CNG for trucks and buses - the compelling case

Gas 2014 “Sustaining Sector Momentum” CNG for tucks and buses – the compelling case 6th November 2014 John Baldwin Managing Director CNG Services Ltd john.baldwin@cngservices.co.uk www.cngservices.co.uk 07831 241217

CNG for tucks and buses – the compelling case

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CNG Services Ltd NGVs in the UK – what is the opportunity?

CNG Trucks (dual fuel and dedicated) Benefits of the high pressure gas grid Shale gas Gas industry and NGVs Conclusions

CNG SERVICES LTD

CNG Services Ltd • Supports projects to inject biomethane into the gas grid – Didcot, Poundbury, Vale Green, Doncaster, Minworth, ReFood Widnes, Avonmouth etc – Involved in 1.8TWh worth of projects (60 million therms)

• Bio-CNG as a fuel for trucks – Own UK’s largest CNG filling station – Sell Bio-CNG (20% biomethane)

• Supports onshore gas developments

We work on innovation in natural gas

Crewe CNG Station • Filling dual fuel trucks for GIST/M&S, Brit European, Tenens, Waitrose http://www.youtube.com/watch?v=orxBtoXyjos

Largest grid supplied CNG station in UK – now selling biomethane via Green Gas Certificates

NATURAL GAS VEHICLES IN THE UK – WHAT IS THE OPPORTUNITY?

DECC Energy Price Forecasts Prices today

Natural gas has diverged from Oil price due to world-wide LNG trade and US Shale gas production and this underpins NGV for trucks – UK imports of oil by 2025 expected to cost >£20 billion a year.....we have to reduce this

UK Oil Production and Demand 1990 - 2020 UK oil production

UK oil demand

DECC forecasts that by 2025, UK will be importing around 1 million barrels of oil per day, almost all for road transport This is the Elephant in the room......Question - How does UK plc afford this extra import bill of around ÂŁ20 billion/year

Answer - we start by importing less oil - HGV sector provides the best opportunity for Natural Gas

Fuel options in each sector

Cars are not the target for natural gas – trucks are relatively few in number but use a lot of diesel and cause significant GHG emissions 9

Truck Market - DfT Funding - TSB Project • TSB providing £11 million funding 2012-15 • 13 consortiums trialling low carbon trucks • 353 natural gas carbon trucks • 348 dual fuel trucks • 5 dedicated gas trucks

• 26 new or upgraded refuelling stations • CNG, LNG , Biomethane CNG Services bringing 5 dedicated CNG Scania tractors to UK for project with Argos – these vehicles are transformational

Bus Market Development • New CNG buses from MAN and Scania • 2013-14 – New high capacity CNG stations built at: – Beccles, Reading, Runcorn, – Darlington, Sunderland, Lincoln

• Incentive for buses to use Biomethane and Green Gas Certificates • 6 p/km payment for the certificates

UK NGV Filling Station Infrastructure

http://www.gasvehiclehub.org/ UK is the leading market in EU for trucks on natural gas

CNG TRUCKS DUAL FUEL AND DEDICATED

Dual Fuel Technology – Key Components 250 bar CNG storage or LNG storage

Hardstaff OIGI system exhaust including methane catalyst Pressure Regulator

Gas Injector

Electronic Control Unit

There is a worldwide dash for dual fuel technology underway driven by abundant world-wide gas resources

The Euro 6 Challenge for Dual Fuel • From 2014, trucks need to meet the Euro 6 Standard • Dedicated CNG/LNG in spark ignition can do it • Scania 340 bhp tractor

• Hard for dual fuel to meet it • • • •

Has to meet diesel standard and gas standard Difficult to do, temperature of methane catalyst May be possible with 30% gas, 70% diesel Prins conversion of MB Actros announced on 29th October 2014

No such thing as Chicken and Egg in UK – its all about the truck

Dedicated CNG – 340 bhp

Dedicated CNG tractors are coming….first 5 in UK by end 2014 in a project led by CNG Services Ltd

Dual Fuel V Dedicated • Dual fuel has advantage can complete journey on diesel so no range issue • Dedicated trucks would give 28% CO2 saving is as efficient as diesel, but likely to give around 18 – 20% saving • Dedicated CNG trucks are very quiet – could be important benefit for moving fracking waste water • Dedicated CNG have very low NOX and PM10 • Dedicated trucks use 2 x the gas of dual fuel and so make it easier to finance CNG filling stations • Dedicated trucks very simple, one fuel, simple methane catalyst, duel fuel trucks complicated to meet Euro 6 Dedicated trucks are the medium/long term solution, dual fuel are great to start the market

Renewable Gas • Compressed biomethane (CBM) used directly in a truck • Not in the UK • 2 small plants in Germany, widespread in Sweden (no gas grid)

• CNG with biomethane injected into the grid and a Green Gas Certificate model used • 450 CNG stations in Germany, widespread in EU • Crewe in UK • UK will have 27 Biomethane plants in operation by 1 April 2015 (compared to 3 at 1 April 2014) • 1.8 TWh of gas in full year = 120,000 tonnes of CNG = 160 million litres of diesel = fuel 5,000 large HGVs (5% of market) • Or can heat 60,000 homes?

Renewable methane very attractive for houses and trucks

UK HIGH PRESSURE GRID – THE £15 BILLION ASSET FOR TRANSPORT

UK Gas System Local Transmission System

LTS is a vital national asset - ideal for CNG – it would cost >£15 billion to build NTS/LTS – these assets can help reduce diesel demand and reduce CO2 from trucks

Benefits of Using LTS • Lower pressure lift • Reducing electricity used in compression • Reduces number of stages of compression from 5 to 2

• Higher flow rates • Compressors run for less time, lower maintenance • Very high capacity per CNG station

• No leakage of gas in LTS • Higher pressure grids have no methane leakage

• Dry Gas • No gas drier needed

The 6,000 km of 20 – 35 bar LTS means that 95% of major UK distribution centres are within 2 km of the ideal energy source is a vital national asset

Energy Used in Compression

As the grid (inlet) pressure increases the electricity used in compression decreases and higher flow rates of above 2,000m3/hr are possible which reduces the running hours of compressor and provides very high capacity

Estimated CO2 savings from LTS CNG • Well-to-Tank savings from LTS compared to Low Pressure grid are significant • No leakage of methane to get gas to the supply point = 11.5% • 80% less electricity for compression = 6% • No drier = 1%

• Compared to diesel, the “Well to Tank” for LTS CNG is around 10% lower • “Tank-to-Wheel” CO2 savings are 20% CO2 • This is based on 100% CNG • Assumes 8% efficiency reduction compared to diesel

• Total CO2 reduction from Dual Fuel trucks supplied via LTS is around 25% compared to diesel Then there is biomethane on top

SAVING IN OIL IMPORT COSTS

How Much Saving in Oil Imports?

• For 1 CNG Station, 1,500 trucks, annual CNG = 30 million KG • 15 million therms • Cost of LNG around £9 Million at 60p/therm for gas

• Equivalent to around 40 million litres of diesel • Cost around £24 million at 60 p/litre (duty free) • This money goes to Russia – main diesel supplier to UK

• 1 CNG station will save around £15 M per annum from gas replacing oil • But if the gas is from Lancashire then of the £9M, around £6M comes back to UK as tax • We can use this money to insulate homes and build renewable generation 25% CO2 saving is great but money also good – UK plc has to switch trucks to gas (like we have heating and 50% of electricity) 25 CNG stations can save 1 billion litres of oil imports

LOCATION OF SHALE GAS COMPASED TO LTS-NTS?

Shale Gas Locations and the UK Gas Grid

The NTS/LTS appears to be wherever there is shale gas which is a stroke of luck (and saves UK around ÂŁ15 billion)

CONCLUSIONS - THE COMPELLING CASE

DfT Transport Energy Task Force

There are 5 working groups: • • • • •

WG 1. Establishing the evidence base WG 2. Sustainability & Objectives WG 3. Policy & Investment certainty WG 4. Customer acceptability WG 5. Role of alternative fuels – GAS FOR TRUCKS

Gas Industry can input into all these groups to support CNG/LNG, fossil and renewable gas for trucks/buses

Conclusions (1) • Very high growth driven by the oil – gas price differential • Gas grid = gas for heating (UK 1970-90) • Gas = gas for electricity (UK 1992 - 2012, 50% switch)

• OEMs now making trucks that run on natural gas • This is the key development - Scania • Supported by UK dual fuel engineering (Hardstaff, Prins, Clean Air Power, G-Volution)

• CNG is ideal fuel for UK • Small country • Extensive Local Transmission System • Back to base operations

The development of dedicated CNG trucks is transformational

Conclusions (2) • LTS CNG and dual fuel trucks can save 1 billion litres of diesel per annum by getting 40% of trucks off 100% diesel • Needs 25 CNG stations, around £40 Million capex • Premium per vehicle in short term of £15- £25K but can be expected to fall towards cost of tanks (£5k) • Reduce CO2 from large trucks by 20 – 30% • Shale gas offers CO2 reduction compared to fossil natural gas/imported LNG • Jobs and more wealth that can remain in UK • Taxes to fund insulation and renewables

Shale gas and LTS CNG can provide huge benefit to UK