Strategic Framework Recognises Potential of Natural Gas as Alternative Fuel in Australia

| Australia

Toll Fleet Trucks refuelling at a newly opened CNG station in Altona, Vic.

“CNG has potential to be an effective alternative transport fuel for the light commercial vehicle market in Australia” – excerpt from Strategic Framework for Alternative Transport Fuels (Australian Government paper)

The Australian Government has released a draft Energy White Paper for public consultation, alongside the release of the Strategic Framework for Alternative Transport Fuels. The draft paper sets out a series of proposed Commonwealth Government priorities to address challenges confronting Australia’s energy sector.

Strategic Framework for Alternative Transport Fuels establishes a long term strategic framework for the market development of alternative transport fuels in Australia in the context of maintaining Australia’s transport fuel security while moving towards a lower carbon economy by 2030. The document identifies key issues and provides a framework to address issues affecting future investment in, and the production and use of, alternative transport fuels including compressed natural gas (CNG) and liquefied natural gas (LNG). This document informs the white paper discussion.

A selection of statements pertaining to the natural gas vehicle industry, taken from the Strategic Framework document, are noted below.

“Whilst the share of the light passenger vehicle segment [across all fuel types] has stabilised and may start to decline in future, this sector has the greatest opportunity for potential diversification to alternative transport fuels in the short term.” (Pg 32).

Australia’s natural gas vehicle association, NGVAustralia, provided considerable input through preliminary information sessions conducted by CSIRO throughout 2011. “Participants also highlighted apparent policy inconsistencies in a national approach to alternative transport fuels. Imposing an excise on CNG and LNG during the market’s formative stages was cited by virtually all fuel forum participants as an example of this inconsistency.” (Pg 44)

ActewAGL CNG refueling station, Canberra

The taxation and grant arrangements for compressed natural gas (CNG) and liquefied natural gas (LNG) will be reviewed after 12 months of operation. A broader review of arrangements for gaseous fuels will take place after 1 July 2015.

“A very small number of vehicles operate on natural gas in Australia. However, CNG and LNG use may increase in the medium term with investment in distribution infrastructure and improvements in fuel tank technologies. Plans such as BOC’s East Coast corridor and Kleenheat’s trials in the Northern Territory and Western Australia are seeking to broaden the use of gaseous fuels in heavy duty vehicles.” (Pg 56)

“As the Ministerial Council of Energy has requested the Australian Energy Market Commission to review energy market barriers in Australian energy markets to the economically-efficient uptake of natural gas vehicles, the outcomes of the review will provide further information on potential opportunities to pursue in future at the lighter end of the commercial market. CNG has potential to be an effective alternative transport fuel for the light commercial vehicle market in Australia.” (Pg 57)

The document also recognises the adaptability of natural gas fuel for a wide range of transport applications, including heavy vehicles, rail and marine. Australian company, Incat, will be the first to build a high-speed ferry craft powered by dual-fuel gas turbines for South American company, Buquebus.

OES CNG filling station, Melbourne

Conventional fuels (petrol, diesel and jet fuel) currently represent 95 per cent of Australia’s transport fuel consumption while alternative transport fuels (gaseous fuels and biofuels) represent 5 per cent of fuel consumption. Without major new discoveries, domestic crude and condensate production is projected to decline to 2035, with a rising share of imports required to meet growing demand. Imports of refined petroleum products have more than tripled over the last 10 years as demand has risen and domestic supply has fallen. Diesel imports constitute the majority of this growth. Diesel is the primary fuel used in the freight transport, mining and agriculture sectors, and imports are expected to increase further, particularly as the mining sector expands.

The Government intends to release the final Energy White Paper around mid 2012.

The Strategic Framework for Alternative Transport Fuels is available from the Department of Resources, Tourism and Energy – click here.

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