The Department of Defense (DOD) is the largest proponent of alternative drive vehicles (ADVs) in the United States. Already around 55% of the DOD’s 195,000-plus non-tactical vehicle fleet can run on alternatives to gasoline, such as diesel and B-20 (Bio-Diesel), E-85 (Ethanol), electricity, natural gas, propane, and hydrogen. Of the DOD’s alternative drive fleet, only a small portion run on compressed natural gas (CNG) and that number has fallen over the past 5 years, according to annual GSA Federal Fleet Reports.
America has an abundant supply of cheap, domestic natural gas, so why isn’t the Pentagon using CNG to run its vehicles? The gradual retreat from CNG vehicles, despite natural gas’ low price, comparatively small greenhouse gas emissions, and energy-security advantages, is a function of a highly competitive North American market for ADV technologies, among which CNG is gradually becoming less competitive.
All alternative drive technologies face four major challenges: vehicle availability, infrastructure availability, infrastructure installation cost, and fuel cost per gasoline gallon equivalent (GGE). When compared to other ADVs, CNG overcomes only two of these factors: vehicle availability and low cost per GGE.
Few CNG vehicles are available directly from original equipment manufacturers (OEMs), which makes the technology more costly and challenges the business cases for developing CNG fueling stations (also costly). Though Honda and the Detroit big three all offer CNG versions of some vehicles, CNG is largely being pushed out of the light duty passenger ADV markets in favor of hybrids and plug-in electric vehicles (PEVs), which benefit from widely-available infrastructure and extremely low refueling costs on behalf of technology efficiencies.
CNG has been the established player in the medium and heavy duty ADV markets. However, the medium duty market is becoming increasingly narrow; both the DOD and commercial fleets are looking into opportunities to use PEV technologies for either vehicle to grid (V2G) or vehicle to building (V2B) services. Additionally, other emerging alternative drive technologies utilizing hydraulic hybrid systems and liquefied propane gas (LPG) are targeting specific niche markets for refuse and postal service trucks and school buses, respectively.
The heavy duty vehicle segment is where natural gas vehicles lead the ADV market. The only competitor in this segment is liquefied natural gas (LNG), which is gradually becoming the choice for long haul trucking because LNG systems can store more energy than CNG systems. According to the Navigant Research Market Data: Natural Gas Vehicles report, heavy duty LNG truck sales in North America will increase at a compound annual growth rate (CAGR) of almost 44% from 2013 to 2020, while the overall market for NGVs in all segments will increase at a CAGR of 17%.
While the market for ADVs is becoming crowded, it does not mean the overall CNG market is on the decline. ADV markets in all vehicle class segments are growing. Though natural gas is losing market share to a host of other ADV technologies, the net effect of the increased competition is simply slower growth. The North American market for CNG vehicles will continue to grow but will only make up marginal portions of the North American vehicle fleet in the next decade. The military market for NGVs will, however, continue to weaken thanks to the Pentagon’s bet on other forms of power for transport.