NGVs could have 20% of Asian market by 2030
Interfax spoke to Lee Giok Seng, executive director of the Asia Pacific Natural Gas Vehicle Association (ANGVA), at the World Gas Conference in Paris. ANGVA’s aim is to promote gas as a transport fuel in the Asia Pacific region.
Interfax: How do you see the market for NGVs developing? What are the main market drivers for NGVs in the Asia region
Lee Giok Seng: The market will continue to grow gradually – not in exciting leaps, but in steps. The main driver of growth in the sector is price, and the low oil price makes gasoline and diesel cheap. This makes it difficult for gas to compete in the sector and will make progress slow.
The second key driver is the availability of gas, and particularly infrastructure. If a country has an existing pipeline network, it is much easier to adopt NGVs. There is a lack of pipeline infrastructure in many Asian countries, which makes it difficult [for them] to adopt NGVs.
The third driver is environmental issues, which are enacted through government policy. Typically, Asian governments have made commitments to increasing the use of alternative fuels and reducing emissions in cities, but they struggle to implement them with budgets that are often limited.
Interfax: Are countries that produce gas expected to lead the way in using NGVS?
LGS: Domestic gas production can have a big impact, but this is not always the case. The availability of infrastructure is often key, and as most of Asia has little need of gas for heating it lacks this supply network.
Domestic gas is primarily used for power generation because it requires low capital costs for a single large pipeline leading to a power plant, whereas NGV fuelling infrastructure requires a lot of pipelines delivering gas over a wide area. After power generation gas is prioritised for use in industry, and if there is some left it may be used for transport.
In countries where there has been a big uptake of NGVs – such as Pakistan – investment in fuelling stations has been slow, leading to long queues at filling stations. This damages the consumer experience of the fuel, but is an example of the difficulty of balancing the number of vehicles versus fuelling stations.
The transport sector uses 30-40% of a country’s final energy supply, which is typically predominantly oil. If countries can reduce their reliance on imported fuels by using domestic gas this will help their energy security, which is an added incentive.
However, gas is becoming easier to transport around the world and more countries in Asia are importing LNG, giving them access to gas supplies. Domestic production provides an advantage, but is not as significant as it has been in the past.
Interfax: Can NGVs compete against gasoline and diesel fuels in Asia given the diverse range of countries and geographies?
LGS: I don’t see gas overtaking oil in Asia. The existing infrastructure and ease of delivering petrol and diesel makes it difficult to replace in much of the region. However, in cities there is great potential for NGVs as less expansive refuelling infrastructure is required.
I think NGVs could make up 20% of market share in Asia by 2030. NGVs still make up a relatively small percentage of the vehicle fleet in many countries, but we will see an incremental uptake.
Governments are still important for promoting gas as a transport fuel, and state companies providing the fuel can sell it at a loss. This needs to change if gas is to be adopted on a wide scale. We are beginning to see the removal of oil subsidies in countries such as Indonesia and Malaysia, which is causing the cost of gasoline and diesel to rise. This could benefit gas as a transport fuel if the price difference is significant.
Interfax: How will NGVs compete with other emerging technologies, such as electric vehicles (EVs)?
LGS: EVs are easier to deliver at lower numbers – if you have 10,000 vehicles and around 1,000 charging stations the existing grid can handle it, but once this scales up to 100,000-200,000 vehicles you are putting a much larger stress on the power grid. When you consider this, there is a much larger infrastructure cost associated with EVs.
This will be reflected in the cost of electricity, which will have to rise. Government incentives for EVs that make them attractive at the moment are also going to stop once more people start buying them as there is a limit to how much they can afford.
The different fuels should complement each other and learn from each other’s experiences. The capacity for new fuels in the transport sector is large and different technologies will fit different roles.