A report released in the US by Resources for the Future (RFF) and the National Energy Policy Institute (NEPI) concludes that expanding the use of natural gas trucks is the most effective and cost-effective policy option available to decrease reliance on petroleum. The report, Toward a New National Energy Policy: Assessing the Options, assesses 35 different policy options for reducing oil consumption and carbon emissions.The report’s authors modeled the cost effectiveness of reducing oil consumption by 4 million barrels a day by 2030 and carbon emissions by 42 percent by 2030. For natural gas trucks, the report evaluated the impacts of an aggressive phase-in of natural gas heavy-duty Class 7 and 8 trucks with market penetration beginning at 10 percent of new sales in 2011 and rising to 100 percent of new sales by 2020.
Using assumptions concerning first-cost of vehicles, fuel savings, discount rates, and petroleum displacement, the report found that natural gas trucks could displace petroleum at a cost of about $15 per barrel. From a cost-effectiveness standpoint, natural gas trucks were the most effective of all policy options evaluated. The report indicates that, if the number of Class 7 and 8 natural gas trucks were to reach 5.5 million by 2030, these vehicles could displace 2.2 million barrels of oil per day at a total cost of $186 billion. With respect to carbon reduction, the study concluded that the NGV option was not as cost-effective as a number of other options. However, if the primary driver is oil displacement, the NGV option’s carbon reduction would be an added bonus.
For its report, RFF and NEPI prepared a detailed background report on natural gas trucks. The report includes various assumptions regarding fuel costs, truck costs and discount rates. The assumptions above regarding cost-effectiveness show that for many fleet’s natural gas trucks are a cost-effective solution that provides real paybacks and lower net costs than diesel vehicles. However, the report also reveals that NGVs, like many other advanced technologies, could have longer pay-back periods than most businesses are willing to accept, and, therefore, require incentives to encourage their expanded use.
The projections above regarding cost-effectiveness are based on an incremental cost of $70 thousand per LNG truck. However, if the incremental cost of natural gas trucks were reduced to $35,000, the costs would be $50 billion instead or $186 billion.