Natural Gas Vehicles
Is US Overlooking Fuel Alternative?

By Clifford Atiyeh
The Boston Globe
May 23, 2008

Is US overlooking fuel alternative?

As prices soar, the nation largely ignores the natural-gas option

While gasoline is near $4 a gallon, it cost $2.69 for the equivalent amount of
natural gas in Newton.

Europeans can buy cars that run on natural gas from at least eight automakers,
but despite large reserves of the relatively inexpensive fuel in the United
States, the federal government and states, including Massachusetts, are backing
pricier biofuels as a way to lessen dependence on imported oil.
About cars running on natural gas

They produce 35 percent less greenhouse emissions than cars powered by regular
gasoline, and 15 percent less than those that run on corn-based ethanol.
Most models only have room for about 8 gallons of natural gas, for a typical
driving range of 170 to 240 miles.

Some trucks use natural gas as a cooled liquid, but it is highly compressed
for use in passenger cars and stored in reinforced tanks beneath the trunk.
To improve mileage and flexibility, many automakers use two fuel tanks - one
for natural gas, the other for gasoline.

The cars cost $3,500 to $6,000 more than their gasoline-powered counterparts,
but federal tax credits can make up most or all of the difference.

SOURCES: Environmental Protection Agency, Energy Information Administration,
Department of Energy

In the United States, use of natural-gas-powered vehicles
is limited mostly to commercial and municipal fleets, including 360 MBTA buses,
but such vehicles are making a significant dent in the European consumer auto
market as oil trades above $130 a barrel. The fuel, compressed at high pressures
and called CNG, burns cleaner and produces fewer greenhouse gas emissions than
other petroleum fuels.

As gasoline prices in Massachusetts near $4 a gallon and diesel is already above
that level, the equivalent of a gallon of natural gas averages about $2.69. A
gallon of pure biodiesel, primarily made from soybeans, sells for an average of
nearly $5 nationwide, according to a recent report from the Energy Management
Institute. Another alternative fuel, E85 - which is ethanol mixed with gasoline
- averages just under $4.20 for the equivalent of a gallon of gasoline.

The United States has the sixth-largest natural gas reserves in the world. It
imports 16 percent of its natural gas - mostly from Canada - and 58 percent of
its petroleum, according to the Energy Information Administration, which
calculates imports after subtracting exports. Philip Giudice, commissioner for
the Massachusetts Division of Energy Resources, said the United States once
viewed natural gas as a "big possible alternative" to gasoline, but that it
"hasn't worked on a broad scale."

"I think that moving money away from natural gas and into ethanol, which is
where a lot of money got moved from the federal government, had a significant
effect," Giudice said.

In a speech this month, Governor Deval Patrick touted cellulosic biofuels, which
include more efficient blends of ethanol and biodiesel. A state report in April
said Massachusetts could replace 6 percent of its gasoline consumption by
producing such fuels. Part of the energy bill President Bush signed into law
last December requires increasing annual biofuel consumption from 9 billion
gallons to 36 billion gallons by 2022.

Even some current users of natural-gas-powered vehicles, like the Massachusetts
Bay Transportation Authority, are rethinking their strategy. In the MBTA's case,
it is because of advances in diesel-electric hybrids, not biofuels. When
natural-gas-powered buses were introduced in December 2003, customers applauded
their lack of smoke, said Richard Leary, the MBTA's chief operating officer. But
manufacturers have greatly reduced diesel emissions in recent years, making
diesel-electric hybrids an attractive and cleaner option, Leary said. As a
result, the MBTA does not plan to buy more natural-gas-powered buses, he said.
Dennis Smith, director of the US Department of Energy's Clean Cities program,
said state incentives have been "very instrumental" in popularizing
natural-gas-powered cars, but only in a few areas.

"It really only makes sense if you're going to use a whole lot of fuel," Smith
said. "But as far as putting a natural gas station that's a 7-Eleven on the
corner, there's probably only a few markets where that pans out."

Massachusetts has just 11 stations out of almost 800 nationwide, which are
mostly in the West, according to the Department of Energy. Many are only open to
federal and state government fleets, which are required by law to use certain
amounts of alternative fuels, and they cost significantly more to build than
similarly sized gasoline stations. By contrast, Germany alone has nearly 800
natural gas stations.

Such availability has helped the market in Europe for cars that run on natural
gas. There are roughly 800,000 natural-gas-powered vehicles - about 12 percent
of the world's total and at least five times the number in the United States.
Half are in Italy, where a large market has developed since the 1930s, said
Jeffrey Seisler of Clean Fuels Consulting, a Brussels-based natural gas lobby.
Germany taxes natural gas at about two-fifths the rate of gasoline and the price
is about 50 percent lower than premium unleaded, which is now more than $8 a gallon.

Automakers in Europe have also been aggressively pushing natural-gas-powered
cars. In March, Volkswagen AG unveiled a natural gas Passat in Geneva, and next
month Daimler AG plans to launch a version of its subcompact Mercedes-Benz
B-Class that runs on natural gas and gasoline. Since 2001, Opel, the German arm
of General Motors Corp., has sold more than 42,000 natural-gas-powered models in
Europe. Gherardo Corsini, an environmental director for GM Europe, said the
company was "very surprised" when more than two-thirds of sales for its natural
gas Zafira minivan went to regular buyers. But that does not mean natural gas
will soon rival diesel, which commands nearly half the German market. Last year,
for example, Ford Motor Co. sold about 350 natural-gas-powered vehicles in
Germany, a sliver of its total 1.8 million sales across Europe.

"CNG is still a niche in Europe," said Adrian Schmitz, a spokesman for Ford of
Europe, "but it's a very, very important niche and could easily increase if the
infrastructure of gas stations would increase."

In the United States, the Honda Civic GX is the only natural-gas-powered car
offered by a major automaker. The company restricts private sales to California
and New York - the states with the most fueling stations. Honda said it sold 459
natural-gas-powered Civics in those states last year.

Detroit automakers said they stopped selling natural-gas-powered cars in the
United States due to high production costs and a lack of fueling stations. One
after the other, the cars were history: Chrysler in 2003, Ford in 2004, and GM a
year later. But the natural gas industry, which has not focused on retail car
sales, blames unfair government policies for relegating the fuel to the back burner.

"The president gets up there and says, 'It's going to be ethanol, it's going to
be hydrogen.' Well, when's the last time you heard him say it's going to be
natural gas?" said Richard Kolodziej, who runs the natural-gas lobby NGVAmerica.
"We don't get that kind of visibility."

Seisler said "people are suffering" because the government's reluctance to let
alternative fuels compete in a balanced market forces them to rely on expensive gasoline.

If there were more options, he said, "people wouldn't be trapped with having to
purchase petroleum-based vehicles."


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