- Fuel price
- Energy security
- European emissions standards generally adopted                               
- 2008 Beijing Olympics contributing factor
- More natural gas infrastructure required

The increasing global demand for crude oil continues to drive an increase in diesel fuel prices around the world. This increase in demand has created a significant price gap between natural gas and diesel on a liter equivalent basis. In China, as in many parts of the world, CNG often costs 30-45% less than gasoline and diesel, and that provides a fuel cost advantage that can make the life cycle cost of CNG vehicles advantageous. This is evident in western regions in China, where natural gas resources are abundant and lower cost, there is a large natural gas vehicle population, e.g. Sichuan province and Chongqing city.

In addition to energy costs, energy security has also become a general concern worldwide, and as China is the 2nd largest energy consumer in the world, it is also a priority of the Chinese government. The government has made a significant investment in pipeline infrastructure to transport natural gas from the West to East side of the country, and has also launched a series of LNG receiving terminals along the south and east coast. For example, the Shenzhen Dapeng Bay LNG terminal will be completed and start operating in June 2006, with the first phrase capacity of 3.7 million metric tonne per year (mil mt/yr).

Engine manufacturers build engines to meet global emission standards. China generally follows closely to European standards and sets China emission limits for NOx, CO and PM. Recent urbanization and rapid vehicle growth have resulted in poor air quality in most China’s urban centers, and 2008 Summer Olympics in Beijing is also a driving force for the government to find a solution to reduce emission from mobile resources. Beijing has adopted Euro 3 standards, while in most China it’s still Euro 2 or lower. See Table below.

 

In many cities around the world, such as Beijing, mandates to improve air quality included natural gas buses as part of the solution.  These mandates helped to encourage fleets to adopt the alternative energy path with natural gas. In Beijing over 2400 natural gas buses are in service today.

The central government set up the China National Clean Automobile Movement Coordination Office in 1999.  Under the leadership of the Ministry of Science & Technology, the office consists of senior personnel from several important government departments as well as from key players of industry, such as National Develop and Research Commission (NDRC), State Environment Protection Agency (SEPA), Ministry of Construction, China National Petroleum Corporation (CNPC), First Auto Works (FAW) etc, and reports directly to State Council. Through the coordination office and its brand offices in nearly all major cities of China, the central government is able to set up action plans for developing, promoting and supervising clean vehicle programs around the country.

With all the drivers mentioned above, the CNG bus market experienced a difficult year in 2005. The shortage of natural gas supply last winter held back further deployment of CNG powered buses in Beijing.  With the expanded supply now nearing completion, deployment is expected to resume.  In addition, the initial priority of government is natural gas infrastructure on the residential side, rather than the transportation needs, i.e. refueling stations. As the natural gas infrastructure matures, the opportunity for an expanded transportation infrastructure could be another driving force in vehicle deployment.

Item written by Guan Saw, President, Cummins Westport Inc. Vancouver, Canada

To meet the anticipated demand for reliable, clean power in China, Cummins Westport replaced the original B5.9G natural gas engine, used in more than 2,400 Beijing buses, with a new and improved engine –the B Gas International in July 2005. This new engine will be manufactured at Dongfeng Cummins Engine Corporation, a joint venture between Cummins Inc. and Dongfeng Motor Corporation, in Xiangfan, Hubei Province.