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NGVs and the Life-Cycle Cost Advantage: A Case for Natural Gas Vehicles in Fleet Applications

Learn about the benefits of Natural Gas Vehicles (NGVs) and why they are a cost-effective and environmentally friendly choice for fleet applications, including available models and tax incentives.

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NGVs and the Life-Cycle Cost Advantage: A Case for Natural Gas Vehicles in Fleet Applications

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  1. NGVs and the Life-Cycle Cost AdvantageThe Compelling Case forNatural Gas Vehicles in Fleet ApplicationsStephe Yborra – DirectorClean Vehicle Education Foundation / NGVAmerica Mobilizing North Carolina Conference & Expo Greensboro Coliseum – April 18, 2007

  2. Signs of the Times

  3. Market Drivers Spur Alternative Fuel Vehicles(Especially Natural Gas Vehicles!) • Global energy supply-demand imbalance will only get worse • New discoveries lag add’l growth, let alone current consumption • Air quality issues getting political traction as economy is impacted • Health: absenteeism, lost productivity, societal healthcare costs • Cost of non-compliance is unacceptable • Advances in transportation technologies to meet tougher emissions requirements create trade-offs in performance and O&O costs • Petroleum-based transportation is becoming more expensive • Alt fuel technologies are gaining acceptance, attaining economies of scale

  4. 1998 Stds EPA’s HD Engine Emissions and Fuel Requirements 0.12 2002/2004 Stds 0.10 0.08 PM (g/bhp-hr) 0.06 2007 Std (1.2 g/hp-hr NOX +NMHC) 0.04 0.02 0.00 0.0 1.0 2.0 3.0 4.0 5.0 NOx (g/bhp-hr) 2010 Std (.20 g/hp-hr NOx)

  5. Engine Design Exhaust Fuel Processing Modifications After-treatment Combustion Low Pressure Chamber Water + or Design Additives EGR Gas to Liquid or PM NOx After- Fuel After- Exhaust Alt. Fuels Treatment Treatment or Desulfurisation Reductant or Platinum Electric EGR and/ or Power Cerium Urea or HCCI The Price of Progress: OUCH!Complexity, Confusion and Cost High Pressure

  6. Methane Molecule Benefits of NGVs • NGVs are proven and reliable • Nearly 5 million worldwide • NGVs use an inherently clean fuel • Simple CH4 structure, few combustion byproducts • Less NOx, soot and greenhouse gases • Natural gas is domestic fuel • 97% comes from North America • NGVs are quiet • 80-90% lower db level than diesel • NGV life-cycle costs are lower • Fuel costs are far lower! • Maintenance costs are =/< than gasoline or diesel vehicles • Life-cycle cost advantage improves with new federal tax credits

  7. NGVs Are a “Good Fit” for Many Different Fleet Applications • Local/State Government • Airports • Refuse • Transit • School Districts • Utilities • Local-Service Businesses • Plumbers, HVAC, etc. • “Short-Haul” Delivery Operations • Food/Beverage/Snack, Linens, Package Delivery/Courier Services, Port/Rail, Newspapers, etc.

  8. Despite Some OEM Withdrawals, A Wide Variety of Natural Gas Vehicles Are Available • Sedans, Pick-ups/SUVs, Vans/Wagons • American Honda • All GMC brands and Ford/Mercury/Lincoln via SVMs • Work/Vocational Trucks • Peterbilt, Freightliner, Freightliner CC,Sterling, Crane Carrier, Condor, Autocar, Isuzu, GM, Workhorse, Ottawa….. Dozens of upfitters in all work sectors • Bus and shuttle • NABI, Orion, New Flyer, SpecialtyEl Dorado-National, Champion, Supreme,Blue Bird, Thomas Built, Optima…

  9. 2007 Certified Natural Gas PoweredEngines and Vehicles for Fleet Applications • Cummins Westport • 5.9L “B Gas Plus” – 195-230hp • 8.9L “ISL-G” – 250-320hp (replaces 8.3L “C Gas Plus” and 8.9L “L Gas Plus”) • Emission Solutions Inc. • 7.6L Phoenix NG – 175-265hp(re-power for Int’l DT466 trucks) • John Deere • 8.1L HN04 – 250-280hp (‘til 12/07) • Westport Innovations Inc • 15L “ISX-Gas” – 450hp • American Honda • Civic GX • BAF Technologies • 4.6L (Crown Vic/Grand Marquis, Town Car) • 5.4L (E-350 cargo/passenger van – certifying F150/250 later in 2007) • 6.8L (E-450 cutaway) • Baytech Corporation • 6.0L L/M/HD (GM, Isuzu, Workhorse – pick-ups, vans/stepvans, CFs, cutaways) • 8.1L (Topkick/Kodiak, cutaways) • EcoFuel • 6.0L HD (GM)

  10. Vehicle Purchase Tax Incentive • A income tax credit to the buyer of a new, dedicated alternative fuel vehicle: • 50 percent of the incremental cost of the vehicle; incremental cost cap based on four GVW ranges • An additional 30 percent if the vehicle meets certain tighter emission standards. • Tax credit goes to the seller if the buyer is a non-tax paying entity (continued)

  11. Vehicle Purchase Tax Incentive • Credits range from $2,500 to $32,000 depending on vehicle weight • $2,500-$4,000 for vehicles under 8,500 lbs. (incremental cost cap : $5K) • $5,000-$8,000 for vehicles between 8,500-14,000 lbs. (icc: $10K) • $12,500-$20,000 for vehicles between 14,000-26,000 lbs. (icc: $25K) • $20,000-$32,000 for vehicles over 26,000 lbs. (icc: $40K) • Credit is effective for vehicles placed in service after December 31, 2005 and currently set to expire on 12-31-10. Extension to 2016 likely. • “Conversions” qualify, if retrofit/re-power was done after 12/31/05

  12. Motor Fuels Excise Tax Credit • The Volumetric Excise Tax Credit for Alternative Fuels (VEETC) • JOBS Act of 2004 created VEETC for ethanol and biodiesel • SAFETEA-LU (“Highway”) Act of 2005 made CNG, LNG, LPG, and hydrogen eligible when those fuels are used in on-road vehicles(and some off-road vehicles, such as forklifts) • A 50 cent motor fuels excise tax credit is paid to the seller: • Per GGE of CNG or per liquid gallon of LNG • The credit is applied/paid to eligible recipients without regard to the amount of excise tax paid, if any (including tax exempts) (continued)

  13. Natural Gas Vehicle Incentives Federal Tax Incentives (discussed already) State Grants: Check with Clean Cities Representatives Federal Grants: • DOT Congestion Mitigation & Air Quality (CMAQ) grant • Up to 80 percent of cost of vehicle • DOE State Energy Program (Clean Cities) grants • Covers incremental cost of vehicle and up to 10% of station • EPA • SEP/(“penalty fund) project grants • Diesel Emission Reduction Program grants

  14. Refuse Collection Truck Life-Cycle Costs(assumes private firm purchases from dealer, fuels at O&O station) *Assumes 2.5mpg (diesel) and 10% fuel consumption “penalty” for S.I.N.G. engine vs diesel-cycle, a differential that is diminishing as 2007 emissions strategies are employed in model year MY’07 engines and more in MY’10. ** Natural gas DGE cost based on $8/Mcf commodity + $.20/kW per DGE compression cost +$.20 M&O expense + $.33 capital/equipment cost + $.09 taxes. Diesel price is rack rate including federal motor fuels excise taxes. Estimate does not include any of $.556/dge CNG tax credit effective 10-01-06 (net credit of $.351/DGE after tax is applied *** Assumes equal maintenance costs. Natural gas vehicles have documented lower maintenance costs than comparable diesel units. NGV’s maintenance cost advantage is projected to increase as MY 2007-2010 diesel engines and exhaust after-treatment technologies are introduced.

  15. Municipal Dump/Plow Truck Life-Cycle Costs * Based on Freightliner M2 with dump-plow package; CNG unit with 3 CNG tank vertical package **Assumes mixed city/suburban duty cycles, 8mpg (diesel) and 10% fuel consumption “penalty” for S.I.N.G. engine vs diesel-cycle. *** Natural gas DGE cost based on $8/Mcf commodity + $.20/kW per DGE compression cost +$.20 M&O expense + $.33 capital/equipment cost . Diesel price is rack rate excluding federal motor fuels excise taxes. Estimate does not include any of $.556/dge CNG tax credit effective 10-01-06 (net credit of $.351/DGE after tax is applied. **** Assumes equal maintenance costs. NGV costs are generally lower.

  16. Cargo Van/Passenger Van • Sample Applications • Newspaper, Pkg/Courier Svc, Airport Shuttle • GVW-9600+ lbs. • Ford E-350, Chevy 3500 Series • MPG: 10/18 City/Hwy • Miles /day: 75-175 • Fuel Use: 10-15 gge/day; 2600-3000gge/yr • CNG Premium: $14-16,000 (before fed tax credit) • Fed Tax Credit: $8000 • Simple Payback: 1.7 – 3.3 years • Life-cycle cost advantage: $3,570 - $13,750

  17. Step Van • Sample Applications • Pkg Srvc, Bakery/Snack Food, Linen • GVW-14,000+ lbs. • Workhorse P, Freightliner Custom • MPG: 4.0 – 6.5 • Mileage: 50-80/day; 325-450/wk; 20K/yr • Fuel Use: 15-20 gge/day; 4800 gge/yr • CNG Premium: $23-26,000 (before fed tax credit) • Fed Tax Credit: $20,000 • Simple Payback: 1 - 1.5 years • Life-cycle cost savings: $30,600 - $63,000

  18. Urban Class 5-7 Truck • Sample Applications • Beverage (beer/soda/water, dairy), Rest. Supply • GVW - 26,000+ lbs. • Int’l 4000 Series, Freightliner M2 • MPG: 3.25 – 4.75 • Mileage: 45-80/day; 250-455/wk; 13-22K/yr • Fuel Use: 14-25 gge/day; 5000-6800 gge/yr • CNG Premium: $48-52,000 (before fed tax credit) • Fed Tax Credit: $32,000 • Simple Payback: 2.75 – 4.2 years • Life-cycle cost savings: $34,800 - $50,000

  19. Questions? Thanks for your attentiveness!

  20. For more information please contact: Stephe Yborra Director of Marketing & Communications NGVAmerica 400 N. Capitol Street, NW - Suite 450Washington, DC 20001 Director of Market Analysis, Education and Communications Clean Vehicle Education Foundation 6011 Fords Lake Court Acworth, GA 30101 syborra@ngvamerica.org / syborra@cleanvehicle.org (301) 829-2520

  21. How to Apply For Motor Fuels Excise Tax Credit • Register: Use IRS Form 637, “Application for Registration” (mark “AL” for alternative fueler) • File Quarterly (if there’s a tax liability): IRS Form 720, “Quarterly Federal Excise Tax Return). Apply credit toward excise tax owed (if any). How you recover “overage/rebate” depends on tax status: • A. Taxable Entities: File IRS Form 4136 at end of year to recover credits over and above those applied against quarterly tax liability. • B. Tax-Exempt Entities: File IRS Form 8849 and addendum form Schedule 6 as often during year as desired as long as there is at least one transaction

  22. Case Study: Linen Service • 14 CNG stepvans @ 18gge/day; • Uses 255gge/day or 66,300gge/year • Has four I-R 25hp compressor station • Redundancy + 75% add’l capacity to grow • Cost per CNG gge: $1.484 (saves $1.50/gge) • Gas Bill: $1.036/gge • Commodity (cost of the gas): $0.737/therm = $.9213/gge (124,800Btu/therm) • Local gas company service (fee to transport gas to his meter): $.08/gge • State special assessments and local municipal use taxes: $.035 • Electric compression costs (estimated @ 1Kw/gge): $.18/gge • “Sinking fund” to cover station maintenance & operations: $.17/gge • Capital amortization of station equipment: $.33/gge (based on $220K over 10 yrs) • State motor fuel excise tax: $.085/gge • Net $.317/gge federal tax credit ($.183/gge excise tax less $.50/gge credit)

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