The Outlook for Natural Gas Vehicles 33 RD A NNUAL C ONFERENCE OF THE A MERICAN A SSOCIATION OF B LACKS IN E NERGY May 20, 2010 Columbus, OH The Outlook for Natural Gas Vehicles 33 RD A NNUAL C ONFERENCE OF THE A MERICAN A SSOCIATION OF B LACKS IN E NERGY May 20, 2010 Columbus, OH

Growth in World NGV Market 2003: 2.8 million 2007: 7 million Today: 11.1 million

Notable NGV Growth Country NGVs 2003 NGVs 2010Stations '03Stations ‘10 Pakistan350,0002,250, ,000 Argentina1,000,0001,800, ,850 Iran*1,735,000*1,080 Brazil550,0001,614, ,770 India137,000700, Italy400,000588, China69,300500, ,340 Colombia * 300,000 * 485 Global Total2,814,43811,110,0006,45516,554

International Vehicle Availability Every major car manufacturer is making natural gas vehicles for some market somewhere: –GM/Opel ­ Chevrolet ­ Ford ­ Mercedes –Volkswagen ­ Fiat ­ Citroen ­ Hyundai –Renault ­ Peugeot ­ Tata ­ Mitsubishi –Toyota ­ Honda ­ Nissan ­ Isuzu – Skoda ­ Volvo ­ Geely ­ Lifan GM alone makes 9 natural gas models

U.S. Overview Number of vehicles: 120,000 (out of 220 million) Total vehicle count has been growing -- but slowly Vehicle count masks volume growth since US focus is on urban fleets -- especially, trucks and buses 30 percent volume growth in 2007; 25 percent growth in 2008

Achievable NGV Gas Usage and Vehicle Growth Trucks (Thousands)

Energy Use in On-Road Transportation Total energy usage: quads or Tcf (2008): –Light-duty: –Heavy-duty freight:5.15 –Commercial light trucks: 0.62 –Buses:0.27 About 25-30% of total is diesel: –The majority of MD/HD use is diesel 6.04 Tcf

Target Markets Heavy-duty freight trucks: –Water ports and rail –“Less-than-Load” (e.g., Yellow-Roadway, Forward Air, Swift) Transit buses/shuttle buses/school buses Major metro fleet management and public works departments Trash, recycling, cement and other vocational work trucks Medium-duty delivery and commercial service trucks: –Telecom ─ food ─ beverage ─ snack food ─ newspapers –linen/laundry ─ grocery ─ furnishings/appliances ─ office products Taxis and light-duty service vehicles

We Have the Fuel – And It’s Ours Historic barrier to NGV growth: Concern over US gas supply: –Is supply adequate? That concern is now put to rest: –Navigant study –PGC study –EIA projections NGVs have the strongest foreign oil displacement message of all alts fuels

Substantial Air Quality: Urban Pollution NGVs produce less criteria pollutants than gasoline and diesel vehicles (NOx, CO, VOCs, PM) Examples: –First vehicles certified to EPA’s tighter standards: Ultra-low emission Super-ultra low-emission Tier 2/Bin 2 standards – Honda Civic GX rated the “Greenest Car in America” by ACEEE – for seven years in a row (continued)

Substantial Air Quality: Urban Pollution –Majority of light duty NGV models currently available have been certified to the Federal Tier 2/Bin 2 standard: Only Bin 1, which requires zero emissions, is more demanding. –Cummins Westport’s and Emission Solutions’ heavy-duty natural gas engines were the first engines to certify to the full-2010 federal emission Air pollution benefits of NGVs are expected to continue to improve as new automotive technologies become available EPA’s call to tighten ozone standards will make NGVs even more attractive

Substantial Air Quality: GHGs NGVs produce less greenhouse gases: –22% less than diesel vehicles –29% less than gasoline vehicles –These are well-to-wheels numbers developed for CARB: Include methane This is equal or better than some renewable fuels Rebuts “you-are-a-fossil fuel” argument

Biomethane Makes GHG Case Stronger Biomethane (renewable natural gas) can be produced from any organic material: –landfill gas, sewage, animal and crop waste and even energy crops CARB: Biomethane reduces GHG emissions by almost 90 percent Blending a little biomethane with natural gas makes further reduces GHG benefits of NGVs

Only Natural Gas Can Displace Diesel Light-duty consumer vehicles use 500 gallons of gasoline per year (12,000 miles x 25 mpg) Diesel trucks and buses use much more: –e.g., 18-wheeler: 20,000 gallons (120,000 miles x 6 mpg) Trucks and buses use about 25% of on-road fuel: –Equivalent to 4.5 Tcf (continued)

Only Natural Gas Can Displace Diesel Many options for light-duty vehicles: –e.g., natural gas, ethanol, electricity, plug-hybrids Only two available options for diesel trucks and buses: biodiesel and natural gas Biodiesel is limited and has small diesel displacement benefits That leaves natural gas as only option (continued)

Only Natural Gas Can Displace Diesel “Electrifying the auto fleet, using natural gas for the 18- wheelers and the heavy vehicles as a transition -- then we can get off of all those imported liquid fuels that come from foreign oil and foreign products and solve the security and economic problem and put people to work in the process.” -- Al Gore at the National Clean Energy Roundtable, Washington, D.C., 02/23/09

NGVs are a Here-and-Now Technology For the foreseeable future, there is no one, silver- bullet, panacea technology or alternative fuel that is going to replace petroleum. (continued)

NGVs are a Here-and-Now Technology For the foreseeable future, there is no one, silver- bullet, panacea technology or alternative fuel that is going to replace petroleum. We have many options – natural gas, ethanol, methanol, propane, gasoline/diesel hybrids and plug- in hybrids and natural gas hybrids. (continued)

NGVs are a Here-and-Now Technology For the foreseeable future, there is no one, silver- bullet, panacea technology or alternative fuel that is going to replace petroleum. We have many options – natural gas, ethanol, methanol, propane, gasoline/diesel hybrids and plug- in hybrids and natural gas hybrids. But we don’t have choices. We have to use all available technologies and fuels – and NGVs ARE AVAILABLE NOW.

Government Policymakers are (Finally) Recognizing the Value of NGVs

Federal: Natural Gas Caucuses What’s a Congressional Caucus? Dozens of such caucuses are in place: –Tourism -- Pro-life -- Steel --Beef –Rural --Taiwan -- Appalachian -- Bourbon In 2009, for the first time (ever), natural gas caucuses were established in both Houses: –House: 76 members (29 states) –Senate: 14 members (not yet offcial)

Federal: NGV Incentives Legislation The “New Alternative Transportation to Give Americans Solutions” (NAT GAS) Act has been introduced in both Houses of Congress –HR 1835 and S –Would significantly extend/ expand NGV incentives. House: 142 bipartisan co-sponsors Senate: 7 bipartisan support: –Majority Leader Harry Reid is an original sponsor.

California leads the way: –Carl Moyer Program –SCAQMD –LA/LB Ports Program Texas TERP Program Tax and other incentives: –Utah; NY; Oklahoma; Louisiana; others State, Regional and Local Government Support

NGVs always cost more to buy or convert, but … –They cost much less to operate On a life cycle basis, NGV scan save lots of money Money!!!

Refuse Truck GVWR: >26,000 lbs. –Crane Carrier LET, Autocar Xpeditor, Peterbilt LCF 320, ALF – Condor and Mack TerraPro (all with CWI ISL-G engine); Int’l with ESI 7.6L engine) MPG: 2.5 – 3.0 (lots of idle and PTO time) Fuel Use: 35-40gge/day; ,000dge/yr CNG Premium: $50,000 (before tax credits) Fed Tax Credit: $32,000 Remaining premium (assuming no grant): $18,000 Simple Payback: yrs Life-cycle cost savings: $84-100K+! (based on 8-yr life) Just a year payback for tax exempt IF NO TAX CREDIT DISCOUNT is available from dealer

Step Van Sample Applications ( Bakery/Snack Food, Linen) GVWR -14,000-19,500lbs. –Freightliner Custom Chassis MT45 w CWI 5.9 B Gas+ MPG: 5.0 – 6.5, 75-90mpd x6 dys/wk, 26-28K/yr Fuel Use: 13-16DGE/day; GGE/yr CNG Premium: $28-30,000 (before tax credits) Fed Tax Credit: $20,000 (> 14,000#, < 26,000 #) Remaining premium (assuming no grant): $9000 Simple Payback: yrs Life-cycle cost savings: $54-66K !!! (based on 10 yr life and 1.50 savings/DGE at O&O station )

We Have the Fuel – And It’s Ours Substantial Air Quality: Urban Pollution Substantial Air Quality: GHGs Biomethane Makes GHG Case Stronger Only Natural Gas Can Displace Diesel NGVs are a Here-and-Now Technology Government Policymakers are (Finally) Recognizing the Value of NGVs Money Why the NGV Market Will Grow

Achievable NGV Gas Usage and Vehicle Growth Trucks (Thousands)

Questions? Contact Rich Kolodziej Questions? Contact Rich Kolodziej

The Outlook for Natural Gas Vehicles 33 RD A NNUAL C ONFERENCE OF THE A MERICAN A SSOCIATION OF B LACKS IN E NERGY May 20, 2010 Columbus, OH The Outlook for Natural Gas Vehicles 33 RD A NNUAL C ONFERENCE OF THE A MERICAN A SSOCIATION OF B LACKS IN E NERGY May 20, 2010 Columbus, OH