Even though the price of natural gas has rallied of late and the diesel prices have fallen there is still a significant spread between the two fuel prices that make a compelling economic case for Compressed Natural Gas (CNG) as a transportation fuel. As of late April the spread between a gallon of diesel fuel and the CNG Diesel Gallon Equivalent (DGE) was around $2.75. This per gallon price spread is large enough to achieve a quick payback on the premium for CNG engines and fueling stations when usage is high. If $1.50/gallon of the savings goes to paying off the average $30,000 premium for a new CNG engine then a two year payback is achieved at 65,000 miles per year.
The momentum around CNG as a transportation fuel continues to grow in the U.S. The Federal excise tax credit of $.50/gallon, effective through 2013, provides an incentive for the installation of new CNG stations. Innovation is also helping to drive down the cost of CNG stations. In October, 2012 GE and Peake Fuel Solutions introduced their CNG In A Box system. CNG In A Box is a modular 8×20 foot container with all the components needed to dispense CNG other than the pump itself. Financing for CNG In A Box is also available through GE.
CNG as a transportation fuel also has significant environmental advantages. CNG can lower the transportation carbon footprint 20-30%. Cleaner burning CNG also reduces air pollutant emissions such as particulate matter (PM) by 95%; carbon monoxide (CO) emissions 70-90%; and hydrocarbon (HC) emissions 50-75%. This makes CNG vehicles particularly useful in urban and other environments where air pollution and smog are a concern.
To learn more about how to evaluate CNG as a transportation fuel check out the whitepaper: Opportunities and Risks related to CNG as a Transportation Fuel: A Fuel Manager’s Perspective by U.S. Energy’s Vice President of Strategic Initiatives, Casey Whelan.