction

This report provides a broad “snapshot” of the manufacturing and end use of heavy-duty natural gas vehicles (NGVs) in the North American transportation sector. Its major sources of information are the direct inputs of knowledgeable representatives from the heavy-duty NGV industry and fleets that purchase and deploy heavy-duty NGVs. To obtain such inputs, TIAX directly queried high-level representatives from key manufacturers and end users of heavy-duty NGVs, using a multi-step process. It is important to note that this methodology inherently relies on inputs from those individuals who were willing and able to respond. Thus, there are limitations regarding the degree to which summarized results in this study should be considered “representative” of the companies involved with manufacturing heavy-duty NGVs or the fleets that deploy them. In particular, there are uncounted heavy-duty fleets across North America; obtaining feedback from a high percentage of these fleets was not feasible for this study.

To determine the list of individuals to contact, TIAX first prepared lists of companies that manufacture and supply heavy-duty NGVs and/or their components. Specific types of companies included: 1) original equipment manufacturers (OEMs) and small volume

manufacturers (SVMs) of heavy-duty vehicles and engines; 2) manufacturers and suppliers of natural gas fuel tanks; 3) NGV aftermarket companies and fuel system installers/upfitters; and 4) other companies involved in the heavy-duty NGV business, such as dealers, finance institutions, and service providers.

Next, TIAX telephoned high-level representatives (e.g., managers, directors, and executives) at these supply-side organizations. Repeated attempts were made to contact the individuals (or their recommended surrogates), until 1) contact was successfully made, or 2) further calling did not seem to be productive. Preliminary discussions were held with all individuals who could be reached. The primary objective was to obtain inputs that could help design effective written questionnaires having strong potential to elicit high response rates from manufacturers and end users. A secondary objective was to expand the list of OEM and end user representatives, to help facilitate a wider andmore-fruitful distribution of questionnaires. TIAX staff also visited a large heavy-duty NGV installer / upfitter operation and a transit district to take photographs and better visualize key issues.

Using information provided by the OEM contacts and other available sources, TIAX prepared its “end user contact list” from prominent companies, organizations, and agencies in North America that operate heavy-duty vehicles (HDVs), with a focus on fleets with 25 or more NGVs. TIAX then prepared five different automated questionnaires geared toward these types of supply- or demand-side heavy-duty NGV entities. Questionnaires (Figure 1-1) were emailed to all organizations and individuals on the contact lists. The five questionnaires (provided in the Appendix) are entitled 1) Questionnaire for Heavy-Duty Vehicle/Engine OEMs, 2) Questionnaire for Heavy-Duty Engine OEMs, 3) Questionnaire for Heavy-Duty Vehicle/SVMs and Upfitters, 4) Questionnaire for OEMs of Onboard Natural Gas Storage Tanks, and 5) Questionnaire for Heavy-Duty Natural Gas Vehicle End Users. Questionnaires were emailed up to four times to each organization, in TIAX’s attempt to get a strong response. In most cases, follow-up telephone calls were also made.

Input received from manufacturers (supply side) and end users (demand side) of heavy-duty NGVs provides a broad “snapshot” for their current and potential use as alternatives to conventional gasoline and diesel vehicles in the North American transportation sector.

1

Figure 1-1

The primary information sources for this report were responses to questionnaires by key players in the heavy-duty NGV industry. Telephone interviews were also major sources of information.

2

Your name: Your Title: Date:Phone: Fax:Name of Your Comapny:

Primary target niche of customer(s) (e.g. public transit, refuse, package delivery, etc.): Please check this box if you would like your answers reported without specific references to you or your agency.

Note: The purpose of this automated questionaire is to obtain/confirm input from heavy-duty (H-D) vehicle original equipment manufacturers (OEMs) about their current and potential future product offerings involving Natural Gas Vehicles (NGVs). Your input will help the natural gas industry understand how to best assist HDV manufacturers in expanding NGV markets.

Type ofHDV

ConventionalDiesel orGasoline

CNG LNG PropaneHybridElectric

Approx. Total Number of

HDVs Models You Offer

Semi Tractors

TransitBuses

SchoolBuses

ShuttleBuses

UtilityTrucks

Misc. MD/HDVocational

Trucks

DumpTrucks

RefuseTrucks

Off-RoadHDVs

StreetSweepers

Other:

America’s Natural Gas Alliance (ANGA)Questionnaire for Heavy-Duty Vehicle/Engine OEMs

1. A. Please characterize your current Heavy-Duty Vehicle offerings by filling in the number of HDV models you sell by fuel/technology type, for all applications that apply.

1. B. If H-D Natural Gas Vehicles are included in the table above, what is the approximate volume of vehicles that your company currently manufactures (units per year)?

2 Background on North American Heavy-Duty NGV Production and Use

In defining the challenges faced by heavy-duty NGV technologies to achieve sustainable and widescale commercialization, it is important to understand their competition. Over the last fifty years, the vast majority of the world’s HDVs have been powered by one particular fuel and technology combination: diesel fuel burned in compression-ignition internal combustion engines. This relatively simple, inexpensive, and robust technology2 has long dominated the HDV sector because it provides essential attributes sought by HDV manufacturers and their main commercial customers (municipal and private fleets). Table 2.1-1 summarizes these attributes desired by HDV fleets and the enabling characteristics of diesel fuel and engines.

Simply stated, diesel-fueled internal combustion engines have long dominated the HDV sector because they enable fleets to effectively and reliably transport goods and people at relatively low direct costs. Diesel fuel’s high energy content (per mass and volume) is a

particularly strong attribute; it enables fast refueling times and long driving ranges for HDVs – both of which are highly valued by fleets. Historically, these many positive characteristics that define diesel-fueled HDVs have made it difficult for heavy-duty NGVs (or other types of alternative vehicles) to gain major market share and “displace” large percentages of diesel use.

Despite these strong attributes of diesel engine technology, alternative fuels and propulsion technologies have gradually gained market share in the HDV sector. For several reasons, HDVs are especially attractive candidates for large-scale use of natural gas or other alternative fuels. On a pervehicle basis, diesel HDVs burn large volumes of diesel fuel and historically emit disproportionately high levels of two harmful air pollutants: fine particulate matter (PM) and oxides of nitrogen (NOX). Large return-to-base municipal HDV fleets (e.g., transit and refuse operations) are particularly conducive to the use of alternative fuel technologies, as they offer favorable logistical, operational, policy, and economic characteristics.

Heavy-duty natural gas engines began to emerge as a technologically and commercially viable alternative to diesel engines in the late 1980s. In today’s North American HDV market, an array of commercial heavy-duty NGVs are offered by numerous OEMs. These various types of heavy-duty NGVs run on either compressed natural gas (CNG) or liquefied natural gas (LNG). Both types of fuel systems have distinct advantages and disadvantages and are used in specific HDV applications, with some overlap.

Conventional fuel displacement is an inherent attribute of NGVs because they replace a traditional fuel with natural gas. However, this attribute has not historically driven OEMs to make and sell heavy-duty NGVs, nor fleets to purchase them. By comparison, another inherent characteristic of heavy-duty engines fueled by natural gas – their relatively low emissions of PM and NOX – has provided a distinct advantage that has motivated OEMs to sell and fleets to purchase NGVs. The importance of this advantage is addressed in the next subsection.

Diesel-fueled engines have long been the dominant power plant of the HDV sector, for both on- and off-road applications. However, over the last two decades, natural gas engines have emerged as technologically and commercially proven alternatives to diesel engines that can address environmental issues while also providing lower lifecycle costs for end users.

2.1 Diesel Baseline for OEMs and End Users

3

2 Diesel engines are sometimes called “million-mile” engines, referring to their typical useful life (with rebuilds).

Table 2.1-1

Diesel fuel and engines are the incumbent power plant for HDVs and define the competition for heavy-duty NGVs, offering characteristics meeting the attributes desired by OEMs and end users.

4

Attributes ofHeavy-Duty Vehicles Desired by

OEMs and End Users

Enabling Characteristics ofDiesel Fuel and Engines

Sufficient Torque/Power to MoveLarge Vehicles and Heavy Loads3

• Fuel: enables engines to operate at high compression ratios• Engine: high power density (power per volume and mass)

High Fuel Economy/Good Driving Range• Fuel: high energy content per volume and mass• Fuel Tanks: low in weight per energy stored• Engine: high thermal efficiency

Fast, Convenient, Easy Refueling

• Fuel: liquid at ambient temperatures and pressures; high energy content per volume of fuel pumped• Fueling Stations: widely dispersed network; no special training or protective equipment required

Low Lifecycle Costs/Good Affordability

• Fuel: relatively cheap• Engine/Onboard Fuel System: low capital costs, low maintenance costs (good durability/reliability)• Fueling stations: low capital and operational costs; existing network of mechanics and technicians

Durability/Reliability• Engine: “million mile” capability; relatively low failure rate of components

Ability to Meet ExistingEnvironmental Standards

• Fuel: reformulation over time enabling aftertreatment systems to help meet criteria pollutant emissions standards• Engine and Emissions Controls: evolution over time help meet criteria pollutant emissions standards

Ability to Meet Existing SafetyRegulations, Codes, and Standards

• Engine and Fuel: long histories of experience by regulators and emergency response professionals• Fuel Transport/Storage: ambient pressure and temperature helps minimize requirements

3 It is important to note that most heavy-duty applications do not require engines with as much horsepower and torque as is often equipped in today’s heavy-duty vehicles. In general, “downsizing” of diesel engines may be an important approach to meet future environmental goals while still meeting vehicle performance requirements of HDV fleets.


The key factor in the successful commercialization of heavy-duty NGVs in North America has been the existence of governmental regulations and incentives, which in tandem have created strong end user demand. In the U.S., the primary driver of such governmental efforts has been concern about meeting health-based federal National Ambient Air Quality Standards (NAAQS) for six criteria pollutants: carbon monoxide, lead, sulfur dioxide, ozone, nitrogen dioxide, and PM. California,which has some of North America’s most unhealthful air quality, has been especially aggressive about accelerated deployment of low-emitting HDVs to meet NAAQS.

This pressing need to reduce vehicle emissions has created a compelling niche for commercialization of heavy-duty NGVs. Over the last two decades, a variety of HDV engines fueled by natural gas and other alternative fuels have been certified at NOX and PM emissions levels significantly below similar diesel-fueled engines. Because these NOX and PM emissions reductions have been considered “surplus,”4 some government agencies have been able to subsidize

deployment of qualifying heavy-duty Alternative Fuel Vehicles (AFVs) in their jurisdiction. This historical emissions advantage was the impetus for creation of California’s landmark Carl Moyer Program, which provides incentive funds for fleets to help pay for the incremental cost of qualifying low-emissions HDVs. Now in its eleventh year, it is difficult to overstate the role played by the Carl Moyer Program (and other similar programs that followed) in creating: 1) demand among large California HDV fleets to purchase alternative fuel HDVs, and 2) supply from manufacturers to meet that demand. By far the greatest number of alternative fuel HDVs that have been sold and deployed under Moyer Program funds have been fueled by natural gas.

Complementary to these programs, regulations have also been very significant drivers for NGV deployments in North America. For example, California’s adoption in 2000 of an Urban Transit Bus Fleet Rule helped to accelerate manufacturing and deployment of CNG and LNG transit buses over the last decade. A local California agency, the South Coast Air Quality Management District (SCAQMD), adopted six different “fleet rules”5 applicable to heavy-duty fleets within its four-county jurisdiction (see Figure 2.2-1). The Ports of Los Angeles and Long Beach have adopted tariffs that have accelerated introduction of new trucks into port drayage6 service, including NGV versions. In New York, state agencies and other affected entities that operate medium- and heavy-duty vehicles must implement strategies to reduce conventional fuel consumption and emissions by using alternative fuels and improving vehicle fleet fuel efficiency (see Executive Order 111). It is important to note that such regulations have been viable and effective in part because there have been financial incentives to help end users buy down the incremental costs of heavy-duty NGVs. Historically, regulations and incentives that have helped deploy heavy-duty NGVs have been justified on the basis of their lower emissions relative to conventional HDVs. This important point is further discussed in subsequent sections.

For nearly two decades, low-emitting heavy-duty natural gas engines have provided air quality regulators with a key weapon to combat urban air pollution. Inherently low emissions from heavy duty NGVs have enabled adoption of both regulations and incentives for their deployment.

2.2 Urban Air Pollution as the Historical Driver for NGV Deployments

4 “Surplus” emissions reductions are generally defined as those obtained early and/or in excess of what is required by regulation.5 SCAQMD fleet rules require public agencies and certain private entities with fleets of 15 or more vehicles to purchase alternative fuel vehicles when replacing or

purchasing new vehicles.6 For this report, “port drayage” refers to heavy-duty Class 8 trucks that haul into and out of seaport terminals.

5

Table 2.2-1

Figure 2.2-1

Nearly 8,000 alternative fuel HDVs have been deployed since 1995 in California’s South Coast Air Basin under local air district fleet rules that seek to improve urban air quality. At least 90 percent of alternative fuel HDVs are estimated to be fueled by natural gas.

A combination of regulations and incentives have helped deploy heavy-duty NGVs in New York State, including CNG school buses for the Long Beach City School District.

6

1192: Clean On-Road Transit Buses

1193: Clean On-Road Residential Refuse Collection Vehicles

1195: Clean On-Road School Buses

1194: Clean Commercial AirportGround Access Vehicles

(Shuttle Buses, Taxis)

1196: Clean On-Road HD Public Fleet Vehicles

1116.1: Clean Street Sweepers

4,217

1,450

908

567

359

232

Source: South Coast Air Quality Management District, Mobile Source Division, October 2010*SCAQMD staff estimates that at least 90% of the deployed AFWs are/were fueled by CNG or LNG**Refers to estimated cumulative AFV deployments since adoption of wach corresponding fleet rule

Estim

ated N

umb

er of M

edium

-/Heavy-D

uty AFV

s* D

eplo

yed** U

nder SC

AQ

MD

Fleet Rules

Estimated Number of Medium-/Heavy-Duty AFVs* Deployed** Under SCAQMD Fleet RulesAQMD Fleet Rule


The Market Segmentation report of the overall TIAX market assessment includes a detailed discussion about the importance of fuel price in the North American transportation sector. HDVs account for just over two percent of the U.S. vehicle population, but they consume more than 21 percent of the transportation fuel.7 Diesel is by far the dominant fuel used for HDVs, for the reasons described in Section 2.1. Because fuel costs constitute a large portion of the total cost of ownership for HDVs, user fleets have strong motivation to operate their HDVs on the lowest-cost fuel that meets their rigorous operational needs.

A major advantage of natural gas as a transportation fuel is its relatively low price. As discussed in the Market Segmentation report, on an energy equivalent basis, CNG and LNG have historically been priced in the U.S. at one-third and two-thirds the price of diesel fuel. As this so-called “fuel cost differential” between natural gas and diesel increases, so does the financial incentive for end users to purchase heavy-duty NGVs as a means to reduce vehicle lifecycle costs. Table 2.3-1 shows a “snapshot” in 2012 to date of the fuel cost differential for CNG in selected U.S. states. As shown, the price of CNG vs. diesel (per diesel gallon equivalent, or DGE), varies widely by region. In addition to state-by-state, regional, and supplier differences in pricing structures, the volume purchased by a given end user can heavily influence prices of heavy-duty transportation fuels.

Looking ahead, an increasing trend appears to be on the horizon for the North American fuel cost differential of natural gas compared to diesel. Figure 2.3-1 shows historical and projected data by the U.S. government for the price of diesel and natural gas transportation fuels. It shows that the price of diesel is expected to rise significantly over the next two decades, while the price of natural gas is expected to stay fairly constant. By this projection, the fuel cost differential for natural gas transportation fuels (CNG and LNG) should significantly widen in the future, reaching over $2 per DGE. The importance of having a significant and sustained fuel cost differential to the future of heavy-duty NGV deployments in North America are discussed in subsequent sections.

A major advantage of natural gas as a heavy-duty transportation fuel is its relatively low price compared to diesel on an energy-equivalent basis. When a large fuel cost differential exists between natural gas and diesel, heavy-duty fleets can have strong motivation to switch to natural gas.

2.3 Fuel Cost as a Driver for NGV Deployments

7 According to the 2010 U.S. DOE Transportation Energy Data Book, an estimated 44.6 percent of all vehicles in the U.S. are trucks. Of those trucks, approximately 5.2 percent are Class 4 or greater.

7

Table 2.3-1

Average diesel-CNG fuel cost differentials8 in the U.S. varied widely by region in 2008 and will be important for the future viability of heavy-duty NGVs. In addition to state-by-state, regional, and supplier differences in pricing structures, the volume purchased by a given end user can heavily influence prices of heavy-duty transportation fuels.

8

State Average Fuel Cost Differential ($/DGE)

California 2.23

New York 1.95

Arizona 1.03

Texas 2.00

Georgia 2.14

Massachusetts 1.24

District of Colombia 2.17

Utah 1.22

Colorado 1.31

Figure 2.3-1

The U.S. government predicts that prices for diesel and natural gas transportation fuels will show an increasingly favorable fuel cost spread over the next 25 years, reaching over $2 per DGE.9

8 Based on data from American Petroleum Institute, “July 2012 Summary Reports,” http://www.api.org/Oil-and-Natural-Gas-Overview/Industry-Economics/~/media/Files/Statistics/gasoline-diesel-summary.ashx, July 2012; EIA, “Natural Gas Prices,” http://www.eia.gov/dnav/ng/ng_pri_sum_dcu_SAL_a.htm, accessed August 23, 2012; EIA, “Refiner Petroleum Product Prices by Sales Type,” http://www.eia.gov/dnav/pet/pet_pri_refoth_dcu_nus_a.htm, accessed August 23, 2012.

9 U.S. EIA. “Annual Energy Outlook 2012, June 2012; U.S. EIA, “Gasoline and Diesel Fuel Update,” http://www.eia.gov/oog/info/wohdp/diesel.asp, accessed September 10, 2012; U.S. EIA, “U.S. Natural Gas Vehicle Fuel Price,” http://www.eia.gov/dnav/ng/hist/na1570_nus_3a.htm, accessed September 10, 2012

2000 2010

History Projections

Fue

l Pri

ce a

t P

ump

(2

01

0$

per

DG

E)

Natural Gas (CNG)

Diesel

2020 2030 2035

3.00

2.00

4.50

2.50

0.00

3.50

1.50

4.00

1.00

0.50

2005 2015 2025

3 Overview of Key Heavy-Duty NGV Applications and Vehicle Types

This report describes existing and potential uses of natural gas as a transportation fuel in the HDV sector. Numerous HDV platforms operating on natural gas have been successfully launched throughout North America over the last twenty years. The result has been that thousands of non-diesel HDVs have been put into commercial fleet service, millions of diesel gallons have been displaced, and major improvements in urban air quality have been realized. While the greatest success has involved on-road HDVs (e.g., trucks, buses, and refuse haulers), significant NGV deployments have also occurred in off-road applications, such as locomotives, cargo-handling equipment, and large forklifts.

While this gradual phasing in of heavy-duty NGVs has been quite significant, HDV applications continue to be dominated by diesel fuel and engines. As summarized in Figure 3-1, there are approximately twenty broad classifications of HDV applications (Class 3 to Class 8). Within these on-road applications, there are about seven major applications that currently offer natural gas HDVs. Similarly, in the off-road sector, there are numerous broad classifications of commercially available diesel-fueled HDVs, as depicted in Figure 3-2. Natural gas alternatives to diesel HDVs are also offered in the off-road sector, although to a lesser degree than in the on-road HDV sector.

The Market Segmentation report of the overall TIAX assessment provides extensive discussion about each type of heavy-duty vehicle application. A brief overview is provided below of the various fleet applications that deploy the greatest numbers of heavy-duty NGVs fueled by CNG or LNG. Specific examples of successful deployments by end user fleets are provided in Section 5.9.

NGVs are successfully used today in several HDV applications, including transit, refuse, goods movement, and off-road applications.

9

Table 3-1

The on-road HDV sector consists of approximately 20 broad types of diesel-fueled HDV applications; about half offer natural gas alternatives.

10

Light-Duty

0-6,000

Type

Bus

es

Shuttle

Intercity

School

Transit

Short Haul

Port

Long Haul

Regional

Van

Tow

Moving

Divided

Beverage

Refuse

Dump

Cement

Car Hauler

Utility Truck

Reefer

Tank

Steet Sweeper

Sem

i-Tra

cto

rsH

eavy

-Dut

y V

oca

tio

nal T

ruck

s

Application Example Class 1 Class 2 Class 3 Class 4 Class 5 Class 6 Class 7 Class 8 Major Fuels in Use

6,001–10,000

10,001–14,000

14,001–16,000

16,001–19,500

19,501–26,000

26,001–33,000

33,001ormore

Medium-Duty

Gross Vehicle Weight: Rating (GVWR)in bs.

Heavy-Duty

Gasoline Diesel Natural Gas LNG

Source: Product literature

> 25 25–50 51–75 76–100 101–175 176–300 301–600 601–750 751+

Dump Truck

Bull Dozer

Grader

Earth Mover

Yard Truck

Self Loader

Baggage

Belt Loaders

Fork Lift

Off

-Hig

hway

Engine Horsepower

Major Fuels in Use

Table 3-2

The off-road HDV sector also consists of diverse vehicle types powered by diesel fuel, with natural gas options emerging.

Gasoline Diesel Natural Gas LNG

11


Numerous types of heavy-duty buses are ubiquitous throughout North America. The function of buses is to transport people rather than cargo (goods and materials). By their very nature, buses are operated near populations, normally in urban areas that place high importance on improving air quality and reducing human exposure to diesel PM. Many, if not most applications, for heavy-duty buses involve return-to-base operations with central fueling and trained fueling personnel. These features make several specific heavy-duty bus applications ideal for using natural gas. Threeapplications in particular are described below (Figure 3.1-1).

Transit buses have been one of the most successful segments for adoption of NGVs, in large part due to their high fuel use and high priority as targets for reducing diesel engine emissions. About 11,000 natural gas transit buses (roughly 20 percent) have been placed into operation in North America over the past fifteen years. Because of their high fuel usage (an estimated 12,800 DGE per year10) and typical operating cycles,

natural gas transit buses can offer significant reductions in operational costs (fuel and maintenance) compared to conventional diesel buses. U.S. transit agencies have maintained or slightly expanded NGV inventories in recent years, and natural gas fuel consumption has increased. Canadian transit agencies were among the world’s first to deploy natural gas transit buses, and Canadian-based transit bus OEMs have been leaders in commercializing this technology. While current use of natural gas in Canada as a transit bus fuel is extremely limited,11 potential exists for expanded deployments.

School buses have been a targeted niche for use of natural gas engines due to the importance of reducing impact to children from harmful air pollutants. An especially compelling attribute is that natural gas school buses eliminate exposure of children to diesel particulate matter, which has been identified by the California Air Resources Board as a potential cause of cancer. Today, there are roughly 1,800 natural gas school buses deployed in North America. With more than 500,000 school buses deployed in North America today, this market segment has potential for expanded use of natural gas. However, school districts are generally cost-constrained and heavily reliant on incentives to offset the incremental capital costs of natural gas buses. Thus, this is among the most important HDV sectors to retain, or even expand, financial assistance mechanisms.

Shuttle buses are operated throughout North America by airports, hotels, universities, and other end user fleets. Heavy-duty buses in these applications can often be designed for relatively low volumes of onboard fuel storage because long driving ranges are generally not required. Shuttle buses operate under return-to-base conditions and can be refueled onsite at the fleet’s central location or at public fueling stations that are located near the fleet. While unknown numbers of diesel-fueled vehicles are operating throughout North America in various shuttle bus niches today, the population is likely to be quite significant. For example, the U.S. has several hundred major airports, most of which are heavily supported by shuttle bus networks.

Buses are distinguishable from most other types of HDVs; they transport people rather than goods and materials. Yet, buses share a number of key characteristics with other types of HDVs, such as high fuel use and operation in urban areas with poor air quality, that have made them attractive candidates for operation on natural gas.

3.1 Heavy-Duty Buses

12

10 Based on data from the American Public Transportation Association “61st Public Transportation Fact Book,” 2010.11 Canadian Natural Gas Vehicle Alliance. http://www.cngva.org. Accessed November 2010.

Figure 3.1-1

Heavy-duty buses operate throughout North America and are strong applications for natural gas. Specific end users of natural gas buses include transit and school districts, and shuttle buses operated by airports, universities, and hotel chains. (See Market Segmentation Report for details and sources for “segment statistics”)

13

Transit Buses

Segment Statistics

Total Vehicles 68,000

Natural Gas Vehicles 10,000

Petroleum Fuel Use (DGE) 650,000,000

Natural Gas Fuel Use (DGE) 150,000,000

Typical Daily Range (Miles) 90 to 130

School Buses

Segment Statistics

Total Vehicles 500,000

Natural Gas Vehicles 1,800

Petroleum Fuel Use (DGE) 550,000,000

Natural Gas Fuel Use (DGE) 2,200,000

Typical Daily Range (Miles) 30

Other Bus Applications Include:

Airport Shuttle Buses

Hotel Shuttle Buses

University Shuttle Buses

Over the Road Coach Buses


Vocational trucks are a strong market in North America for the use of natural gas fuel, primarily CNG. “Vocational” in this context generally refers to a category of HDVs designed for very specific end uses with specialized bodies. Examples of vocational trucks include cement mixers, dump trucks, and a wide array of trucks used in the waste management industry. Such trucks are typically ordered from HDV OEMs with only the cab attached to the vehicle chassis. They are thenshipped from the chassis OEM to a body builder that installs a customized body to the vehicle chassis. This is the same basic process used in the medium-duty market when specialized truck bodies are required. However, in the heavy-duty market the vehicle purchaser typically has many more choices for configuring the vehicle chassis, cab, and engine.

Because of this ability to customize the body and chassis on vocational trucks, it is possible for purchasing fleets to specify almost any vocational truck as a natural gas truck, assuming at least one vehicle OEM offers a suitable natural gas option. For example, Freightliner

currently offers its M2-112 chassis with the Cummins ISL-G natural gas engine; this chassis can support a wide variety of vocational truck bodies as well as a semi-truck configuration. However, this chassis is designed for Class 7 and Class 8 applications and would not be ideal for Class 4 to Class 6 vehicles. Where natural gas options are not available from the vehicle OEM on a chassis in the proper weight class for a particular application, vocational truck purchasers must utilize upfitters / installers to provide natural gas engine conversions. As with medium-duty vehicles, the standard practice of customizing heavy-duty vehicles provides an opportunity to integrate natural gas engines and fuel systems without significantly altering the typical HDV purchase process.

Refuse trucks are a special type of vocational application with especially high fuel use (Figure 3.2-1). Fuel costs are significant for this sector due to their stop-and-go operation and the fact that engines must frequently provide “power take off” (PTO) operation. In the PTO mode, refuse trucks power special functions such as hoisting trash cans and compacting trash as it is dumped onto the truck. Use of PTO greatly increases fuel usage and reduces fuel economy (mpg).

The refuse hauling/solid waste sector is among North America’s fastest growing applications for heavy-duty NGVs. Two of the largest solid waste companies, Waste Management and Republic, collectively operate about 40,000 HDVs in North America, of which about 1,400 (3.5 percent) are fueled by natural gas (LNG or CNG).12 To keep up with natural gas fueling needs and further expand these NGV fleets, one major fuel supplier now operates natural gas stations for refuse trucks in at least twelve different states. In three years, growth of natural gas fueling stations specifically for the refuse hauling application has increased by an order of magnitude.13 Much of the growth in natural gas refuse truck deployments has been driven by local and regional regulations requiring cleaner vehicles.

Heavy-duty vocational trucks offer many characteristics conducive to natural gas, including high fuel use and return-to-base operation over well-prescribed service routes Refuse haulers are special vocational trucks that make up one of the fastest growing NGV segments.

3.2 Vocational and Refuse Trucks

12 Based on questionnaires completed by refuse companies.13 Showtimesdaily.com. “Clean Energy Likes Refuse Sector.” http://showtimesdaily.com/news-articles/clean-energylikes-the-refuse-sector. August 17, 2010.

14

Figure 3.2-1

Refuse haulers are special types of vocational trucks that are especially conducive to adoption of natural gas because they use high volumes of fuel per vehicle and employ return-to-base operation with well-prescribed service routes.14

Autocar Xpeditor Crane Carrier

Peterbilt 320

Mac TerraPro

Heil Rapid Rail

14 See Market Segmentation report for sources of sector information.

15

Side-loading and Rear-loading Refuse Trucks

Example Natural Gas VehiclesAutocar Xpeditor, Mack TerraPro, Crane Carrier, Heil RapidRail, Peterbilt 320

Common refueling locations fleet yards

Typical daily range 85 miles

Average age at first replacement 10 years/drive to scrap


Local and regional delivery trucks are another high fuel use sector that can be well suited for the use of natural gas fuel. Trucks with detachable trailers, known as semi-tractors, are the most common type of Class 7 and Class 8 trucks on the road. Approximately 65 percent of the miles traveled by these trucks can be accommodated by a driving range of 200 miles or fewer.15 This market segment includes a wide array of “goods movement” HDVs, such as port trucks, food distribution trucks, and other short-haul trucks. Natural gas trucks in this market can provide significant fuel cost reductions compared to diesel trucks. Their localized area of operation allows these trucks to rely on a single onsite fueling station and/or a nearby public fueling station. Recent growth in these NGV deployments has been strongly driven by combinations of regulations, mandates, and incentive programs (e.g., California’s Carl Moyer and Proposition 1B Goods Movement programs.)

Line-haul trucks consume the largest volume of fuel per vehicle in the North American transportation sector. A single Class 8 semi-truck hauling one or two trailers on North American highways can travel more than 500 miles and consume nearly 100 DGE per day. This makes the economics of line-haul trucking highly sensitive to fuel costs. As such, strong potential exists to significantly reduce lifecycle costs for line-haul trucking operations through the use of natural gas, primarily LNG. At present, no truck manufacturer offers a natural gas powered truck with sufficient horsepower intended for high-mileage line-haul operation (Figure 3.3-1), as truck and engine OEMs are hesitant to invest in HDVs with large LNG engines unless and until there exists a suitable infrastructure to support them. However, at least two manufacturers offer Class 8 trucks with the Westport GX LNG engine that can serve well for the lower horsepower range of this duty cycle, where sufficient LNG fueling infrastructure exists. As discussed later in Section 5.9, there are important emerging deployments (especially in eastern Canada) for this line-haul use of heavy-duty NGVs, with very significant potential benefits.

Local-, regional-, and line-haul trucks are high fuel use applications in which end users can realize significant fuel cost benefits when switching to natural gas. While some return-to-base operations occur, many fleets in this segment are reliant on publicly available fueling infrastructure. In certain regions of North America, significant deployments of CNG and LNG trucks are underway for local and regional delivery trucks. Line haul trucks present unique challenges and opportunities for deployment of heavy-duty NGVs.

3.3 Local-, Regional-, and Line-Haul Trucks

15 U.S Census Bureau. “Vehicle Inventory and Use Survey.” 2002.

16

Table 3.3-1

Class 8 tractors drive local-, regional-, or limited line-haul operations throughout North America. In addition to diesel trucks, a variety of truck OEMs offer LNG versions that may work well in these applications, though no current LNG truck is planned for the highest mileage applications.

17

Class 8 TruckOfferings

Cab TypeEngine and

Horse PowerImages

FreightlinerColumbia(Diesel)

Day Cab

Detroit DieselSeries 60

410 HP

Mack CXU613(Diesel)

48” ExtendedCab

Mack MP7-395C

395 HP

Volvo 64T300(Diesel)

Day CabVolvo D13

405 HP

Freightliner M2-112 ISL-G

(LNG) Day Cab

Cummins-Westport ISL-G

320 HP

Kenworth T800ISX-G(LNG)

Extended CabWestport ISX-G

400 HP

Peterbit 384ISL-G(LNG)

Day Cab

Cummins-Westport ISL-G

320 HP


Heavy-duty construction vehicles and equipment include highly specialized equipment ranging in size from less than 50 horsepower to more than 1,000 horsepower (Figure 3.4-1). Despite the availability of natural gas engines in many common horsepower ranges used in construction equipment, few if any natural gas options are currently available for construction equipment. Two key challenges, fuel tank integration and changing regions of operation, have made transitions from conventional diesel-fueled equipment difficult. As for drivers toward natural gas, some public agencies do require lower emission construction equipment to be used at local job sites. However, these requirements can generally be met by repowering the equipment with newer diesel engines.

Mining equipment and vehicles are similar to their counterparts in the construction industry but tend to be larger in size, due to a focus on maximizing throughput of material. This requires larger engines, some of which range from 1,000 to 4,000 horsepower. Currently, there is very limited availability of natural gas engines suitable for this market segment. However, high fuel consumption per vehicle and other use logistics make this niche attractive for engine and vehicle OEMs to consider for introduction of NGV offerings.

Locomotives can operate on natural gas; North America programs to develop low-emissions locomotives go back as far as the early 1980s. Recent focus has been on “switcher” locomotives that are used in urban rail yards to move freight cars. These locomotives typically have 1,200 to 2,000 horsepower diesel generator set engines that power electric drive systems. On a demonstration scale, LNG switchers have been created by repowering with a natural gas generator set engine and adding an onboard LNG fuel system. Also, at least one company (Energy Conversions, Inc.) upfits existing locomotives to run on either CNG or LNG, for use in specialty applications (e.g., the Napa Valley, California wine train).

Currently, with the exception of forklifts, North American use of natural gas in heavy-duty off-road vehicles has largely been limited to niche or demonstration uses such as aircraft support vehicles, terminal tractors, and switcher locomotives. These sectors, and a variety of other heavy-duty off-road applications, have potential to introduce or expand the use of CNG and/or LNG systems. In some cases, these vehicles are used continuously for eight or more hours per day at the same “captured” location, making it possible to achieve attractive economics for a switch to natural gas. For all off-road sectors, tougher emissions regulations are being introduced, which may serve as an impetus for OEMs to commercialize natural gas platforms. Specific off-road sectors are discussed below.

Terminal tractors (also known as yard hostlers or yard goats) are a promising heavy-duty off-road application for use of natural gas. These vehicles, which often use the same engines as similar on-road HDVs, are ubiquitous at North American seaports and other areas where cargo containers are moved. While natural gas configurations of terminal tractors are already commercially available, to date deployments in North America have been minimal.

Market penetration of NGVs in the heavy-duty off-road sector has largely been limited to forklifts and demonstrations for vehicles such as terminal yard tractors, ground support equipment, and switcher locomotives. The potential for expanded use is large, however, in part because more stringent emissions regulations are now taking effect. Potential new off-road niches for natural gas include construction and mining equipment.

3.4 Heavy-Duty Off-Road Vehicles

18

Figure 3.4-1

Construction and mining equipment have characteristics that are conducive to the use of heavy-duty NGVs, including high fuel use and centralized fueling. New emissions regulations in these sectors are likely to help drive commercialization of natural gas platforms, and engine manufacturers have expressed interest in entering such markets with large-displacement LNG engines.

19

Scraper Back-Hoe Excavator

Underground Mining Loader Large Rubber-tire Loader

Large Dump Truck (up to 400 ton payload)Underground Mining Truck

Skid Steer Loader Track-Type Tractor

Example Natural Gas Vehicles None

Common refueling locations Job sites

Typical daily range Varies (8+ hours of operation)

Average age at first replacement Drive to scrap


Merchant ships, ferries and other marine applications are emerging as potentially major markets for natural gas engines. Among the drivers are new and stringent emissions regulations, including emerging “Emissions Control Areas” (ECAs) in the world’s more air polluted coastal areas.

3.5 Marine and Ferry Boat Applications

Some shipping industry representatives now believe that marine diesel oil is not sustainable as the fuel for ships within ECAs.17 One possible solution under consideration by the shipping industry, especially in Scandinavian countries and the Baltic Sea region, is to phase out marine diesel oil and replace it with LNG for “short sea shipping” applications. Worldwide today, approximately 100 merchant ships use LNG fuel for propulsion. Some predict that this will grow significantly given the push to reduce shipping-related emissions and implement ECAs in highly impacted regions across the globe. Marine engine maker Waertsilae OYG estimates that 10% of ships calling at ECAs will be running on LNG by 2015. That would represent a tenfold increase in vessels currently using the fuel. Some in the industry have predicted that LNG will become the dominant fuel source for all merchant ships within 40 years.18

Ferry boats are another emerging marine application for LNG fuel. For example, in countries bordering the Baltic Sea region (e.g., Norway and Poland), LNG-fueled passenger ferries are now being deployed. Like merchant ship applications, this switch requires infrastructure changes and entails additional capital costs, but it can result in lower lifecycle costs. The resulting emissions reductions can be compelling: according to Rolls-Royce Marine, ferry boat emissions of SOX, NOX, and PM are each reduced by at least 80% when such vessels are repowered from diesel engines to lean-burn natural gas engines.19 Use of LNG for marine vessel propulsion in North America has not yet been attempted on a significant scale, but good potential appears to exist for short sea shipping and ferry boat applications.

Currently, the dominant fuel for the merchant shipping industry is high-sulfur-content marine diesel oil. Largely due to sulfur content that averages about 2.7%, marine vessels are major sources of sulfur oxides (SOX) emissions and other harmful pollutants.16 Under new rules adopted by the International Maritime Organization, ships must cut SOX emissions by nearly 90% over the next decade. In the most air-pollution-impacted locations designated as “Emissions Control Areas” (ECAs), SOX emissions must be cut by 98%. In addition, NOX emissions from certain marine vessels must be reduced under IMO requirements. To address global climate change, shipping companies are also now facing pressure to reduce carbon emissions.

16 A sulfur content of 2.7% is equivalent to 27,000 parts per million (ppm). By contrast, on-road diesel fuel in the United States cannot exceed sulfur content of 15 ppm. High sulfur in diesel fuel increases emissions of SOx and other pollutants, while also prohibiting the use of emissions after treatment systems such as diesel particulate filters.

17 Tor Svensen, President of DNV, The Age of LNG is Here: Most Cost Efficient Solution for ECAs, presentation dated June 8, 2010, downloaded from http://www.dnv.com, 18 Maritime News, “LNG to Displace Oil as Dominant Ship Fuel within 40 Years, Det Norske Says,” November 25, 2010, accessed online at http://bestshippingnews. com/uncategorized/lng-to-displace-oil-as-dominant-ship-fuel-within-40-years-det-norske-says/.19 As cited by Per Magne Einang, Research Director, Marintek, “LNG as Fuel for Marine Application”,presentation , http://www.cimac.com/cimac_cms/uploads/ explorer/other_events_2009/presentation_marintek.pdf, November 2009.

20

Figure 3.5-1

Merchant ships and ferry boats powered by LNG are being deployed in environmentally sensitive areas of Europe such as the Baltic Sea region. While not yet a significant marine fuel in North America, some in the shipping industry have predicted that LNG will become the dominant fuel source for all merchant ships within 40 years.20

21

BERGENSFJORD

20 Maritime News, “LNG to Displace Oil as Dominant Ship Fuel within 40 Years, Det Norske Says,” November 25, 2010, accessed online at http://bestshippingnews.com/uncategorized/lng-to-displace-oil-as-dominant-ship-fuel-within-40-years-det-norske-says/.

The LNG-fueled Norwegian passenger ferry, “Bergensfjord”, first deployed in 2007 for Baltic Sea service.

One of two Rolls-Royce lean-burn natural gas engines used to power the Bergensfjord.

4 Manufacturers’ Views Supply Side: Manufacturing and Production of Heavy-Duty NGVs

Currently, most heavy-duty NGV platforms are designed for one of two engines. The smaller of these engines, the Cummins Westport ISL-G, has emerged as the workhorse of heavy-duty NGVs in North America. However, the ISL-G’s power and torque ratings are not optimal for larger HDVs. Other natural gas engines with higher horsepower and torque are being introduced into the market to fill this void.

4.1 Current Natural Gas Engine Offerings

The smaller, dedicated natural gas Cummins ISL-G engine has emerged as the prevailing power plant for North American HDVs that operate on natural gas. For example, approximately 23 commercially available transit bus models (thirteen CNG and ten LNG) can be purchased with this engine today.21 The ISL-G also powers a variety of other heavy-duty NGV types across various on- and off-road applications, including lower horsepower port drayage trucks, school buses, shuttle buses, and street sweepers. The larger Westport GX heavy-duty natural gas engine was designed primarily for non-transit HDV applications that require higher horsepower and torque. Targeted applications include port drayage trucks, heavy-haul trucks, refuse transfer, dump trucks, roll-offs, line-haul, and other vocational applications. The GX is currently available in factory-assembled LNG truck platforms that include the Kenworth T800 and three different Peterbilt models.22 Approximately 300 GX-equipped HDVs have been deployed in North America to date.

The heavy-duty NGV market has heavily relied on the Cummins Westport ISL-G engine. However, at least three new heavy-duty natural gas engines are now emerging as in-demand power plants for the North American HDV market: the Doosan Infracore 11.1 liter GK12, the Emissions Solution 7.6 liter Phoenix, and the Cummins Westport 11.9 liter ISX-G. Figure 4.1-2 lists all available engines and their applications. Over the longer term, heavy-duty engine OEMs are pursuing additional new commercial offerings, with support from North American governmental agencies. For example, the U.S. Department of Energy is spearheading a $21 million public-private partnership to support the development of new natural gas engine and vehicle platforms. Reportedly, numerous heavy-duty engine OEMs have expressed interest in participating. Canadian federal and provincial governmental agencies are also supporting OEM efforts to expand heavy-duty natural gas engine and vehicle offerings.

As of late 2010, most commercially offered heavy-duty NGV platforms are designed for one of two engines: the Cummins Westport 8.9 liter ISL-G, or the Westport 14.9 liter GX. Figure 4.1-1 shows their engine specifications. Other than displacement and horsepower, the primary difference is that the smaller ISL-G is a “dedicated” (100 percent) natural gas engine that uses stoichiometric, spark-ignited combustion combined with a three-way catalyst to achieve the U.S. federal 2010 heavy-duty engine emissions standards. By contrast, the larger GX uses high-pressure direct injection of natural gas into a compression-ignited engine. The GX relies on pilot injection of diesel fuel to ignite natural gas, resulting in diesel-equivalent power and vehicle range. However, this technical approach has made it necessary for Westport to equip the GX with essentially the same emissions controls used on its diesel-fueled engine.

21 NGVAmerica. “Guide to Available Natural Gas Vehicles and Engines.” http://www.ngvamerica.org/pdfs/marketplace/MP.Analyses.NGVs-a.pdf. May 21, 2010.22 Westport. “LNG Engines for Heavy-Duty Trucks.” http://www.westport-hd.com. Accessed November 2010.

22

Figure 4.1-1

Examples of heavy-duty natural gas engines available in North America today.

23

CWI ISL-G Natural Gas Engine

Type: 8.9L, 4-cycle spark-ignited inline 6-cylinder, turbocharged, CAC

• Advertised HP: 250 to 320• Peak Torque: 1,000 lb-ft @ 2,200 rpm

Doosan GK-12 Natural Gas Engine

Type: 11.1 L, 4-cycle spark-ignited inline 6-cylinder, turbocharged


Westport GX Natural Gas Engine

Type: 14.9L 4-cycle compression-ignited HPDI with diesel plume, inline 6-cylinder


ESI Phoenix Natural Gas Engine

Type: 7.6 L, 4-cycle spark-ignited inline 6-cylinder, turbocharged

• Advertised HP: 300• Peak Torque: 860 lb-ft @ ~1,700 rpm

Table 4.1-1

An array of HDV applications.

Class Supplier Engine

HD Converter

Emission Solutions Inc.

7.6 LNGPhoenix

HD OEM

CumminsWestport

8.9LISL G

HD OEM

Doosan Infracore

America 11LGK12

HD OEMCummins Westport

11.9L ISX G

HD OEM Navistar 13L

HD OEMWestport

Innovations15L GX

Ligh

t-D

uty

Pass

enge

r C

ar

Taxi

Ligh

t-D

uty

Truc

ksPa

ckag

e D

eliv

ery

Vehi

cle

Uti

lity

Truc

ksSh

uttl

e B

uses

Oth

er M

ediu

m-D

uty

Truc

ks

Tran

sit

Bus

esSc

hool

Bus

esD

raya

ge T

ruck

s Sh

ort-

Hau

l Tru

cks

Long

-Hau

l Tru

cks

Refu

se H

aule

rsO

ther

Hea

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Truc

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24

4 Supply Side: Manufacturing and Production of Heavy-Duty NGVs

There are four basic types of design for CNG tanks. Today’s heavy-duty CNG vehicles are mostly equipped with the lightest-weight Type III or Type IV systems, generally requiring three to six CNG tanks per vehicle to store sufficient fuel for a heavy-duty NGV.

4.2 Onboard Fuel Storage for Heavy-Duty NGVs4.2.1 CNG Fuel Tank Offerings

CNG cylinders for motor vehicle applications are manufactured and commercially offered in a wide array of weights and sizes. There are four basic tank types, designed to meet specific requirements of different NGV applications. As indicated in Table 4.2.1-1, the most suitable type of CNG tank for a given vehicle depends largely on a cost vs. weight tradeoff. The heaviest all-metal Type I tanks store the least fuel per pound of system weight, but they are relatively inexpensive. Lighter composite tanks, Types II, III, and IV, store more fuel per pound of system weight but also cost more. Today’s heavy-duty CNG vehicles are mostly equipped with the lightest-weight Type III or Type IV systems. These NGV applications generally require onboard fuel storage ranging from 40 to 80 DGE, with transit buses carrying as much as 150 DGE. Thus, it typically takes three to six Type III or IV CNG cylinders (of varying sizes) to comprise a practical heavy-duty NGV fuel system (Figure 4.2.1-1).

It is important to note that all CNG cylinders used on NGVs in North America must meet the same basic and comprehensive safety standards. Moreover, end users are required to conduct periodic safety inspections on all tank types. This is an important issue because typical road conditions can present a very severe environment for CNG tanks.23 Section 4.6.2 discusses end-of-life concerns regarding CNG tanks and field inspections.

25

23 Gambone, L. “CNG Cylinders 101.” Powertech presentation, Natural Gas Transit Users Group Meeting. October 2005.

Cylinder Type

General Description Characteristics Example NGV Uses

I Entirely made of metal (either steel or aluminum)

• Lowest cost• Heaviest

OEM and aftermarket on- or off-road applications that are cost- rather than

weight-sensitive, and/or where additional weight can be helpful

(e.g., forklift counterweight)

II

Metal liner reinforced withcomposite wrap

(e.g., glass or carbon fiber) in epoxy of resin around the

tank’s middle (“hoop wrapped”)

• Lighter than Type I cylinders, but more expensive

OEM and aftermarket on-road LDV and MDV applications

III

Metal liner reinforced withcomposite wrap

(either glass or carbon fiber) around the entire tank

(“full wrapped”)

• Lightweight, more expensive than Types I and II

OEM on-road MDV and HDV applications that are cost sensitive but focused on weight reduction and maximizing fuel

efficiency/range

IV

Plastic gas-tight liner reinforced by composite wrap around the

entire tank (“full wrapped”);entire strength of cylinder is

composite reinforcement

• Lightweight• Best for higher working pressures• Most expensive

OEM specialty MDV and HDV applications that are less cost sensitive while focused on weight reduction and

maximizing fuel efficiency/range

Table 4.2.1-1

Overview of CNG Cylinder Types and Example NGV Uses

26

27

Figure 4.2.1-1

Type III and IV CNG tanks dominate the heavy-duty NGV sector. Shown here are:

A. A 5-tank pack of Type III cylinders, designed to hold 90 DGE for refuse trucks. B. The cross-section of a Type III tank, showing reinforcing. C. A 3-tank pack of Type III cylinders, encased for installation on a vocational truck, holds 82 DGE. D. A single Type IV cylinder is needed here to hold 82 DGE; this is a relatively low-weight system that takes up less space but entails higher costs.

A.

C.

B.

D.


LNG tanks are more complex than CNG tanks but hold more natural gas per weight and volume. Two basic tank types are being installed on heavy-duty NGVs in North America, with total system capacities of 65 to 170 DGE per vehicle.

4.2 Onboard Fuel Storage for Heavy-Duty NGVs4.2.2 LNG Fuel Tank Offerings

Currently, there are two companies manufacturing and marketing LNG fuel tanks in North America for heavy-duty NGVs: NexGen Fueling, Inc. and BTIC Westport, Inc. Both make LNG tanks that are refilled at LNG stations using the same procedure. However, the two types of LNG tank technology vary somewhat in their design, as noted below.

NexGen Fueling, Inc. (also known as “Chart”) has reportedly manufactured more than one million LNG and cryogenic liquid cylinder tanks. NexGen will manufacture LNG tanks to “fit any application” of heavy-duty NGV. They offer ten core LNG tank products with fuel volumes that range from 25 to 86 DGE. Currently NexGen’s worldwide annual sales of LNG tanks for NGVs are about 1,000 units.24 Customers that have purchased and utilized NexGen Fueling’s vehicle tanks include most major bus, truck, and engine manufacturers. In the NexGen LNG tank technology, coolant fluid from the engine is used to warm the LNG from the fuel tank into a gaseous phase for introduction into the combustion cylinders.25

BTIC Westport, Inc. (BWI) is a joint venture formed in 2006 between Canadian company Westport Innovations and BTIC of Beijing, China. The company’s objective is to “market and sell more cost-effective, custom-engineered” LNG tanks for the transportation market. In addition to making LNG tanks, BTIC claims to be the largest CNG cylinder manufacturer in Asia. BTIC has reportedly “built a sophisticated new assembly line” that will be used to manufacture BWI LNG tanks. Currently, for applications to LNG trucks using the Westport fuel system, there are two core LNG tank products, with fuel volumes that are believed to be approximately 65 and 85 DGE. Currently BWI’s annual worldwide sales of LNG tanks for the Westport system are about 600 units.26 The Westport LNG fuel system is diagrammed in Figure 4.2.2-1. A key difference from the NexGen system is that, in the Westport system, a unique, engine-driven LNG pump pressurizes liquid natural gas to high pressure and then subsequently the liquid natural gas is vaporized to a warm, high-pressure gas.27

LNG is stored as a cryogenic liquid at temperatures as low as -260°F (-162°C). Fuel pressure within the storage vessel remains relatively low, ranging from 50 psi (3.5 bar) to 150 psi (10.3 bar). The advantage of liquefying natural gas into LNG instead of compressing it into CNG is that much greater energy can be contained in a given size and weight of fuel storage. However, this higher energy density brings greater storage system complexity. Specialized, highly insulated storage tanks are needed to keep LNG fuel in its cryogenic state in heavy-duty NGVs. If LNG vehicles are not regularly operated, onboard LNG fuel will revert to its gaseous state and must be vented to the atmosphere. LNG tanks are designed with a special vacuum layer of insulation that keeps the fuel cold, provided it is used within one to two weeks. Due to the physics and dynamics of cryogenic natural gas as it is stored in these systems, roughly 10 percent of the LNG in a full tank is not usable to power the NGV that carries it.

28

24 Questionnaire response received from NexGen Fueling, Inc.25 NexGen Fueling, Inc. http://www.nexgenfueling.com/p_ofs_specs.html. Accessed November 2010.26 Questionnaire response received from Westport Innovations.27 Westport Innovations, Inc. http://www.westport-hd.com/complete_system.php. Accessed November 2010.

Figure 4.2.2-1

A. Two different single-tank LNG configurations from NexGen: 68 DGE (foreground) and 86 DGE (background) B. NexGen’s 86 DGE LNG tank installed on the frame rail of a Class 8 port truck C. Complete Westport LNG fuel system as specially designed for use with Westport’s GX engine D. LNG tanks for the Westport LNG fuel system manufactured by the BWI joint partnership

29

A.

C.

B.

D.

Fuel Injectors(Under Valve Cover)

Diesel FuelPump

HydraulicPump

Warm,High-Pressure

CompressedNatural Gas

Control Units(Chassis Mounted)

High-Pressure Accumulator(Chassis Mounted)

LNG Tank(Chassis Mounted)

Fuel ConditioningModule


Manufacturers work with end users to build heavy-duty NGVs with enough onboard natural gas for typical operational needs, without unacceptable tradeoffs in cargo weight or volume.

4.2 Onboard Fuel Storage for Heavy-Duty NGVs4.2.3 Size and Weight of Natural Gas Fuel Storage Systems

Diesel is a heavy-duty transportation fuel with exceptional energy density. A typical truck fuel tank filled with 100 gallons of diesel fuel weighs about 850 pounds and takes up about 14 cubic feet of space on the chassis frame rails. By contrast, alternative fuels such as CNG, LNG, and propane have lower energy density than diesel. An advanced all-composite (Type IV) CNG fuel storage system with four tanks holding 100 DGE would weigh approximately 1,600 lbs and take up about 62 cubic feet of chassis space.28 A single onboard LNG tank carrying approximately 100 DGE of natural gas29 would weigh about 1,300 lbs and take up about 30 cubic feet of chassis space.

Figure 4.2.3-1 compares the weights and volumes per energy stored (in DGE) of full fuel tanks for five transportation fuels: diesel, gasoline, propane, LNG, and CNG. OEMs work with end users to ensure their heavy-duty NGVs have enough onboard natural gas for typical operational needs, without incurring unacceptable reductions in the weight or volume to be transported. OEMs were specifically asked about how this issue of fuel system weight and size affects their NGV products and use by purchasing fleets. Comments received are itemized in Table 4.2.3-1.

30

28 Based on literature from CNG and LNG fuel tank OEMs, online or provided directly to TIAX.29 Note that this is a hypothetical LNG fuel tank because the largest commercially offered single tank holds 86 DGE.

Figure 4.2.3-1

Onboard storage tanks for alternative fuels are heavier and take up more space than typical diesel and gasoline fuel tanks, requiring special planning by manufacturers to build heavy-duty NGVs for customers that store enough natural gas onboard for typical operational needs, without incurring unacceptable reductions in the weight or volume to be transported.

31

Size of Fuel Tank per Energy Stored(ft3 per DGE)

CNG Type I (3.6k PSI)

CNG Type II (3.6k PSI)

CNG Type III (3.6k PSI)

CNG Type IV (3.6k PSI)

Typical Gasoline

Typical Diesel

LNG

Propane (Various Applications)

0.4

0.3

0.5

0.8

0.7

0.6

0.2

0.1

0

0 5 10 15 20 25 30 35 40 45 50

Heavier per Amount of Energy Carried

Larg

er

pe

r A

mo

un

t o

f E

ne

rgy

Car

rie

d

Weight of Full Fuel Tank per Energy Stored (Pounds per DGE)

Table 4.2.3-1

Heavy-duty NGV industry representatives perceive weight and volume issues for onboard fuel storage to be challenging.

32

Input From:Comments Regarding Weight and/or Volume

of Onboard Natural Gas Fuel Storage

Class 8 Truck OEM #1• Weight/size is important, but fleet customers know tradeoffs well and optimize accordingly

Class 8 Truck OEM #2

• Tank weight and size are big issues because payload and volume are big industry drivers

• Truck weight (front axle, overall tare weight) critical, especially vocational/delivery applications

Class 8 Truck OEM #3• NGV weight can be “close to neutral.” Even though NG fuel storage adds weight, some diesel components (e.g., certain emissions control systems) are not needed on NGVs


• CNG is difficult to package on trucks; 60 DGE requires two large tanks on frame rails

• Many return-to-base trucking applications need “every bit of frame space”

Refuse/VocationalTruck OEM

• Fuel tank packaging “a very big deal,” but refuse and vocational applications can work very well

• CNG dump and cement trucks need extra fuel, but have little extra room to accommodate it

Street Sweeper OEM • 50 DGE requires “a lot of space” on the chassis, creates challenges

HD Engine OEM• Weight and cost of fuel storage system vs. range are big decision points for OEMs

HD NGV Upfitter

• Some truck applications are very weight sensitive, while others are not; won’t use Type I tanks

• Return to base trucking with the ISL-G works very well without compromising cargo volume

CNG Fuel Tank OEM #1• Type IV tanks effective in high payload applications where onboard weight saving is essential

CNG Fuel Tank OEM #2• Every 1,000 lbs reduces fuel economy by ~2%; 500 lbs of extra weight is “very significant”

CNG Fuel Tank OEM #3• CNG fuel tank industry has “more room for improvement on weight and volume”

LNG Fuel Tank OEM• LNG tank weight compared to diesel is a barrier to expanded LNG HDV deployments


To meet the needs of individual fleets and the applications they serve, various CNG and LNG fuel tank configurations are being installed on heavy-duty NGVs throughout North America.

4.2 Onboard Fuel Storage for Heavy-Duty NGVs4.2.4 Common Onboard CNG and LNG Fuel Systems for HDVs

of onboard natural gas storage; these vehicles tend to be fueled by LNG rather than CNG. This is because vehicle driving range is usually important, the space available for fuel tank(s) on the tractor is limited, and the incremental weight of the fuel tank(s) affects payload capacity and therefore business economics. Smaller HDVs in the Class 4 to 7 range typically need 35 to 75 DGE of onboard natural gas storage and are much more likely to use CNG than LNG. Vocational trucks in specialty applications may require significant use of PTO in their duty cycles; such NGVs may be offered in either CNG or LNG configurations, depending on the operational needs and fuel-use logistics of the end user.

Transit buses tend to be different from other HDVs in terms of fuel system design. They are often designed to carry enough fuel to meet requirements of the longest route; frequently, they carry as much as 130 DGE of natural gas. On articulated (double) buses, as much as 190 DGE can be carried. This is partly because transit buses are designed to meet federal requirements for 350 miles of range,30 which requires at least 100 DGE of onboard fuel storage for a 40-foot transit application. This would seem to favor LNG rather than CNG in the transit sector. Although OEMs offer both fuel configurations for their transit bus offerings, CNG is a much more prevalent choice for transit districts that use natural gas. There are a variety of reasons for this, but one key factor is that transit buses have space on their sizable 40-foot chassis to fit multiple large CNG storage tanks (usually on the roof, which allows purchase of low-floor buses typically desired by transit districts).

This general relationship between natural gas fuel type and the amount typically stored on heavy-duty NGVs is depicted in Figure 4.2.4-1. It shows the onboard volumes of CNG and LNG that OEMs typically equip on their commercially available heavy-duty NGVs.31 The variations in fuel volume are indicative that OEMs often customize their heavy-duty NGVs for just enough fuel storage to comfortably meet operational requirements of individual applications.

Given the associated tradeoffs (weight, volume, and cost), a critical decision for OEMs is how much CNG or LNG storage capacity to offer for a given heavy-duty application. OEMs must configure fuel storage systems carefully to meet application- and user-specific needs. This means finding the right balance between carrying sufficient energy to meet operational requirements, while also minimizing fuel systems costs and avoiding user-unacceptable reductions in the weights or volumes to be transported. Because operational requirements vary widely by application and vehicle type, OEMs customize onboard fuel systems for their customers’ optimal volume of fuel storage. For both CNG and LNG fuel systems, OEMs can “mix and match” fuel tank configurations and customize locations for supplemental fuel tanks to best meet the operational needs of the purchaser.

This same parameter (optimal quantity of onboard fuel) is a key determinant of an OEM’s choice for which type of natural gas fuel system to equip on its various heavy-duty NGV products. Whether or not a given natural gas HDV uses CNG or LNG is largely a function of how much fuel is needed for its intended application. Large NGVs deployed in applications with high daily fuel (e.g., Class 8 trucks) typically need more than 80 DGE

33

30 American Public Transportation Association. “Standard Bus Procurement Guidelines.” 2010.31 Derived from responses to questionnaires from HDV OEMs and end users, by TIAX, Fall 2010.

Figure 4.2.4-1

OEMs often customize their heavy-duty NGVs with volumes of onboard CNG or LNG fuel that will best meet operational requirements of individual end users. Generally, heavy-duty NGVs that require the largest volumes of onboard fuel storage (> 80 DGE) are equipped with LNG fuel systems. Notably, HDVs are often designed to carry more on-board fuel than is needed for normal operation between fleet-defined refueling intervals.

34

Street Sweepers

School Buses

Refuse Trucks

Short Haul Semi-Trucks

Regional Haul Semi-Trucks

Transit Buses

Yard Hostler (Off-Road)

Misc. Vocational HDVs

0 20 40 60 80 100 120 140 160

Heavy-Duty NGVs carrying less than 80 DGE are generally CNG fueled*

Heavy-Duty NGVs carrying more than 80 DGE are generally LNG fueled*

*Note: Transit buses often carry large volumes of

natural gas, but are usually CNG fueled. They have

ample chassis space to hold multiple large CNG tanks.

Typical On-Board Fuel Capacity (DGE)


Heavy-duty NGV OEMs are very cognizant of the range-related needs of their customers and customize onboard fuel storage systems accordingly. Consequently, return-to-base end users with well-prescribed driving routes are able to very effectively balance range vs. payload tradeoffs.

4.2 Onboard Fuel Storage for Heavy-Duty NGVs4.2.5 Manufacturer Targets for Heavy-Duty NGV Range

A very important operational consideration for end user fleets is the range (in miles or operating time) that their various types of HDVs will provide between typical refueling events. End users of heavy-duty NGVs seek sufficient range for their vehicles while also managing tradeoffs on weight, volume, and cost. However, for obvious reasons, fleets assign very high importance to their vehicles not running out of fuel while in service. Thus, they tend to specify heavy-duty NGVs from OEMs that carry more onboard fuel storage than is functionally needed. For example, Class 8 LNG trucks being used in return-to-base delivery applications are often equipped for 300 miles of range, even though trucks in such applications are typically driven less than 200 miles per day for the majority of their operational time.32 Transit districts are particularly concerned about not running out of fuel. As previously described, they commonly request that OEMs equip their transit buses with more fuel than is normally needed in typically daily operation. One reason for this may be that some transit districts seek to provide all buses with enough fuel for their longest routes.

Heavy-duty NGV OEMs are very cognizant of these range-related needs of their customers, and customize onboard fuel storage systems accordingly. OEMs were queried about typical driving ranges on their various heavy-duty NGV types and applications. End user fleets also provided input about the heavy-duty NGVs they typically purchase. Figure 4.2.5-1 presents the input received for “typical driving ranges” for various types of heavy-duty NGVs. Industry representatives also provided anecdotal comments about this issue of range. As summarized in Table 4.2.5-1 representatives generally believe range is not an issue for return-to-base heavy-duty NGV fleets. In fact, such fleets can “flourish” with driving ranges that are routinely provided today.

35

32 U.S Census Bureau. “Vehicle Inventory and Use Survey.” 2002.

Figure 4.2.5-1

The typical driving range achievable with heavy-duty NGVs varies by type and application. For return-to-base applications with well-defined routes, range tends to be a non-issue. A driving range of 200 to 300 miles is routinely provided and reportedly works very well for many HDV sectors.

36

Street Sweepers

School Buses

Refuse Trucks

Short Haul Semi-Trucks

Regional Haul Semi-Trucks

Transit Buses

Yard Hostler (Off-Road)

Misc. Vocational HDVs

0 50 100 150 200 250 300 350 400 450

Heavy-Duty NGVs traveling less than 300 miles are generally CNG fueled*

Heavy-Duty NGVs traveling more than 300 milesare generally LNG fueled*

(Not Reported)

(Not Reported)

Typical Range (Miles)

*Range refers to the maximum distance the vehicle can travel between refueling events. This is typically greater than the daily/maileage accumulated by the vehicle

Input from ExecutiveRepresenting:

Comments Regarding Vehicle Range

Class 8 Truck OEM #1• Local and regional distribution trucks “flourish” with 75 DGE of CNG and a range of 250 miles


• Customers don’t worry about range, although more range is clearly better (all else being equal)

• CNG and LNG fuel tanks can be configured to meet the customer’s range requirement

• 70 to 80 DGE of either LNG or CNG can provide “sweet spot” range of 300+ miles


• Range in return-to-base trucking applications is not a significant problem for end users

• Range capabilities can be customized by configuring with a mix of 15 and 30 DGE tanks

• However, Class 8 line-haul trucking “can’t be done” with current range and infrastructure

CNG Tank OEM• Transit buses are typically equipped with 4 to 7 CNG tanks to meet user range requirements

Heavy-Duty NGVUpfitter

• Standard practice to mix and match tank numbers and types to fit range needs of customers• Common packages include 50, 60, 72, and 82 DGE

Medium-Duty NGVSVM

• With lightweight CNG tanks, range is a non-issue in return-to-base trucking applications

• A Class 8 tractor with the (anticipated) 11.9L Cummins Westport CNG engine carrying 150 DGE will deliver a compelling driving range of 500 to 600 miles

LNG/CNG TruckDealer

• Fleets that understand their routes have no problem with NGV range

• A range of 250 to 350 miles is readily available and works very well for return-to-base trucking

Table 4.2.5-1

Heavy-duty NGV industry representatives generally believe range is not an issue for return-to-base heavy-duty NGV fleets.

37


The current heavy-duty NGV industry in North America is relatively small compared to markets for conventional HDVs and their various parts and components. Higher production andsales volumes are the key to a sustainable and expanded heavy-duty NGV market.

4.3 Industry Business Drivers: Profitability and Sales Volumes 4.3.1 Heavy-Duty NGVs OEMs

Detailed information regarding heavy-duty vehicle OEM sales volumes and profitability associated with NGVs was not available for this study. Table 4.3.1-1 summarizes general comments received from OEM representatives. Trends from OEM input include the following:

All the responding representatives indicated that their company “perceives a long-term business advantage and positive return on investment” for selling heavy-duty NGVs.

Currently, heavy-duty NGVs are not purpose-built for natural gas engines and onboard fuel systems;they are built by adapting an existing diesel-powered truck. The additional costs to develop and commercialize heavy-duty NGVs varies widely, depending on whether or not the OEM also manufacturers the NGVs’ natural gas engine (not currently the norm).

For the companies that provided input, current annual production volumes of heavy-duty NGVs range from 25 to 1,000 units for North American markets. In most cases, capacity already exists to significantly increase production, if there is demand from end users.

To justify large new investments in heavy-duty NGV production capabilities, a significant increase in demand would be needed within the North American market. No consensus was found regarding sales volumes that would constitute a “sustainable” and profitable market. OEM representatives generally cite the need for at least tens of thousands of units annually.

The future of a profitable heavy-duty NGV business largely depends on HDV fleets having access to: 1) affordable, conveniently located fueling stations, 2) a reduction in incremental costs, and 3) a compelling cost differential between diesel and natural gas fuel.

Current production and sales of heavy-duty NGVs and their components in North America are very small compared to diesel HDVs. For example, current annual production of Class 8 trucks for the North America market is approximately 150,000 units (although as many as 235,000 units have been estimated for 2011).33 It is estimated that less than 1.5 percent of this recent Class 8 truck production consisted of vehicles that were factory built or upfitted to operate on natural gas.34

In the broad sense, corporate profitability refers simply to a company’s near-term ability to make money through performance and productivity. A company’s profits or losses associated with a given product or service captures the associated direct revenues and costs. In a more detailed sense, profitability takes into account timeframe and whether indirect benefits are considered. It can include less-tangible costs or benefits such as long-term impact, competitive positioning and corporate image. Thus, a company’s “profitability” (or lack thereof) for selling products in the heavy-duty NGV market may not be directly or immediately measurable.

38

33 Transport Topics. “Aging U.S. Truck Fleet Could Lead to Production Boost Next Year.” http://www.ttnews.com/articles. November 19, 2010.34 Based on questionnaire input from heavy-duty truck OEMs/SVMs and NGV upfitters to TIAX, Fall 2010.

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Table 4.3.1-1

Input from representatives for 11 different heavy-duty NGV OEMs indicate that they generally perceive a long-term business advantage for selling NGVs.

39Source: input from OEMs to TIAX, Fall 2010


Manufacturers of heavy-duty natural gas engines generally perceive a long-term positive return on their investments and see strong opportunity ahead to bring new heavy-duty natural gas engines into the North American market. However, some cite the high costs and resource impacts of meeting government requirements for such engines as being significant impediments to expanded NGV commercialization.

4.3 Industry Business Drivers: Profitability and Sales Volumes4.3.2 Heavy-Duty Engine Manufacturers

Four manufacturers currently offer at least one heavy-duty natural gas engine for the North American market. Table 4.3.2-1 summarizes general comments regarding profitability and manufacturing volumes that were received from executive-level representatives of these companies.

40

Additional comments and trends from OEM/SVM input include the following:

All the responding representatives indicated that their company “perceives a long-term business advantage and positive return on investment” for selling heavy-duty natural gas engines.

However, each also cited higher costs and a lower return on investment (ROI) as being major impediments to expanding their heavy-duty NGV production.

The cost to develop and commercialize a heavy-duty natural gas engine from an existing diesel engine platform ranges from $2 million to $10 million. This range of costs is significantly higher than the range cited by vehicle OEMs to develop and commercialize a heavy-duty NGV platform (without the engine). The difference appears to relate to regulatory requirements that specifically fall on the engine manufacturer, such as the emissions certification process.

One engine OEM representative noted that it costs at least $1.5 million per engine family to obtain U.S. federal or California emissions certification. The process to comply with California’s onboard diagnostics and durability requirements are particularly extensive and costly.

Table 4.3.2-1

41

Input fromWhat

CompanyType?

CurrentAnnual

Production

AnticipatedNear-TermProduction

Cost toDevelop/

CommercializeNG Version of

HD Engine

Comments Regarding Volume/Profitability/Expansion of Industry

Engine OEM #12,500 to

3,000TBD

~$8 to $10Million

• Threshold for OEM interest is at least 1,000 units annually

• However, much higher volumes are required to justify expanded production and greater investments

Engine OEM #2 ~250 Units TBD ~$10 Million

• Annual volumes in the range of 10,000 units are needed for sustainability

• Engineering and testing resource requirements are “very intensive”

• HDV OEMs “reluctant to do engineering” for new HD NGVs without tangible and immediate orders

Engine OEM #3No

Information(Starting Up)

Significant,“Not Diesel”

Levels~$2 Million

• Ready to bring in NG engines in the 6.0, 8.0 and 15.0 liter displacement categories

• However, there must be significant market growth and ROI

Engine OEM #4 ~200 Units ~750+ Units No Input

• Conversion market demand looks strong

• HDV OEM interest is strong with strong sales projected

• Dealership network expanding throughout U.S. and Canada

Heavy-duty engine manufacturers reported the need for strong market demand to expand their NGV offerings.


Installers and upfitters of heavy-duty NGVs are doing brisk business in regions where heavy-duty NGVs are most in demand. These markets are generally driven by a combination of regulatory requirements and availability of incentives for end users to partially offset higher costs.

4.3 Industry Business Drivers: Profitability and Sales Volumes4.3.3 Heavy-Duty Vehicle Installers/Upfitters

It is important to note that Southern California has historically been North America’s busiest market for conversions of heavy-duty diesel vehicles to operate on natural gas. This is primarily due to a combination of government regulations and available financial incentives. According to AFV Fleet/FAB’s literature, its business in Southern California was specifically founded to meet the demand for heavy-duty AFVs created by the SCAQMD’s 1100 series of fleet rules (discussed in Section 2.2). Hundreds of millions of dollars in grants have been allocated to help offset the incremental cost of heavy-duty NGVs deployed in Southern California. No other region across the U.S. or Canada currently has this compelling combination of mandates and financial assistance for end user fleets to deploy heavy-duty NGVs.

Several other companies that perform NGV fuel system installations and upfits provided input for this study. Most are primarily involved with light- and/or medium-duty NGVs. In general, representatives reported that business for NGV conversions has been good in a variety of niche markets that are driven by government mandates and/or incentives. Current annual volumes are typically in the range of 500 to 1,000 units, though one company reported 4,000 units in 2010. However, like other industry players, representatives from these companies tend to cite the need for tens of thousands of NGVs to be manufactured or upfitted in North America before the industry can become self-sustaining. They also cite the high costs of meeting regulatory requirements during the NGV conversion process. Specifically, they noted that obtaining certifications from the U.S. Environmental Protection Agency (EPA) and/or the California Air Resources Board (CARB) can be extensive and costly.37 While such costs are not unique to the alternative fuels business, the associated low annual sales volumes make it much harder to spread costs over multiple product lines and achieve a favorable ROI.

Ten companies that perform NGV upfits for the North American market were contacted for this study, six of which provided input. One heavy-duty NGV upfitter, AFV Fleet Services of FAB Industries (AFV Fleet/FAB), advertises itself as “North America’s largest supplier of complete alternative fuel storage systems to the transit and refuse industry.” AFV Fleet/FAB has installed several thousand CNG and LNG fuel systems on heavy-duty NGVs of many types over the last ten years (Figure 4.3.3-1). Reportedly, more than 50 percent of all natural gas transit buses in the U.S. use its fuel system.35 At its state-of-the-art facility in Southern California, AFV Fleet/FAB can simultaneously accommodate fuel system installations for approximately 36 HDVs. Capacity for gaseous fuel system installations is currently 100 systems per month (1,200 per year), with room to expand production.36 AFV Fleet/FAB’s actual volume of fuel system installations for the North American market is proprietary information, but it is clear from visiting this facility that its California business is booming, and revenue generation is quite strong.

42

35 AFV Fleet Service/FAB Industries. http://www.fabind.com/handout.pdf. Accessed October 2010.36 Fleets and Fuels Show Times. “AFV FAB Expands.” http://showtimesdaily.com/news-articles/afv-fab-expands. August 16, 2010. 37 Based on input provided by OEMs via questionnaires and telephone discussions.

43

Figure 4.3.3-1

Business is thriving for fuel system installations on heavy-duty NGVs in regions with a strong combination of regulations and incentives for end users.


Manufacturers of onboard CNG and LNG fuel systems are collectively manufacturing and selling tens of thousands of fuel tanks for the North American NGV market. They generally acknowledge that costs of their products need to be reduced, one key to which is significantly higher volumes.

4.3 Industry Business Drivers: Profitability and Sales Volumes4.3.4 CNG and LNG Tank Manufacturers

Additional anecdotal comments38 by these tank manufacturers are highlighted below:

Numerous companies manufacture natural gas tanks for heavy-duty NGVs in North America (Figure 4.3.4-1). Currently, annual sales for North American NGV markets are relatively low compared to worldwide sales. Seven manufacturers of onboard natural gas storage tanks were contacted for this study. Five provided input on the general issue of profitability and sales volumes. Table 4.3.4-1 summarizes these inputs.

44

38 Source: based on input provided by CNG and LNG tank manufacturers to TIAX, Fall 2010.

CNG Tank OEM: Economy of scale needs to increase substantially, but this will plateau to a point where costs can no longer be driven lower by increased volumes.

CNG Tank OEM: North American market is improving but remains “soft” compared to worldwide markets. Italy is driving development of tank technology and has strong end use.

CNG Tank OEM: Reducing costs is the major barrier to expand North American NGV business. Volumes and profits are hindered by limited supply/high costs of carbon fiber and energy intensiveness of manufacturing. Overhead costs need to be spread over tenfold more units.

CNG Tank OEM: Company is capable of expanding but is currently restricted to a single forge line. Company will expand if and when the market moves.

LNG Tank OEM: “Lots of capacity” exists to significantly expand production, if market drivers are strengthened (especially end user incentives).

LNG Tank OEM: At 10,000 annual units, “step-change decreases” in both material and labor costs will accrue (based on experience with similar products in other cryogenic liquid storage applications).

Figure 4.3.4-1

Table 4.3.4-1

Numerous companies manufacture CNG tanks for heavy-duty NGVs in North America. Input from manufacturers indicates that sales need to be significantly increased to reduce manufacturing costs.

Inputs from fuel tank manufacturers about profitability/volume.

45

Input SourceCurrent Annual

Production(Worldwide)

North AmericanShare of

WorldwideSales (%)

Annual Quantity Needed from NorthAmerican NGV Markets to Significantly

Reduce Manufacturing Costs?

CNG Tank OEM #1(100% Type IV)

10,000 50No Specifics;

“Higher Volumes Will Bring Down Costs”

CNG Tank OEM #2(~90% Type III)

8,000+ 90 100,000+ Units

CNG Tank OEM #3(Mostly Type IV)

Not Disclosed Not Disclosed 100,000 Units

LNG Tank OEM #1 600 70 2,000 Units

LNG Tank OEM #2 1,000 90 10,000 Units


Currently, few regulatory drivers exist for OEMs to manufacture and sell heavy-duty NGVs; such drivers have primarily shifted to end user fleets. However, industry players generally attribute high value to enhancing “green image” and portraying good corporate responsibility.

4.4 Other Drivers: Regulatory Compliance and Corporate Responsibility

However, this advantage has diminished with introduction of the federal 2010 heavy-duty engine emissions standards, which are being met with both natural gas and diesel engines. However, future regulations to reduce greenhouse gas emissions or reduce transportation fuels from geopolitically unstable regions of the world may become new drivers for the sale and use of heavy-duty NGVs. For example, the U.S. Department of Transportation and (DOT) and EPA have jointly proposed America’s first program to regulate fuel efficiency and greenhouse gas emissions for medium- and heavy-duty trucks, beginning with model year 2014.39

While regulatory compliance does not seem to be a strong factor, corporate image does appear to help motivate OEMs to produce and sell heavy-duty NGVs. Most corporations are increasingly aware of the roles they play in movements toward “green” policies and enhanced environmental protection activities. Many large companies, including vehicle manufacturers, now actively portray positive “green” images as integral parts of their overall marketing strategy.

To assess the degree to which these are significant market drivers, high-level representatives from heavy-duty NGV OEMs were asked the following in questionnaires:

Rate the relative importance that the following “market drivers” may have played in your company’s decisions to sell heavy-duty natural gas vehicles:

1) My company has a corporate responsibility to sell environmentally friendly products2) My company seeks to enhance its “green” image

Representatives from thirteen different heavy-duty NGV OEMs responded. As shown in Figure 4.4 1, the majority of these representatives attributed high or very high importance to enhancing corporate green image. A similar, albeit slightly weaker, trend was found regarding the importance of heeding corporate responsibility to sell environmentally friendly products.

In contrast to the end user demand side of the heavy-duty NGV industry, regulatory compliance does not seem to be a significant current driver for the supply side. Most notably, OEMs do not need to produce NGVs (or other alternative fuel vehicles) to meet current North American emissions or future fuel economy regulations. As previously described, a key historical advantage of using natural gas to power HDVs has been the ability to achieve low engine-out emissions of NOX and PM. This formerly was a key driver for heavy-duty engine OEMs to build and sell certified low-emissions natural gas engines for deployment in heavy-duty NGV platforms.

46

39 For details, see Department of Transportation website at http://www.nhtsa.gov/fuel-economy.

Figure 4.4-1

In questionnaires, heavy-duty NGV OEM representatives generally reported that their companies attribute high importance to enhancing corporate “green image” and meeting “corporate responsibility to sell environmentally friendly products.”

47

Refuse Truck OEM #1

School Bus OEM #1

Transit Bus OEM #2

Heavy-Duty Truck OEM #4






Transit Bus OEM #1

Off-Road HDV OEM #1

Refuse Truck OEM #2

Street Sweeper OEM #1

1 2 3 4 5

Response Rating

Not Important Very Important

Vehicle OEM Questionnaire

Rate the relative importance that the following “market drivers” may have played in your company’s decisions to sell heavy-duty natural gas vehicles:

1. My company has corporate responsibility to sell environmentally friendly products 2. My company seeks to enhance its “Green” image


A frequently cited challenge associated with expanding markets for heavy-duty NGVs is the major incremental cost (forty to sixty percent) that they currently entail over comparable diesel HDVs. The biggest contributor by far is the relatively high cost of an onboard CNG or LNG fuel system. Most industry representatives believe that incremental cost must be significantly reduced if heavy-duty NGVs are to become an expanded and self-sustaining business.

4.5 Manufacturers’ Views on Key Challenges and Barriers4.5.1 Incremental Costs of Heavy-Duty NGVs and Components

Heavy-duty NGVs currently cost significantly more to manufacture than their diesel counterparts; these higher capital costs are passed on to fleets that purchase them. Figure 4.5.1-1 shows the incremental capital costs to end users for seven different heavy-duty NGV types. Depending on the specific application and fuel type (CNG vs. LNG), heavy-duty NGVs cost 40 to 60 percent more than comparable diesel models. Notably, costs for conventional diesel HDVs have been increasing due to more complex emissions control systems required to meet 2007 and 2010 emissions standards. Still, the price premium for heavy-duty NGVs remains large.

The higher cost for a given heavy-duty NGV depends on numerous factors, including: vehicle type, how it is built, which engine model and fuel type (LNG or CNG) are selected, and the energy storage capacity of the onboard fuel tank(s). By far the biggest contributing factor is the relatively high cost of a heavy-duty NGV’s onboard fuel system. As shown in Table 4.5.1-1, representatives from CNG and LNG tank manufacturers estimate that onboard fuel tanks and related components constitute 50 to 75 percent of the incremental costs of heavy-duty NGVs; most of the extra costs specifically relate to the CNG or LNG fuel storage tank(s).

Manufacturers of CNG and LNG tanks acknowledge that fuel system costs need to be reduced, and cite higher manufacturing volumes as one key. However, they also note problems that cannot necessarily be solved by increased manufacturing volumes, such as shortages of carbon fiber for CNG tanks. Also, a key factor in the relatively higher costs of onboard natural gas fuel storage systems is that the baseline fuel storage system – less complex diesel fuel tanks manufactured in very high volumes – is widely available at relatively low cost in today’s markets.

48

Input Source Example Fuel Storage Systemfor Heavy-Duty NGVs

Approximate % of Heavy-Duty NGV’sIncremental Cost Attributable to Fuel

Storage System

CNG Tank OEM #1Type III and IV CNG, Up to 46 DGE

per Tank(“Significantly Higher”)

CNG Tank OEM #2Type III CNG @ 60 to 75 DGE

Configurations70

CNG Tank OEM #3Type IV CNG @ 41 or 82 DGE

Configurations60

LNG Tank OEM #1One or More LNG Tank(s)

~85 DGE Each65 to 75

LNG Tank OEM #2One or More LNG Tank(s) @ 68 to 86

DGE Each50

Table 4.5.1-1

CNG and LNG tank OEM estimated significant contribution by fuel storage systems to incremental costs of heavy-duty NGVs.40

49

40 Source: inputs received by TIAX via questionnaires from/conversations with vehicle, engine and fuel tank OEMs, Fall 2010.

Figure 4.5.1-1

Heavy-duty NGVs have much higher capital costs than comparable diesel HDVs; onboard fuel systems are the major cost contributor.

50

School Bus

Street Sweeper

HD Vocational

Transit Bus

Regional Haul Semi

Short Haul Semi

Other(e.g.:Engineering,

Methane Detection, Safety)$10,000 (20%)

Heavy-Duty NG Engine$7,500 (15%)

Onboard LNG orCNG Fuel System$32,500 (65%)

Refuse

$0 $10 $20 $30 $40 $50 $60 $70 $80 $100$90

OEM-Reported Incremental Costs of Various Heavy-Duty NGV Types

Figure 4.5.1-2

A typical heavy-duty NGV’s incremental cost is $50,000. The onboard CNG or LNG fuel system contributes about $32,500 (65%).

Incremental Cost ($ in Thousands)

Source: Questionnaire responses from and/or telephone conversations with OEM representitives. TIAX Fall 2010

Source: questionnaire responses from and/or telephone conversations with industry representitives. TIAX Fall 2010

Typically CNG fueled

Typically CNG or LNG fueled

TypicallyLNG fueled


Polled industry representatives generally believe that end users purchasing heavy-duty NGVs require payback periods of about three years. The key metric for end users of heavy-duty NGVs is the cost differential between diesel and natural gas fuel; some industry representatives believe this cost differential should be larger in North American markets.

4.5 Manufacturers’ Views on Key Challenges and Barriers4.5.2 Customer Payback Period

Table 4.5.2-1 provides a summary of inputs received from industry representatives (OEMs, installers and upfitters) about what they perceive to be an acceptable payback period for fleets interested in purchasing heavy-duty NGVs. All comments are assumed to refer to definitions of payback period as used by their customers (end user fleets). Section 5.3 further elaborates on required payback periods from the perspective of end users, and provides an example analysis. Obviously, a key metric in determining payback period for heavy-duty NGVs is the fuel cost differential. It is widely acknowledged that a suitably large differential is needed for end users to realize low NGV lifecycle costs compared to the diesel baseline. In feedback received for this study, some representatives of the heavy-duty NGV industry commented that the current fuel cost differential in North American NGV markets is not consistently as large as it needs to be. They indicated that both CNG and LNG are being priced by some vendors at a set percentage of diesel fuel (“top down”) rather than based on the actual cost of the commodity plus margin (“bottom up”).

This is not just a problem associated with the pricing of natural gas fuel. Feedback from some stakeholders of the North American NGV industry indicates there is dissatisfaction that NGV components – especially onboard fuel systems – continue to be priced significantly higher than their conventional vehicle counterparts, even after factoring in low-volume manufacturing. As noted elsewhere in this report, there are various dynamics that can contribute to less-than-optimal pricing of heavy-duty NGVs and/or the natural gas fuels on which they operate. These include varying pricing strategies by region or type of customer, as well as what some might consider “extra” markup by vendors. For heavy-duty NGV deployments to be expanded in North America, it appears that greater cooperation may be needed among all members of the NGV supply chain to offer more favorable pricing that ultimately leads to a shorter payback period for end users.

The “payback period” for a vehicle purchaser refers to the time needed for the purchaser of a heavy-duty NGV to recoup the net present value of the vehicle’s incremental capital cost through lower operation and maintenance (O&M) costs. Primarily, NGVs can provide lower O&M costs because their fuel has historically been priced well below diesel fuel on an energy-equivalent basis. It is important to note that payback period also applies to the purchase of new conventional HDVs, i.e., there is a capital cost that can be partially or fully offset by lower operational costs associated with a newer vehicle (improved fuel efficiency, reduced vehicle maintenance requirements, etc.). The payback period for purchasing a heavy-duty NGV entails time to recoup capital costs above and beyond the baseline diesel option. While simple in concept, determining the payback period for fleets that purchase heavy-duty NGVs can involve complex issues and assumptions.

51

Table 4.5.2-1

Heavy-duty NGV industry representatives responding to questionnaires indicated that an acceptable payback period for their fleet customers is about 3 years. The keys to achieve this are low incremental capital costs, continued availability of financial incentives, and a favorable fuel cost differential.

52

Input fromExecutive

Representing:

Comments Regarding Customer PaybackPeriod for Purchase of Heavy-Duty NGV

Class 8 Truck OEM• HDV fleets typically seek payback period of about 1.5 years for a new diesel HDV purchase• For purchasing an NGV, fleets will tolerate payback period roughly twice as long (3 years)• Without incentives (grants, tax credits) payback period for a HD NGV is too long (~5 years)

Class 8 Truck OEM • Largest fleets in North America typically seek 3-year payback; must not exceed 5 years

School Bus OEM • School districts are not open to long payback periods, due to short and tight budget cycles

Refuse Truck OEM• High incremental costs make it difficult for fleets to achieve acceptable payback period without significant government incentives

HD Engine OEM • End users seek a payback period of 2 to 3 years

HD Engine OEM • End users seek a payback period not exceeding about 4 years

HD Engine OEM• A compelling payback period for fleets “is currently not there,” but could be in the future if government incentives can be based on value of reduced greenhouse gas emissions

HD NGV Upfitter • Fleets seek payback within 4 to 5 years; this goal is very achievable for return-to-base uses

LNG Fuel TankOEM

• Fleets can achieve an acceptable payback period through fuel cost savings alone; however, fleets may be “hesitant” to make decision without clear, compelling government incentives

CNG Fuel TankOEM

• Payback period highly depends on incremental cost, fuel usage, and fuel cost differential


Responding representatives of the heavy-duty NGV industry believe that fueling infrastructure issues present major problems for existing and future deployments of heavy-duty NGVs in North America. Across all types of industry representatives, concerns were expressed that end users face high costs to build onsite CNG or LNG fueling stations and that end users have inadequate access to offsite fueling stations.

4.5 Manufacturers’ Views on Key Challenges and Barriers4.5.3 Refueling Infrastructure

Within the heavy-duty NGV sector, return-to-base fleets with high fuel usage are best positioned to cost effectively gain access to natural gas fuel. There are two basic options available to such fleets: 1) build and use one or more fueling stations onsite at their fleet yards, or 2) obtain access to offsite shared stations that are nearby and/or along normal driving routes.

As Figure 4.5.3-1 summarizes, representatives of the heavy-duty NGV industry have significant concerns that existing or potential heavy-duty NGV users are not optimally positioned for either option. Across all types of industry representatives (heavy-duty vehicle and engine OEMs, fuel tank OEMs, installers and upfitters), high levels of concern were expressed that end users face high costs to build onsite CNG or LNG fueling stations and that end users have inadequate access to offsite fueling stations.

This figure also summarizes the level of concern expressed by the end users themselves about their fleets’ access to CNG and/or LNG fueling stations. Notably, non-transit end users expressed similar concerns as the industry representatives, i.e., that access to fueling infrastructure is not affordable and/or adequate. By contrast, transit end users did not identify fueling infrastructure as being a major concern. This reflects fairly unique operational and policy parameters associated with the transit bus sector. For example, transit districts tend to be well subsidized for NGV use, and many use very large volumes of fuel that command attractive long-term agreements with third parties for onsite supply of CNG or LNG, or they own and operate the station themselves.

Representatives of the heavy-duty NGV industry were queried about concerns they may have regarding challenges (real or perceived) for existing or future deployments of heavy-duty NGVs in North America. A top concern expressed by industry representatives involves the need for end user fleets to have affordable, convenient access to natural gas. (See the CNG Infrastructure and LNG Infrastructure reports of the overall TIAX assessment for extensive discussion about the natural gas fueling infrastructure and its high importance to the North American NGV market.)

53

Figure 4.5.3-1

Fueling infrastructure issues are among the top concerns of the heavy-duty NGV industry. As reflected in responses to the two issues below, industry representatives and non-transit end users expressed concern that end user fleets may not have affordable access to CNG and/or LNG fuel.

54

Issue #1: End users face high costs to build on-site CNG or LNG fueling stations

Issue #2: End users have inadequate access to off-site fueling stations

5

4

3

2

Large Concern(Very Significant)

QuestionnaireResponse Rating

No Concern(Not Significant) 1

Vehicle OEMs Engine OEMs Tank OEMs SVM Upfitters End Users(Non-Transit)

End Users(Non-Transit)

3.8*

3.9*

OEM-Reported Incremental Costs of Various Heavy-Duty NGV Types

*Average of All Responses to QuestionsSource: Responses to Questionnaires, Fall 2010


The Cummins Westport ISL-G natural gas engine – the workhorse of most heavy-duty NGVs in North American service today – achieves comparable durability and reliability to Cummins’ diesel engines and has essentially the same warranty. Industry representatives indicate this has become the norm.

4.6 Technology Limitations and Manufacturing Issues4.6.1 Durability/Reliability/Warranty

Notably, heavy-duty natural gas engine technologies have matured sufficiently and are providing durable, reliable options to end user fleets. In particular, the Cummins Westport ISL-G natural engine has become the workhorse for most heavy-duty NGVs deployed in North America today. About ten years ago, Cummins Westport realized a “six-fold” reliability improvement in its spark-ignited natural gas engine technology through changes in combustion strategy and electronic controls.41 As reflected in Cummins Westport’s brochure (Figure 4.6.1-1), the ISL-G now offers durability and reliability comparable to Cummins diesel engines.

It is also noteworthy that the complexity of diesel-fueled HDVs has increased due to the addition of emissions control systems used to meet the 2007 and 2010 emissions standards. It may take many more years of real-world fleet service for post-2010 diesel and natural gas HDVs before detailed comparisons can be made about reliability and durability.

Reliability and durability are especially important concerns in HDV applications with the most-severe operating conditions, such as the construction and mining industries. Consequently, compression-ignition engines have been highly preferred in these applications, leading to the near exclusive use of diesel fuel in this market segment. If heavy-duty natural gas engines are to make in-roads into these sectors, they will need to prove that they meet the same rigorous requirements.

Warranties for heavy-duty natural gas engines are typically comparable to diesel engines, which share many if not most parts with their natural gas derivatives. In many cases, the base warranty is essentially the same as the OEM factory warranty for a diesel HDV (see Figure 4.6.1-1). Additional component-specific warranty coverage may be provided by the onboard fuel storage system provider or the vehicle’s upfitter (if applicable). This can lead to lack of clarity about the responsible party for warranty claims. However, this issue is diminishing as greater numbers of heavy-duty NGVs are being sold as factory (OEM) options.

Durability and Reliability are important aspects of the performance of an engine, affecting end user opinions of the engine as well as lifecycle costs. Durability is a measure of the useful life of the engine, often expressed in total miles or hours of operation. Reliability is an indication of the number of failures or interruptions encountered by a user over the useful life of the engine. A multitude of factors influence the durability and reliability of engines. Historically, compression-ignition (diesel) engines have demonstrated greater durability and reliability than spark-ignition (gasoline or dedicated natural gas) engines in the transportation market. This is due to the higher- speed operation of spark-ignited engines and additional complexities of ignition systems. For spark-ignited natural gas engines, fuel system differences from diesel also impact relative durability and reliability; for example, LNG fuel systems, tanks, and pumps have experienced durability issues, although such problems are being addressed by manufacturers.

55

41 Personal communication between TIAX and Cummins Westport executive, August 2010.

Company Statement on Durability and Reliability:The ISL-G engine block is shared with the rugged Cummins ISL diesel – a full-skirted block for increased rigidity and strength. The design provides superior piston ring and bearing life, improved coolant flow and targeted piston cooling for greater reliability and superior durability. Life-to-rebuild and rebuild-ability are the same as diesel.

Company Statement on Warranty:Cummins Westport [natural gas] engines feature the same factory base warranty coverage as Cummins diesel engines. For transit bus and shuttle engines, a standard 2-year/unlimited-mileage/kilometers warranty with full parts and labor coverage on warrantable failures* applies. Major components are covered for 3 years/300,000 miles (482,804 km), whichever comes first. For truck customers, full engine coverage is provided for 2 years/250,000 miles (402,336 km), whichever comes first.

Figure 4.6.1-1

The Cummins Westport ISL-G natural gas engine is currently the workhorse of heavy-duty NGV deployments in North America. Cummins Westport claims that durability and reliability for the ISL-G engine are essentially the same as Cummins diesel engines, and (as noted in the boldface text below) the ISL-G has “the same factory base warranty coverage as Cummins diesel engines.”42

Similar to the ISL-G, other available heavy-duty natural gas engines are essentially conversions of existing diesel engine platforms. For example, the Emissions Solutions 7.6L Phoenix natural gas engine is based on the Navistar Maxxforce diesel engine of the same displacement. Input from engine manufactures indicate that, in general, existing heavy-duty natural gas engines have similar warranties to the diesel engines from which they were derived.

56

42 Cummins Westport. “ISL G Natural Gas Engine.” http://www.cumminswestport.com/pdf/CWI-ISL_G_Brochure_MED.pdf. Accessed November 2010.

Cummins Westport ISL-G Natural Gas Engine


Service and maintenance requirements for heavy-duty NGVs are not unlike those for other types of HDVs. End-of-life issues exist and present challenges, some of which are being addressed.

4.6 Technology Limitations and Manufacturing Issues4.6.2 Service, Maintenance, and End-of-Life Issues

Notably, heavy-duty NGVs designed for return-to-base applications are best suited to getting needed service and maintenance regimens. A potential issue for LNG line-haul trucks is that such vehicles often rely on public truck stops and networks of maintenance providers to fuel and service their trucks. Currently, resources to service and maintain LNG trucks are lacking in North America.

End-of-life issues for vehicles and their components are potential challenges for expanding today’s NGV industry in North America. End-of-life concerns are most often associated with high-pressure vessels used in onboard CNG fuel storage systems. Representatives of OEMs that make either CNG or LNG fuel tanks were queried about whether end-of-life issues for their products could potentially be significant challenges expansion of the North American NGV industry. As shown in Figure 4.6.2-1, neither CNG nor LNG tank manufacturers rated this as a large potential barrier. CNG tank OEMs noted that their tanks have been designed and tested to meet twenty year lives with 15,000 pressure cycles, with some components receiving as much as one million cycles. However, they acknowledge that end users must follow established inspection requirements and ensure that CNG tanks are used properly. An LNG tank OEM representative noted that his company’s LNG tanks are designed to outlive the vehicles using them (thirty or more years).

Other industry players (manufacturers, installers, and upfitters) were also asked about end-of-life issues, in reference to fuel tanks as well as NGVs in general. They generally concur with the CNG tank OEMs that end-of-life for CNG tanks has not been an issue, noting that CNG tank safety has been proven in real-world experience. However, as described in Figure 4.6.2-1, some government and industry representatives have voiced concerns about older cylinders (25+ years) that may still be in service, and could potentially fail. Actions to address such concerns are being proposed.

Service and maintenance requirements for heavy-duty NGVs with spark-ignited engines (e.g., the Cummins Westport ISL-G) tend to be similar to heavy-duty gasoline vehicles, which also use spark-ignited engines. The heavily deployed Cummins ISL G can be serviced at any Cummins-authorized distributor or truck dealer, for which there is an extensive service network in the western U.S., where thousands of ISL-G equipped HDVs have been deployed. Requirements for maintaining and servicing natural gas engines like the ISL-G tend to be different—but overall no more complex or costly—than those for comparable diesel engines. For example, maintenance intervals for the ISL-G include spark plug replacement every 18,000 miles. Diesel engines have no spark plugs and therefore do not include this as a maintenance item. On the other hand, natural gas engines use a different type of oil than diesel engines, and they require about one third fewer oil changes than diesel engines.43 Also, today’s new diesel HDVs are equipped with particulate filters and other diesel-specific emissions control systems that require periodic maintenance. As noted in a recent government report, switching to natural gas in a heavy-duty vehicle application “can increase or decrease maintenance costs, depending on the particular vehicle, application, and mechanic.”44

57

43 ATA. “Is Natural Gas a Viable Alternative to Diesel for the Trucking Industry?” http://www.truckline.com..44 National Renewable Energy Laboratory. “Business Case for Compressed Natural Gas in Municipal Fleets.” Technical Report NREL/TP-7A2-47919. June 2010.

Table 4.6.2-1

A. Neither CNG nor LNG tank OEMs rated end-of-life issues as a large potential barrier to expansion of the NGV market in North America, although CNG tank OEMs rated it as more significant.

B. A Department of Energy government-industry NGV user group has discussed concerns about CNG tank end-of-life issues, and is proposing various types of action.

B. Concerns Expressed at the U.S. DOE’s NGV Technology Forum45

Many older CNG tanks are still in use that raise “obvious safety concerns.”

A comprehensive cylinder tracking system is needed. CNG cylinders have limited life, and many older (pre-1996) cylinders are still in use.

These cylinders should be removed at their end-of-life, but little is known about the current vehicle owners or if they know to take appropriate action.

Lack of information could allow potentially unsafe cylinders to remain in service and fail from stress corrosion cracking or other causes.

The North American NGV industry needs to work with the DOE NGV Technology Forum to propose and implement solutions, including 1) cylinder tracking programs, 2) end user education efforts, and 3) technology-based solutions to locating and verifying cylinders.

58

45 Douglas Horne. “CNG Cylinder Safety Issue and Opportunities.” Clean Vehicle Education Foundation. http://www1.eere.energy.gov/cleancities/pdfs/ngvtf10_cyl_safety.pdf. October 12, 2010.

A. Natural Gas Tank OEM Questionnaire Responses

Please rate: Are end-of-life issues a potential barrier related to onboard CNG/LNG fuel tanks that would impede expansion of NGV markets in North America?

LNG Tank OEM 1

LNG Tank OEM 2

CNG Tank OEM 3

CNG Tank OEM 1

CNG Tank OEM 2

1 2 3 4 5

Response Rating

Not a Barrier Large Barrier


Representatives of the heavy-duty NGV industry anticipate producing and marketing advanced hybrid electric HDVs for North American markets in the foreseeable future, but development of natural gas fueled versions is not currently a high priority.

4.7 Manufacturers Views on Future Market Opportunities

Representatives from the heavy-duty NGV industry provided the following input about their companies’ perspectives on advanced-technology HDVs and the likelihood of producing versions fueled by natural gas:

Heavy-duty truck OEM: Currently offering a hybrid-electric version of vocational truck platform, which could potentially be fueled by CNG in the future.

Heavy-duty truck OEM: No plans to develop and build a heavy-duty hybrid-electric NGV; the cost would be prohibitive.

Heavy-duty truck OEM: No plans to develop and build a heavy-duty hybrid-electric NGV. Development of a hydrogen fuel cell HDV presents “engineering and economic” issues, but technical hurdles are not as large as market barriers.

Heavy-duty truck OEM: Working on diesel hybrid electric and hydraulic hybrids, but they are costly to develop. Natural gas hybrids are not currently being pursued.

Heavy-duty truck OEM: Diesel hybrid electric HDVs work well but are costly. No need for natural gas hybrids, as this would essentially double the incremental cost.

Refuse duty truck OEM: Hybrid electric competes with natural gas for company resources. No plans for natural gas hybrids.

Refuse duty truck OEM: Currently launching hydraulic hybrid refuse trucks.

Heavy-duty engine OEM: Clear business case needed before launching a natural gas hybrid

Heavy-duty engine OEM: Natural gas hybrids can work, but they present significant challenges

Heavy-duty vehicle OEMs are developing and commercializing various types of advanced technology electric-drive HDVs for North American markets. For example, transit buses powered by diesel- or gasoline-fueled hybrid electric drivetrains have been commercially deployed in certain North American cities. Hybrid electric technology is also beginning to be deployed in other on-road applications, such as vocational and port trucks, and off-road applications, such as terminal tractors. So-called “plug-in hybrid electric” drivetrains are also emerging for HDV applications. Natural gas can also be used as the fuel for hybrid electric HDVs, and such vehicles have been deployed in limited demonstration capacities. Hydraulic hybrid, fast-charge battery electric, and fuel cell electric drivetrain technologies are also emerging. Figure 4.7-1shows some advanced-technology HDV types that are now being deployed, in a demonstration or early commercial capacities.

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60

Figure 4.7-1

OEMs are developing and commercializing various types of advanced technology electric-drive HDVs. These advanced vehicle types can operate on diesel, natural gas, other fuels such as hydrogen, or they may solely use battery power. Electric drive propulsion systems present both opportunities and challenges for expansion of the heavy-duty NGV industry.

Capacity Plug-In Hybrid Electric Terminal Truck

Freightliner M2 Hybrid

Proterra Ecoliner All-Electric Transit Bus

Odyne Plug-In Hybrid Electric Truck with Terex Lift

Crane Carrier CNG Hydraulic Hybrid Refuse Truck BNSF Genset Switcher Locomotive

5 Demand Side: Heavy-Duty NGV Ownership and End Use

Over the last fifteen years, the number of heavy-duty NGVs deployed in North America has significantly increased within specific regions, driven by tandem drivers of mandates for their use and programs that offer users compelling financial incentives.

5.1 Tandem Drivers for End Users: Regulations and Incentive Programs

buses in response to state or local rules, using funds from incentive programs. For example, to comply with SCAQMD Rule 1194, local airports such as Los Angeles International Airport operate fleets of 40-foot LNG and CNG shuttle buses. Rule 1193 requires refuse collection trucks operating within SCAQMD’s jurisdiction to run on alternative fuels. SCAQMD Rule 1195 has similar requirements for school buses. Most of these heavy-duty NGV applications tend to involve return-to-base trucking operations.

Incentive Programs - The Market Segmentation extensively discusses the issue of incentive programs. In general, state, province, and local level policies that affect the NGV industry are similar across the U.S. and Canada in that they promote alternative fuel vehicles as a whole. These policies include, to varying degrees, grants for purchase of vehicles; education and outreach; fuel, vehicle, and infrastructure tax incentives; and non-tax incentives, such as free parking and carpool lane access.

It is difficult to overstate the critical role that incentive programs for end user fleets – often in parallel with regulations and mandates – have played in the deployment of heavy-duty NGVs in the U.S., and to some extent, in Canada. Heavily impacted sectors have included school buses, transit buses, refuse haulers, port drayage, and an array of goods movement trucking operations.

Section 2.2 provides specific examples of incentive programs in California. Other states and provinces have also developed and implemented incentive programs to help deploy heavy-duty NGVs. For example, the New York State and Local Fuel Tax Exemption on Alternative Fuels provides a tax exemption on CNG consumed in that state. New York also offers a Clean Fuel Vehicle Refueling Property Tax Credit to assist with the cost of natural gas infrastructure. Similar programs can be found across North America. However, many of these programs face near-term “sunsets” and will need to be renewed if end users are to continue receiving financial assistance.

Over the last fifteen years, the numbers of heavy-duty NGVs deployed in North America have significantly increased. Most deployments have involved high-profile heavy-duty sectors such as transit and refuse within specific regions that have the tandem drivers of mandates for their use and programs that offer compelling financial incentives. Figure 5.1-1 shows how end users rated the importance of these tandem drivers in their deployment of heavy-duty NGVs. Specific examples are provided in subsequent sections, in the context of regions, HDV applications, and programs.

Regulations and Mandates - NGVs have been particularly successful in heavy-duty sectors where local or regional regulations and/or mandates have targeted end user fleets. A good example is Southern California’s deployment of natural gas transit buses. Today, there are approximately 5,500 natural gas transit buses operating in California, of which about 85 percent are CNG fueled46 and approximately 77 percent are operated in the greater Los Angeles area. Key drivers have been SCAQMD fleet rule 1192 and CARB’s statewide transit rule. Various other types of public HDV fleets have also deployed natural gas

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46 Based on the American Public Transportation Association Transit Vehicle Database, 2010.

Vocational Fleet 2

Municipal Fleet 1

Municipal Fleet 2

Refuse Fleet 1

Refuse Fleet 2

Transit Fleet 1

Transit Fleet 2

Transit Fleet 3

Transit Fleet 4

Transit Fleet 5

Transit Fleet 6

Transit Fleet 7

Vocational Fleet 1

Drayage Fleet 1

Drayage Fleet 2

1 2 3 4 5

Response Rating


Figure 5.1-1

Regulations and incentives have been the tandem drivers for deployment of heavy-duty NGVs in certain regions of the U.S. Most large heavy-duty end fleets queried for this study attributed high or very high importance to regulations and incentives in their decision to purchase NGVs.

End User Questionnaire

Rate the relative importance that the following “market drivers” may have played in your agency’s decision to use natural gas: 1. Take advantage of available grants/incentives/tax breaks 2. Comply with government mandates/regulations

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In addition to current government mandates and/or financial incentives, important drivers for end users to purchase and deploy heavy-duty NGVs include meeting environmental goals and enhancing their organization’s green image.

5.2 Other Drivers: Corporate Policies and Green Image

As noted in the previous section, government requirements (regulations and mandates) and financial benefits (incentives) were reported to be major drivers for end users to purchase heavy-duty NGVs. Important additional drivers involved reducing lifecycle costs (discussed in the next subsection), complying with internal policies, reducing environmental impacts, and enhancing their organization’s green image. As shown in Figure 5.2-1, specific types of environmental initiatives that fleet representatives were asked to comment about included: 1) reduce greenhouse gas emissions, 2) reduce dependence on foreign oil/petroleum usage, and 3) reduce criteria pollutant emissions (NOX and PM). In general, representatives across all four fleet sectors attributed relatively high importance to their organization contributing toward these goals.

This reflects a snapshot of the attitudes for the companies that responded to the questionnaire. They are not necessarily indicative of the majority of end users. Market drivers continue to evolve and affect the purchasing decisions of end user fleets.

However, the “fleet greening” comments from responding fleet users appear to be in line with a general trend across North America. According to a recent survey by NAFA Fleet Management Association, “fleets throughout North America seek to reduce their carbon footprint, improve the number miles per gallon their vehicles receive, and use a mix of alternative fuels as part of their sustainability initiative.”47 NAFA polled roughly 200 fleet managers (NAFA members) throughout North America and found that four of every five fleets “currently have sustainability initiatives in place.” Notably, public service fleets were found to be “far more aggressive in their approach to sustainability, using a larger variety of methods and alternative fuels than their corporate counterparts.”

Just as corporations on the supply side of the heavy-duty NGV industry are tending to move toward “green policies,” so too are demand-side end user fleets. Fleet representatives in four general HDV sectors (transit, refuse, port drayage, and municipal/vocational) provided input about the most important drivers that led to their decisions to purchase and deploy heavy-duty NGVs. General categories of drivers were: 1) financial benefits, 2) environmental/societal benefits, 3) government requirements, and 4) internal policies.

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47 NAFA Fleet Management Association. “Corporate Fleet Sustainability Programs Soar.” http://www.nafa.org. October 4, 2010.

Enhance Agency’s“Green” Image

Comply with Governing Body Guidance/Requirement

Comply with Government Mandates/Regulations

Reduce Dependence on Foreign Oil/Petroleum Usage

Reduce Greenhouse Gas Emissions

Reduce Criteria Pollutant Emissions (NOX,PM)

Reduce Lifecycle Cost(Cheaper Fuel and/or Vehicle

Maintenance)

Take Advantage of Available Grants/Incentives/Tax Breaks

Fin

anci

alB

en

efi

ts

Not Important Driverto Purchase/Deploy

Very Important Driverto Purchase/DeployResponse Rating

En

viro

nm

en

tal/

So

cie

tal

Be

ne

fits

Go

vern

me

nt

Re

qu

ire

me

nts

Inte

rnal

Po

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es

1 2 3 4 5

Market Driver TransitRefuseDrayageVocational/Municipal

Figure 5.2-1

Fleet representatives in four HDV sectors reported that government mandates and/or financial incentives, environmental goals, and enhancing “green image” were the most important drivers that led to purchasing and deploying heavy-duty NGVs. This reflects a snapshot of the attitudes for the companies that responded to the questionnaire, but is not necessarily indicative of the majority of end users. Market drivers continue to evolve and affect the purchasing decisions of end user fleets.

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High fuel use heavy-duty NGV applications offer strong potential to yield lower lifecycle costs of HDV ownership through combinations of reduced capital costs and lower operational costs. Historically, fleets have been driven to deploy heavy-duty NGVs primarily because they had access to incentives to buy down capital costs. For use of heavy-duty NGVs to be expanded in North America, it may be necessary to focus more on total lifecycle costs.

5.3 Reduced Lifecycle Costs of HDV Ownership

End users of heavy-duty NGVs were questioned about how capital and lifecycle costs have affected their organizations’ vehicle purchasing decisions. Results are presented in Figure 5.3-1, with additional discussion below.

School districts are especially cost-constrained by low general budgets and need to reduce lifecycle costs on their school buses. They generally cannot afford to purchase more expensive environmentally benign school bus technologies, such as those fueled by CNG. Accordingly, deployments of CNG buses are rare unless they occur in regions that heavily subsidize the purchase.

Drayage fleets tend to be especially sensitive to higher capital costs associated with purchasing heavy-duty natural gas port trucks. Most drayage trucks in North America continue to be owned and operated by individuals rather than large trucking companies. Not surprisingly, major efforts in North America to “modernize” the fleets of drayage truckers with new low-emissions trucks (including those fueled by LNG) include grant programs to help buy down capital costs and provide low-interest financing for the balance of payments.

In general, transit fleets do not express great concern about capital and lifecycle costs of deploying heavy-duty NGVs. This is probably because many transit districts in North America that use natural gas made the switch from diesel because they were required to do so, and they are well capitalized by government agencies to help pay the associated costs.

As discussed in the next subsection, a key metric that determines affordability for fleets investing in the purchase of heavy-duty NGVs is the payback period needed to recoup their investment through lower operational costs.

A major driver for heavy-duty end user fleets – both public and private – is their “bottom line” need to operate within allocated budgets. As described in Section 4.5.1, heavy-duty NGVs have significantly higher capital costs to end users than similar diesel-fueled HDVs. On the other hand, they can provide much lower lifecycle costs. Often, heavy-duty fleets make purchase decisions focused heavily on minimizing capital costs rather than lifecycle costs. This makes it challenging for fleets to purchase heavy-duty NGVs, unless they have financial assistance to help “buy down” the incremental capital costs. Such financial assistance has been readily available from government agencies in some regions of North America, in the form of grants, tax incentives, loans, and rebates. Consequently, deployments of heavy-duty NGVs in North America seem to have largely been driven by upfront capital incentives rather than prospects for fleets to reduce operational costs.

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Transit

School Bus

Refuse

Municipal

Vocational

Drayage

Not Important Driverto Purchase/Deploy

Very Important Driverto Purchase/Deploy

Response Rating

1 2 3 4 5

Figure 5.3-1

End users of heavy-duty NGVs were questioned about how capital and lifecycle costs have affected their organizations’ vehicle purchasing decisions. Certain fleet applications, especially school buses and port-drayage trucks, are especially cost-constrained and sensitive to incurring higher capital costs.

Higher NGV capital costs relative to conventional HDVs

Reduce lifecycle costs (cheaper fuel and/or vehicle maintenance

Rate the relative importance that the following “market driver” may have played in your agency’s decision to purchase/deploy HD natural gas vehicles:

Rate the relative effect of the following concerns about deploying/purchasing HD natural gas vehicles:

General budget constraints of agency

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3.5

5.04.0

4.0

4.0

4.0

4.0

4.0

2.5

3.5

3.53.5

3.0

3.0

5.0

5.0

2.42.1


Representatives from approximately twenty medium-to large-sized HDV fleets generally indicate that three to five years can be tolerated to achieve payback for the incremental cost of a heavy-duty NGV. Achieving this appears to require favorable fuel cost differentials and government incentives.

5.4 Payback Period as a Determinant for Fleet Purchase Decisions

Heavy-duty NGV fleets that provided input for this report where asked: “What is the longest payback time that your agency will accept when purchasing environmentally desirable HDVs that have higher capital costs but lower lifecycle costs?” Representatives from approximately twenty medium-to large-sized HDV fleets responded by picking a range of years. Most responders from non-transit fleets indicated that three to five years can be tolerated to achieve payback. Most transit fleet representatives indicated that their “agency is not concerned with payback period” in determining which types of HDVs to purchase.

Figure 5.4-1 represents payback period curves for five different heavy-duty NGV applications. Outputs of these payback calculations clearly show the importance of government incentives in ensuring that end users achieve a payback period of less than five years. In this calculation model, at current fuel costs and assuming no federal tax credit,48 only transit buses achieve payback within five years. Medium-haul trucks could achieve payback at five years without such incentives, provided that the fuel cost differential for natural gas is $1.50 per DGE or more. As shown in Figure 5.4-1, government incentives to offset initial vehicle costs can reduce payback periods significantly. Figure 5.4-1 provides additional, application-specific assumptions used for this analysis. These include assumptions regarding vehicle maintenance, repair, licensing and insurance, and residual scrap value for each vocation identified.

The payback period is a relatively simple concept that can entail fairly complex parameters and calculations. As it relates to purchasing and deploying heavy-duty NGVs, payback period depends on many fleet variables, including incremental costs of the vehicles purchased, their annual fuel usage, the fuel cost differential between the diesel baseline and natural gas, and availability of user incentives such as grants or tax credits. As reported in Section 4.5.1, NGV industry representatives generally indicated that the payback period for their fleet customers to purchase and deploy heavy-duty NGVs should not exceed five years; ideally it would not exceed about three years.

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48 The previous Federal Natural Gas Tax Credit provided up to $32,000 per heavy duty natural gas vehicle purchased. Vehicles equipped with the Cummins ISL-G were eligible for the full $32,000. Vehicles using the Westport ISX-G were eligible for a prorated amount of $28,800 due to the use of up to 10% diesel fuel during operation.

Type of Assumption

Short Haul Medium Haul Transit Bus MunicipalRefuse

Municipal HDVocational (w/o PTO)

Purchase Year 2011 2011 2011 2011 2011

Engine Type ISLG Westport HD2010 ISLG ISLG ISLG

Fuel Type LNG LNG CNG CNG CNG

Base Case ISX 2010 ISX 2010 ISL 2010 ISL 2010 ISL 2010

Incremental Purchase Cost $50,000 $75,000 $40,000 $35,000 $50,000

VMT (mi/yr) 55,900 125,000 46,600 24,900 24,900

First OwnerLife (yrs) 10 10 12 6.5 10

Diesel FE(mi/DGE) 5.6 6.0 3.6 3.3 5.3

Natural Gas FE(mi/DGE) 5.0 5.3 3.2 3.0 4.7

Table 5.4-1

Payback period depends on vehicle usage (fuel consumed), incremental vehicle cost, fuel prices, and availability of government incentives. For most HDV fleets, all these parameters tend to play an important role in whether NGV payback periods are acceptable. Transit districts tend to be the exception. They tend to be heavily impacted by mandates, and have the best access to financial assistance. Thus, payback period and cost-related parameters generally do not play significant roles in the purchasing decisions of transit districts.

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*Municipal Refuse assumes use of Power Take Off (increased fuel consumption), while municipal Vocational does not.

Heavy-Duty Natural Gas Vehicle Application

$2.50

$2.00

$1.50

$1.00

0 2 4 6 8 10 12

Timeframe for Return on Investment (“Payback Period”) in Years After Purchase

Short Haul

Source: TIAX model on life-cycle costs and emissions. See text for assumptions and input sources.*Federal tax credit assumed to range from $28,800 to $32,000 depending on type of engine deployed.

Medium Haul Municipal Refuse Municipal HD VocationalTransit Bus

Without Federal Tax Credit*

With Federal Tax Credit*

Transit

Figure 5.4-1

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Payback period depends on vehicle usage (fuel consumed), incremental vehicle cost, fuel prices, and availability of government incentives. For most HDV fleets, all these parameters tend to play an important role in whether NGV payback periods are acceptable. Transit districts tend to be the exception. They tend to be heavily impacted by mandates, and have the best access to financial assistance. Thus, payback period and cost-related parameters generally do not play significant roles in the purchasing decisions of transit districts.

Return on Investment (ROI) Period for Various Heavy-Duty NGV Applications as a Function of Fuel Price Differential

Fu

el

Pri

ce D

iffe

ren

tia

l p

er

DG

E (

$D

iese

l-$

NG

)


A key to expanded deployments of heavy-duty NGVs may lie in innovative ways to help end users achieve fairly rapid payback on their investments by a compelling combination of lower operational costs.

5.5 Innovative Financial Programs for End Users

Special Heavy-Duty NGV Cost Buy Down Program – In Quebec, Canada, efforts are underway to fully buy down the incremental cost of qualifying LNG tractors (about C$79,000 for an LNG tractor powered by the Westport GX engine). The objective is to supplement a purchasing fleet’s fuel cost savings with proposed tax rebates to help fully recoup the incremental capital cost within about two years of purchase (Figure 5.5-1). In part, this program is being developed in conjunction with deployment in eastern Canada of 180 LNG-fueled Class 8 trucks that were recently ordered from Peterbilt by Robert Transport of Quebec (see Section 5.9.5).

CNG and LNG Truck Leasing – An innovative pilot program is now underway to offer fleets the option to lease heavy-duty trucks fueled by CNG and/or LNG. In mid 2010, Ryder Trucks announced a cooperative program with the San Bernardino Association of Governments in California to deploy up to 202 heavy-duty NGVs through a vehicle leasing program. Ryder’s Southern California operations network includes 1,200 customers representing more than 6,000 commercial trucks. Funded in part by $19.3 million in California and federal funds, Ryder is in the process of purchasing the first wave of 70 heavy-duty NGVs.49 Ryder’s commercial customers will access the available heavy-duty NGVs “through short-term rentals, long-term leases, or through Ryder’s dedicated logistics services.”

“Operation Upcycle” – This program will purchase and repower school buses for CNG operation and lease them back to the school district at a significantly subsidized rate with low interest. Based on OEM input and the National Association of Pupil Transportation, a typical CNG school bus conversion can cost up to $50,000, while the program can reduce that number by approximately $16,000 to $18,000 per bus.50

From previous sections of this report, it is clear that heavy-duty NGVs entail significant higher capital costs, some or all of which can be recouped by end users through reduced operational costs. In addition, financial incentives exist in some regions of North America to help immediately defray this higher capital cost. However, successfully achieving payback within a period of time that is acceptable to the purchasing fleet requires high fuel usage and a favorable fuel cost differential (estimated to be at least $1.50 per DGE). It also currently requires some type of financial assistance. The heavy-duty NGV industry is acutely aware of this need for end users to achieve relatively fast payback on their investments. So too are government agencies in North America that seek to expedite affordable availability of heavy-duty NGVs for fleets. Many innovative programs exist or are under development toward this end. Examples include:

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49 NGV Global News: News for the Natural Gas Vehicle Industry. “Ryder Awaits First 70 CNG Trucks.” http://www.ngvglobal.com/ryder-awaits-first-70-cng-trucks-0808. August 8, 2010.

50 National Association of Pupil Transportation. “Stimulus Plan to Boost CNG School Buses.” http://www.ngvjournal.com.

Figure 5.5-1

In Canada at both provincial and national levels, efforts are underway to fully buy down the incremental cost of qualifying LNG tractors. The objective is to supplement a purchasing fleet’s fuel cost savings with proposed “accelerated depreciation” tax rebates to help fully recoup the incremental capital cost within about 2 years of purchase. As an example, an LNG truck traveling 80,000 miles per year with a fuel economy of 6 miles per DGE would achieve the 2-year payback under this scenario, assuming a fuel cost differential of C$1.80 per DGE.

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$80,000

$70,000

$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

$0

Net Present Value (C$) of Depreciation Deduction for Capital Assets

Incremental Purchase Cost of LNG Truck

Current LNG Truck Benefit

New LNG Truck (Quebec)

Proposed LNG Truck

*Example: 80,000 annual miles @ 6 mi/DGE and C$ 1.80/DGE fuel price differential

Source: Based on ENCANA Presentation, April 28, 2010, provided to TIAX

Incremental Cost Recoup Scenarios

Fuel Savings* Provincial CCA Tax Changes

Federal CCA Tax Changes

ASSumED ADD ADD

$79K $79K

$48K

$31K

$48K

$20K

$11K

$48K

$13K

$18K


OEMs note that much progress has been made to develop durable, reliable, and efficient heavy-duty NGVs that compete well with diesel HDVs. End users express varying levels of concern about operational issues but are able to make heavy-duty NGVs work quite well in their respective applications.

5.6 End User Operational Considerations

the needs of heavy-duty end users. A good example is finding “sweet spots” of onboard CNG or LNG storage that provide sufficient driving range while not significantly compromising payload and cargo volume.

However, the real test is whether the operational needs of end user fleets are being met by heavy-duty NGVs. Much progress has been made in the last decade to develop durable, reliable, and efficient heavy-duty NGVs, and influential end user groups are acknowledging that they can be viable alternatives to diesel HDVs. For example, the American Trucking Association (ATA) states that natural gas can be “an acceptable fuel choice for certain applications” within the trucking industry. ATA notes that “CNG is being successfully used in short and medium range, heavy-duty applications such as refuse trucks, concrete mixers, straight trucks, and municipal buses,” and that “LNG may present a viable alternative for certain trucking applications.” According to ATA, “natural gas engine durability is equivalent to diesel fuel engines.” However, ATA also notes that certain other operational parameters of heavy-duty NGVs are not on par with diesel.51

To explore these parameters, representatives from fleets using heavy-duty NGVs were queried regarding concerns they may have about operational issues for NGVs relative to conventional diesel HDVs. Specific operational parameters included 1) vehicle performance, 2) vehicle range, 3) vehicle payload/cargo volume, and 4) differences in safety, procedures and/or staff training.

Results are summarized in Figure 5.6-1. Fleet representatives expressed various levels of concern about operational issues. Transit end users showed the least concern, while drayage and vocational truck end users showed the most concern. However, these same end users have been able to make CNG and/or LNG vehicles work quite well in their respective applications.

As described in Section 2.1, diesel-fueled HDVs define the competition for heavy-duty NGVs. They provide HDV fleets with many highly valued attributes needed for successful operation, including 1) sufficient torque and power; 2) high fuel economy; 3) good driving range; 4) fast and convenient refueling; 5) good durability and reliability; and 6) the ability to meet existing safety regulations, codes and standards. Fleets expect alternative fuel HDVs to meet these same basic needs but not necessarily to outperform diesel HDVs.

As noted in previous sections, from the perspective of HDV and engine manufacturers, many if not most key operational aspects of heavy-duty NGVs are becoming comparable to diesel HDVs. While some operational parameters are not diesel equivalent, OEMs are able to manage tradeoffs on commercialized NGVs to meet

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51 American Trucking Association. “Is Natural Gas a Viable Alternative to Diesel for the Trucking Industry?” http://www.truckline.com. Accessed November 2010.

Drayage

Vocational

Municipal

Refuse

School Bus

Transit

No Effect Large EffectResponse Rating

1 2 3 4 5

Figure 5.6-1

Representatives from fleets using heavy-duty NGVs expressed various levels of concern about operational issues. Transit end users showed the least amount of concern, while drayage and vocational truck end users showed the most concern. However, these same end users have been able to make CNG and/or LNG vehicles work quite well in their respective applications.

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Rate the Relative Effect of the Following Concerns About:

Increased Weight and/or Reduced Cargo Due to On-Board Natural Gas Storage (Rating Avg.: 2.8)

Differences in Safety, Procedures and/or Staff Training (Rating Avg.: 2.7)

Natural Gas Vehicles Performance Relative to Conventional HDVs (Rating Avg.: 3.2)

Natural Gas Vehicle Driving Range Relative to Conventional HDVs (Rating Avg.: 2.9)


OEMs note that much progress has been made to develop durable, reliable, and efficient heavy-duty NGVs that compete well with diesel HDVs. End users express varying levels of concern about operational issues but are able to make heavy-duty NGVs work quite well in their respective applications.

5.7 End User Fueling Logistics

by independent truckers (e.g., port drayage) and/or those that do not necessarily involve daily return-to-base operations. Such stations are sited and operated similarly to retail diesel stations, and may offer diesel or other fuels with normal public access.52 This “hub and spoke” approach to support the fuel needs of heavy-duty NGVs can work quite well. Figure 5.7-1 provides a snapshot of daily routes for 390 port drayage trucks using actual GPS data. These and about 450 other LNG-fueled drayage trucks are routinely making daily trips exceeding 150 miles while refueling at either of two public LNG stations located near the port terminals they serve.

Regardless of which fueling approach is used, large fleet-oriented CNG and LNG stations are very expensive to build, operate, and maintain. Owners and/or user fleets must amortize these high costs by regularly dispensing very high volumes of fuel. Broadly speaking, a compelling business case exists to build a large-capacity CNG or LNG station when at least one “anchor” HDV fleet has committed to consume tens of thousands of DGE each month. Depending on the specific application, this requires at least 25 to 50 heavy-duty NGVs fueling at a single station. Notably, designing a natural gas station for “public access” can add significant additional costs for card reader and other facility modifications, which may not be justified by minimal increases in fuel sales from adding this capability. However, public access is often a requirement by the government entities that help fund natural gas fueling stations.

CNG and LNG fueling facilities for large transit bus operations tend to have the highest costs but also the best economics because of the very high fuel volumes dispensed. For example, Los Angeles County Metro’s CNG stations were designed to fuel about 2,500 CNG buses each day, many in rapid sequence (or simultaneously). This requires substantial natural gas compressor capacity and other features that have very high capital and operational costs. Since Metro’s monthly demand for CNG fuel reportedly exceeds 100,000 DGE per station, it has been able to enter into cost-effective ten-year contracts with its natural gas fuel provider.

Today’s heavy-duty NGV deployments work best in return-to-base applications. Such applications often include centralized fueling/maintenance facilities and staff, allowing a few trained technicians to support numerous heavy-duty NGVs that return to the same location each day. This enables daily refueling, allowing fleets to specify NGVs with minimal onboard fuel storage, which in turn reduces incremental capital costs and helps maximize payload/cargo space. Daily fueling also greatly reduces the likelihood that heavy-duty NGVs will run out of fuel.

Return-to-base fleets using heavy-duty NGVs have two basic choices for gaining access to CNG or LNG fuel. Fleets that are able to afford onsite fueling stations can refuel within their own yards. This is essential for large, high fuel use HDV fleets such as transit and refuse operations. It can also work well using less costly time-fill CNG stations for smaller HDV fleet types like school districts.

The second basic fueling choice is to utilize nearby public stations or share stations with other end users. For example, CNG and LNG stations have been strategically sited to serve HDV applications dominated

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52 For example, Speedy Fuel offers LNG fuel for port drayage trucks at a “multi-fuel public access” station near Los Angeles, California.

Figure 5.7-1

In Southern California, return-to-base LNG port drayage trucks are working well with only a few offsite fueling stations. The blue lines track daily activity for 390 GPS-equipped Class 8 LNG trucks serving the Ports of Los Angeles and Long Beach. Daily trips range from about 80 miles north of Los Angeles, down to San Diego 90 miles to the south. Most LNG fueling takes place daily at public stations near port boundaries.

75

110

8

405 215

10

15

40

710605

Los Angeles

San Diego

23

805

HuntingtonBeach

1

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5

Oceanside


Heavy-duty fleet procurement cycles tend to be application- and user-specific, varying as a function of HDV useful lives and other factors such as economic conditions. The current in-use HDV fleet is older than usual, and demand for new HDVs in 2011 is expected to be very high. Existing end users of heavy-duty NGVs appear ready to replace or expand their NGV fleets (including the addition of hybrid NGVs), but little is known about non-users.

5.8 Vehicle Procurement Cycles and Near-Term Procurement Choices

than the historical average and the oldest since 1979. However, as the recession ends, HDV fleets will need to replace larger numbers of HDVs than normal. For example, the ATA’s 37,000 trucking company members “desperately need to replace trucks.”53 Based on this strong demand, truck production in North America is expected to climb more than 50 percent in 2011, from an estimated 151,000 units in 2010 to as many as 235,000 units in 2011.54

To help better define current thinking of end users regarding HDV procurement and planning cycles, fleet representatives were asked several questions:

1. How frequently do you purchase new vehicles? (Every __ years)2. How far ahead to you determine which vehicles you will purchase? (Every __ years)3. How many vehicles do you typically purchase at a time? ( __ vehicles)4. Would your organization consider leasing or renting heavy-duty NGVs if available? (Y or N)

In addition, to help characterize the types of HDVs that end users are likely to purchase, they were asked the following question and given options to select:

What type(s) of alternative fuel or advanced technology H-D vehicles does your fleet plan to purchase and deploy over the next few years? Check ALL that apply.

• CNG • LNG • NG Hybrid • Diesel Hybrid • Battery Electric • H2/Fuel Cell • Hydraulic Hybrid

Responses received for these various questions were highly variable. Figure 5.8-1 graphically shows a summary chart of responses by each fleet type. It shows that nearly all responding fleets plan to purchase heavy-duty NGVs “over the next few years.” Several fleets plan to purchase natural gas fueled hybrid electric HDVs, if available.

If heavy-duty NGVs are to become more broadly deployed in North America, OEMs need to understand which vehicle types will be in high demand and when HDV fleets will be ready to make major procurement decisions. Heavy-duty fleet procurement cycles tend to be application- and user-specific, varying as a function of HDV useful lives and other factors. The timeframe that fleets require to plan ahead for new vehicle procurements can also vary. Larger-scale issues such as current economic conditions can strongly influence HDV replacement behavior of fleets.

This latter factor – current economic conditions – is now strongly affecting the supply and demand of HDVs in North American markets. First, HDV fleets have been holding on to their in-use vehicles longer than normal, due to years of recession. Reportedly, the age of U.S. trucks now averages 6.7 years — about 11 months older

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53 Daley, W., M. Clothier. “Oldest Trucks Since 1979 May Mean Output to Rise 56%.” www.bloomberg.com. Accessed November 19, 2010.54 Ibid.

Vocational 2

Municipal 1

Municipal 2

Municipal 3*

School Bus

Refuse 1

Refuse 2

Transit 1

Transit 2

Transit 3

Transit 6

Transit 4

Transit 7

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1 2 73 84 95 106 11 12 CNG LNG NGHybrid

YearsAnticipated Heavy-Duty

NGV Purchases “Over the Next Few Years”

(No Response to Q1 or Q2)

(No Response to Q2) (None)

(None)

Figure 5.8-1

Representatives from HDV fleets gave a wide range of responses when asked about procurement cycles for new vehicles. Such decisions are user- and application-specific and influenced by many factors. All HDV fleets currently using NGVs indicated they plan to purchase some portion of heavy-duty NGVs “over the next few years.”

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*Not a current user


The Clean Trucks Program of the Ports of Los Angeles and Long Beach is the largest, most-aggressive emission cleanup program at any port complex in the world. Driven by a compelling combination of local regulations and state/regional funding incentives, one of the largest fleets in the world of older, higher-emitting Class 8 port trucks were replaced with new vehicles meeting or exceeding the federal 2007 heavy-duty emissions standards, including nearly 1,000 powered by LNG engines.

5.9 Examples of Successful End User Deployments in North America5.9.1 LNG Drayage Trucks at the Ports of Los Angeles and Long Beach

to buy down the higher capital costs of the LNG trucks was provided by California’s Proposition 1B program, with supplemental support from the two ports and SCAQMD. Special financing for the balance of truck costs was provided via the ports’ selected financial institution. LNG fueling stations have been constructed near port boundaries by Clean Energy and Speedy Fuel.

Figure 5.9.1-1 shows how, over the course of about twenty months, the large port drayage fleet of heavy-duty trucks moving containers at the Ports of Los Angeles and Long Beach phased in vehicles that meet or exceed the U.S. federal 2007 emissions standards. As of November 2010, about 850 (roughly 10 percent) of these clean trucks are fueled by natural gas. Figure 5.9.1-2 shows that nearly 12.5 percent of the cargo container moves at the Port of Los Angeles are currently being performed by natural gas trucks.

Virtually every seaport in North America relies heavily on the use of older diesel trucks to move cargo into and out of its port terminals. Many of these ports (e.g., New York – New Jersey, Seattle, Oakland, Houston, Savannah, Charleston) have adopted or are expected to adopt “fleet modernization programs” like those in Los Angeles that accelerate fleet turnover to newer, lower-emitting port truck technologies. This presents significant new opportunity for heavy-duty NGVs to play an expanded role in moving cargo at North American seaports.

However, it is important to note that the introduction of LNG trucks into the Ports of Los Angeles and Long Beach would not have happened without a regulatory mechanism and, most importantly, the existence of financial incentives. Port trucks are typically operated by independent owner-operators who least can afford to purchase new trucks, especially if they carry a major price premium such as today’s commercially available LNG trucks.

In 2008, the Ports of Long Beach and Los Angeles jointly launched their Clean Trucks Program (CTP). The CTP is the largest, most-aggressive emission cleanup program at any port complex in the world. First appearing as a component of the 2006 San Pedro Bay Ports Clean Air Action Plan, the CTP institutes a progressive ban on older, higher-emitting diesel trucks operating in the ports. The goal is to bar all trucks that do not meet 2007 emissions standards by 2012. However, the ports in partnership with other public and private sectors entities were able to institute innovative funding mechanisms and sustained outreach efforts to achieve this goal two years ahead of schedule.

To date, the CTP has resulted in accelerated deployment of approximately 8,000 diesel trucks and nearly 1,000 natural gas trucks (850 are accessing terminals). Most natural gas trucks are powered by the Cummins Westport ISL-G LNG engine and used in short-haul drayage applications. Much of the funding

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Diesel 87.55%

CNG 0.02%Electric Hybrid 0.02%

Other 0.02%

LNG 12.39%

Figure 5.9.1-1

Figure 5.9.1-2

Beginning in 2008, the Ports of Los Angeles and Long Beach began phasing in vehicles that meet or exceed the U.S. federal 2007 standards, including heavy-duty natural gas drayage trucks. Today approximately 850 (or 10%) of the clean trucks moving containers at the ports are LNG-fueled and meet or exceed the federal 2010 emissions standards.

In September 2010, nearly 12.5 percent of the cargo container moves at the Port of Los Angeles were performed by natural gas trucks.

Number of Natural Gas Trucks (2010 Emissions)

Number of Diesel Trucks (2007 Emissions)

% of Trucks Fueled by Natural Gas

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Port of Los Angeles Drayage Truck Fleet% of Container Moves by Fuel Type, September 2010

Source: Tetra Tech, Inc., Clean Truck Program Administrator, Weekly DTR/Concessions Status Reports to the San Pedro Bay Ports

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Major success stories can be found across North America for the use of natural gas refuse trucks.

5.9 Examples of Successful End User Deployments in North America5.9.2 CNG and LNG Refuse Trucks

areas. Waste Management plans to deploy additional NGVs as greater numbers of diesel units are retired.58 Waste Management has also participated in the world’s first “mobile source emissions reductions credit” program, in which emissions from deployment of 120 LNG-fueled waste trucks were used to offset emissions of a new power plant.

Republic Services operates 500 heavy-duty NGVs (425 CNG, 75 LNG).59 Republic recently signed an agreement with Clean Energy to process and sell renewable natural gas recovered from one of Republic’s landfill sites in Michigan. Republic will use both renewable landfill gas and conventional natural gas to fuel its growing fleet of NGVs. Under other agreements, Republic has contracted with Clean Energy to build, operate, and maintain fourteen CNG fueling stations and to provide its refuse fleets in California with approximately three million gallons of LNG per year.60

Veolia is introducing a new fleet of 32 CNG-powered refuse collection trucks to Fort Myers, Florida. Veolia has invested in an onsite “time-fill” CNG fueling that is reportedly the first privately owned CNG fueling station in southwest Florida. Veolia intends to expand its CNG fleet into other markets in early 2011 as part of its long-term “sustainability” strategy.61

Other refuse fleets using heavy-duty NGVs include Montgomery County, Maryland, which is deploying 100 new CNG refuse trucks and expects to have its entire refuse fleet converted to natural gas by 2012. Pennsylvania’s Northern Tier Solid Waste Authority plans to convert part of its refuse collection and recycling truck fleet from diesel to CNG. The City of Toronto has purchased its first waste and recycling collection truck powered by CNG as a pilot test.62

The solid waste sector represents a major success story for deployment of heavy-duty NGVs. A rough estimate is that at least 2,000 heavy-duty trucks used by twenty or more North American solid waste organizations are currently operated on natural gas.55 In California alone, at least 1,400 natural gas refuse trucks are currently operating.56 California operators include the City of Los Angeles, Waste Management, the County of Sacramento, Burrtec Waste & Recycling Services, and Specialty Solid Waste and Recycling. Figure 5.9.2-1 characterizes NGV use in this sector. Examples of existing and emerging deployments for natural gas refuse trucks across North America include:

Waste Management operates more than 900 heavy-duty waste-hauling and recycling trucks operating on CNG and LNG. Deployments regions include California (485 natural gas trucks in twenty communities57), Seattle (180 CNG trucks planned), greater Vancouver (twenty CNG trucks planned), and other North American urban

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55 Burke, R. “Natural Gas Powered Refuse Trucks.” Clean Energy presentation. January 24, 2008.56 Cannon, J. “Greening Garbage Trucks: Trends in Alternative Fuel Use, 2002-2005.” Inform, Inc. ISBN #0-918780-84-5. 2006.57 Waste Management. http://www.wastemanagementsd.com. Press release. January 13, 2010.58 From Waste Management press releases, http://www.wastemanagementsd.com/press, accessed November 2010.59 Questionnaire completed by representative of Republic Services, Inc.60 NGV Global News, November 8, 2010, compiled from Clean Energy Press Release.61 Veolia Environmental Services. http://veoliaes.com. Press release. November 16, 2010.62 City of Toronto. “Latest Addition to City of Toronto’s Truck Fleet Can Run on Converted Biogas from Green Bin Organic Material.” http://www.toronto.ca/index.htm. November 3, 2010.

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Figure 5.9.2-1

Refuse trucks typically travel less than 100 miles per day, can carry as little as 40 DGE of CNG or LNG, and yet have high fuel usage. These characteristics have enabled refuse trucks to be one of the fastest growing heavy-duty NGV sectors in North America.

Roof-Mounted CNG Tanks (~60 DGE) Crane Carrier CNG Hydraulic Hybrid Refuse Truck

Frame-Mounted LNG Tank (~86 DGE) Roof-Mounted CNG Tanks (~90 DGE)

Typical Characteristics for Sector (CNG or LNG)

Daily Route:Fixed, 50–100 miles

Refueling Logistics:Return to Base

On-Board NG Volume:40–60 DGE (3 axle)

Approx. Weight of Tanks with Fuel700–1,000 lbs.

Heavy-Duty Natural Gas Vehicle Use Snapshot: REFUSE SECTORExamples of Existing and Emerging North American Deployments

• Southern California• Northeastern U.S.• Fort Myers, Florida• Houston, Texas

• Seattle, Washington• Chicago, Illinois• Vancouver, Canada• Long Island, New York


Approximately 10,000 natural gas transit buses operate in North America today.

5.9 Examples of Successful End User Deployments in North America5.9.3 CNG and LNG Transit Buses

Like the refuse sector, use of natural gas transit buses in the U.S. is a major success story. Today, about 10,000 natural gas transit buses in the U.S. are fueled by natural gas, of which about 90 percent are CNG fueled. Figure 5.9.3-1 presents additional facts about this sector. Example deployments include:

•

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Approximately 5,500 natural gas transit buses now operate in California, 77 percent of which operate in the greater Los Angeles area. With a fleet of 2,500 CNG transit buses, the Los Angeles County Metropolitan Transportation Authority currently operates one of North America’s largest heavy-duty NGV fleets. These buses collectively consume nearly 10 million DGE of CNG per year. Metro also operates 100 specialty HDVs and tow trucks on CNG; almost 100 percent of its HDV fleet is fueled by CNG.

Other California transit operations that are users of CNG and/or LNG transit buses include Sacramental Regional Transit, Foothill Transit, Golden Empire Transit, San Diego County Transit, Santa Monica Big Blue Bus, Orange County Transit Authority, Sonoma County Transit, Visalia Transit, Union City Transit, and the City of Turlock.

Outside of California, more than twenty U.S. transit districts operate at least 100 natural gas transit buses. Major transit users include New York City’s Metropolitan Transit Authority, the Metropolitan Atlanta Rapid Transit Authority in Georgia, the Washington Metropolitan Area Transit Authority in Washington, DC, the Massachusetts Bay Transportation Authority, and the Phoenix Public Transit Department in Arizona.

Use of natural gas in the U.S. transit sector appears to be expanding. In May 2010, The U.S. Department of Transportation (DOT) announced hundreds of millions of dollars of new grants to upgrade or expand CNG bus operations across the U.S. Many U.S. transit districts that are currently using natural gas buses are expanding their fleets and making new investments in onsite infrastructure to fuel their transit buses. For example:

Los Angeles County Metropolitan Transportation Authority has signed a new ten-year contract for Clean Energy to operate and maintain its CNG facilities fueling 2,500 CNG buses. Annual fuel throughput at all of its stations is expected to reach about 40 million DGE under this new contract. This transit agency no longer purchases diesel buses.

New York City’s Metropolitan Transit Authority (MTA) has awarded New Flyer of America Inc., a contract for the acquisition of up to 475 buses. The contract is for 135 40-foot CNG heavy-duty transit buses with options for up to an additional of 340 CNG buses. These 135 CNG buses will join be replacing the existing NGVs at MTA.

A number of U.S. transit districts are now trying out CNG buses for the first time. For example, the Utah Transit Authority recently tested two CNG buses against conventional and hybrid-electric diesel buses.

Figure 5.9.3-1

The transit bus sector has been a major success story in North America for the use of heavy-duty NGVs. More than 10,000 transit buses currently operate on natural gas in the U.S. today, 90 percent of which are fueled by CNG.

# of NGVs

0–1

2–120

136-262

312-693

2,821

83

Heavy-Duty Natural Gas Vehicle Use Snapshot: TRANSIT SECTORU.S. Transit Properties Operating CNG and/or LNG Transit Buses

Transit Fleet LNG CNG Total NGVs

Los Angeles County Metropolitan Transportation Authority 6 2,815 2,821

Orange County Transportation Authority 228 465 693

Metropolitan Atlanta Rapid Transit Authority - 538 538

MTA New York City Transit - 491 491

Washington Metropolitan Area Transit Authority - 461 461

San Diego Metropolitan Transit System - 369 369

Massachusetts Bay Transportation Authority - 360 360

City of Phoenix Public Transit Department 353 - 353

Metropolitan Suburban Bus Authority - 312 312

Foothill Transit - 262 262

Sacramento Regional Transit District - 216 216

Mass Transit Department - City of El Paso 14 193 207

Pierce County Transportation Benefit Area Authority - 194 194

Fort Worth Transportation Authority - 187 187

Dallas Area Rapid Transit 181 - 181

North County Transit District - 180 180

MTA Bus Company - 174 174

Omnitrans - 168 168

Regional Public Transportation Authority - 148 148

City of Tempe Transit Division 130 15 145

CNY Centro, Inc. - 137 137

Golden Empire Transit District - 136 136

Riverside Transit Agency - 120 120

LACMTA - Small Operators - 113 113

Regional Transportation Commission of Southern Nevada - 103 103

Total NGVs 912 8,157 9,069

Percent of Total NGVs 10.1% 89.9% -

Table 5.9.3-1

Typical Characteristics for Sector (CNG or LNG)

Daily Route:Fixed 200–400 miles

Refueling Logistics:Return to Base

On-Board NG Volume:50–125 DGE

Approx. Weight of Tanks with Fuel700–2,300 lbs.

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Top 25 North American Transit Fleets Using NGVs.

Source: National Transit Database 2010


School buses are a very good application for CNG, as long as cash-strapped school districts receive incentives that help buy down higher capital costs and have affordable access to fuel. In the U.S., federal, state, and local programs are underway to provide assistance. Consequently, roughly 1,000 CNG school buses have been deployed. In Canada, limited deployments have occurred.

5.9 Examples of Successful End User Deployments in North America5.9.4 CNG School Buses

this program, SCAQMD has allocated more than $177 million to replace more than 1,000 older diesel school buses with cleaner models, many of which are CNG fueled. A newly launched program by the National Association of Pupil Transportation seeks to assist school districts in replacing old diesel engines with CNG units. The American Recovery and Reinvestment Act and the U.S. EPA are awarding millions of dollars to help deploy CNG school buses.

Today there are roughly 1,000 natural gas school buses deployed in North America. Figure 5.9.4-1 presents additional information about CNG in the school bus sector. Example deployments include:

The Los Angeles Unified School District will introduce a total of 403 new CNG school buses, most of which will be fueled at a new CNG station south of downtown Los Angeles. The district’s CNG fleet will grow to nearly 700, supported by multiple CNG stations. Many other school districts in California are users of CNG school buses.

Oklahoma’s Tulsa Public Schools currently operates 63 CNG school buses and plans to acquire an additional 177 CNG buses.63

Mansfield, a district of about 30,000 students located in the Dallas-Fort Worth area, currently deploys twenty CNG-fueled school buses in a total fleet of about 180.

In Ardmore, Pennsylvania, the Lower Merion School District operates a fleet of 63 natural gas buses. The district has logged millions of miles on its CNG bus fleet.

Florida’s Leon County is reportedly the first Southeastern U.S. school district to introduce CNG school buses into its fleet.64

CNG school buses have also been deployed in areas such as the City of Long Beach, New York; Kansas City, Kansas; and Jordan County, Utah.

For a variety of reasons, school buses can be very good applications for CNG. Perhaps most significantly, school buses have been a targeted for use of natural gas engines due to the importance of reducing child exposure to air toxics. However, school districts are generally cost constrained and heavily reliant on incentives to offset the incremental capital costs of natural gas buses.

Consequently, incentive programs are essential elements for deployment of natural gas school buses. In response to this need, several local, state/provincial, and federal programs have been developed. For example, California’s Lower Emitting School Bus Program has helped to deploy thousands of CNG school buses by providing assistance with capital costs and fueling infrastructure investments. Under

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63 NGV Journal. “Oklahoma’s City to Run Its Entire School Fleet on CNG.” September 16, 2010, http://www.ngvjournal.com/en/vehicles/item/2425-oklahomas-city-to-run-its-entire-school-fleet-on-cng.

64 NGV Journal. “Florida’s District Introduces CNG School Buses.” August 13, 2010. http://www.ngvjournal.com/en/vehicles/item/628-floridas-district-introduces-cng-school-buses.

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Figure 5.9.4-1

Elimination of child exposure to diesel particulate matter is a major driver for deployments of CNG school buses. They work quite well in regions where incentive funds are provided to help defray higher costs for vehicles and fueling infrastructure. CNG school buses can be refueled at public fast-fill stations, but are also very conducive to “time fill” fueling during off-peak hours.

Typical Sector Characteristics

Typical Fueling Characteristics

Typical Market Driver/ Concern Characteristics

Daily Route: Fixed, 30 milesOn-Board NG Volume: 50–60 DGE

Fueling Infrastructure: Return to BaseRefueling Infrastructure: Fast Fill or Time Fill(Commonly used due to long mid-day break)

Market Drivers• Reduce child exposure to air toxics• Reduce lifecycle costs• Comply with government body mandates

Market Drivers• School district’s budget constraints

Heavy-Duty Natural Gas Vehicle Use Snapshot: SCHOOL BUS SECTOR

CNG

Fast Fill CNG Fueling Station

Time Fill CNG Fueling Station


Use of heavy-duty NGVs in Canada has been limited; however, natural gas corridors are now being developed for eastern and western Canada.

5.9 Examples of Successful End User Deployments in North America5.9.5 Canadian Corridors for Heavy-Duty NGVs

One major impetus for the eastern Canada corridor is establishment of an “anchor” fleet that will regularly operate large numbers of LNG trucks. Quebec-based Robert Transport has ordered 180 Class 8 LNG trucks from Peterbilt and will deploy them along this route under a public-private partnership. Gaz Metro will build three LNG (possibly “LCNG”) fueling stations along Highway 401/Autoroute 40 between Windsor and Quebec City. Figure 5.9.5-1 shows this emerging LNG trucking corridor for eastern Canada (locations for fueling stations are hypothetical).

The planned deployment of at least 180 LNG trucks along this eastern Canada corridor by Robert Transport is groundbreaking, in several ways. First, it represents the largest North American order for LNG trucks with the Westport GX engine. Second, it represents an evolution in the push for LNG trucking deployments for North America. A new focus is being put on high-volume LNG usage through line-haul/regional trucking that can potentially provide fleets with a two-year payback period. Such point-to-point warehouse deliveries with hauls of over 500 miles (800 km) using LNG trucks has never been done, except on a relatively small scale in Australia. Reportedly, there were several keys to make this work economically for Robert Transport. These included 1) the need to deploy large numbers of high fuel use trucks (180 trucks using approximately 25,000 DGE per year, per truck) to obtain a favorable fuel cost differential; and 2) provision of innovative ways to help buy down the incremental costs of the LNG tractors (see Section 5.5). Currently, tax incentives that exist in Quebec province are not available for end users in western Canada, but efforts are underway to nationalize the Quebec system.67

Approximately 500 heavy-duty NGVs currently operate in Canada.65 A major opportunity to expand deployments in Canada is its unique highway system, which is conducive to LNG/CNG trucking corridors. For example, regular point-to-point truck runs are conducted between distribution centers near Toronto and Quebec City, along Highway 401 and Autoroutes 40 and 20. This trucking route of approximately 500 miles (800 kilometers) is the only major highway system connecting these two major Canadian cities. This provides a definitive route for “controlled” line-haul trucking using currently available LNG trucks, assuming build out of a fueling infrastructure.

To help “kick start” heavy-duty NGVs in Canada, the natural gas industry is working with the Canadian transportation industry, federal, and provincial governments to develop two pilot natural gas transportation corridors. The western corridor will run from Vancouver, British Columbia to Calgary, Alberta and then to Edmonton, Alberta via Highways 1 and 2. The eastern corridor starts in Winsor, Ontario and ends in Quebec City, Quebec via Highway 401 (passing through Toronto and Montreal). Natural gas refueling stations will be built for use by fleet vehicles, buses, and tractor-trailers that regularly travel in either corridor. Initially, infrastructure build out will focus on LNG or LCNG stations between Ontario and Quebec City, geared toward return-to-base fleets.66

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65 Canadian Office of Energy Efficiency. “Canadian Vehicle Survey.” 2008.66 Neandross, E. “LNG Case Studies in the U.S. and Canadian Opportunities.” Gladstein, Neandross and Associates presentation at the 2010 Canadian NGV Summit – Calgary,

Canada. October 29, 2010.67 Based on TIAX communication with Westport and the ANGA/AGA Natural Gas Transportation Collaborative, 2010.

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Figure 5.9.5-1

Eastern Canada’s emerging LNG trucking corridor will consist of three LNG fueling stations to be built by Gaz Metro along Highway 401/Autoroute 40 between Windsor and Quebec City. Quebec-based Robert Transport has ordered 180 Class 8 LNG trucks from Peterbilt and will deploy them along this route as an “anchor fleet” under a public-private partnership.

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*To be determined by Gaz Métro Transport Solutions

Robert Transport - Boucherville, Quebec

Hypothetical Locations of LNG Fueling Stations*

Eastern Canada’s Emerging LNG Trucking CorridorWindsor to Quebec along Highway 401/Autoroute 40

401


The vast majority of heavy-duty NGVs deployed recently in North America are powered by one engine, the 8.9 liter Cummins Westport ISL-G. End users require additional engine platforms, and several are being commercially introduced to meet this important need.

5.10 Challenges for Expanded Heavy-Duty NGV Deployments 5.10.1 Need for Expanded Offerings of Heavy-Duty Natural Gas Engines

Fortunately, at least three new heavy-duty natural gas engines are now emerging as in-demand power plants for the North American HDV market. These are the Doosan Infracore 11.1 liter GK12, the Emissions Solution 7.6 liter Phoenix, and the Cummins Westport 11.9 liter ISX-G.

Representatives of HDV OEMs and end users were asked to rate their level of concern about the limited number of commercially available engines for their application (selling or buying HDVs). Responses vary by HDV application, as the comments above illustrate. As Figure 5.10.1-1 shows, many respondents noted that one or more new heavy-duty engines are needed in certain specific engine displacement categories. However, OEM input confirms that numerous new heavy-duty natural gas engines are expected to be offered in the near term to help fill these needs.

A refuse truck OEM representative called it a “big limitation” that only the ISL-G fits its natural gas refuse trucks. (The Westport GX engine is too large for their chassis offerings.)

A street sweeper OEM representative notes that the medium-duty vocational truck market is limited by having only the ISL-G engine. The ISL-G is a good engine, but it cannot be used in certain popular medium HDV chassis (e.g., International’s Class 6 and 7 offerings).

The vast majority of the newer heavy-duty NGVs deployed in North America are powered by the Cummins Wesport ISL-G. This engine is thriving as the power plant for a wide variety of heavy-duty NGVs and applications and could potentially work well in expanded HDV chassis offerings.68 However, the existence of just one mainstream heavy-duty natural gas engine has hindered expanded heavy-duty NGV deployments in North America. For example,

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68 One OEM selling ISL-G equipped refuse trucks is considering expanding into vocational trucks.

A representative from the Los Angeles County Metropolitan Transit Authority noted that the ISL-G is “undersized for our application.”

A school bus OEM representative indicates that the ISL-G works well in larger, rear-engine “transit-style” (Type D) school buses, but it does not fit in smaller, front-engine (Type C) school buses. If a “small block” CNG engine became available (e.g., one based on the Cummins 6.7 liter ISB), his company would “immediately commit to building” more affordable Type C CNG school buses, resulting in a “significant increase” for sales.

Representatives from an authorized Cummins service provider note that Class 8 trucks powered by the ISL-G engine cannot always meet the demanding operational challenges of port drayage duty. While it delivers adequate performance for most operational needs, it falls short for some operational conditions (e.g., hill climbing under load).

Figure 5.10.1-1

HDV OEMs, end users, and other industry experts were asked about the currently limited number of commercial offerings in heavy-duty natural gas engines. Many responders noted that one or more new heavy-duty engines are needed in certain specific engine displacement categories ( marks). However, as indicated by the yellow areas, numerous new heavy-duty natural gas engines are now being introduced or will be available in the near future. In addition, existing engines can be deployed in a wider breadth of applications than is currently the norm.

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7L 8L 13L9L 15L10L 11L 12L

Heavy-Duty Natural Gas Engine DisplacementType/Business of Respondee

Heavy-Duty Truck

Public Transit

School BusHDV OEms

Other

HDV Endusers

Over-the-Road Coach

Refuse/utility Truck

HD NGV Converter

Drayage

Public Transit

School Bus

Vocational

Refuse/utility Truck

*As reported in engine OEM questionnaire (Is there a particular sized heavy-duty natural gas vehicle engine not currently offered that your company intends to offer in the near future?)

Indicates New or Additional Engine Needed

HD NG Engine Currently Available

HD NG Engine Newly Available

HD NG Engine Expected Near Term*

Is there a particular sized heavy-duty natural gas vehicle engine…… not currently offered that your company might equip in a H-D NGV if available? (HDV OEMs)… not currently offered that is needed to make H-D NGVs more viable? (Other)… that your agency would purchase if available? (HDV end users)


One potential barrier to expanded deployment of heavy-duty NGVs in North America is competition from other fuels and technologies for market share. The greatest interest in purchasing or deploying non-NGV advanced HDV technologies was expressed in the refuse and vocational trucking sectors.

5.10 Challenges for Expanded Heavy-Duty NGV Deployments 5.10.2 Competition with Hybrid and Battery-Electric Technologies

Examples abound across North America of OEMs developing, and heavy-duty HDV fleets deploying, these types of electric-drive technologies. For example, Los Angeles Metro is currently operating ten hybrid-electric transit buses in addition to its fleet of 2,500 CNG transit buses. These are believed to be a gasoline-fueled hybrid transit bus technology that has been deemed by SCAQMD to be compliant with its Rule 1192 for Clean On-Road Transit Buses. Foothill Transit in California has announced an aggressive plan to deploy “fast charge” battery-electric transit buses as its long-term path toward zero-emission buses (Figure 5.10.2-1). Hybrid-electric and hydraulic hybrid refuse trucks have been developed by OEMs and are being demonstrated by waste haulers and sanitation districts such as the New York Department of Sanitation. The Ports of Long Beach and Los Angeles are testing out hybrid-electric and plug-in hybrid electric yard tractors made by at least two OEMs. They are also trying out battery-electric yard tractors and drayage trucks. Canadian HDV fleets are testing various types of hybrid-electric HDVs. Railroads are deploying low-emissions switcher locomotives that use on-highway diesel engine/generator sets instead of conventional diesel-electric drive systems. Most if not all of these technologies share a common trait with heavy-duty NGVs: they entail significantly higher capital costs compared to conventional diesel engine HDVs.

To better gauge the likely competition for NGVs to gain increased HDV market share, fleet representatives were asked to express any strong preference their organization may have to purchase or deploy other HDV technologies (e.g. hybrid-electric or battery-electric). Figure 5.10.2-2 presents the averaged responses of end users in five different end use sectors. As shown, refuse and vocational end users expressed the highest level of interest to purchase and deploy non-NGV advanced HDV technologies. This may in part be explained by the need for PTO in these trucking sectors. The use of hybrid-electric or hydraulic hybrid technologies in these applications can assist in meeting PTO requirements.

One potential barrier to expanded deployment of heavy-duty NGVs in North America is competition from other fuels and technologies for market share. Other combinations of fuels and drive train types can also deliver low- or even zero-emissions of criteria pollutants, while also providing other sought-after societal benefits such as reductions in full fuel-cycle greenhouse gas emissions and conventional transporation fuel use. As previously shown in Figure 4.7-1, numerous types of advanced electric-drive HDVs are being introduced, and some have been available in the market place for at least a decade (e.g., hybrid-electric transit buses). Advanced-technology propulsion systems that use internal combustion engines, such as hybrid-electric buses, can also use natural gas as the fuel instead of diesel or gasoline. However, deployment of such technology has been limited to demonstrations.

91

Transit

Refuse

Municipal

Drayage

1 5432

Vocational

No Preference to Purchase/Deploy

Large Preference to Purchase/DeployResponse Rating

Figure 5.10.2-1

Figure 5.10.2-2

“Quick-charge” battery-electric transit buses are now undergoing preliminary testing as prototypes.

Heavy-duty fleets that responded to questionnaires expressed no strong preference to purchase or deploy other heavy-duty vehicle technologies (e.g. hybrid-electric or battery-electric). Refuse and vocational truck end users expressed the highest interest, possibly because they seek to help manage PTO requirements.

92

2.0

3.5

4.0

2.5

2.5

Rate the relative preference of your agencyfor other competing HDV technologies(e.g hybrid electric or battery electric)


Manufacturers and end users of heavy-duty NGVs have major concerns about two specific challenges: vehicle costs and infrastructure costs/access. Innovative methods are needed to reduce costs for end users, accelerate their payback period, and ensure affordable and convenient access to natural gas fuel.

5.11 Opportunities for Expanded Heavy-Duty NGV Deployments

these also point to opportunities for expanded heavy-duty NGV deployments. It would appear that there are two key, inter-related types of priorities. Innovative methods are needed to 1) reduce vehicle capital and lifecycle costs for end users, accelerating their payback period, and 2) ensure that end users have affordable and convenient access to natural gas fuel. While current heavy-duty NGV markets can be quite effective when coupled with end user regulations and incentives, the horizon for regulations and incentives in North America markets is uncertain.

There are already some innovative cost-reduction methods underway by the heavy-duty NGV industry and its stakeholders. Canadian heavy-duty NGV corridors are being established with a program to fully buy down the incremental cost of Class 8 LNG trucks. Ryder has rolled out a program to lease heavy-duty NGVs to fleets. On the infrastructure side, station costs are being better managed by sizing stations carefully to match infrastructure growth to end user needs, since over- or under-building stations entails costs.

However, it may be necessary to rethink what is needed for heavy-duty NGVs, looking at other successful efforts to manage cost-related challenges in transportation markets. For example, American Airlines concluded that it should more carefully manage topping off of fuel in its aircraft as a means to reduce weight and save on fuel costs.69 UPS learned through time studies that avoiding left turns for its delivery vans saves time, conserves fuel, lowers emissions, and increases safety. Since implementation in 2004 of a specific policy, UPS has eliminated millions of miles from delivery routes.70

The key point is that it may be as important, or more important, to better understand application-specific logistics of heavy-duty NGV use as it is to focus only on reducing vehicle and fueling station costs.

This report provides the perspectives of both manufacturers and end users about current challenges for expansion of heavy-duty NGV deployments in North America. Figure 5.11-1 summarizes the principal concerns expressed by end users across five general use sectors. These concerns highlight potential challenges for expanded deployment of heavy-duty NGVs across the following four general categories: 1) vehicle costs, 2) infrastructure costs/access, 3) vehicle performance/operations, and 4) vehicle/engine availability.

Figure 5.11-1 shows that the greatest concerns of responding end users focus on two specific challenges: vehicle costs and infrastructure costs/access. Input from industry representatives (as reported in Section 4) corroborates that these two issues present the largest challenges for expanding North American deployments and driving the industry toward sustainability. However,

93

69 American Airlines. “Fuel Smart Program.” www.aa.com. Accessed November 2010.70 UPS. Press release. August 4, 2009.

Issue:Vehicle/Engine

Availability

Issue:Infratructure Costs/Access

Issue:Vehicle Costs

Issue:Vehicle Performance/

Operations

(No Concern)5 5

5(Large Concern)

5

Transit

Refuse

Drayage

Vocational/Municipal

School Bus

“Big Picture” Summary of End User Concernsby Issue Type and HDV Sector

Transit

• Vehicle/Engine Availability

PrincipalConcern(s):

Refuse

• Infrastructure Costs/Access

Drayage

• Infrastructure Costs/Access• Vehicle Costs• Performance (Engine HP)

Vocational/Municipal

• Infrastructure Costs/Access• Vehicle Performance/ Operations

School Buses

• Vehicle Costs• Infrastructure Costs/Access• Vehicle/Engine Availability

Figure 5.11-1

These concerns of heavy-duty NGV end users across five general use sectors point not only to challenges but also opportunities for expanded heavy-duty NGV deployments in North America. Not surprisingly, the keys lie in: 1) innovative ways to reduce deployment costs for end users, accelerating their payback period, and 2) ensuring that end users have affordable and convenient access to natural gas fuel. Notably, these responses were received in the Fall of 2010, with significant uncertainty about the future of financial incentives.

94

6 Actions and Opportunities

Heavy-duty NGV deployments are a success story for energy diversification of the North America transportation sector. Expansion of markets and deployments will require innovative ways to improve affordability for end user fleets.

depends on their ability to compete head-to-head with diesel HDVs and provide low lifecycle costs with a relatively short payback period. Expected fuel cost differentials between natural gas and diesel will help meet this important need.

Based on input from the North American heavy-duty NGV industry and a limited number of end users across five basic HDV sectors, four general areas of challenge and/or opportunity are identified in this report: 1) vehicle costs, 2) infrastructure costs/access, 3) vehicle performance/operations, and 4) vehicle/engine availability. However, it is the first two that present the most formidable challenges for expanded commercialization and deployment of heavy-duty NGVs, as summarized below.

Vehicle costs – Industry representatives and end users are concerned about the much higher capital costs of heavy-duty NGVs compared to similar diesel HDVs. By far the largest portion relates to fuel system choice (LNG or CNG) and the amount of onboard energy storage provided. Onboard CNG and LNG fuel systems contribute 50 to 75 percent of a typical heavy-duty NGV’s incremental cost. To some extent, higher manufacturing volumes for fuel tanks can reduce such price premiums. However, much of the cost premium is inherent to the complex nature and components of onboard natural gas fuel tanks relative to diesel fuel tanks.

Infrastructure costs/access – Across all types of industry representatives (heavy-duty vehicle and engine OEMs, fuel tank OEMs, SVMs, and upfitters), high levels of concern were expressed that end users face high costs to build onsite CNG or LNG fueling stations and that end users have inadequate access to offsite fueling stations. End users (other than transit districts) also expressed high levels of concern.

These financial and logistical challenges must be addressed to expand deployments of heavy-duty NGVs in North America. It appears that innovative ways are needed to 1) further reduce deployment costs for end users, accelerating their payback period, and 2) help ensure that they have affordable and convenient access to natural gas fuel. Specific recommended actions are provided in Table 6-1.

Heavy-duty NGV deployments are a success story for energy diversification of the North America transportation sector. Thousands of CNG and LNG fueled HDVs have been put into commercial fleet service, millions of diesel gallons have been displaced, and major improvements in urban air quality have been realized. The greatest success has been with high fuel use, return-to-base applications, such as transit buses, refuse trucks, vocational trucks, local and regional delivery trucks, and to a lesser extent, school buses. It is difficult to overstate the important role played by air quality based regulations in heavy-duty NGV deployments.

Major opportunity exists to expand such deployments, including into off-road vehicle sectors, with compelling benefits. If regulations and incentive programs are to continue driving heavy-duty NGV deployments, however, they need to evolve toward realization of societal benefits that have not yet been significantly monetized, such as reduced greenhouse gas emissions and reliance on transportation fuel from geopolitically unstable regions of the world. Moreover, the sustainability of heavy-duty NGVs increasingly

95

General Objective Specific Challenge/Opportunity Recommended Action(s)

Reduce Vehicle Costs(capital, lifecycle)

• Heavy-duty NGVs cost 40% to 60% more than diesel HDVs

• Onboard fuel systems (LNG or CNG) dominate this price premium

• Volume manufacturing can partially reduce price premiums, but higher costs relative to diesel tanks are inherent to the complexity and components of CNG/LNG fuel tanks

• Explore consistent and sustained federal-level (U.S. and Canadian) incentive to level the playing field to produce and use heavy-duty NGVs based on reduced greenhouse gas (GHG) emissions and dependence on transportation fuel from geopolitically unstable regions of the world

• Assess/describe ways that some NGV end users meet operational needs with minimal onboard fuel storage to reduce capital costs

• Assess/describe ways that have worked in the general transportation sector to reduce vehicle miles traveled (and therefore range requirements)

• Fleets are often more focused on reducing capital costs than total costs of ownership

• Educate interested end user fleets on payback period

• Provide new or improved payback models that allow input of user- specific parameters

• Payback period depends on technology costs as well as the prevailing fuel cost differential

• Explore pooled fuel demand possibilities to get better pricing (government role?)

• Encourage reasonable margins by fuel retailers

Reduce Costs of OnsiteFueling Stations

• CNG and LNG stations have high capital costs (see the CNG Infrastructure and LNG Infrastructure reports of the overall TIAX assessment for further details)

• Reduce need for building onsite by developing or expanding “user” forums that can help lead to station sharing

• Obtain or provide capital offsets for stations (grants, incentives, etc.)

Improve Access toOffsite Fueling Stations

• Existing network of CNG and LNG stations is inadequate to support significant expanded deployments

• Develop and/or expand “user” forums that can help lead to station sharing

Table 6-1

Numerous actions are recommended to help improve the long-term viability of heavy-duty NGVs by addressing key challenges and opportunities.

96

Appendix: Industry and End User QuestionnairesThe following five questionnaires were used to obtain input from industry and end users: 1) Questionnaire for Heavy-Duty Vehicle/Engine OEMs 2) Questionnaire for Heavy-Duty Engine OEMs 3) Questionnaire for Heavy-Duty Vehicle Installers/Upfitters 4) Questionnaire for OEMs of Onboard Natural Gas Storage Tanks 5) Questionnaire for Heavy-Duty Natural Gas Vehicle End Users

97

Questionnaire for Heavy-Duty Vehicle/Engine OEMs

98

Your name: Your Title: Date:Phone: Fax:Name of Your Company:


Note: The purpose of this automated questionaire is to obtain/confirm input from heavy-duty (H-D) vehicle original equipt-ment manufacturers (OEMs) about their current and potential future product offerings involving Natural Gas Vehicles (NGVs). Your input will help the natural gas industry understand how to best assist HDV manufacturers in expanding NGV markets.

Type ofHDV




HDVs Models You Offer

Semi Tractors 0

TransitBuses 0

SchoolBuses 0

ShuttleBuses 0

UtilityTrucks 0


Trucks0

DumpTrucks 0

RefuseTrucks 0

Off-RoadHDVs 0

StreetSweepers 0

Other: 0

America’s Natural Gas Alliance (ANGA)Questionnaire for Heavy-Duty Vehicle/Engine OEMs

1. A. Please characterize your current Heavy-Duty Vehicle offerings by filling in the number of HDV models you sell by fuel/technology type, for all applications that apply.

1. B. If H-D Natural Gas Vehicles are included in the table above, what is the approximate volume of vehicles that your company currently manufactures? units per year.

2.

If your company is currently selling Heavy-Duty (H-D) Natural Gas Vehicles, please rate the relative importance that the following “market drivers” may have played in your company’s decisions.

1 2 3 4 5


My company preceives a long-term business advantage/positive ROI

1 2 3 4 5


My company seeks to enhance its “green” image

1 2 3 4 5


My company can take advantage of avaliable grants / incentives / tax breaks

1 2 3 4 5


My company’s customers preceive and value opportunity to reduce greenhouse gas emissions

1 2 3 4 5


My company (or its engine supplier) can meet emissions standards (NOx /PM) at lower costs

1 2 3 4 5


My company’s customers must comply with government mandates/regulations

1 2 3 4 5


My company has a corporate responsibility to sell environmentally friendly products

1 2 3 4 5


My company’s customers seek to reduce dependence on foreign oil / petroleum usage

Other (please describe by briefly typing response):

99

3.

If your company has concerns about making and selling H-D Natural Gas Vehicles, please rate the relative effect of the following in such concerns.

1 2 3 4 5No Effect Large Effect

Higher costs/lower ROI to manufacture NGVs relative to conventional HDVs


High costs / complexity of meeting regulatory requirements for emissions certification, on-board diagnostics, safety, etc.


Insufficient avaliable grants/incentives/tax breaks to build and sell NGVs

Other OEM concerns/barriers? (Please describe the issue and its importance by briefly typing responses below):


Lack of sufficient choices for heavy-duty natural gas engines to install in our HDVs


Customers have insuffcient access to incentives / grants / tax breaks to offset higher costs


Higher priorities exsist for my company’s limited R&D/product development funds


Customers perceive reduced need for H-D NGVs with 2010 NOX and PM emissions standards


Customers have inadequate access to off-site natural gas fueling station(s)


Customers face high costs to build on-site natural gas fueling station(s)

100

3. (Continued)


Customers have concerns about H-D NGV performance relative to conventional HDVs


Customers have concerns about differences in safety, procedures and/or staff training


Customers prefer other competing “clean” HDV Technology (e.g. Hybrid Electric)


Customers have concerns about H-D NGV durability/reliability relative to conventional HDVs


Customers have concerns about H-D NGV driving range relative to conventional HDVs


Customers have concerns about H-D NGV weight and/or cargo capacity

101

4.-8.

Questions 4 through 7 apply if your company currently makes and sells H-D NGVs. If not, please skip to Question 8.)

4. What is the minimum vehicle range that you typically equip your H-D NGVs to meet (for return-to-base applications)? Place an X in only one box by clicking it.

Less than 50 miles

50–100 miles

100–150 miles

150–200 miles

200–250 miles

250–300 miles

300-350 miles

350-400 miles

> 400 miles


10–20 DGE

20–30 DGE

30–40 DGE

40–50 DGE

50-60 DGE

Other

7. What is the typical incremental cost over comparable diesel HDVs of your H-D NGVs?

8. Approximately how much does it cost to develop, certify, market and support a new HDV platform that operates on an alternative fuel such as CNG and LNG?

6. How does the on-board volume of natural gas in diesel gallon equivalents (DGE) that you typically specify for your H-D NGVs to achieve the minimum vehicle range? Check all that apply.

100% Factory Built

Partially factory built: NG engine and/or fueling system installed by 2nd party

100% outsourced to small volume manufacturers / upliftters / converters

Other (Please briefly describe):

102

9.-10.

10. What type(s) of alternative fuel or advanced technology H-D vehicles does your company plan to make and sell over the next few years? Check all that apply.

9. Is there a particular sized H-D Natural Gas Vehicle engine not currently offered that your company might equip in a H-D NGV if avaliable? Please Specify by engine displacement/HP/torque.

CNG

Battery Electric

LNG

Class 8 Trucks

Street Sweepers

School Buses

Refuse Trucks

H2/Fuel Cell

NG Hybrids

Shuttle Buses

Class 6–7 Vocational Trucks

Specialty Trucks (e.g. Dump/cement trucks)

Transit Buses

Hydraulic Hybrids

Diesel Hybrids

Other On-Road

Off-Road Vehicles

(describe)

By Fuel Type/Technology

By Application

THANK YOU VERY MUCH! The information you have provided will help the natural gas industry address needs of OEMs and end users for deployment of quality, cost-effective heavy-duty natural gas vehicles.

Please email your completed questionnaire back to:

[email protected]@TIAXLLC.com

103

Questionnaire for Heavy-Duty Engine OEMs

104



Note: The purpose of this automated questionaire is to obtain/confirm input from heavy-duty (H-D) engine original equipment manufacturers (OEMs) about their current and potential future product offerings involving Natural Gas Vehicles (NGVs). Your input will help the natural gas industry understand how to best assist HD vehicle and engine manufacturers in expanding NGV markets.

Type ofHDV



Total Number of HD Engine Families You

Offer

Semi Tractors 0

TransitBuses 0

SchoolBuses 0

ShuttleBuses 0

UtilityTrucks 0


Trucks0

DumpTrucks 0

RefuseTrucks 0

Off-RoadHDVs 0

StreetSweepers 0

Other: 0

America’s Natural Gas Alliance (ANGA)Questionnaire for Heavy-Duty Engine OEMs

1. A. Please characterize the number of heavy-duty engine families your company offers, as a function of fuel type/tech-nology and targeted application(s). For each fuel/technology, indicate the number of H-D engines that you sell.

1. B. If H-D Natural Gas Vehicles are included in the table above, what is the approximate volume of those engines that your company currently manufactures/sells?__________________units per year.

2.

If your company is currently selling heavy-duty (H-D) Natural Gas Vehicles, please rate the relative importance that the following “market drivers” may have played in your company’s decisions.

1 2 3 4 5



1 2 3 4 5



1 2 3 4 5


My company can take advantage of avaliable grants/incentives/tax breaks

1

1

2

2

3

3

4

4

5

5

Not Important

Not Important

Very Important

Very Important

End user fleets percieve and value opportunity to reduce green house gas emissions

End user fleets preceive and value opportunity to reduce life cycle costs of their HDVs

1 2 3 4 5


My company can meet emissions standards (NOX/PM) at lower costs

1 2 3 4 5


End user fleets must comply with government mandates/regulations

1 2 3 4 5



1 2 3 4 5


End user fleets seek to reduce dependence on foreign oil/petroleum usage

105

3.

If your company has concerns about making and selling H-D Natural Gas Vehicles, please rate the relative effect of the following in such concerns.


Higher costs/lower ROI to manufacture NG engines relative to conventional HD engines


High costs / complexity of meeting regularoty requirements for emissions certification, on-board diagnostics, safety, etc.


Insufficient avaliable grants/incentives/tax breaks to build and sell NG engines

Other OEM concerns / barriers? (Please describe the issue and its importance by briefly typing responses below):


Lack of sufficient interest from heavy-duty NGV OEMs to purchase NG engines

1 2 3 4 5No Effect

Large EffectEnd user fleets have insuffcient access to incentives / grants / tax breaks to offset higher costs



1 2 3 4 5No EffectLarge Effect

End user fleets perceive reduced need for H-D NGVs now that diesel engines meet the 2010 NOX and PM emissions standards

1 2 3 4 5No Effect

Large EffectEnd user fleets have inadequate access to off-site natural gas fueling station(s)

106

3. (Continued)

107


End user fleets face high costs to build on-site natural gas fueling station(s)


End user fleets have concerns about differences in safety, procedures and/or staff training


End user fleets prefer other competing “clean” HDV Technology (e.g. Hybrid Electric)


End user fleets have concerns about H-D NGV performance relative to conventional HDVs


End user fleets have concerns about H-D NGV durability/reliability relative to conventional HDVs

1

1

2

2

3

3

4

4

5

5

No Effect

No Effect

Large Effect

Large Effect

End user fleets have concerns about H-D NGV driving range relative to conventional HDVs

End User fleets have concerns about H-D NGV weight and/or cargo capacity

4.-8.

Questions 4 through 7 apply if your company currently makes and sells H-D NG engines. If not, please skip to Question 8.)

4. What is the minimum vehicle range that you (or your chassis partners) typically equip your H-D NGVs to meet (for return-to-base applications)? Place an X in only one box by clicking it.

Less than 50 miles

50–100 miles

100–150 miles

150–200 miles

200–250 miles

250–300 miles

300–350 miles

350–400 miles

> 400 miles

5. What is the on-board volume of natural gas in diesel gallon equivalents (DGE) that you (or your chassis partners) typically specify for H-D NGVs to achieve the minimum vehicle range?

10–20 DGE

20–30 DGE

30–40 DGE

40–50 DGE

50–60 DGE

Other

7. What is the typical incremental cost (over comparable diesel H-D engines) of your H-D natural gas engine (without fuel storage)?

8. Approximately how much does it cost to develop, certify, market, and support a new H-D engine that operates on an alternative fuel such as CNG and LNG?

6. How does your company currently supply H-D natural gas engines to vehicle OEMs?Check all that apply.

We build the NG engine and chassis (100% factory build of NGV results)

We build the NG engine, which is installed at the vehicle OEM factory

Our engines are installed in OEM vehicles by upfitters/converters


108

9.-10.

10. What type(s) of alternative fuel or advanced technology H-D vehicles does your company plan to make and sell over the next few years? Check all that apply.

9. Is there a particular sized H-D Natural Gas Vehicle engine not currently offered that your company intends to offer in the near future?

CNG

Battery Electric

LNG

Class 8 Trucks

Street Sweepers

School Buses

Refuse Trucks

H2/Fuel Cell

NG Hybrids

Shuttle Buses


Specialty Trucks (e.g., Dump/

cement trucks)

Transit Buses

Hydraulic Hybrids

Diesel Hybrids

Other On-Road

Off-Road Vehicles

(describe)


By Application




109

Questionnaire for Heavy-Duty Vehicle/Engine SVMs and Upfitters

110



Note: The purpose of this automated questionaire is to obtain/confirm input from heavy-duty (H-D) vehicle upfitters, converters, and Small Volume Manufacturers (SVMs) about their current and potential future product offerings involving Natural Gas Vehicles (NGVs). Your input will help the natural gas industry understand how to best assist in expanding NGV markets.

Type ofHDV



Approx. Total Number of HDV

packages

Semi Tractors 0

TransitBuses 0

SchoolBuses 0

ShuttleBuses 0

UtilityTrucks 0


Trucks0

DumpTrucks 0

RefuseTrucks 0

Off-RoadHDVs 0

StreetSweepers 0

Other: 0

America’s Natural Gas Alliance (ANGA)Questionnaire for Heavy-Duty Vehicle/Engine SVMs and Upfitters

1. A. Please characterize your current HDV-related products and services. If applicable, put in the number of seperate packages you sell, by heavy-duty application and fuel/technology type. (for example, you offer 2 CNG/1 Propane conversion packages for transit buses

1. B. If you offer conversion packages for H-D Natural Gas Vehicles, what is the approximate volume of units that your company currently sells/installs? Units per year?

2.

Please rate the relative importance that the following “market drivers” may have played in your company’s decisions to focus on the heavy-duty NGV business.

1 2 3 4 5



1 2 3 4 5



1 2 3 4 5


My company can take advantage of avaliable grants/incentives/tax breaks

1

1

2

2

3

3

4

4

5

5

Not Important

Not Important

Very Important

Very Important

End user fleets preceive and value opportunity to reduce greenhouse gas emissions

End user fleets preceive and value opportunity to reduce green house gas emissions

1 2 3 4 5


My company (or its customer) can meet emissions standards (NOX /PM) at lower costs

1 2 3 4 5


End user fleets must comply with government mandates/regulations

1 2 3 4 5



1 2 3 4 5


End user fleets seek to reduce dependence on foreign oil/petroleum usage

111

3.

If your company has concerns with the H-D Natural Gas Vehicle business, please rate the relative effect of the following in such concerns.


Higher costs/lower ROI to manufacture NGVs relative to conventional HDVs


High costs / complexity of meeting regularoty requirements for emissions certification, on-board diagnostics, safety, etc.


Insufficient avaliable grants/incentives/tax breaks to build and sell NGVs or components

Other SVM/upfitter concerns/barriers? (e.g. price of individual components? Please describe the issue and its importance


Lack of sufficient choices for heavy-duty natural gas engines to install in HDVs


End user fleets have insufficient access to incentives/grants/tax breaks to offset higher costs




End user fleets percieve reduced need for H-D NGVs with 2010 NOX and PM emissions standards


End user fleets have inadequate access to off-site natural gas fueling station(s)

112

3. (Continued)




End user fleets have concerns about H-D NGV weight and/or cargo capacity

1

1

2

2

3

3

4

4

5

5

No Effect

No Effect

Large Effect

Large Effect

End user fleets have concerns about differences in safety, procedures, and/or staff training

End user fleets prefer other competing “clean” HDV technology (e.g. Hybrid Ekctric)







113

4.-8.


Less than 50 miles

50–100 miles

100–150 miles

150–200 miles

200–250 miles

250–300 miles

300–350 miles

350–400 miles

> 400 miles

5. What is the on-board volume of natural gas in diesel gallon equivalents (DGE) that you typically specify for your H-D NGVs to achieve the minimum vehicle range?

10–20 DGE

20–30 DGE

30–40 DGE

40–50 DGE

50–60 DGE

Other

7. What is the typical incremental cost over comparable diesel HDVs of your H-D NGV conversions(if applicable)?

8. Approximately how much does it cost to develop, certify, market adn support a new HDV conversion package that operates on an alternative fuel such as CNG or LNG?

6. How does your company currently manufacture/obtain H-D Natural Gas Vehicles for sale?

100% conversion: we modify OEM HDVs to NGVs (engine and fuel system)

Partially factory built: we send NG engines and fueling systens to OEMs for factory installation


114

9.-10.

10. What type(s) of alternative fuel or advanced technology HDV systems does your company plan to make and sell over the next few years?

9. Is there a particular sized H-D Natural Gas Vehicle engine not currently offered that is needed to make H-D NGVs more viable?

CNG

Battery Electric

LNG

Class 8 Trucks

Street Sweepers

School Buses

Refuse Trucks

H2/Fuel Cell

NG Hybrids

Shuttle Buses


Specialty Trucks (e.g. Dump/cement trucks)

Transit Buses

Hydraulic Hybrids

Diesel Hybrids

Other On-Road

Off-Road Vehicles

(describe)


By Application




115

Questionnaire for OEMs of On-Board Natural Gas Storage Tanks

116



Note: The purpose of this automated questionaire is to obtain/confirm input from fuel tank OEMs about their current and potential future product offerings involving on-board storage tanks for Natural Gas Vehicles (NGVs). Your input will help the natural gas industry understand how to best assist in expanding NGV markets.

Number of Fuel Tank Products Offered by Your Company:


CNG LNG PropaneCompressed Hydrogen

Liquefied Hydrogen

America’s Natural Gas Alliance (ANGA)Questionnaire for OEMs of On-Board Natural Gas Storage Tanks

CNG Tank Questions (if applicable)

1. A. Please characterize your current fuel tank products. Indicate the number of fuel tank products that you make and sell, as a function of fuel type.

2. What is the approximate quantity of CNG fuel tanks that your company currently sells (worldwide) for vehicle applications?

3. What is the percentage of your company’s current worldwide CNG tank sales that are for the North American Market?

North American CNG tank sales account for about _________________% of our worldwide sales

4. What quantity of CNG fuel tanks for vehicle applications do you think is needed from North American NGV markets to significantly reduce manufacturing costs?

CNG (Type I) tanks: _______________________ units per yearCNG (Type II) tanks: ______________________ units per yearCNG (Type III) tanks: _______________________ units per yearCNG (Type IV) tanks: _______________________ units per year

CNG (Type I) tanks: _______________________ units per yearCNG (Type II) tanks: _______________________ units per yearCNG (Type III) tanks: ______________________ units per yearCNG (Type IV) tanks: _____________________ units per yearComments?

5.

Please rate the following potential barriers related to on-board CNG fuel tanks that could impede expansion of NGV markets in North America.

1 2 3 4 5

Not Important Large Barrier

High cost/low volume [hard to reduce costs without volume, hard to reach volume without lower cost(s)]

1 2 3 4 5


End of life issues

1 2 3 4 5


High cost due to limited supply of carbon fiber

1

1

2

2

3

3

4

4

5

5

Not a Barrier

Not a Barrier

Large Barrier

Large Barrier

Other markets for compressed gas tanks may take precedence over increased production for CNG/NGV tanks

Technology barriers with CNG tanks (e.g., limitations on working pressures or fill volumes)

1 2 3 4 5


High cost due to limited supply of other tank materials and components

Other CNG tank-related barriers? Please describe the issue and its importance by briefly typing your response below:

1 2 3 4 5


High energy costs associated with making tank materials or components

117

118

6.-9.

1 2 3 4 5Not a Barrier Large Effect

High cost/low volume (hard to reduce cost without volume, hard to reach volume without lower costs)

1

1

1

2

2

2

3

3

3

4

4

4

5

5

5

Not a Barrier

Not a Barrier

Not a Barrier

Large Effect

Large Effect

Large Effect

High cost/limited supply of tank materials and components

Other markets for cryogenic tanks may take precedence over increased production for LNG/NGV tanks

Technology barriers with LNG tanks (e.g., limitations on tanks holding vacuum)


High energy costs associated with making tank materials or components


End of life issues

6. What is the approximate quantity of LNG fuel tanks that your company currently sells (worldwide) for vehicle applications?

LNG tanks: _______________units per year

8. What quantity of LNG fuel tanks for vehicle applications do you think is needed from North American NGV markets to significantlty reduce manufacturing costs?

LNG tanks: _______________units per yearComments?

7. What is the percentage of your company’s current worldwide LNG tank sales that are for the North American market?

North American LNG tank sales account for about _______________ % of our worldwide sales

9. Please rate the following potential barriers related to on-board LNG fuel tanks that could impede expansion of NGV markets in North America.

LNG Tank Questions (If Applicable)

10.

119


End user fleets have insufficient access to incentives/grants/tax breaks to offset higher costs

1

1

1

1

1

2

2

2

2

2

3

3

3

3

3

4

4

4

4

4

5

5

5

5

5

No Effect

No Effect

No Effect

No Effect

No Effect

Large Effect

Large Effect

Large Effect

Large Effect

Large Effect

OEMs or fleets percieve reduced need for H-D NGVs in lieu of 2010 NOX/PM emissions standards




End user fleets have concerns about H-D NGV weight and/or cargo capacity


End user fleets have inadequate access to off-site natural gas fueling station(s)



10. Please rate the following potential barriers related to on-board LNG fuel tanks that could impede expansion of NGV markets in North America.

General NGV Questions

11.-16.

11. What is the minimum H-D NGV driving range that your H-D NGV customers typically require (return-to-base applications)?

Less than 50 miles

50–100 miles

100–150 miles

5,000 psi: Very unlikely

10,000 psi: Very unlikely

CNG

Class 8 Trucks

Street Sweepers

150–200 miles

200–250 miles

250–300 miles

Unlikely

Unlikely

LNG


Specialty Trucks (e.g. Dump/Cement Trucks)

Likely

Likely

NG Hybrids

300–350 miles

350–400 miles

> 400 miles

Highly likely

Highly likely

12. What on-board volume(s) of natural gas in diesel gallon equivalents (DGE) do you most offer to achieve the minimum driving range needs of these customers? Check all that apply

10–20 DGE

20–30 DGE

30–40 DGE

40–50 DGE

50–60 DGE

Other

14. Approximately what percentage of the incremental cost for a H-D NGV (over a comparable diesel HDV) is currently attributable to the fuel storage system?

CNG: _______________%LNG: _______________%

15. How likely is it that higher-pressure CNG tanks will become common and practical (price, compatibility with fueling stations, good fill volume, etc.) over the next few years to better optimize NGVs (weight, payload, drving range)? Check all that apply

16. What do you think will be the biggest markets for your natural gas tanks in North America over the next 5 years?


By Application

13. How does your company provide CNG or LNG fuel tanks for NGVs?Check all that apply

We sell directly to major vehicle OEMs who install our tanks at their factory

We sell to SVMs and/or converters who install our tanks at their own facilities


120

17.

17. Do you have any other thoughts or comments about how the NG industry can help expand NGV markets in North America?




121

Questionnaire for Heavy-Duty Natural Gas Vehicle End Users

122

Note: The purpose of this automated questionaire is to obtain/confirm input from heavy-duty vehicle fleets about their current and potential future use of Natural Gas Vehicles (NGVs). Your input will help the natural gas industry understand how to best assist your fleet with obtaining and utilizing NGVs.

America’s Natural Gas Alliance (ANGA)Questionnaire for Heavy-Duty Natural Gas Vehicle End Users



Type ofHDV




HDVs in Your Fleet

Semi Tractors 0

TransitBuses 0

SchoolBuses 0

ShuttleBuses 0

UtilityTrucks 0


Trucks0

DumpTrucks 0

RefuseTrucks 0

Off-RoadHDVs 0

StreetSweepers 0

Other: 0

1. Please characterize your current Heavy-Duty Vehicle fleet. Please fill in the approximate number of HDVs by fuel/tech-nology type, for all applications that apply.

2.

If your fleet is currently using Heavy-Duty (H-D) Natural Gas Vehicles, please rate the relative importance that the following “market drivers” may have played in your agency’s purchase decisions.

1 2 3 4 5


Take advantage of Available Grants/Incentives/Tax Breaks

1 2 3 4 5


Comply with Government Mandates/Regulations

1 2 3 4 5


Reduce Criteria Pollutant Emissions (NOX,PM)

1

1

2

2

3

3

4

4

5

5

Not Important

Not Important

Very Important

Very Important

Reduce Dependence on Foreign Oil/Petroleum Usage

Comply with Governing Body Guidance/Requirement

1 2 3 4 5


Reduce Greenhouse Gas Emissions

1 2 3 4 5


Enhance Agency’s “Green” Image

1 2 3 4 5


Reduce Lifecycle Costs (Cheaper Fuel and/or Vehicle Maintenance)

Other (Please describe by briefly typing your response below):

123

3.

If your fleet management has concerns about using H-D Natural Gas Vehicles, please rate the relative effect of the following in such concerns.

124

1 2 3 4 5

No Effect Large Effect

Higher NGV Capital Costs Relative to Conventional HDVs

1 2 3 4 5

Large Effect

Concerns about Natural Gas Vehicle Performance Relative to Conventional HDVs

1 2 3 4 5


Insufficient Available Grants/Incentives/Tax Breaks

1

1

2

2

3

3

4

4

5

5

No Effect

No Effect

Large Effect

Large Effect

Concerns about Natural Gas Vehicle Driving Range Relative to Conventional HDVs

Concerns about Increased Weight and/or reduced Cargo Due to On-Board Natural Gas Storage

1 2 3 4 5


Inadequate Access to Off-Site Natural Gas Fueling Station(s)

1

1

2

2

3

3

4

4

5

5

No Effect

No Effect

Large Effect

Large Effect

General Budget Constraints of Agency

1 2 3 4 5

No Effect

No Effect

Large Effect

Cost of Building On-Site Natural Gas Fueling Station(s)

Preference of Agency for Other Competing HDV Technology (e.g., Hybrid Electric)

3. (Continued)

1

1

2

2

3

3

4

4

5

5

No Effect

No Effect

Large Effect

Large Effect

Limited Number of Commercially Available H-D Natural Gas Vehicles or Engines for Application

Concerns about Differences in Safety, Procedures and/or Staff Training

Other Concerns/Barriers? Please describe the issue and its importance by briefly typing your response below:

125

4.-9.

4A. Please check all types of on-site fueling stations that your fleet currently uses (i.e., at your home base).

5. What is the minimum vehicle range (between fuelings) typically required by your return-to-base H-D vehicles?

6. If you currently use H-D Natural Gas Vehicles, what is the on-board volume of natural gas in diesel gallon quivalents (DGE) that you typically specify to achieve your minimum vehicle range?

7. For any H-D Natural Gas Vehicles that you are fueling off site, what is the maximum distance you are willing to travel to a fueling station? ______________miles

8. How does your fleet currently purchase/obtain H-D Natural Gas Vehicles?

9A. How frequently do you purchase new vehicles? Every ___________ year(s)B. How far ahead do you determine which vehicles you will purchase? Every ___________ year(s)C. How may vehicles do you typically purchase at a time? ___________ vehiclesD. Would your agency consider leasing or renting H-D NGVs if available? _______

B. Please feel free to further describe how you fuel your H-D vehicles.

Diesel

CNG

Hydrogen

Gasoline

LCNG

Electric Charging

Propane (LPG)

LNG

Less than 50 miles

50–100 miles

100–150 miles

We purchase factory-built NGVs from factory-authorized dealers

We purchase new upfitted vehicles from converters/small volume OEMs

We have upfitters convert existing HDVs in our fleet

We lease or rent them from third parties (e.g., Ryder, Penske, etc.)

Other (please explain):

10–20 DGE

20–30 DGE

150–200 miles

200–250 miles

250–300 miles

30–40 DGE

40–50 DGE

300–350 miles

350–400 miles

50–60 DGE

Other________

126

10.-12.

127

10. What is the longest payback tim that your agency will accept when purchasing environmentally desirable HDVs that have higher capital costs, but lower lifecycle costs?

11. Is there a particular sized H-D Natural Gas Vehicle engine that your agency would purchase if available?

1 year

2 years

3 years

4 years

5 years

Agency not concerned with payback period

CNG

Class 8 Trucks Class 6–7 Vocational Trucks

School Buses Transit Buses

Shuttle Buses Off-Road Vehicles (describe) ____________

Battery Electric

Street Sweepers Specialty Trucks (e.g. Dump/Cement Trucks)

Refuse Trucks Other On-Road ____________

LNG NG Hybrids

H2/Fuel Cell Hydraulic Hybrids

Diesel Hybrids

12. What type(s) of alternative fuel or advanced technology H-D vehicles does your fleet paln to purchase and deploy over the next few years?


By Application

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This assessment was sponsored by America’s Natural Gas Alliance with the support of participating American Gas Association companies.

For questions, please contact:

TIAX LLC20813 Stevens Creek Blvd, Suite 250Cupertino, CA 95014

http://www.tiaxllc.com/services/

The opinions expressed within the Executive Summaries of Modules 1 and 2 of this market assessment are the work product of America’s Natural Gas Alliance (ANGA) and participating American Gas Association (AGA) companies based upon data provided by TIAX LLC. The Final Reports of Modules 1 through 5 are the work of TIAX LLC as a market assessment sponsored by ANGA with the support of participating AGA companies.

U.S. and Canadian Natural Gas Vehicle Market …...Industries 416, New Flyer Xcelsior, Orion VII...

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