Modelling the global prospects and impacts of heavy duty liquefied natural gas vehicles in computable general equilibrium

Abstract

Natural gas vehicles have the prospects of making substantial contributions to transportation needs. The adoption of natural gas vehicles could lead to impacts on energy and environmental systems. An analysis of the main factors and trends that affect adoption of natural gas vehicles such as vehicle costs, infrastructure costs, and fuel economics was performed. The fuel cost analysis showed that assuming production and distribution at scale, liquefied natural gas (LNG) can be competitive as a diesel fuel substitute for heavy duty vehicles in the US, and also in EU and China. A methodology of incorporating heavy duty natural gas vehicles into a computable general equilibrium (CGE) economic modelling was developed to investigate the potential adoption and impacts. Modelling variables such as vehicle and infrastructure costs were tested and several scenarios were applied to examine the general equilibrium impacts on natural gas vehicle adoption and the general equilibrium impacts of resulting natural gas vehicle adoption. Climate policy scenarios were also developed and tested. In the base case scenario, results showed significant adoption of LNG trucks (Class 8) in the US, with 10% penetration of heavy duty trucks by 2020 and up to 100% by 2040. In China and the EU, adoption was projected to be slower due to higher natural gas prices. In the US, introduction of LNG trucks resulted in moderately higher natural gas prices, slightly lower oil prices, and a small reduction in total GHG emissions, relative to scenarios without LNG truck availability. The development of natural gas fuelled transportation is still in its infancy and CGE modelling offers a tool that can be applied to test a wide range of assumptions of cost development and relative prices.