Some of the largest players in the natural gas sector are targeting certain markets -notably the heavy truck market -for expansion of demand for their product.
These companies have begun a significant and aggressive lobby campaign in Ottawa and the provinces in an effort to obtain government funding to develop and create a liquid natural gas (LNG) distribution network between Montreal and Windsor and between Edmonton and Vancouver.
They appear to be gaining some traction. CTA is participating on a natural gas industry/government roundtable whose goal is to establish priorities for a joint initiative to develop a natural gas deployment roadmap. CTA has been asked to head up a “user committee” to explore carrier issues, concerns and needs.
LNG has long been considered a potential alternative to diesel fuel for a segment of the heavy commercial vehicle market.
It’s in plentiful supply in North America. The Canadian natural gas industry has been using a new drilling technique that has opened up massive deposits of LNG in shale formations. LNG is currently a lot cheaper than diesel fuel.
And, although it is less efficient than diesel, LNG emits far less GHG than conventional diesel. Canadian-made LNG engine technology is world class.
Various pilots confirm that both LNG and the engines that run on it work well.
On balance, CTA sees potential and growing interest from carriers for LNG.
However, it is also CTA’s view that LNG should be viewed as part of a broader, more comprehensive strategy for reducing GHGs from heavy trucks which includes CTA’s
enviroTruck initiative and other future, alternative fuel and propulsion strategies such as hybrid technology.
LNG can serve a niche; but it is not for everyone and we have to make sure that there are sufficient resources available to accelerate the penetration of other solutions as well.
As with virtually all alternative fuels and GHG mitigation strategies, there are issues that limit LNG’s current appeal within the trucking industry -ie., lack of a distribution network, the high cost of LNG engines, etc.
As a result, LNG’s potential is likely to remain strongest in niche markets, where distance and routes travelled are within ranges and are regular enough to be served by a somewhat limited and defined distribution network.
Port operations, municipal garbage trucks, etc., are most ideally suited. However, LNG could also have application for over-the-road freight hauling in certain lanes -again, such as Montreal-Windsor and Edmonton-Vancouver corridors.
However, with limited funds available, governments should avoid investing in one solution at the expense and exclusion of other bona-fide solutions. Governments are not good at picking winners and losers.
As we have seen many times in the past (biodiesel comes immediately to mind), governments will sometimes latch onto the flavour of the month, at the expense of other worthwhile initiatives.
Moreover, it will take more than investment in distribution infrastructure to make LNG fly. It will also take some very significant financial incentives from government to stimulate capital investment by carriers in LNG technology.
It is essential that governments understand that whether we are talking about LNG or hybrid technology, the unit cost to purchasing these next generation vehicles is significantly higher than conventional equipment.
In the absence of tax incentives (ie., super accelerated capital cost allowances, investment tax credits or other financial incentives such as rebates/grants) it is unlikely that many carriers would be willing or in a position to make the necessary investment.
Quebec is the first province to provide carriers with super accelerated CCA rates for the purchase of LNG heavy trucks. A coordinated response from the federal government and all provinces is required.
In addition, and especially now that Canada is moving towards the adoption of new, national fuel economy standards for heavy trucks, governments need to provide significant carbon offset credits to carriers that invest in LNG and the broad range of other GHG-reduction strategies and technologies that carriers utilize.
-David Bradley is president of the Ontario Trucking Association and chief executive officer of the Canadian Trucking Alliance.