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"We need political commitment for CNG/LNG to succeed." Interview with ERDGAS

Michael Schaarschmidt, ERDGAS, discusses the need for a bigger political commitment by Europe to boost compressed and liquefied natural gas transport, the difference between both types of fuels, and other challenges ahead.



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Michael Schaarschmidt, Head of Product Management at ERDGAS, has an MBA in European Management. He previously worked as a consultant in Southern Germany, Switzerland and China for various industries including aerospace and automotive. 

*You can watch part of the interview here

Q. How would you assess the current situation of CNG and LNG fuelling in Europe?

A. We have very different situations in each European country. Unfortunately, we have to recognise the fact there is a reduced population of natural gas vehicles (NGVs) and a stagnating market. In Italy you can find the biggest number of NGVs, while in countries like France there is almost nothing. Germany has a strong CNG network.

Countries like Germany, Austria and Switzerland, which 20 years ago started to develop the market to compensate turnover loses in the heating market with the fuel market, have now reduced their efforts. Sadly, that initial investment has not followed through in some cases. I would highlight the Czech Republic and the Netherlands as two countries that have made good, long-term steps in the last years regarding NGV population and refuelling stations.

What kind of measures need to be taken in order to improve market conditions and make natural gas more business-friendly?

As seen in the countries that I previously mentioned, it is necessary to extend the investment cycles. You can´t promote or fund a technology for a couple of years and expect people to make serious investments.  Without long-term commitments it is hard.

At the end of the day, political commitment is necessary to push natural gas as an alternative fuel. Brussels (the European political bodies) gave a good base at the end of 2014, establishing that each European country needed a minimum level of infrastructure for alternative fuels. All countries needed to come up with a strategy plan by November 2016. Germany, for example, has already surpassed that minimum requirement with its 900 CNG fuelling stations, but the country has no LNG infrastructure. I think politicians have to be aware of the environmental benefits of natural gas as a fuel.

They have to come up with certain legislation that makes natural gas transport attractive, not only for OEMs to develop their product – VW, Fiat, Audi, Skoda already have NGVs – but they also have to promote it. We need demand. With demand we then build the infrastructure that is currently quite cost-intensive.

CNG and LNG have different characteristics and are suited to various kinds of vehicles. What benefits and disadvantages does compressed natural gas have over liquefied?

The whole CNG value chain is a less cost intensive than with LNG, which needs to be liquefied in other countries. For example, they have to bring it by ship from Qatar to European harbours, and then take it by truck to refuelling stations across the continent. CNG is transported via pipeline and, therefore, it is a little cheaper. At the end is one commodity but the value chains are different. For most kind of vehicles, such as public transport buses, garbage collection vehicles, or passenger vehicles, CNG is the right solution. The advantage of LNG is the high energy density which you need for long travelling distances, typically made by trucks.

What do you consider to be the biggest challenges facing natural gas transport in Europe?

Crude oil and petroleum-based fuel prices are an obvious challenge, as seen in the last two years. Each fuelling alternative that is going to succeed needs to be competitive. In 2012, when we had high diesel prices, natural gas became very competitive.

Another challenge is the political commitment regarding incentives, as we have already mentioned. OEMs need legislations that will make it attractive not only to manufacture NGVs, but also to promote them. OEMs have to meet new emission requirements for 2021 with cars only allowed to emit 95 grams of CO2 per kilometre, up from the current 135 grams. All electric-battery vehicles officially only have 0 grams of CO2, and that is what counts for many regulators. But they are not taking into consideration the whole value chain for the production of electricity, where you can see there is no reduction of CO2 compared to NGVs.

Finally, we also need to reach customers. The key benefits of NGVs – a cost-efficient, environmentally friendly car – are not enough to lure customers. When choosing a vehicle, people focus less about the environment, and more about the brand and function of the car. That is why the private customers are hard to reach.  

You talked about the difficulties of reaching out to private customers. Who should the target group for NGVs be?

The target market for NGVs should be those customers which need the vehicles for their daily business operations – where they have to earn money. People who are very price-sensitive, such as taxi fleets. They need small vehicles and they are price-sensitive. They also have a higher annual mileage. Large vehicles used for professional purposes is another key group: buses, vans, garbage colleting vehicles… For them natural gas is a very interesting option. This fuelling segment does not have so much competition as other sectors, where fuel cells and electric are much more present. Without incentives these other alternative fuels will never be competitive in the near future.

Some people say the future will not be dominated by one type of fuel, but it will be a mixture of different kinds: petrol, electric, hydrogen, natural gas… What kind of role will CNG/LNG play in that future map of fuels?

Each fuel has its own individual benefits: electric and fuel-cell vehicles for urban areas; CNG is also for urban areas, but can serve for long distances – such as from North to South of Europe, where there is a good infrastructure; LNG will remain a fuel for heavy duty trucks, as well as coaches that are travelling long distances, but not for public transport, where CNG will continue to be a better solution. 

Interview by Oscar Smith Diamante 

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