Converting B. C.'s transport sector to natural gas : a policy brief Henry, Jessica Kiyomi
This report explores the feasibility of converting part of the transport sector from gasoline and diesel to natural gas. The investigation of feasibility was organized into three sections: an assessment of the current state of technology, considerations of economic feasibility, and barriers to conversion. The following conclusions were reached. The conclusions are accompanied by associated policy recommendations for consideration: 1. Natural gas vehicles (NGVs) are already technically feasible, including through conversion of conventional vehicles, but there is opportunity to continue to improve vehicle technology and that of related infrastructure, and in doing so to potentially lower overall costs and improve the economic outlook for investors and early adopters. a. Recommendation: Support research and development into making technologies more cost effective, such as fuel system design. 2. While technological feasibility applies to most transport divisions, economic feasibility for many market participants is a threshold payback of 3-4 years, narrowing the vehicle types and circumstances of use that would naturally trigger conversions. a. Recommendation: Increase the economic attractiveness, including the likelihood of payback within the requisite timeframe, via targeted subsidization and incentives in those sectors that are most appealing for growth. 3. While there has been some question about the possibly detrimental effect of the recently introduced B.C. LNG income tax, it is not anticipated to be a significant disincentive to LNG fuel suppliers or to users of NGV vehicles. a. Recommendation: None 4. Barriers to deployment include the “chicken or egg” barrier associated with lack of infrastructure leading to lack of demand and vice versa, both direct and indirect costs, and perception of risks. a. Recommendation: coordinate fleet and fuel suppliers to achieve concurrent growth in demand and supply infrastructure. b. Recommendation: ameliorate high upfront costs through subsidization and/or incentives schemes. c. Recommendation: decrease indirect costs by maintaining up-to-date codes, standards and regulatory regimes in collaboration with the Canadian Standards Association, and provide support for development of training materials for vehicle repairs and NGV fleets. d. Recommendation: address the perception of risk through education and outreach to end-users, market influencers, and other key stakeholders. 5. As it is the first of a two-part investigation on conversion, with the second part being focused on the net environmental benefit and the market supply and demand effects, this report does not conclusively determine whether the BCGP should support conversion to natural gas. Irrespective of whether the BCGP supports conversion to natural gas vehicles, measures can be taken to help facilitate transition of the transport sector to sustainable alternatives more generally. a. Recommendation: a carbon tax, to increase price differentials between natural gas (or other alternative fuels) and petroleum-based fuels. B.C. already has a carbon tax in place, however, this should be regularly reviewed to ensure that it is incentivizing the right move to reduce greenhouse gas emissions quickly enough. b. Recommendation: stricter vehicle emissions standards, to constrain the permissible performance of emissions-intensive fuels and vehicles, and in doing so create the market space for alternative vehicles.
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Attribution-NonCommercial-NoDerivs 2.5 Canada