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A strong case for natural gas vehicles

Published March 1, 2013

Fact: In 1985, the city of Hamilton introduced the world’s first compressed natural gas (CNG) transit bus.

Fact: Westport Innovations, the global leader in natural gas engine technology, is a Vancouver-based company.

Fact: Canada had about 30,000 light-duty natural gas vehicles in operation in the early 1990s. Today, that number is closer to 10,000.

For all the recent buzz surrounding natural gas vehicles in the U.S., the resounding silence around this alternative powertrain up here has been a little perplexing, particularly in light of Canada’s historical ties with the technology.

Across the border, continuing low natural gas prices, a glut of shale gas reserves and the quest for energy independence have brought the technology to the forefront. Even U.S. President Barack Obama touched on the potential of natural gas vehicles in his State of the Union address.

Currently, most of the excitement seems to be coming from the heavy-duty commercial segment, where return-to-depot, fixed-route vehicles, such as garbage or construction trucks, with access to private refuelling stations can see most operational benefits from converting to natural gas.

However, even light-vehicle manufacturers are showing more enthusiasm in the technology. General Motors recently introduced bi-fuel versions — which can run on both natural gas and diesel or gasoline — of the 2013 Chevy Silverado HD and the GMC Sierra 2500. Chrysler also made its first bi-fuel Ram pickups available to retail customers for the first time late last year. All these vehicles are expected to be available in Canada as well.

In passenger cars, Honda is the only automaker that has consistently offered a natural gas option since 1998 — a CNG version of its Civic, available only in the U.S.

Although only about 15,000 units have been sold, Honda reported record sales for the CNG last year and the company is expecting the surge to continue.

Richard Kolodziej, president of the lobby group Natural Gas Vehicles of America, believes that other automakers will jump on this trend in the coming years. Chrysler is expected to take a lead because of its relationship with Fiat, the largest producer of natural gas cars in Europe.

Although the $5,000 to $15,000 price premium is unlikely to go away anytime soon, some U.S. companies are targeting the lack of public fuelling infrastructure, another major problem in making natural gas vehicles attractive to the average driver.

Oklahoma-based Chesapeake Energy Corp. is working with General Electric and Whirlpool to build a $500 home-fuelling appliance in the hope that it would encourage automakers to offer more natural gas options. Similarly, there’s an incentive scheme currently under consideration in the U.S. Congress.

But no such luck in our part of the continent. I haven’t heard the federal government talk much about natural gas opportunities in transportation, although one would think the increased consumption of natural gas, combined with its relative eco-friendliness, would be appealing to domestic energy producers and government stakeholders.

Even worse, the infrastructure support for natural gas vehicles has been dying a slow death here. Beyond the dwindling numbers among light-duty vehicles, public fuelling stations across the country have dropped from 134 in 1997 to about 70, according to a report submitted to Natural Resources Canada in 2010. In 2011, Shell shut down natural gas outlets at all its stations, citing low demand.

Alicia Milner, president of the Canadian Natural Gas Vehicle Alliance, does not hold out much hope for natural gas in passenger vehicles anytime soon.

“It could be a medium-term opportunity in Canada, and the most obvious route to adoption will be through fleets. The return-to-base model just doesn’t work in the consumer market under current conditions,” she said in a recent interview.

Despite the muted outlook for Canada, the continued rise of oil prices and the growing abundance of natural gas, both locally and globally, present a strong case for natural gas vehicles. Also, they are still far cheaper than lithium-ion-battery-powered electric vehicles.

There are several Canadian companies that could benefit from renewed interest in natural gas. Westport is the most obvious example, as it has already made great progress through its alliance with Cummins, a leading heavy-duty engine manufacturer.

But there are others, such as Calgary-based Dynetek Industries, which produces CNG cylinders and works globally with several automakers such as Ford, Hyundai, Nissan and Chrysler.

Yes, natural gas vehicles may never go mainstream, but there’s no reason why it can’t take its place beside hybrids and EVs.

Kumar Saha is a Toronto-based automotive analyst with the global research firm Frost & Sullivan.

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