Posted by Jessie Johnson on December 1,2014
It’s Not Only About Policy, but a Proper Application Decision
Over 24 million autogas vehicles are in operation throughout the world, utilizing more than 70,000 Autogas refueling sites. Autogas, the term for LP Gas when used in the transportation sector, is the second most widely-used alternative fuel in the world after ethanol. Its use as a transportation fuel varies widely by country. Turkey has 17% of its vehicles running on autogas, Poland 11%, South Korea 10%, and India 8%, while in the United States, less than 1% of vehicles run on autogas.
In the United States, autogas has received little attention despite its many benefits:
– It reduces harmful emissions by 35% and CO2 by 18% versus gasoline.
– 100% of LP Gas is domestically produced. In fact, projections are that more than 6 billion gallons of LP Gas will be exported in 20 15!
– Over the past eight years, autogas has average $1.35 less per gallon than gasoline.
Autogas is one of the most viable alternative fuels available today. Its energy content does not come from coal-fired power plants, it does not require toxic battery technology that will end up in our landfills, and unlike compressed natural gas, autogas does not require expensive fuel storage tanks and refueling sites that cost millions of dollars.
Why would city, state, and federal governments encourage the use of autogas and what are the most common policy initiatives?
The main justification for governments to promote the use of autogas is to reduce the environmental impact of transport activities. They can promote the use of autogas through regulatory schemes and financial incentives.
– The most direct means is the use of legal mandates on public or private organizations to purchase a fixed number of AFVs.
– Levy charges on polluting activities
– Provide HOV lane access to autogas vehicles
– Traffic-control regulations can be also be used to favor alternative fuel vehicles. For example, AFVs may be granted exemptions from city or highway-driving restrictions such as those imposed on peak-pollution days.
In principle the most economically efficient approach to internalizing external costs is one that relies mainly on financial incentives i.e. a market-based approach.
– Provide low interest financing for autogas vehicle “upfits” or the incremental costs associated with original equipment manufacturer vehicles with alternative fuels.
– Provide rebates for the incremental costs associated with alternative fueled vehicles.
– Alternative Fuel Tax Credits – Reduce state and federal fuel taxes.
– Provide tax credits for the installation of alternative fuel refueling sites.
Governments can support the research, development, and demonstration of alternative-fuel technology.
– Direct funding through voluntary agreements with manufacturers or vehicle technology providers.
– Information dissemination and education – This approach may take the form of regular communications, such as websites or newsletters, to inform the public of market and technology developments and to indicate how to apply for available subsidies.
Is There another Missing Piece to the Government Policy Puzzle?
Even if government and policy incentives create favorable conditions to deploy autogas or other alternative fuels, an important step is often omitted. The right alternative fuel must be chosen for the vehicle application. Vehicle operating profiles, mission requirements, and fuel usage are among the many factors to consider. For example, if the operating profile of a vehicle dictates that it must drive 250 miles per day with a heavy load, an electric vehicle will not make as much sense as an autogas vehicle. However, if the vehicle is used on a short fixed route with much starting and stopping, the electric vehicle may prove superior. Popular is the ever-growing Zipcar car sharing and car club service market, whereby the choice of hybrid or a hydrogen cell battery vehicle may be good for that industry.
Unless the fleet operator, whether a public or private entity, properly evaluates the best energy source for the vehicle operating profile, inaccurate choices will be made.
Do government policy and incentives work? Yes, if they are properly crafted and the fleet operator evaluates all options that meet their application requirements.
About the Author: Jessie Johnson, responsible for Blossman’s sales and business development, has over 42 years of experience in the propane industry. Prior to joining Blossman in 1982, Jessie held branch manager positions with a major national propane marketer. He attended the University of Southern Mississippi, and is a Vietnam veteran. He is an active participant in state associations of propane gas dealers.