Alternative Fuels: Selecting the Right Fuel for your Business

For alternative fuels, like in life, there is no ‘one size that fits all’. While I’ve focused my last 17 years on Compressed Natural Gas (CNG), I have also been lucky enough to work on vehicle fuelling projects using Liquefied Natural Gas (LNG), Propane, Electricity and Hydrogen. Even for those of us that have been in the industry for some time, it can difficult to separate the science and economics from the marketing and politics related to alternative fuels. What I’ve also found is that a fuelling solution that works effectively in one market does not necessarily translate to another – what works well for passenger, light-duty vehicles and medium-duty vehicles may not always make sense for heavy-duty vehicle fleets and vice versa.

I think it is useful, before talking about alternative fuels in Canada, to get some perspective on the size of the alternative fuel market globally. When we imagine what our fleets could look like in the future, the best examples are often found in Asia and the Middle East. Looking at the CNG market as a whole, there are currently just over 26 million CNG vehicles in the world. Of these vehicles, China, Iran, India and Pakistan account for approximately 64%. In India, CNG was adopted to fight the poor air quality caused by overpopulation and increased use of diesel-run vehicles. In cities like New Delhi, CNG was adopted to counteract the increased air pollution resulting in the government mandating that all buses, 3-wheelers and taxis be converted to CNG, a move which has had a net positive benefit in overall air quality. A study by the Washington DC-based Resources For the Future, which studied air pollution in the capital for 15 years (1990-2005), said the CNG conversion of public transport has made the “most significant” impact on air quality. A 2004 World Bank study of several Indian cities where CNG programs were launched concluded that the switch to CNG had prevented premature deaths, concluding that “one of the largest CNG programs have helped to reduce the number of premature deaths annually – at least 3,629 in Delhi and at least 5,308 in Mumbai.”

CNG AND THE CANADIAN MARKET

In Canada, there are currently approximately 15,000 natural gas vehicles on the road. While this number is very small (0.07% of Canada’s vehicle population), the untold story is that Canadian companies have long been leaders in the alternative fuel sector and have been providing equipment and services to high-volume CNG, Hydrogen and Electric Vehicle markets for years. If you hear about large CNG projects in South-East Asia, South America or the Middle East, odds are that experienced Canadians are working on these projects. We have always had the expertise, but it has been some time since we have had the market conditions domestically to see alternative fuels grow locally. We at Envoy Energy believe the time is now.

PASSENGER AND LIGHT-DUTY VEHICLES

If you drive around Karachi in Southern Pakistan, a fun game (for engineers) is to try to pick out a light-duty vehicle without a CNG kit – this is quite challenging! Similarly, if you decide to play ‘punch-buggy’ with light-duty CNG vehicles in Canada, your arm will be pretty safe. While the CNG market is quite successful in places like Pakistan, some people like to say that it is the lack of CNG stations that is deterring the light-duty vehicle market growth in Canada. In my opinion, it is more due to the high cost of light-duty CNG conversion kits. In Pakistan, for example, a CNG kit costs approximately $500 CDN while, in Canada, this could be up to 20 times higher. While the fuel savings are significant for heavy-duty fleets, it would be challenging for the average consumer with a small-to-average commute to achieve savings within a reasonable payback period.

What is a more practical solution for Canadian light-duty vehicles in the mid-to-long-term, is an electric drivetrain. While vehicles like the Tesla Model X are never going to be used for the mass-market, we are seeing more lower cost electric vehicle options. There have been some very exciting trends in the light-duty electric market as the battery cost has dropped substantially in recent years. While the total cost of ownership is still lowest for a conventional vehicle, there’s a feeling that the costs of ownership for electrics with equal conventional light-duty vehicles in the next 4-5 years.

HEAVY-DUTY VEHICLES

For those of us in the alternative fuel industry, we are very excited about the future of CNG in the heavy-duty vehicle industry. Some of the reasons are obvious ones; heavy-duty fleets spend a lot of time on the roads and use much more fuel than light-duty vehicles. For both Bus and Waste Fleets in many markets, CNG has become an accepted and reliable source of cleaner, lower-cost transportation fuel.

While the announcements regarding Tesla’s Electric and Nikola’s Fuel Cell Class 8 Trucks are sensational, there are plenty of challenges for these drivetrains. As with most alternative fuels, there tends to be a “chicken and egg” issue where these vehicles are announced, but the infrastructure to charge or refuel them is lacking. This is certainly the case for electric fast-chargers and hydrogen fuelling stations. While these new trucking technologies are exciting, and I agree that electric drivetrains will have a place in the trucking market of the future, for fleets looking for clean, reliable Class 8 solutions today with lower-operating costs, CNG is a good alternative. While the lack of CNG infrastructure has been a challenge for the North American market in the past, today we are seeing large networks of CNG stations expanding along trucking corridors in Ontario, Quebec and into the US. These stations, along with Class 8 Tank kits up to 200 DGE becoming more common, drivers and fleets are experiencing reduced range-anxiety and lower maintenance and fuel costs.

It’s an exciting time to be in the alternative fuel industry and we look forward to helping fleets find the most reliable fuelling solutions. It’s always challenging to predict the future, but fleets today have great alternatives to both reduce operating costs and emissions.