Government assistance to alternative transport fuels

If, like me, you have often read about how the incoming excise on alternative fuels is going to make it difficult for the fledgling industry to compete against fossil fuel the following article may provide some clarity. It is a few years old so if anyone has a current version please let me know.

Government Assistance to Alternative Transport Fuels.pdf

Commonwealth of Australia 2006: Government Assistance to Alternative Transport Fuels (PDF)

In basic terms LPG, CNG, LNG, ethanol and biodiesel are excise free until 30 Jun 2011. From then on excise gets applied at different rates through to 2015 depending on the type of fuel. Click the image above to read more.

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Reading: Fuel for thought

While digging around the Commonwealth Scientific and Industrial Research Organisation (CSIRO) web site I discovered Fuel for thought, a publication by the Future Fuels Forum 2007. This June 2008 publication informs us how the Future Fuels Forum thinks transport fuels will pan out in our future with modelling from now to 2050.  It is an interesting document and I suggest you read it if you are at all interested in the future of transport fuels in Australia. Click the cover page below to download the PDF (1.5Mb).

challenges and opportunities (PDF)

CSIRO 2008: Fuel for thought - The future of transport fuels: challenges and opportunities (PDF)

Apart from being relatively easy to read and informative for those of us without a scientific or economic background it provides great insight into the conservative information upon which our governments are making decisions that impact your future and mine. It isn’t all conservative mind you. The modelling for a continuing rise in demand for oil and a sharp decline in supply shows we could pay as much as $8 per litre for petrol in the not too distant future and the authors do stress the urgency with which alternatives for oil must be found.

While the document was written before the global financial crisis really started to bite the bulk of it remains relevant. If you do read it I’d like to know what you think so please leave a comment.

Advanced Engine Components is doing good business in China

Following on from its December 2008 deal with Tata Motors in India (previous post), Perth based Advanced Engine Components (AEC) has recently announced a $1.2m order for their Natural Gas Vehicle System (NGVS) kits and associated engine components from Aussen Engine (Aussen) in China. Aussen is building compressed natural gas (CNG) engines for buses and trucks. The buses are for Wuhan Public Transport. Wuhan, with a population over 9 million, is the capital of Hubei Province. The trucks are for the Guizhou Province.

Separate negotiations for delivery of a further $600,000 worth of NGVS kits to Wuxi Xilian Diesel Engine Manufacturing (Xilian)  is in final stages of negotiation with delivery expected by 30 April 2009. The CNG engines, to be built by Xilian, are for the Nanjing Xincheng Bus Company. Nanjing is the capital of Jiangsu Province. Nanjing Xincheng Bus Company has been running fifty buses delivered in April 2008 that were built by Chongqing Hengtong Bus Company with Xilian AEC CNG engines. Xilian has also taken delivery of twenty two ACE NGVS kits for liquefied natural gas (LNG) bus engines for Haikou Public Transport Company. Haikou is the capital of Hainan Province.

Xiamen Kinglong Bus Company in Shaoxing has purchased and taken delivery of ten Weichai WT 615 LNG engines from AEC. The buses are for Hangzhou Public Transportation Company. The order follows extensive trials in a competitive tender situation.

Guiyang Public Traffic Company has purchased forty buses from Huanghai Bus Company in Dandong. The buses have FAW DDE 230 hp AEC LNG engines. The purchase follows eight months of competitive trials against other LNG engines.

At 31 December 2008 there were approximately 400 natural gas vehicles, using the ACE NGVS, in active service throughout China. The above sales are certain to at least double that number.

Source: Advance Engine Components (PDF)

Volvo truck engines to get Clean Air Power

UK based Clean Air Power has announced an agreement with Volvo to development and incorporate their Dual-Fuel™ technology into Volvo truck engines. Dual-Fuel™ is a patented system which enables heavy duty diesel engines to run on up to 90 percent natural gas with a small amount of diesel fuel providing the ignition source. The benefits are lower fuel costs and lower emission.

The intention of the agreement is that the resulting products will be marketed and supported by Volvo Trucks. The products will have the Clean Air Power technology fully interfaced with the Volvo engine management system and will be applied to Volvo’s D13 engine. Clean Air Power and Volvo engineers will work together to develop the products and the agreement provides for Clean Air Power to receive revenue from Volvo during the project.

Clean Air Power has over 1,600 Dual-Fuel™ installations operating in some very demanding environments around the world. Beginning in early 2007 Clean Air Power sold a minimum of 84 Dual-Fuel™ kits to Western Australian trucking company Mitchel Corp Australia Pty Ltd ( previous post). Mitchell’s fleet of LNG and diesel powered road trains (multi-trailer vehicles running at over 100 tonne gross vehicle weight) transport a range of goods on long haul journeys in and out of Perth, Geraldton and Kalgoorlie.

Tasmanian consortium to provide LNG for heavy transport

LNG Refuellers Pty Ltd, a consortium comprising seven Tasmanian transport operators, has announced a deal with industrial gas company BOC, for the supply of Liquid Natural Gas (LNG) fuel for over 120 natural gas powered heavy vehicles. LNG Refuellers will own and operate a network of six commercial LNG refuelling stations across Tasmania.

BOC will design and construct the entire supply chain infrastructure for the group, including the LNG road tankers and the six refuelling stations. The company will also build and operate a new Micro-LNG plant near Westbury, provided it obtains all the necessary planning and development approvals. It says the plant will able to produce around 50 tonnes of the gas every day which is the equivalent of 70,000L of diesel.

The seven Tasmanian transport operators in the LNG Refuellers Pty Ltd consortium are:

  • Chas Kelly Transport
  • KJ Padgett Pty Ltd
  • Aprin Transport
  • Les Walkden Enterprises
  • Exeter Sawmill
  • Country Roadways Pty Ltd
  • Kevin Morgan Pty Ltd

Kenworth and Westport to bring LNG trucks to Australia

Westport Innovations and PACCAR Australia, the manufacturers of Kenworth trucks, have announced that the companies will develop and commercialise liquid natural gas (LNG) Kenworth trucks for the Australian market. Kenworth plan to begin factory-installed production in mid-2009 beginning with the T908, K108 and T408SAR truck chassis and roll out across additional models into the future. The LNG trucks, featuring the Westport high pressure direct injection (HPDI) LNG engine and fuel system, will be produced at the Kenworth Bayswater plant outside Melbourne.

Kenworth T908 - Tim O'Connor

Kenworth T908 - Tim O'Connor

Westport’s engine and LNG fuel system for heavy-duty trucks allows trucking fleets to move to lower-cost, domestically available natural gas and/or biogas while offering significant greenhouse gas reductions compared with similar diesel engines. Based on the Cummins ISX diesel engine with cooled EGR, Westport’s direct-injection LNG version of the engine offers the same horsepower, torque, and efficiency as the base diesel engine it is replacing, with ratings in the Australian market of up to 1850 lb-ft torque and 580 peak horsepower.

The Westport LNG fuel system comprises LNG fuel tanks, proprietary Westport fuel injectors, cryogenic fuel pumps and associated electronic components to facilitate robust performance and reliable operation. The Westport engine is fuelled with vaporised LNG – a safe, cost effective, low carbon, and low emissions fuel. LNG fuel tanks can be configured to suit customer range requirements. The Westport LNG system for the Cummins ISX is certified to 2008 Australian Design Rules (ADR 80/02 and ADR 30/01).

The Australian Government has been supportive of the introduction of Westport’s LNG fuel system into the Australian market with demonstration funding. Under the funding arrangement Mitchell Corp., Sands Fridge Lines and Murray Goulburn Cooperative have been early adopters of Westport’s technology.

Victorian Government committee prefers natural gas to biofuels

On 07 Feb 08 the Victorian Parliament’s Economic Development and Infrastructure Committee tabled its final report on the Inquiry into Mandatory Ethanol and Biofuels Targets in Victoria. The Committee’s 27 recommendations below are what it considers are appropriate for the development of the biofuels and alternative fuels industries in Victoria.

The key recommendation of the Committee is that the Victorian Government not introduce a mandatory target for biofuels use at this time.

The Hon. Christine Campbell, Chair of the Committee said:

While biofuels are viewed by many as a solution to declining petroleum fuel supplies, at this stage the weight of evidence indicates there is potential for the costs associated with the introduction of a biofuels mandate to exceed the overall benefits.

In particular, issues brought to the Committee’s attention highlighted limited feedstock availability and the potential for increased biofuels production to place upwards pressure on feedstock and food prices.While not supportive of a biofuels mandate, the Committee did emphasise the potential for smaller and regionally located biodiesel plants to encourage investment in local communities.

A number of recommendations were made to encourage regional development through biofuels, including that the Victorian Government’s Biofuels Infrastructure Program continue to prioritise biodiesel initiatives in regional areas.

The Committee believes that local biodiesel enterprises offer an exciting means to encourage regional development in Victoria, particularly when feedstocks are sourced locally and consumers are local businesses.

In recognition of the role that government has in promoting biofuels, the Committee recommended that the Victorian Government require transport providers to use biodiesel fuel when contracts become available for renewal or tender. The Committee also recommended that the Government initiate a pilot project with a public or privately owned public transport provider to use B5.

The Committee’s report also noted the enormous potential for fuels derived from natural gas – such as CNG, LNG and LPG – to significantly contribute to Australia’s future fuel mix.

Victoria has access to considerable reserves of natural gas that could be developed for use in transport.

The Committee recommends that the Victorian Government examine the merits of expanding the CNG industry in Victoria.

Recommendation 1:
Given increasing interest in vehicle air emissions reductions in association with biofuels use, that EPA Victoria also implement procedures to ensure improved compliance of existing vehicles with current air emissions requirements.

Recommendation 2:
That the Victorian Government work with other state governments, in particular NSW and Queensland, to advocate to the Commonwealth Government for the continued development of harmonised and consistent biofuels standards.

Recommendation 3:
That the Victorian Government request that the Commonwealth Government introduce biodiesel blend standards for both B5 and B20 blends.

Recommendation 4:
That the Victorian Government request that the Commonwealth Government create a biodiesel labelling standard.

Recommendation 5:
That the Victorian Government advocates that the Commonwealth Government increase resources and personnel allocated to monitoring biodiesel fuels to ensure that all suppliers provide biodiesel to the market that meets the Australian standard.

Recommendation 6:
That the Victorian Government initiate a pilot project with a public or privately owned public transport provider to use B5.

Recommendation 7:
That the Victorian Government require transport providers to use biodiesel blended fuel when contracts become available for renewal or tender.

Recommendation 8:
That the Victorian Government not establish mandatory targets for biofuels at this time.

Recommendation 9:
That the Victorian Government conduct a formal review of the merits of a mandatory biofuels target by 2013.

Recommendation 10:
That the Victorian Government continue to support the establishment of a national emissions trading scheme and request that a national greenhouse gas emissions target be established. The trading scheme and target should apply to transport applications.

Recommendation 11:
That the Victorian Government work with industry to develop a comprehensive GHG emissions auditing process, with a particular focus on emissions associated with transport applications.

Recommendation 12:
That the Victorian Government continue to facilitate the development of a renewable fuels industry, with the key focus being the reduction of greenhouse gas emissions.

Recommendation 13:
That the Victorian Government ensure that biofuels manufactured and/or sold in Victoria are obtained from environmentally sustainable sources.

Recommendation 14:
That the Victorian Government promote the benefits to regional Victoria of investment in biodiesel plants, particularly where the majority of raw materials are sourced locally and key consumers are local businesses.

Recommendation 15:
That the Victorian Government find mechanisms to encourage local councils to support local biofuel-related initiatives.

Recommendation 16:
That the Victorian Government place on the agenda for a future regional councils meeting the issue of support for the biodiesel industry. Consideration of support for the biofuels industry should consider uniform regulation across government and councils to provide information about, and streamline processes for, the establishment of biodiesel facilities.

Recommendation 17:
That the Biofuels Infrastructure Grants (BIG) program continues to prioritise biodiesel initiatives in regional areas.

Recommendation 18:
That the BIG program be independently evaluated and extended if the evaluation indicates proven economic benefits to regional areas.

Recommendation 19:
That cost-benefit analyses regarding the expansion of a biofuels industry in Victoria should be conducted through an independent and transparent process that examines:

  • production, infrastructure and distribution costs;
  • agricultural requirements, including land and water usage;
  • feedstock prices;
  • government support;
  • energy security;
  • life-cycle greenhouse gas emissions;
  • fleet transformation; and
  • life-cycle air pollutants.

Recommendation 20:
That the Victorian Government, in consultation with other state governments and the Commonwealth Government, investigate the feasibility of requiring all vehicles sold in Australia to comprise technology to enable use of a range of fuels, including higher blends of biofuels.

Recommendation 21:
That the Victorian Government encourage major oil companies to construct shared biodiesel blending facilities at the Melbourne terminal.

Recommendation 22:
That independently, peer-reviewed research be conducted at regular intervals to provide updated data on the life-cycle greenhouse gas emissions and life-cycle air pollutants produced from the use of biofuels in transport applications.

Recommendation 23:
That through representation on the relevant ministerial council the Victorian Government seek to place on the agenda for consideration the development of a nationally coordinated research program to examine feedstock and biodiesel production technologies for application in the Australian biodiesel industry.

Recommendation 24:
That the Victorian Government request the Commonwealth Government to review and assess plastics-to-diesel fuel with a view to including this fuel under the definition of “cleaner fuels” in the Energy Grants (Cleaner Fuels) Scheme Act 2004 (Cth).

Recommendation 25:
That the Victorian Government request the Commonwealth Government review and assess plastics-to-diesel fuel with a view to introducing a 50 per cent reduction to standard fuel excise rates applied to plastics-to-diesel fuel from 1 July 2011, in line with excise rates to be introduced for other alternative fuels.

Recommendation 26:
That the Victorian Government conduct an extensive cost-benefit analysis of the merits of an expanded CNG industry in Victoria, with particular attention to infrastructure requirements and initiatives to increase market demand.

Recommendation 27:
That the Victorian Government conduct a public transport pilot program with CNG.

Source: EDIC Biofuels Report 2008 (PDF)