Biomethane for Transport: HGV cost modelling - new LowCVP report
Fri 04 May 2012
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A new study commissioned by the LowCVP finds that operating heavy commercial vehicles on biomethane can lead to lower operating costs compared to conventional diesel operation but that the capacity of the delivery infrastructure has an important bearing on economic viability.
The study, prepared by Transport and Travel Research (TTR) with Joulevert, found that HGV operators with average vehicle mileages and access to large capacity infrastructure can make cost savings. The costs of operating dedicated or dual fuel trucks is most attractive where operators can access the economies of scale arising from a 5,000-10,000kg/day refuelling station (sufficient for 50-100 trucks).
Reducing the refuelling station size to 2,000kg/day or below, quickly makes the economics less attractive. Hence smaller operators (which make up the majority of the HGV industry) will struggle to make gas vehicles pay back unless they can join forces with other operators to invest in larger refuelling stations.
The report says that well-to-wheel analysis of automotive fossil fuels and powertrains carried out by CONCAWE shows that biomethane produced from municipal waste is able to achieve GHG savings of about 50% compared with conventional fossil fuels.
Likely rises in diesel prices should make the operation of dual fuel and dedicated gas trucks more attractive but the study also identified a number of non-cost barriers to the increased uptake of biomethane. The key barriers identified are:
• Refuelling infrastructure (lack of), compounded by:
• Fleet size (many are small);
• Return to base frequency (many do not);
• Supply and servicing of gas vehicles;
• Uncertainty about fuel incentives;
• Short-termism in an industry under pressure;
• Financing;
• Availability of biomethane.
The report says that stakeholders gave the clear message that stimulating a growth in refuelling infrastructure would have the greatest effect of all factors on take up of gas as a transport fuel to enable out-based fleets to refuel.
The study suggests a number of incentives that could be put in place by Government to encourage the use of gas as a fuel for trucks. Examples of such policies noted in the report are:
• A long term fuel duty incentive for both natural gas and biomethane as road transport fuel – preferably zero rated to 2020 (as is given to electricity and hydrogen);
• Green gas certificates to allow for a book and claim system for biomethane gas after grid injection;
• Reduced VED rates for natural gas/biomethane vehicles;
• 100% first year capital allowance on the cost of refuelling stations;
• 100% first year capital allowance on the cost of natural gas/biomethane vehicles.
The LowCVP has commissioned a second part to this study which will examine the impact of such incentive regimes on the potential uptake of dedicated and dual fuel gas vehicles, the costs and benefits of doing so and future potential reductions in CO2 emissions.
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