By on October 3, 2012

“We do not need incentives for natural gas technology to drive adoption,” Bill Larkin, CFO of Westport Innovations, a Vancouver-based developer of technology that allows truck and bus engines to run on natural gas, told Reuters in an interview:

 “It actually hurts the investment in this technology because the U.S. government has been dangling this carrot … and so investments are delayed.”

While billions of tax payer money are spent on electrification programs with dubious prospects (and a few certain duds,) the U.S. sits on a mountain of natural gas. Prices of natural gas are coming off decade lows as production soars from U.S. shale fields.

Larkin is glad that the U.S. Senate’s rejected proposed tax incentives for long-haul trucks and commercial vehicles to switch to CNG. At about $1.33 per gallon, the cost of CNG is around half of gasoline, more than enough of an incentive to make the relatively low-tech switch. Natural gas produces lower emissions of nitrogen oxides, particulate matter and greenhouse gases than gasoline or diesel.

 

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34 Comments on “CNG Developer: Incentives? We Don’t Need No Stinking Incentives...”


  • avatar
    Landcrusher

    Surprise, I agree with Mr Larkin. :)

    If Congress needs to help a tech, it should concentrate on removing externalities, not adding them by throwing “investment” of public funds at them.

  • avatar
    racer-esq.

    Road destroying trucks and busses are the last vehicles that should be evading gas taxes.

    • 0 avatar
      nikita

      What? CNG dispensed at fleet fueling stations is fully road taxed. Even then its about half the price of gasoline or diesel here in California.

      If our state didnt divert the Commercial weight tag fees to non-highway uses, trucks would be paying for road repairs.

      • 0 avatar
        racer-esq.

        Obviously evasion is super easy. Almost every building has natural gas and at home pumps are cheap (I belive Honda sells one).

        I looked into a natural gas kit for my car, but it looks like it would be $2,200 for just the parts, and from e-bay. That plus blowing my warranty is not quite worth it yet.

      • 0 avatar
        nikita

        It takes longer than overnight to fill a small passenger car tank from the home compressor. We are on our fourth CNG car in our family and we tried that route and gave up. Fully utility taxed gas and electricity to compress it means no real savings. The home pump is actually expensive, and has a limited lifespan as well.

        Fleet operators dont have the time to screw around to evade road taxes when they are already saving half the cost of diesel anyway.

  • avatar
    dts187

    And cue the “fracking is the root of all evil” comments!

  • avatar
    MarkP

    Sorry, but the logic (or lack of it) fails to convince me. Why would increasing the number of vehicles that use natural gas as fuel be harmful to natural gas suppliers? Discouraging investment in what? Natural gas vehicles? That’s simply absurd. Discouraging investment in infrastructure? Again, absurd. If you have more vehicles using natural gas, you will need more fueling stations and the business will grow. Something about this opposition doesn’t smell right.

    I don’t necessarily support tax incentives, but there ought to be a sound reason for opposing or supporting them.

    • 0 avatar
      gslippy

      His point is that as long as somebody else (taxpayers) is/are goosing development through incentives, private investment will always lag and hence deployment will lag. At least that’s his premise.

    • 0 avatar
      EEGeek

      Th opposition to the tax incentives in this story is from a CNG conversion supplier, not a natural gas supplier. The opposition is that the promise of a future tax incentive keeps potential customers (trucking and bus companies) from adopting the conversion NOW. Larkin’s position makes perfect sense to me.

      • 0 avatar
        MarkP

        Oh, so it’s the promise of an incentive, not the incentive itself. He really ought to be lobbying for the incentives, since it will help his business. Oh, wait … he’s actually in Vancouver, isn’t he? Maybe he ought to be telling the Canadian government what to do rather than the US government.

      • 0 avatar
        dash riprock

        simply he is saying that people will not buy today if their is a chance it will be cheaper tomorrow.

        Mark, yes it is a Canadian company, but it does a lot of business in the US so he has a interest in what goes on down there. They have a joint venture with Cummins to convert deisel engines into natural gas engines. Very good technology, a bad stock purchase from personal experience

    • 0 avatar
      Pch101

      “I don’t necessarily support tax incentives, but there ought to be a sound reason for opposing or supporting them.”

      Westport is a publicly traded company that has been in business for awhile. Two issues:

      -Incentives may encourage others to enter the market so that they can take advantage of them. He doesn’t want additional competition.

      -The company’s activities are centered around converting conventional engines into running on natural gas. The last thing that he wants to say to his investors is that there isn’t any demand for his product, or that a lack of incentives could harm future revenues (i.e. their share price.)

      The comments by the CEO, whether or not they are correct, were rather self-serving. If he had an early-stage startup, then he’d almost surely be saying the exact opposite.

  • avatar
    drewtam

    Looks like heavy equipment manufacturers will beat automotive to the production punch.

    http://www.hhpsummit.com/naturalgas.html

    http://www.heraldonline.com/2012/10/03/4309485/caterpillar-goes-all-in-on-natural.html

  • avatar
    danio3834

    Yes! CNG and LPG are terribly underutilized and are a perfect alternative fuel.

    Costs to convert a gasoline engine are minimal and many manufactureres offer systems right from the factory.

    Notably Crown Vics and Town Cars that were built for fleet use were very commonly equipped to run on gasoline/CNG or or gasoline/LPG. This enables fleets to use a lower cost fuel and install their own “charging stations”.

    Chrysler will be offering a Hemi powered CNG capable 2500 Ram this year as well.

    With the cost and downfalls associated with EVs, I wonder why more people aren’t exploring multi/flexible fuel vehicles.

    I suppose the most practical solutions just aren’t as romantic.

    • 0 avatar
      redmondjp

      CNG/LNG vehicles (assuming that they are not dual-fuel gasoline) have the same range anxiety (or should I say ‘refill anxiety’) issue as EVs. Sure, their typical range is a bit higher than most EVs, but you have to get back to a filling station before the tank runs dry. Try taking one on a trip, and then try to find refueling stations that are open when and where you need them to be.

      In my urban area, there is only one retail place (U-Haul) that even refills propane tanks that I am aware of. There are dozens of public EV recharging stations within this same general area.

      So without a refueling infrastructure in place, how are we going to get this ball rolling? Government incentives, perhaps? Maybe a personal tax break for the installation of a home refilling station (but what will your insurance company say about that)? Or business tax breaks for the same?

      • 0 avatar
        Athos Nobile

        @red

        Down here in sunny Awstraya, it is possible to travel between mayor cities on LPG alone. The biggest distances between refueling stations were factored in by Holden and Ford when they were developing their dedicated LPG cars.

        A car with a dedicated LPG or CNG system would easily run for 400 kms before having to be refueled, so I don’t see how the EV and CNG/LPG range anxieties correlate here.

        @danio

        The costs for converting a petrol car to CNG or LPG are around the $2K-4K range, depending on the technology used. Hardly insignificant. And… you REALLY want to use vapor injection in either CNG or LPG or go to LPi for LPG, which are in the high end of the cost spectrum. Also, OEM factory fitted systems have to deal with engine durability/emissions, crash test and other certification testing.

        On heavy trucks and specially in power generation a conversion to CNG would really shine. Using a normal diesel engine, you would be looking at replacing between 60-70% of the diesel fuel with gas (you still need some pilot diesel injection to start combustion), which is still a big saving. And that is before factoring in the CO2 emissions reductions so dear to some people.

      • 0 avatar
        danio3834

        All of the CNG/LPG vehicles I’ve seen or worked on we’re dual fuel with gasoline. Most of them cold start on gasoline and transition to the other fuel.

        That’s really what I like about them is that it gives you options. Around here, it isn’t too difficuly to find a CNG refueling station, but still nowhere near as easy as gasoline/diesel.

        CNG and LPG really reduce wear on the engine as well. A shop I worked at years ago maintained a fleet of delivery vans. I remember a CNG Ram Van with 1.2 million km on the original 318. It was kinda piston slappy, but ran good. We changed the oil on them every 8-10,000km on them and it still came out gold.

  • avatar
    Da Coyote

    Yup, the govt dodos have such a superb record of technology investment.

    Let us all remember why these loons are in government and not on some engineering staff.

    • 0 avatar
      icemilkcoffee

      Yet you are on the Internet and using the World Wide Web. Both government inventions.

      • 0 avatar
        gslippy

        You could say Xerox invented Windows, too, but everyone knows that Microsoft made it successful.

        The nascent Internet/WWW may have served an initial government need (as did digital computing for artillery shell targeting), but private industry made these things successful.

      • 0 avatar
        Landcrusher

        False. Please cite your source, and don’t say Al Gore. I helped build more of the Internet than Al Gore did.

      • 0 avatar
        dts187

        @Landcrusher

        DARPA is part of the DoD and evolved packet switched networks and created ARPANET which is recognized as the first WAN with packet switching technology. This laid the foundation for the internet we all know and love.

  • avatar
    el scotto

    So, like the US Government is buying and selling CNG and other alternative fuel vehicles, eh? http://www.gsa.gov/portal/content/104211. The GSA reports and associated PDF’s are very dull to read. I prefer mine gray, nuclear powered, and about 90 Thousand tons.

  • avatar
    icemilkcoffee

    Sure. This guy is a CNG converter. Of course he doesn’t want any government sponsored CNG initiative. He doesn’t need to OEM’s to be competing with him.

  • avatar
    corntrollio

    CNG adoption would help reduce the dependence on foreign oil, since we produce so much natural gas here.

    These days, taxis in Delhi run on CNG instead of diesel because the government required it. Seems to have made a huge difference in the air quality, but that’s probably more because the taxis now have a more modern engine vs. the ancient belching Ambassador diesel engines they had before.

    Sounds like this bloke doesn’t want any competition, doesn’t it?

  • avatar
    -Cole-

    It’s the oil companies that are keeping us down!! Big Oil

  • avatar
    Geekcarlover

    I think the problem is the Govt’s maybe/maybe not approach to incentives. There are many willing to invest in expanding this technology, but don’t want to use their own money if the government is going to throw money at them or their competitors. So everyone sits and waits.

  • avatar
    jacob_coulter

    I’m against government subsidies and corporate welfare, even if it’s something I believe in.

    but I do think there are “pro-market” policies that can encourage CNG development without having taxpayer subsidies. An example: How about giving generous CAFE credits to auto manufacturers that produce CNG vehicles from the factory to get the ball rolling?

    Also, I do see energy independence as a national security issue. CNG is the closest thing to a stop gap solution I’ve seen. It’s also MUCH cleaner and would be a boon to America’s economy.

    • 0 avatar
      redmondjp

      I’m with you, but CNG vehicles need a belt & suspenders approach in order to be successful. CNG-powered cars are useless without the refueling infrastructure in place. Chicken? Egg?

      The infrastructure issue is the more complicated problem to solve IMO (and it’s not because of technical issues, just to be clear).

  • avatar
    Sooke

    I believe CNG tanks have to be replaced every ten years, for safety reasons.

    • 0 avatar
      highdesertcat

      When I was stationed with the US military in Germany during the seventies, the CNG tank in my Opel Ambassador had to be replaced every five years, as opposed to the LPG tanks in cars and trucks which had to be replaced every ten years (for safety reasons).

      Actually, the cost was reasonable (380 DM for CNG, less for LPG) and the annual inspections required in Europe were part of the process ensuring that CNG and LPG tanks were replaced on a timely basis.

      Often car bodies were condemned during inspections for rust while the tanks still had a few years of life left in them. Those tanks could actually be moved, and often were moved, to other vehicles since they were all date-stamped.

  • avatar
    Kabayo

    If you want to muck anything up, let the government tax it, regulate it, or subsidize it.

    Getting the government completely out of the energy sector would be the best way to eliminate shortages, and assure that the smartest and most efficient technologies come to the fore, at the lowest cost.

    Ending the gulf drilling ban is Job One

    The Keystone Pipeline is next

    Eliminating ethanol mandates, eliminating solar and wind subsidies, opening up ANWAR, and then an emergency urgent leasing program on federal and offshore areas should be next.

    Continuing to import oil from countries that have led us to horrible wars, that have added trillions to the national debt, killed and maimed thousands of Americans and unknown numbers of innocent foreigners, as well as provoked numerous attacks including 9/11, and created immeasurable hatred of the USA, is just plain crazy.

    It doesn’t have to be this way.


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