While natural gas vehicles (NGV) have ridden the wave of enthusiasm that has accompanied the “dash for gas” in the US, several political and market hurdles may hamstring substantial US NGV penetration. Natural gas price volatility, regulatory roadblocks and costly infrastructure requirements are among the factors which will challenge NGV’s ability to increase market share in the consumer vehicle market. In today’s GR Energy and Climate Brief, energy consultant Michael Kadish analyzes the barriers to large-scale NGV penetration.

This year, natural gas vehicles have ridden the wave of political enthusiasm surrounding the growing use of natural gas in the US energy mix, leading to predictions that legislation will pass Congress to promote wide consumer adoption of natural gas vehicles. However, despite political momentum, the key proposal incentivizing natural gas vehicles, the NATGAS Act, remains unlikely to pass Congress. Even if it were to pass, signficant hurdles remain for natural gas vehicles adoption. Today’s GR Energy and Climate Brief examines the status of the policies aiming to incent natural gas vehicle adoption and the obstacles that stand in the way of increased penetration in the consumer vehicle marketplace. 

A Nascent Market:

Though the American NGV market has grown in recent years, it remains small. According to the Department of Energy, there are only 825 CNG and 38 LNG refueling stations throughout the United States, while there are approximately 68,000 stations that sell diesel and 167,000 that sell gasoline. The US natural gas vehicle market is dominated by fleet sales to governments and private businesses. CNG buses account for 62% of all vehicular natural gas use, while waste collection comprises another 12%. In the passenger vehicle market, Honda is the only original equipment manufacturer (OEM) to offer a natural gas vehicle, the Civic GX NGV.

Tight Political Calendar:

The natural gas vehicle component of President Obama’s strategy for America’s energy security, laid out in his March 30th address on a Blueprint for a Secure Energy Future, is the NATGAS Act (New Alternative Transportation to Give Americans Solutions Act), HR 1380. The bill, which now has 182 co-sponsors in the House, is a five-year proposal that would promote natural gas vehicles by providing incentives for natural gas refueling infrastructure, the purchase of natural gas passenger vehicles ($7500 for a light duty passenger vehicle) and increasing the tax credit for home refueling stations up to $2000. However, despite the widespread support, according to sources on Capitol Hill, prospects for any significant legislation making it through both Chambers and onto the President’s desk are not promising. In the House, passing the measure out of the Energy and Commerce Committee chaired by Fred Upton is unlikely before the end of 2011 as priority is given to rolling back EPA rulemaking and unlocking domestic oil and gas production. While Senators Bennet, Begich, and Murkowski are reportedly considering introduction, there is currently no Senate version of the NATGAS Act and other major budget issues still need to be considered in this session before any kind of energy bill will be taken up.

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