Russia Decrees Massive Natural Gas Transport Fuel Targets for 2020

| Russia, Moscow
Medvedev

Prime Minister Medvedev (right) meets with vice-premiers to discuss natural gas fuel implementation.

50% conversion planned for cities with population over 1 million

Russian Prime Minister Dmitry Anatolyevich Medvedev on 13th May signed a decree prepared by the Ministry of Energy of Russia that will change the face of transportation in his country. The decree includes an order to “develop a set of legal, economic and organizational measures of the state to support the production, release into circulation and trafficking in motor vehicles and agricultural equipment to natural gas, creating traffic fueling and service infrastructure, statistical systems and technical regulation for natural gas as a motor fuel”.

The Ministries of Industry, Regional Development, Transport and Energy of Russia are charged with the task of submitting to the Government by 1 January 2014 a set of measures aimed at creating the conditions in the Russian Federation to achieve the following targets for natural gas as a fuel for road transport, public transport and road utility:

  • In cities with populations of more than 1 million people – up to 50% of the total number of pieces of equipment;
  • In cities with a population of over 300 thousand people – up to 30%;
  • In cities and towns with a population of over 100 thousand people – up to 10%.

Implementation to these levels is proposed for completion by 2020.

The document envisages harmonization of Russian legislation in the field of standardization with the relevant international instruments in the field of the use of natural gas as a motor fuel, as well as promoting the use of natural gas as a motor fuel due to tax benefits of customs and tariff regulation and subsidies.

Included in the decree is a recommendation to the Government to reduce the tax rates for vehicles that use natural gas as a motor fuel, from January 1, 2014 through to 2020. According to Government transcripts of the meeting, Medvedev also suggested there may be a need to reduce the rate of customs duty on the components that are necessary for the production of natural gas vehicles (NGVs).

Deputy Prime Minister Arkady Dvorkovich explained the decree includes compressed natural gas (CNG), liquefied natural gas (LNG) and liquified petroleum gas (LPG) fuels.

On May 14, Russian President Vladimir Putin subsequently held a meeting devoted to the prospects of natural gas vehicles in Russia. The President discussed opportunities and bottlenecks on the way to successful implementation of this NGV strategy and instructed the government to speed up the preparation of the legal framework in this area.

Conversion of transport to natural gas will save Russia’s economy almost 90 billion rubles (USD 2.86 billion) per year, was the assessment was made by Chairman of the Board of Directors of Gazprom Viktor Zubkov at the meeting with Russian President Vladimir Putin.

The President’s Special Representative for Cooperation with Countries Forum – Gas Exporting Viktor Zubkov noted the cost of fuel gas is several times cheaper gasoline. Breaking down the fuel savings, Zubkov estimates the introduction of the natural gas to the passenger sector can save up to 49 billion rubles, the freight sector – 34 billion rubles, and agriculture – 6 billion.

NGVRUS, the National Gas Vehicle Association of Russia, describes the decision of the Russian leadership as revolutionary. A systematic, integrated approach to the implementation of the decision of the Government will not only improve the environmental situation in the cities and curb the rise in the price of public transport services, but also contribute to the restoration of Russian production of natural gas vehicles, compressor equipment, cryogenic technology, pressure vessels, gas engines and equipment. It will be a key success factor is the development of gas-filling network and stimulate domestic and foreign investment in the development of NGV market in Russia, which will create new industries and jobs, increase tax revenues, stimulate research and development, the Association says.

Alicia Milner (Canada), Chair of the Board of Directors and Diego Goldin (Argentina), Executive Director of NGV Global say “Congratulations!”

(Sources: Government of Russia, NGVRUS)