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LNG commercial vehicle: a way out of the pressure of high oil prices?

 

– by Liu Weiyan and Zhu He

 

Liquefied Natural Gas (LNG) has become a well-accepted clean energy model in the face of climbing oil prices.

“The development of LNG commercial vehicle is a solution to environmental and energy problems given the immaturity of electric vehicles,” said Zhang Guobao, standing committee member and deputy director of the economic committee of the CPPCC at the 2012 China LNG Heavy-Duty Industry Development Summit Forum held on May 8.

Yao Mingde, director of China Road Transport Association, also told the media recently that relevant government departments are promoting the use of clean energy by commercial vehicles.

According to insiders, the 12th Five-Year Plan (2011-2015) of Natural Gas Industry drafted by the National Energy Administration has gone through evaluation and has been submitted to the State Council for final approval, which may open another door for the application of LNG heavy-duty vehicles.

 

Growing enterprise investment

China’s LNG vehicle parc has soared from 10,000 units in 2000 to over a million in 2011, ranking fourth largest in Asia and sixth largest in the global natural gas vehicle market.

Sales of LNG heavy-duty trucks in China jumped 30 percent last year despite the overall gloomy market, which declined 13 percent in 2011. Enterprises and brands such as Baotou Beiben, Foton Auman, SAIC-IVECO-Hongyan, CAMC Hualing, and Dayun Truck have all placed the LNG heavy-duty market as their focus in the future.

Ten CNHTC Golden Prince LNG port trailers have been delivered to Xiamen Port Holding Group at Haitian Port recently, and CNHTC Shanghai branch also signed a supply agreement for 100 LNG trailers with Shanghai Fucang Logistics Co., Ltd. on April 16. The company has sold LNG heavy-duty trucks to Shandong, Shaanxi, Shanxi and Shanghai.

C&C Trucks showcased its 6×4 LNG trailers, 6×4 LNG mixers, 4×4 LNG self-dumpers, and 4×4 LNG liquid add trucks in Beijing recently. And FAW Jiefang held a delivery ceremony for its new Dawei LNG heavy-duty trucks in Hebei on May 3. “It is a significant move for FAW Jiefang to have a LNG vehicle approaching the Hebei district,” commented Jiang Chongxin, market service director of FAW Jiefang Qingdao Automobile Co., Ltd.

Yutong bus launched its first LNG bus in 2006 and currently owns a production line ranging from 6 to 13.7 meters and covering a sales area of 28 regions in China. Zhongtong LNG bus received 40 orders from Taiyuan city and another 50 from Dongying district on May 18, with sales regions covering Xinjiang, Shaanxi, Inner Mongolia, Sichuan and Chongqing.

Shaanxi Automobile LNG heavy-duty trucks have covered a range of 210-380 hp in trailers, trucks, self-dumpers, concrete mixers, and mine trucks with a maximum range of 2,070 kilometers since the development of its first LNG truck in 2005.

According to Fang Hongwei, chairman of Shaanxi Automobile Group, LNG heavy-duty trucks will enter a period of rapid growth in the next few years. The Group aims to sell 50,000 LNG trucks by 2015 and owns a production capacity of 100,000 units, said the chairman.

 

Enormous room for development

Thirty-three percent of environment contaminators come from vehicle tail gas, and one-third of contaminators will be cut if commercial vehicles are powered by natural gas.

One cubic meter of LNG gas costs ¥6 ($0.95), thus ¥60 is saved by every commercial vehicle in a journey of 100 kilometers.

Considering that the LNG offers environmental protection and cost savings, the country will increase pilot cities of LNG vehicles from the previous 16 to 26 and may allocate cash subsidies to LNG makers, said the Ministry of Transport.

China had 2,000 natural gas stations (including those under constructions) as of the end of 2011. Kunlun Energy Co., Ltd. owns 100 LNG gas stations currently and will build another 200 by the end of 2015. China National Offshore Oil Corp. (CNOOC), one of China’s three oil tycoons, also plans to construct 1,000 LNG gas stations in the next five years.

“Without the monopoly of Sinopec, Petro China and CNOOC, natural gas station construction will boom due to large market space and high profits,” said Tan Xiuqing, vice president of Shandong Heavy Industries Group.

By the end of 2011, China owns more than 60 natural gas vehicle makers with production volume exceeding 80,000 units.

Sales of LNG and CNG (compressed natural gas) vehicles have grown at 20 and 30 percent respectively in recent years, however, natural gas vehicles only take up 5 percent market share, providing enormous room for development.

 

Bottlenecks in development

According to predictions of Sinopec Economic Technology Institute, China natural gas production volume will reach 185 billion cubic meters in 2015. With the estimated demand of 260 billion cubic meters by then, a deficit of 75 billion cubic meters will be the main obstacle to the popularization of LNG commercial vehicles.

“LNG trucks will take up one-third to two-thirds of the heavy-duty truck market given enough gas stations and complete networks,” said Zhang Guifu, product planning director of Baotou Beiben Heavy-Duty Truck Co., Ltd. “But the market prospects are still uncertain for LNGs as they do not fall under current government policies for the new energy vehicle industry.”

LNG trucks usually cost around ¥80,000 more than their gasoline versions, and China has considered raising natural gas price to 75 percent of the No. 93 gasoline price, which would prevent customers from using LNG vehicles.

(Rewritten by Jennifer Chen based on authors’ article in National Business Daily)

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