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How Natural Gas Will Transform the Automobile

By Michael S. Lerner

Gasoline’s reign of dominance in worldwide transportation is being eroded by a new contender. The challenge is not imminent, but it can no longer be dismissed or ignored. Take a walk through the streets of New Delhi, and everything from passenger cars and commercial trucks to the city buses and the three-wheel motorized rickshaws runs on natural gas. The Indian city has the world’s largest municipal fleet of natural gas vehicles (NGVs), at 450,000. Working with Sweden, the global pioneer of renewable natural gas vehicles, New Delhi will soon be using biogas generated from its own sewage treatment plants to fuel some of its NGVs. Remarkable, yes, but it is far from an isolated case. Countries all over the world are enacting similar programs. Gasoline-fueled vehicles will still dominate for some time, but the future of automobiles is already here.

The ongoing mainstream debates over energy for transportation tend to pit conventional gasoline against mixed ethanol-gasoline blends, 100 percent biofuel, hybrid gasoline-electricity, and 100 percent electricity. Even with rising fuel-efficiency standards in gasoline-fueled vehicles, gasoline still accounts for the majority of carbon emissions. More importantly, gasoline prolongs an increasingly untenable dependence on oil. Yet, in many parts of the world, gasoline is often subsidized and therefore tends to be cheaper than alternative transportation fuels. The already established infrastructure of pipelines and refueling stations for gasoline is also a huge advantage against the high costs of constructing new ones for alternative fuels. So even though their costs are slowly but steadily decreasing, alternative fuels remain years away from widespread adoption.

But there is another, less well-known option that is available right now: natural gas vehicles. Besides having significantly lower environmental emissions than gasoline, natural gas is abundant and relatively cheap in many parts of the world. Natural gas prices have fallen dramatically in the last three years, while oil prices (and therefore gasoline prices) have sharply risen. In October 2011, while the average price of gasoline in the US was $3.46 per gallon, the average price of CNG was just $2.09 per GGE (gallon of gasoline equivalent). Even in Europe, where fuels in general are less abundant and more expensive, switching from gasoline or diesel to CNG reduces fuel costs by 30% on average, according to NGVA Europe. As a fuel source, for the most part it functions just as well as petroleum-based fuels, although it needs a specially adapted engine. For those still skeptical of completely switching to natural gas, there are many dual-use gasoline and natural gas engines, such as those in Iran, and even engines that use gasoline, ethanol, and natural gas, such as those in Brazil.

Overall, the world has experienced exponential growth of NGVs and natural gas refueling stations over the last two decades. Still mainly test projects and novelties in the early 1990s, NGVs grew at a significantly accelerated rate in the 2000s, going from four million worldwide at the end of 2004 to 9.8 million by fall of 2008, and to approximately 14.6 million today. In a report issued last year, Pike Research estimated that by 2016, 19.9 million NGVs will be in use around the world. At the same time, the company predicts that the number of natural gas refueling stations worldwide will increase to 26,000 by 2016, up from about 20,600 today, and just 13,000 in 2008. Other respected organizations predict even higher numbers: NGVA Global estimates 65 million NGVs will be in use by 2020, and the International Energy Agency predicts 30 to 186 million NGVs by 2035. These may sound like staggering figures, but they look increasingly likely, especially as the insatiable global demand for vehicles of any kind will push the total number of vehicles from slightly over 1 billion today to as much as 2.5 billion by 2050, according to the OECD International Transport Forum’s forecast. 

While NGVs are only gaining momentum in the U.S. and Canada, they are rapidly growing in environmentally conscious Europe. Yet, by far the vast majority of the world’s existing NGVs are found outside the West. The countries with the highest numbers of NGVs in the world may be surprising to some, but they have all succeeded in demonstrating the feasibility of NGV fleets. In almost every example, these innovative vehicles have proven both cheaper and cleaner than conventional ones.


Worldwide, the numbers of NGVs are growing so rapidly that the statistics lag behind, and no sources of official statistics are universally agreed upon. However, from the latest available data, published in the February 2012 Gas Vehicles Report, the world leader in NGVs (for the moment) is Iran, with 2.86 million NGVs as of November 2011. While Iran hardly seems to be a country the world should look at for progressive developments to be emulated, it has undeniably made impressive strides in NGVs over the last few years. First and foremost, Iran’s explosive growth in NGVs is a crucial part of the regime’s strategy to diminish the bite of international sanctions. Acutely aware of its vulnerability to being cut off from gasoline imports that the country heavily depends on, the Iranian government has actively intervened in the market to expand its domestic oil refining capacity. Simultaneously it is converting its vehicle fleet to using natural gas and constructing many more natural gas refueling stations. As a result of the regime’s policies to encourage the use of NGVs, principally by subsidizing conversion costs, providing incentives to NGV purchasers, and ending the high subsidies on gasoline, the number of NGVs in the country skyrocketed from about 150,000 in 2006 to nearly three million today. Iran has the world’s second largest deposits of natural gas (after Russia), and its abundance makes it much cheaper for Iranian motorists than gasoline. The concurrent reduction in harmful environmental emissions is also urgently needed and appreciated—four of the World Health Organization’s Top Ten Most Air-Polluted Cities in the World in 2011 were in Iran, including the number one spot, Ahwaz. 

Following closely behind Iran is Pakistan, with 2.85 million NGVs as of July 2011. It has the world’s 26th largest deposits of natural gas, and the government has encouraged the switch from oil to natural gas for both economic and environmental reasons. It sees its growing NGV industry as a source of employment and desperately needed foreign investment. It is also a way to save money that was formerly spent on importing diesel fuel, as well as a means of reducing Pakistan’s notoriously bad urban air pollution. Apart from converting governmental fleets to NGVs, the Pakistani government’s policies primarily aim to promote a market-driven expansion of the natural gas industry, for example by exempting conversion kits and NGVs from import tariffs and sales taxes. These policies, combined with the rising price of gasoline in recent years, have been very successful; NGVs now make up some 61 percent of all vehicles in Pakistan, the highest proportion of any fleet in the world. However, it is not without its own problems. Due to the insatiable and higher-priority demand for natural gas by industry and power plants, Pakistan has to ration natural gas for transportation. It often declares “gas holidays” where refueling stations are closed for several days, leading to widespread discontent. However, this is a problem of supply and infrastructure particular to Pakistan, not of natural gas per se.

Argentina comes in third with over two million NGVs as of October 2011. Besides saving Argentine drivers lots of pesos due to the lower costs of natural gas, the country's NGV industry has provided jobs in internal natural gas infrastructure development and it exports NGV equipment and technology all over the world. The industry initially developed with limited market intervention by the government; the primary reason was a reaction to the high tax on gasoline, combined with the abundance of natural gas in Argentina as well as the already existing network of natural gas pipelines reaching its major cities. In November of last year, the South American country hosted the Fifth ExpoCNG international convention, where Fausto Maranca, President of the Argentina's Chamber of Compressed Natural Gas boasted that CNG provides “jobs to 30,000 people directly, and many more indirectly,” and that the state's domestic supply of natural gas could help “close the gap in imports.”

Brazil ranks fourth, with 1.7 million NGVs as of November 2011. The country has already established itself as a leader of vehicle fuel innovation with bi-fuel models that can use both gasoline and ethanol seamlessly. The latest popular development is tri-fuel “flex cars,” which can also use the cheapest fuel in Brazil—natural gas. The cost of converting a car to natural gas is about 25 percent of the cost in the U.S., and doing so can get drivers very appealing reductions in their annual vehicle registration, such as 25 percent less in São Paulo and 75 percent off in Rio de Janeiro.

Admittedly, conventional natural gas is still a fossil fuel that pollutes the air and contributes to global climate change. It is also a finite natural resource, and it cannot be the long-term solution to the world’s energy and climate change problems. Yet, it is certainly a major step forward, and it is easy to scale up right now, across the world. And there is one more plus. Before we plan on purchasing a solar-powered car or a hydrogen-fuel cell car in the not-too-distant future, we should keep in mind an enduring positive feature of natural gas engines: they burn biomethane equally well as conventional natural gas, because chemically both are essentially just high concentrations of methane. Biomethane, also known as renewable natural gas (RNG), can be affordably produced with present-day technology from organic wastes, with zero or minuscule net carbon emissions. Countries have been extremely creative in how they generate RNG, from food scraps, yard waste, sewage, and even bloody slaughterhouse waste. Natural gas vehicles can and will be a part of a clean energy future around the world. From Peru to Mozambique to Indonesia, new NGV projects are being announced in ever faster numbers. The next big thing is upon us. Quietly, it has already swept large swaths of the world, and in the coming years, it will continue to inexorably reduce gasoline’s position as the world’s dominant vehicle fuel. When it comes to transportation, future cities across the world will very likely resemble New Delhi rather than the urban centers in the United States.



Michael S. Lerner is an editorial assistant at World Policy Journal.

(Photo Courtesy of shutterstock)


Anonymous's picture
NGV and future

Mr. Lerner misses one huge point in his otherwise insightful discussion on NGVs and that is the part that "corrective taxes" (or Piguvian taxes) should pay in advancing Americans toward rapidly adopting alternative source vehicles and other alternative transportation. We don't pay, at the pump, anywhere near what it costs society for us to burn gasoline and diesel in our daily driving. Our 18.4 federal gasoline tax today is about what our great grandparents paid in the 1920s against income. Overall, Americans still pay the second lowest prices for gasoline in the OECD nations, behind only Mexico, a major exporter of oil while we import better than half of what we use in our 251 million cars and trucks. The Victoria Transportation Policy Institute calculates society pays 54 cents for each of the 2.9 trillion miles Americans drive annually and a decade-old calculation, excluding such concepts as the cost of greenhouse emissions and to fight wars in oil fields, found that we should be paying $10.02 in additional gasoline taxes. Another small point that Mr. Lerner misses is the cost and difficulty of using Natural Gas here in America. The next time he's in Dehli he should take an NGV autorickshaw to where they are fueled. The line is easily 3/4 of a mile long and the lost productivity those drivers face while waiting, sometimes all afternoon, to fuel up must be massive. Few Americans can imagine waiting one-20th as long to fill up, especially on a long trip, which is one reason neither eCars nor NGVs are flying out of showrooms today. To build the kind of infrastructure to support any fuel change, America needs a higher gasoline tax because we need drivers, who calculate their personal cost based almost solely on those huge neon numbers alongside the highway, to have an incentive to consider alternative vehicles and transportation. And we need to educate that, for example, U.S. taxpayers keep carrier task forces in the Persian Gulf to ensure oil supply and that we send daily $1 billion overseas to import auto fuel, the largest single item in our trade deficit. Please do not read this as a condemnation of NGVs (or electrics either). Both have their place in a more rational transportation system but the biggest issue is that Americans pay too little for gasoline, not -- as polticians and mainstream media today imply -- too much.

Anonymous's picture
NGVs - Is this the solution?

I am afraid that putting in more or converted NGVs will not solve our problems of energy scarcity, our ever growing thirst for energy, fuel and food.. While we continue to work on innovative, efficient and renewable sources, we MUST work more aggressively to reduce the needs. That will be possible only with a control on global human population. More concrete steps are required in social sector to be able to control it and hence reduce loads on natural resources.

Anonymous's picture

Yes, CNG is at least an answer now. We can do this NOW! While we continue to develop alternate fuel concepts. We will never make significant reductions in our useage of energy, but technology with time may reduce out dependence (short of population control -- if we did that we should eliminate idiots like the anonymous writer before me) on the fossil fuels.
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