Gas chief: ‘We expect at least 10% of the car market in 2030’

A general showing a public bus in downtown Malmo, Sweden, 13 March 2013. All green coloured busses in Malmo are natural gas powered. [EPA/MAURITZ ANTIN]

Just as Europe is engaging in a fierce race to electrify transport, makers of natural gas vehicles are coming out with bullish projections, saying they expect their car fleet in Europe to multiply tenfold to 13 million vehicles in 2030 – a 10% market share that could reach 20-30% for trucks and buses.

Andrea Gerini is the secretary general of NGVA Europe, the natural and bio gas vehicle association. He spoke to EURACTIV’s energy and environment editor, Frédéric Simon.

INTERVIEW HIGHLIGHTS:

  • NGVA Europe expects a 10% market share for passenger cars running on natural gas in 2030, by comparison to 30% for electric vehicles.
  • This means a tenfold increase in the current fleet, reaching 13 million vehicles in Europe.
  • Market share is forecast to reach at least 20-25% for trucks and 30% for buses.
  • Transport decarbonisation cannot be achieved with electro-mobility alone.
  • Natural gas is here to stay. But it can also act as a bridge to other energy sectors, like electricity.

***

Eurogas is organising its annual conference on Tuesday (20 March) on the topic of mobility, together with NGVA. What is the situation today regarding the use of gas in transport?

The conference will discuss the various options, their pros and cons, and the political framework needed to achieve an efficient low-carbon transport system.

Transport is high on the EU agenda now as this sector needs to be decarbonised. The Commission’s second mobility package was published in autumn last year, and the third package will be out in May. So we thought it’s high time we talk sustainable mobility.

Gas in transport is not exactly a novelty. Technologies have existed since decades, in Europe at least for 20 years. Worldwide, there are about 25 million natural gas vehicles running. For Europe, the number is only 1.3-1.4 million. So Europe is not the key player.

Has the share of gas vehicles evolved in Europe?

It has remained more or less stable. Even if we have seen a lot of interest over the last years, especially in the heavy-duty sector.

At the moment, the market penetration of natural gas vehicles is 0.5%. But some countries are champions – Italy for example, where most of the fleet is concentrated because of historical reasons linked to the availability of gas and technologies for natural gas vehicles.

Germany is also a promising market where new investments are taking place. The Volkswagen group, for instance, has put 15 new gas-fuelled models on the market. And the market for Compressed Natural Gas (CNG) in Germany has increased by 300%, which is easy of course if you start from close to zero.

Still, this is an important sign in relation to decarbonisation and air quality objectives adopted at the European level. These targets cannot be achieved with a silver bullet solution represented by electro-mobility. A broader range of solutions is required to deliver on those objectives and natural gas can play its part.

With such a small market share, and low economies of scale, cost probably weighs against natural gas.

The question of cost is increasingly related to cost-effectiveness. We are starting from conventional vehicles with internal combustion engines. And from there, you get a range of solutions. On the one hand, you have electrification – from hybrid to plug-in and full electric. And on the other hand, you have alternatives like natural gas.

And of course, there is a cost linked to the components that you are adding to the vehicle, which are affected today by the low volumes of production. Today, a CNG car is 10 to 15% more expensive than a conventional vehicle, so similar to a mild-hybrid or hybrid vehicle. And CNG is anyway less expensive than a plug-in electric.

And buses?

For buses, the cost difference is about the same. So when you compare natural gas with full electric or fuel cell buses, natural gas is less expensive. Looking at the evaluations that were made last year as part of the green public procurement criteria, natural gas buses tend to represent a 15% cost increase compared to an 85% increase for full electric solutions.

So the real question is what kind of benefits you get from each solution, which leaves the door open to multiple answers. Northern European countries have tended to opt for the full electric solution while in Eastern Europe, they are still quite far from being able to afford this.

Norway is often seen as some sort of “dream country” leading the way on battery-electric vehicles. But think of Greece or Southern Italy – they are far from being able to afford it.

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So you see gas more like a bridging fuel?

No, it would be a very long bridge, then. It’s been 20 years since natural gas has been around. And what does it bridge? The system is open to all kinds of low-carbon, low-polluting vehicles.

Electricity will surely be a big player. But when you look at all the different bottlenecks standing in the way of a massive uptake for electro-mobility, you see that conventional solutions will continue to be on the market for at least the next couple of decades. And maybe there will be different hybridisation solutions and alternative fuels that will lower the emissions of internal combustion engines.

Electricity makes up only 20% of final energy consumption. So if you want to cover everything that is now covered by oil-derived fuels with electricity, you would need to make huge investments. This is why the market needs to be divided up between electricity and the different gases, including hydrogen.

Europe is trying to cut its dependence on gas imports – notably from Russia – so relying on fossil gas for transport doesn’t help much in this regard…

I would say exactly the contrary. Because the natural gas infrastructure can be refuelled today with renewable forms of gas, without any impact on the sector.

It all depends where the gas comes from.

The same can be said about electricity, to be honest.

True.

It is important to keep in mind that no single solution can prevail in a transition period. Take transport fuels. There is no single biofuel that can be a substitute for petrol or diesel. We see the limitation with bioethanol because it has an impact on the distribution infrastructure and on vehicle technology.

So, having technologies that can switch from one system to another is a real advantage. It keeps the door open.

Now, there is a growing industry looking at the renewable gas production. And there are several pathways to produce renewable gas, starting from the conversion of waste biomass. Our society produces a lot of organic waste, which has to be disposed of. So gas conversion is a clever way to have a local production of clean fuel from waste – the cleanest fuel that you can get today for engines.

And the second way, which is going to play an increasingly important role in the future, is synthetic gas produced by green hydrogen coming from renewable electricity, in combination with CO2 – so-called power-to-gas. And the gas infrastructure is ready to cope with this – it is readily available and has an enormous capacity to store energy at low cost.

So there is a very interesting potential to bridge the various energy sectors and make the most sensible use of the energy that we have.

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The storage aspect is an area where gas compares favourably with electricity.

Correct. We are all aiming for renewable electricity production in the future. But there is always the problem of guaranteeing supply and balancing the grid according to fluctuations in demand and production.

Of course, part of it can be dealt with by demand-side management and smart grids. But honestly, this is peanuts in terms of volumes. When looking at the needs in terms of energy storage, we’re talking about hundreds of Terawatt hours. And the gas network today is the only system that can provide this solution at low cost.

Europe is currently engaged in a global race to electrify transport. Is there really still a place for gas-powered vehicles in that context? It seems the direction is pretty clear now – at least when it comes to passenger cars.

I am more optimistic and I’ll tell you why: we expect a 30% market share in 2030 for battery electric vehicles, despite the remaining questions about grid and recharging infrastructure.

Regarding the remaining 70%, diesel will continue to play a role but it will start disappearing. And speaking about gasoline engines, they use the same technologies as natural gas. And here, there is a huge potential to include natural gas as a bridge to other solutions – like electricity, gaseous fuels and advanced biofuels. Because that 70% may have a hybrid powertrain but the internal combustion engine will still be there.

We shouldn’t jump to conclusions from the European Commission proposals. There is a number of countries where natural gas vehicles have picked up tremendously and it shows that the overall framework allows various avenues to develop.

How do you expect demand to evolve in the future? Looking ahead to 2030 and 2050, do you expect that the share of gas will increase or diminish?

For passenger cars, we expect to reach a market share of at least 10% in 2030. And that is realistic, it’s not a dream.

For 2030, what I can say is that we project to multiply our fleet by ten, reaching 13 million vehicles in Europe. This means that we will have reached the volume necessary to bring costs down and be competitive. So natural gas will be a conventional fuel at this stage, it won’t be a niche market anymore. And it will be a fuel available all over Europe.

And that would be power-to-liquids, essentially?

No, in 2030 there is an assumption to potentially include renewable gas in the mix. We see the potential reaching 30% of the total natural gas mix used for transport across Europe on average.

Power-to-gas will accelerate, most probably starting from 2030 because there will be a serious need to convert the renewable electricity production in chemical form.

Between now and 2030, we see most of the renewable gas being produced via the conventional waste biomass conversion route, with some power-to-gas already in place.

And after that, looking towards 2050?

There are some publications. Recently Ecofys did a study saying more than 100 billion cubic meters (bcm) of renewable gas will be available by 2050. Today, transport is a modest consumer of natural gas, around 2 bcm. With our roadmap, we think we will reach around 29 bcm in 2030. So transport will still be well below other sectors in terms of gas consumption, well behind the heating sector and electricity production.

So all these elements support our forecast that natural gas can cover at least 10% of energy demand for passenger cars. And we could go even further for buses and trucks. Because these are two sectors where electrification will be very difficult – certainly for long-distance haulage.

This is despite the fantastic semi-trailer from Elon Musk, who is promising fantastic acceleration with an electric motor. But the reality is that hauliers need to run 1,500 kilometres at low cost with a reliable solution.

And in the last three years, we’ve seen demand for LNG trucks multiply by ten. So hauliers now consider LNG as a second fuel, it’s no longer an alternative fuel.

The volumes are still small though, I suppose.

Volumes are small indeed, we are talking about a few thousand registrations per year for natural gas trucks compared to 15 million truck registrations overall in Europe. But the numbers are rising.

You said you expected a 10% market share for cars running on natural gas in 2030. What are your expectations for trucks?

For trucks we expect at least a 20-25% market share in 2030. For buses, at least 30%.

And looking ahead to 2050, have you made projections?

To be honest, it’s difficult to say. It will mostly depend on progress made on electrification and batteries.

Maybe the electrification process will be stopped because of bottlenecks regarding the availability of raw materials. We also hear about progress made on nuclear fusion, so overall the energy picture is still unclear.

You mentioned the Ecofys study published in February. The study estimated it was possible to scale up production of renewable gas (biomethane and renewable hydrogen) in the EU to a quantity of 122 billion cubic metres by 2050. However, it said it expected only a very small share – only 5 bcm – would go to transport. Most of it would actually go to industry, buildings or power generation. This seems to contradict your own projections (29 bcm), so how can your conclusions differ so widely?

We were really disappointed with this conclusion, as you can imagine.

Regarding the projections, the 29 bcm figure that we came up with relates to the overall fuel consumption of the entire transport sector. If we are targeting 30% market share in 2030, this means the gas sector will need approximately 9 bcm. And 70% of that will come from natural gas, while the remaining 30% will come from renewable gas.

So the 5 bcm figure in the Ecofys study shows they have a different projection of the market situation in 2030. But the 5 bcm figure doesn’t represent the entire fuel consumption of the transport sector in 2050, which will be much greater.

Turning to CO2 emissions now, the European Commission proposed a 30% CO2 reduction target for passenger cars and vans to be met by 2030. My understanding is that this effectively rules out any other technology than electric vehicles, correct?

Correct. Unfortunately correct. Our position is that blending solutions together can offer interesting alternatives – electric motors with conventional engines and fuels.

And our view is that the time was ripe to change the metric in assessing greenhouse gas emissions, taking a more global view and not only concentrating on tailpipe emissions. Tailpipe emissions provide information about fuel consumption but they are not suited to measure the global impact in terms of greenhouse gas emissions.

You’re referring to life-cycle assessments, I guess?

I’m referring more to the well-to-wheel assessment. LCAs give very important background information but they are very complicated to translate into regulation because data is lacking, particularly on end-of-life processes for vehicles.

So, if the 30% goes through, what will be the result?

The result is that vehicle manufacturers will be forced to develop electric solutions, just to comply with the regulation.

This is the intention in fact, even though the proposal claims to be “technology neutral”…

This is the risk in this proposal. The Commission is forcing a solution but maybe one day, we will discover that electricity cannot provide all the expected benefits. And the industry will have already invested heavily into it.

This is pushing the industry in a single direction. All the battery manufacturing is outside of Europe so this is a risky operation. And we are not alone in alerting about this – several other trade associations are also calling for a well-to-wheel approach in order to have a more complete assessment of the benefits of each solution.

Of course, it’s easy to consider electric vehicles as zero-emission. While there are other solutions like renewable gas which are equivalent to battery electric vehicles in terms of emissions – such as power-to-gas, and anaerobic digestion biomethane. But they are not rewarded.

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A similar CO2 standard is expected for trucks in May. What are your expectations there?

We are confident that the Commission (DG CLIMA) are well aware of the limits of electrification in the heavy-duty sector. They are also aware of the role that can be played by other solutions – including the big family of biofuels, CNG, LNG, and renewable gas.

But we know also how fascinating it is to listen to Elon Musk, who is shaking the opinion with his semi-trailer. They announce fantastic performance, they speak about super-charging stations as if it was very easy to do. So they are completely out of the engineering world and the production world. And we know very well that Tesla is likely to go bankrupt. We see the difficulties they have to move to serious massive production of electric vehicles.

But anyway, the Commission is listening. And there are a lot of NGOs in Brussels also selling this dream. Still, we hope the fascination with electro-mobility will be lower for trucks than for cars. Also because the haulage sector is more pragmatic and needs concrete solutions. And here too, we are calling to open up the evaluation of CO2 emissions, looking at greenhouse gas emissions from a broader well-to-wheel perspective, not just tailpipe.

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A 2016 study commissioned by T&E showed cars and trucks running on Compressed Natural Gas (CNG) or Liquefied Natural Gas (LNG) offer no greenhouse gas savings compared to diesel. What do you make of that study?

T&E are good in doing these kinds of studies. They were even able to demonstrate that a battery-electric vehicle in Poland is less polluting than a diesel one!

We did our own study in May, which was done by an external consultant and went through a peer-review process. It was recognised as a high-level and independent study.

And the result is that, even considering the contribution of natural gas production, the benefits of gas in terms of emissions for trucks and passenger cars are clear when compared to diesel and gasoline.

For trucks, the CO2 reductions are in the range of 7 to 15%.

This is relatively modest. When you look at the 30% reduction that the Commission wants to obtain in the passenger car sector, it’s not huge.

You know, vehicle manufacturers are struggling to reduce CO2 emissions by increments of 1g, or 0.5%. Every new technology, every screw on the vehicle is now assessed in terms of CO2 reduction. So a solution like LNG which can reduce emissions by 7%, or other new solutions which can reduce emissions by 15% – that’s quite important.

It’s nice to say CO2 emissions have to be reduced by 60% in 2050. But let’s build up a pathway to get there. So let’s start decreasing emissions by increments of 2% per year, which corresponds to a 2g decrease per year until 2050. And if you start by including natural gas, even without renewable sources, you start decreasing those emissions and you start building this bridge to 2050.

These long-term targets are derived from the Paris Agreement.

Of course, having long-term targets in mind is a key priority. But people who have to buy a car or a truck today and tomorrow, they will not find a complete range of battery-electric vehicles.

EVs are nice and funny to use. But the concrete solutions that can be represented by natural gas and others are very important to launch progress towards the long term. Otherwise, we continue dreaming and waiting for the silver bullet solution.

It would be fantastic if we could easily switch towards electricity. But this is not possible. So we have to keep all options open. Electricity can be envisaged as one of the main objectives. But decarbonisation does not equal electricity. It comes from a set of solutions.

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