Shippers and supply chains would like nothing more than to reap the benefits of green energy in the truck industry. When carriers save money from reduced fuel costs, those savings are passed on. Natural gas is considered the cleanest fossil fuel, and one that domestically the US has seen in greater abundance especially for the past five years.
The burning of natural gas instead of coal offers important and immediate benefits, including reduced air and water pollution, fewer smokestack carbon emissions, less power plant water use, greater flexibility of the power grid, and renewed economic development in gas-rich regions of the country. The rise in natural gas also comes as coal dependency continues to fall.
Natural gas is in such abundance, in fact, that exports have ramped up. So much so that Harold Hamm, chairman and CEO of Continental Resources, recently told CNBC that he sees natural gas exports changing the power dynamics of Europe (namely, less dependency on Russia).
About the future of natural gas, Hamm says: “We are in for very moderate pricing for natural gas for a lot of years going forward. I feel prices are in a fair range. I think we will be north of the average $3.50 by the end of the year. In 2018, I expect the same. Who knows about where prices go after that? I think we have adequate supply for a hundred years. I think north of three dollars may be the new normal.”
As a result, some are suggesting that in spite of a downtrend in natural gas in 2017, it’s spiking back up. Also, from continued pressures to respond to climate pollution, some suggest natural gas could be the top fuel source for domestic trucks in the US.
So with natural gas projecting to be cheap (or at least fair-priced) for the coming short and longer-term future, and with it being the cleanest burning fossil fuel, why is the buzz about electric vehicles and hydrogen-fuel cell electrics?
Truckers themselves haven’t bought into natural gas because it is estimated they would have to refuel more frequently. Also, natural gas trucks cost $50-to-$100 thousand more than diesel trucks, and any price advantage natural gas has is undercut by continual efficiency improvements in diesel engines — and the fact that oil continues to remain low as well.
It’s also been demonstrated in response to the “Pickens Plan” that the freight sector is not the optimal end-use for natural gas from even an environmental perspective, in part because of increasingly cleaner diesel technology. From a climate perspective, increasing natural gas in the electricity sector is likely to be more efficient than a comparable increase within the freight sector.
“I think we have adequate supply for a hundred years. I think north of three dollars may be the new normal.”
From an infrastructure perspective, increasing natural gas within the electricity sector is seemingly far easier than comparable changes to freight transportation. Whereas liquid natural gas (LNG) freight requires a transformation of truck inventory and fuel infrastructure, much of the requisite power plant infrastructure already exists.
Railroads don’t want to have to build a completely new gas distribution system and replace their 25,000-30,000 $2 million locomotives, plus adding a giant tank car of combustible natural gas fuel.
Other issues remain as well. Natural gas is a non-renewable energy, has a history of price volatility, and is not necessarily as clean as we’d like to believe. While general consensus seems to agree that natural gas burns at a 50% cleaner efficiency than diesel, it is still unknown just how high the levels of escaping methane are from source. The estimates of just how much vary wild, depending on whether the study is top down or top up.
Yet natural gas (NG) technology for transportation is mature and extended through the use of the compressed form in urban and light vehicles. The introduction of liquefied natural gas (LNG) could broaden the use of natural gas for longer distances due to its higher energy density. In addition, studies show the use of LNG in heavy-duty vehicles reduces the GHG emissions per kilometer by up to 20% and eliminates almost 100% of the sulfur oxides and particulate matter while also reducing the noise in inner cities compared with the use of diesel trucks.
Yet only 3.5% of trucks run on natural gas, mainly private fleets of delivery trucks and buses. As a bridge between greener and 80-100% renewable energy sources, it’s still not ideal, mainly because it will delay the development and onset of the renewables and according to those keeping a close eye on the climate, there’s simply not time.
The Union of Concerned Scientists, itemize what they suggest needs to be done from an economic and environmental approach.
· Adopt and implement a strong federal carbon standard for power plants with a follow-up from states: The EPA should strengthen, finalize, and then implement the power plant carbon standards in its proposed Clean Power Plan. In addition, states should develop and implement strong compliance plans that prioritize the use of renewable energy and energy efficiency to meet as much of their emissions reduction target as possible.
· Strengthen and enact strong state and federal clean energy policies: Policy makers at all levels of government should adopt new or strengthened policies and programs aimed at hastening the deployment of renewable energy and energy efficiency, including renewable electricity standards, energy efficiency resource standards, carbon pricing programs, and tax and other financial incentives.
· Strengthen regulations for fugitive methane emissions and hydraulic fracturing: The EPA should develop regulations that establish technology-based methane emissions limits throughout the oil and gas supply chain, including new and existing sources. Strong state and federal laws are also needed as part of a comprehensive framework for monitoring, evaluating, and mitigating the potential public health and safety risks associated with hydraulic fracturing.
· Improve grid operation and resource planning: Utilities, regulators, and grid operators should work to modernize the U.S. electric grid as part of a transition away from coal toward a cleaner, more efficient electric system based on greater use of renewable energy, efficiency, and natural gas.
Their analysis shows that the dangers of an over-reliance on natural gas can be overcome by greatly expanding the use of renewable energy and energy efficiency in our power supply. These technologies are already ramping up quickly across the US and demonstrating that they can deliver affordable, reliable, and low-carbon power. With sensible policies in place, these technologies can flourish and natural gas would play a useful — though more limited — role in a clean energy system.
That explains why liquid natural gas vehicles (LNGs) aren’t getting strong and clear endorsement either from those focused on sustainable, environmental solutions, nor from a cost-savings, industry-insider perspective.
Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.
