The US natural gas vehicle market needs federal and state tax incentives if it is to grow appreciably in the next 10 years, an analyst with Barclays said Friday.
"If the state is willing to give you $20,000 for an NGV, the economics would improve significantly," according to Barclays analyst Shiyang Wang. "More companies would then want to switch their vehicles from diesel fuel to a natural gas engine."
Diesel-fueled commercial vehicles (buses, freight trucks, commercial light trucks) are the largest potential market for NGV penetration, Wang said in a report on the subject.
In 2010, diesel-fueled commercial vehicles consumed the diesel equivalent of about 13 Bcf/d of natural gas. If these vehicles were converted to run on natural gas, it would represent 20% of total US natural gas demand. Support at the state level has grown in recent years, the report said. So far, 35 states have some level of incentive for NGV development.
Compressed natural gas costs on average $2.34/diesel-gallon equivalent, while diesel is priced at $3.99/DGE, she said. But despite the economic advantage to using natural gas, there is not yet enough refueling infrastructure for "NGVs to flourish," the report said.
