China’s Green Vehicle Revolution is Fueled by Natural Gas

China LNG taxiSHANGHAI — The blue automobile that taxi driver Shen Guiqin uses to carry riders around in northern China’s Tianjin City tells much about an unsung clean solution in the nation.

It looks like a conventional vehicle but emits less pollutants. Its carbon dioxide footprint is one-quarter less compared with petroleum-powered cars. And there is no need to worry about lead poisoning, as lead compounds that can be found in emissions from most cars Chinese have driven barely exist in its exhaust.

What Shen has is a natural gas car. It may not sound as cool as its green cousins — pure electric vehicles or plug-in hybrids — but it has attracted more drivers than both combined. While taking a small share in the nation’s current auto market, cars running on natural gas are expected to be a major path toward China’s greener transportation goals.

Already, China’s natural gas car ownership has accelerated from nearly 10,000 units to more than 1 million during the past decade. By some forecasts, this figure will triple by 2015.

The natural gas car boom owes much to China’s energy policy. Currently, half of the oil China uses is imported. To bolster the nation’s energy security, Beijing sees growing natural gas car ownership as an important force to limit dependence on foreign oil in the world’s largest and fastest-growing auto market.

Public transportation service providers here also demand a cleaner alternative. Cao Changzhen, senior engineer of the leading Chinese automaker Shanghai Sunwin Bus Corp., said many of his clients lost their appetite for diesel-powered buses as they found it hard to meet the country’s stricter clean-tailpipe requirements.

Although electric cars could help, their price tag scares away many buyers. Even after generous government subsidies of 500,000 renminbi, or about $80,000, the price of the e-buses that Sunwin makes would be twice that of the same model using natural gas, Cao said. He added that “natural gas cars are the most ready green solution in the market.”

Cheaper natural gas price lures car buyers

In addition to rising environmental concerns, Chinese drivers see another reason to change their cars.

“Using natural gas is much cheaper than using petroleum,” said Shen, the 50-year-old Tianjin taxi driver. Shen used to spend 40 percent of her income on fuel bills, but retrofitting the taxi to consume natural gas cut that expense by half.

Just like Shen, about a quarter of cab drivers in China are now using natural gas cars. In cities such as southwestern China’s Chongqing, which tops the nation in this trend, almost every taxi driver views natural gas as a lifeline.

Chinese bus and truck drivers are also interested. Gai Tao, an executive at a trucking company, knows this better than others because his company is among many that made the switch.

When Gai’s company, Sinotrans Shandong Hongzhi Logistics Co. Ltd., phased out dozens of aging diesel-powered trucks in 2010, for the first time it opted to have natural gas trucks, banking on its cheaper fuel.

That choice halved the expense for every kilometer driven. Plus, the company says natural gas trucks generate a net profit 10 times that of diesel-powered trucks. In the meantime, the lower operation cost helps the company win a price war and gain more deals despite the economic recession.

Fueling infrastructure lags

The result whetted the appetite of Gai’s company. Earlier this year, it brought another 10 trucks. But such switches do not come without challenges.

Relatively costly natural gas cars require a higher upfront investment. Besides that, maintenance remains a headache. Because China’s natural gas cars market just started taking off, repair shops are hard to find and drivers often have to wait for days to get needed parts.

But what annoys drivers most is the lack of natural gas car fueling infrastructure. Because of limited stations, drivers at Gai’s company have to stand in line for two or three hours every day to get their natural gas trucks refilled.

Gai’s company delivers goods mainly in Shandong Province, which has built more gas stations than elsewhere in the nation. For companies that haul goods around other parts of China, it is not rare to see their natural gas trucks nearly out of power while gas stations are still far away.

To avoid being stranded, Gai’s company recently called all the gas stations along the way to ensure fuel supplies before heading 900 kilometers south to Shanghai City for a trial drive with natural gas trucks.

Will the market decide the future?

China’s transportation authority promised to strengthen the natural gas vehicle fueling network. Under a government plan, China will have 12,000 gas stations by 2020 — five times the current scale.

The market potential has already caught the eye of Chinese natural gas suppliers. State-owned giants like the China National Petroleum Corp. and private majors like the ENN Group all announced ambitious plans to expand their reach. And ongoing policy reform may further fuel their ambition.

Late last year, Chinese policymakers promised to liberalize natural gas prices in two pilot regions. Although details are still under discussion, the idea is to let the market decide the price. The change would also solve a current problem: The more natural gas that stations sell, the more money they lose, according to Steven Lu, assistant director of Timer, an auto consulting firm in Shanghai.

Lu said this will be a mixed blessing for China’s natural gas car market. On one hand, higher prices will increase natural gas outlets, removing the refueling challenge. But if the price hikes too high, it may reduce the advantage of natural gas cars against conventional ones.

Yet for now, the price is low and the desire for natural gas vehicles is running high. During a recent industry conference in Shanghai, Gai, the trucking company executive, was surrounded by fleet managers who had tons of questions on how to make the switch.

Photo courtesy of Flickr

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