Memorandum submitted by CNG Services Ltd |
What are the implications of large discoveries
of shale gas around the world for uk energy and climate change
1. The UK economy was converted to natural gas
in the 1970's on the back of North Sea reserves. The use of oil
in British industry was dramatically reduced in the period 1970
- 1990 as industry converted to gas and as a result oil is now
predominately used for transport.
2. Around 85% of domestic consumers have gas
for heating with appliance efficiencies of around 90%.
3. British Gas were generally reluctant to promote
the use of natural gas as a fuel for power generation because
a combined cycle gas turbine (CCGT) generation plant will only
operate at around 50% efficient.
4. However, in the period 1993-2010 there has
been dramatic growth in CCGTs and now around 50% of UK electricity
is generated by gas, with a large build programme now underway
as a number of coal plants are being closed down. Reference 1
gives details of CCGT generation in the National Grid 2010 Ten
5. British Gas were world leaders in the development
of natural gas vehicles in the early 1990's. However, the NGV
programme in the UK failed for a number of reasons. First, the
compressed natural gas (CNG) filling stations were located on
gas-holder sites were British gas had lots of vans. This was a
major mistake in that the gas was generally "wet" which
6. In addition, the vehicles were conversions
of petrol vehicles. They were not reliable, had no standby fuel
and the CNG storage tanks took up significant space and reduced
payload. They were also poor to drive, with low acceleration.
Reference 2 gives an indication of British Gas NGV activity in
7. The privatized British Gas has spawned three
world class companies, Centrica, BG Group and National Grid. In
the UK it has helped to develop a highly advanced gas grid (connecting
around 95% of population centres) which has broader coverage then
any other major economy.
8. Overseas BG Group is making investment in
relation to NGVs (Brazil, Argentina, India, Kazakhstan) as the
world sees huge growth in NGVs. When British Gas worked on it
in 1992 there were around 10,000 vehicles in the world running
on natural gas. By 2002 this had grown towards 1 million. But
by 2012 there is forecast to be 15 million, this is significant
9. In the US, National Grid are also involved
in the growing NGV market there. This is partly driven by the
political drive to reduce reliance on oil but the key driver is
the low price of natural gas caused by shale gas production. Reference
3 shows National Grid NGV activity in the US.
10. The German Government fixed CNG fuel duty
in 2001 at the CEU minimum level (6 p/kg) for 20 years on the
basis that the gas industry would build CNG filling stations and
the car industry will develop CNG cars (note - in the same period
duty in the UK has risen from 9 p/kg to 28 p/kg today). Reference
4 shows EU and Worldwide NGV Statistics.
11. This strategy has been successful in that
in Germany there are now 900 CNG filling stations and around 100,000
cars and vans running on CNG from the grid.
12. The new cars and vans have been designed
to run on CNG and have none of the drawbacks that the British
Gas developed vehicles had 20 years ago. The VW Passat Ecofuel
has a 1.4 litre engine with twin supercharger and turbocharger.
It can go 0-60 mph in 9.5 seconds but has CO2/km of
less than 120 g/km. It can also run on petrol and has a combined
range on CNG and then petrol of around 700 miles. The Mercedes
Benz Sprinter NGT is similarly excellent in terms of range (1,100
km) and performance as is the VW Caddy. Reference 5 shows that
the Passat Ecofuel has been voted the Greenest Car in the world.
13. By designing from first principles cars and
vans to run on CNG there is excellent performance and utility
and low CO2.
14. But what of the UK? In 2002 there were around
20 CNG filling stations operational in the UK but now there are
no grid connected public access stations that are capable of
"fast filling" a vehicle.
15. In terms of vehicles there are estimated
to be around 50 vehicles running on CNG and 200 running on natural
gas stored on board as LNG, with fuel mostly provided at a small
number of depot-based filling stations.
16. There is no case for large scale investment
in installing CNG at petrol stations. Diesel and petrol hybrid
cars are very good in terms of CO2/km and whilst CNG
emissions are lower than a normal petrol they are comparable to
many diesel and hybrids. There is not believed to be any investors
looking at the UK car market for natural gas and, with the development
of electric vehicles, this situation is unlikely to change. We
can reasonably assume that CNG will not be made available at petrol
stations in the UK. Home refueling with CNG is possible and attractive
but will be a niche market.
17. The sector of interest for natural gas is
the commercial vehicle sector. There are around 700,000 vans,
rigid trucks and tractors operating in the UK and a large proportion
of these operate from depots. As such, they are well suited to
running on natural gas as the gas grid is invariably close by.
The most significant technological development is in relation
to the engine and fuel combination. Reference 6 shows that 18%
of transport emissions come from trucks.
18. If air quality is the driver (nitrous oxides
and particulates) then having an engine that runs on 100% natural
gas gives exceptional performance. This is why most Los Angeles
buses run on CNG (9,000) and all 670 refuse trucks in Madrid run
on CNG. There are now no longer any diesel buses operating in
LA City nor any diesel refuse trucks in Madrid. CNG is the fuel
of choice where air quality is a major issue. Whilst air quality
is an issue in the UK, the driver for change is now reduction
in CO2. Reference 7 shows LA buses and Reference 8
shows the benefits of the CNG refuse trucks in Madrid.
19. Diesel is a mix of hydrocarbons, typically
in the C9H20 to C12H26 range. Compared to a molecule of CH4 (methane,
which is >90% of natural gas), burning diesel gives rise to
greater CO2. However, the buses in Los Angeles and
refuse trucks in Madrid and 99.9% of the 13 million NGVs on the
road today use a "spark ignition" engine. This is similar
to a petrol engine and not as efficient as a diesel engine. It
can be said that the price for improved air quality and longer
life is achieved by a reduction in efficiency of conversion of
hydrocarbons to vehicle movement.
20. The development of dual-fuel diesel-natural
gas engines in transformational. The vehicle starts on 100% diesel,
but after 30 seconds it becomes 80% natural gas, 20% diesel. This
gives the advantage of lower CO2 from burning methane instead
of C12, but maintains the advantage of the diesel cycle. The engine
thinks it is still a diesel engine and if the gas runs out it
is still a diesel engine. No range anxiety there then. Reference
9 shows Volvo dual fuel trucks.
21. There are also reductions in emissions of
Nox and particulates by the displacement of 80% of the diesel.
22. Volvo and Mercedes Benz are both selling
diesel-natural gas trucks and they say that the reduction in CO2
is around 20% compared to 100% diesel. This is highly significant
when it is compared with the reduction possible from biofuels.
Even if 10% of diesel is replaced with biodiesel this will not
give a 10% reduction in CO2 because of the energy cost
of making biodiesel, then there are the food versus fuel issues.
23. There is a further good news element. There
are three companies in the world that lead in relation to dual
fuel truck technology. One is Canadian (Westport), the others
are based in Leyland (Clean Air Power, CAP) and Nottingham (Hardstaff).
24. My grandfather worked at Leyland Motors in
the inter-war years and it is encouraging for UK manufacturing
industry that CAP are now providing their dual fuel technology
to the likes of Volvo Trucks (as an aside, the name Leyland lives
on in the truck industry but not in the UK - Ashok Leyland make
trucks and buses in India including CNG versions). Reference 10
shows CAP technology.
25. Hardstaff are also very successful with their
technology which is being sold in Mercedes Benz trucks. Hardstaff
also hold the patents for a system that allows CNG storage to
be on the trailer with an umbilical connection to the tractor
unit - this means that as much CNG storage as required can be
on the vehicle. A leading UK logistics company Tenens Environment
are using this system. Reference 11 shows Hardstaff Dual Fuel
technology, Reference 12 shows Hardstaff Umbilical technology
and Reference 13 shows Tenens Environment and CNG.
26. What other vehicle technology is there with
2/3rds of the world's best technology in the UK?
27. So, we have the vehicles, we have the technology,
we have the truck manufacturers, we have the CO2 saving,
what about the fuel?
28. When there have been "Well to Wheel"
studies that have looked at natural gas they have used data from
the 1990's gas industry. The assumption has been that the gas
is taken out of the low pressure grid (same as around gasholders).
29. First, it requires 30% more electricity to
drive a compressor using gas at 0.5 bar than if the gas was at
4 bar. Going forward, CNG should be taken out of the grid at pressures
from 4 - 50 bar, giving up to a 75% reduction in electricity consumption.
30. Second, a substantial part of the gas pipeline
grid was developed in the period 1890-1930 when towns gas (made
from coal) was the fuel. These pipelines were made from cast iron
and have leaking joints, around 0.5% of the gas leaks out of the
low pressure tiers. Even though around £1 billion a year
is invested replacing these pipelines it will take until 2030
until the grid is substantially leakage free. Hence, if gas it
taken for CNG at these low pressures, it was assumed that around
0.5% of it would have leaked out. With the global warming effect
of methane around 20 times worse than CO2, this 0.5%
translates to around 10% CO2. By taking gas out of
high pressure grids (4 bar and above) there is negligible leakage
and hence there is a further 10% benefit.
31. There is also a new advantage of CNG that
is aligned with wind generation. It makes sense to run compressors
at times when renewable electricity is in surplus. In this way,
the CNG will further reduce its carbon footprint. The alternatives
of compressing air or pumping water up-hill to use "surplus"
electricity are both highly wasteful of energy, because something
is being done that no-one wants to be done Compressing gas however,
is a required activity, why not do it at night? Overseas it is
already seen as a complement to wind generation.
32. There are also positive developments in relation
to the energy footprint of bringing natural gas to the UK. At
the Isle of Grain, National Grid uses waste heat from an EON CCGT
to warm the LNG and make it into natural gas for injection into
the gas grid. This is estimated to give around a 5% CO2
benefit which is also significant. Reference 14 shows the benefits
from the efficient scheme at Isle of Grain.
33. Paragraphs 28 - 32 have considered CNG made
from gas within the grid. There is also liquefied natural gas,
LNG. The Hardstaff and CAP technology uses gas in gaseous form
at low pressure. Whether the gas is stored on the truck in compressed
form (CNG) or liquid form (LNG) is neither here nor there. So,
let us look at the LNG supply chain.
34. There is a major prize possible in relation
to "Well to Wheel" CO2. The UK now has major
LNG importation facilities at Isle of Grain and Milford Haven.
It is low cost and technically straightforward to load 20 tonne
road tankers with LNG at these facilities by installing an LNG
road tanker loading bay (cost around £3 Million). Fluxys
has done this in Zeebrugge and already LNG is imported by ferry
and road to UK from Zeebrugge to serve the new dual fuel trucks
that are coming to market.
35. We do not know if the owners of the LNG importation
terminals at Isle of Grain and Milford Haven are considering LNG
road tanker loading but we hope they are. Importing LNG in containers
by ferry and road is not a great idea when we have Isle of Grain
and Milford Haven and there should be jobs in UK not in Belgium
for this activity. Reference 15 shows the Fluxys LNG Road Tanker
36. If LNG is made in Qatar (for example), transported
by ship to UK, loaded into an LNG road tanker, transported to
a depot LNG storage tank, then decanted into the LNG storage on
board a truck, there are very low CO2 emissions in
that supply chain. The LNG stored on board uses waste engine heat
to become gas again. We estimate that there is around 10% saving
in CO2 from this.
37. So, LNG in dual fuel may be able to deliver
a 30% reduction in CO2, with CNG a similar saving.
38. In terms of climate change, the reduction
from dual fuel trucks is material within that sector and material
overall and is worthy of independent analysis. It would be very
helpful if The Committee on Climate Change reviewed the data and
gave an opinion.
39. Separately, the reason British Industry switched
from oil to gas was because gas cost around half price in energy
terms. It is around half price again today and so the logic of
switching haulage from diesel to (part) gas is a sound one, We
estimate that UK balance of payments would take a hit of around
£40 billion a year compared to 2010 as a result of importing
oil. If we can reduce oil imports by 15% as a result of dual fuel
then we would save £6 billion of oil at a cost of £3
40. Security of Supply is going to be an oil
issue by 2020 and anything to reduce reliance on Middle East oil
imports by then has to be considered attractive.
41. For a 44 tonne truck to run on electricity,
it has been estimated that around 50 tonnes of batteries would
be required. So there is clearly not going to be a material electricity
option for trucks.
42. If the shale gas reserves are as big as the
promoters say, and if they can be developed economically, then
the logical response for UK plc is to start to switch haulage
to natural gas-diesel dual fuel.
43. The final point, if the shale gas is real,
what can the Government do. It could ask the owners of Milford
Haven and Isle of Grain to install LNG road tanker loading buys.
It could ask the Technology Strategy Board to support Hardstaff
and CAP in developing their dual fuel natural gas - diesel technologies.
The Government can also support cities like Sheffield that are
taking significant steps to move along the LA and Madrid paths
by introducing natural gas for refuse trucks and other commercial
vehicles as the best way to improve air quality. Reference 16
shows Sheffield/Veolia and CNG.
44. Crucially, however, the Government can also
support investment in infrastructure and vehicle development by
giving a longer period of confidence on natural gas fuel duty
(at present only fixed relative to diesel for 3 years). The regimes
to promote investment in offshore wind or ground source heat pumps
or anaerobic digesters rely on a long term guarantee of income
support. An equivalent level of confidence in duty level is required
if we are to capture the CO2 reduction prize offered by dual fuel.
This will also offer a duty reduction to hauliers who are prepared
to invest in the natural gas refueling infrastructure and vehicles.
45. Once the depot based filling stations are
built and depreciated, the Government can look forward to increasing
duty on natural gas without it killing the market, but this is
15 years away.
46. The Energy Networks Association commissioned
a report by Redpoint published in November 2010 ("Gas Future
Scenarios Project - Final") which makes the case that natural
gas for commercial vehicles is an attractive option. See Reference
47. One final point, the Government is preparing
to announce the level of the Renewable Heat Incentive which includes
the renewable premium paid to biomethane (renewable natural gas
made from organic material). If set at an appropriate level this
will encourage waste to be converted into biomethane, injected
into the gas grid and taken out at existing truck depots. In this
way, the duel fuel CNG-diesel development is aligned with the
move towards a fossil free economy. National Grid forecast in
January 2009, that biomethane could supply around 50% of the gas
used by domestic gas consumers. The same resource would supply
much more than the 80% of gas required to move haulage to dual
fuel. Reference 18.
1. CCGT Generation
2. British Gas NGV Paper from the 1990's
3. National Grid NGV
4. NGV Statistics - NGVA Europe
5. Passat Ecofuel
6. Transport Emissions from Trucks
7. Los Angeles buses - no more diesel
8. Madrid refuse trucks on CNG
9. Volvo Dual Fuel Trucks
10. Clean Air Power Dual Fuel Trucks
11. Hardstaff Dual Fuel Trucks
12. Hardstaff Umbilical Trailer Connection
13. Tenens Evironment and CNG
14. National Grid Isle of Grain (see page 2)
15. Fluxys LNG Road Tanker Loading
16. Para 43 Veolia CNG Refuse Trucks in Sheffield
17. Redpoint Report on Gas Future Scenarios
18. National Grid Biomethane Report