Fuel for the Future

 

Takeaway

  • Transportation is a promising territory for transitioning to natural gas because much of the necessary technology has already been developed or is currently being researched
  • The primary argument for increasing the use of natural gas in transportation is its environmental benefits

Texas is the top producer and consumer of natural gas in the U.S., and with its expansive shale reserves and growing gas infrastructure, the state is at the forefront of the natural gas revolution. And because natural gas is cleaner and cheaper than other fossil fuels, it is expected to play an increasingly important role in electricity generation, residential and commercial products, and transportation.

On a small scale, the transportation sector has already begun to embrace natural gas as a fuel source. Dr. Fred Beach, a University of Texas energy research fellow, outlined several potential future uses for natural gas at a recent conference hosted by the McCombs School of Business. He also identified barriers to widespread adoption.

“The biggest challenge [for natural gas] is clearly in transportation,” Beach said. “The vehicles don’t exist for the most part, and the infrastructure doesn’t exist. But if you think of how much petroleum we use in this country, that is perhaps the biggest potential for growth.”

Why Transportation?

Transportation is a promising territory for transitioning to natural gas because much of the necessary technology has already been developed or is currently being researched. Many buses in the U.S. already run on compressed natural gas, and taxi fleets are increasingly adopting it as a fuel source, primarily in Asia and Latin America.

The primary argument for increasing the use of natural gas in transportation is its environmental benefits,

The primary argument for increasing the use of natural gas in transportation is its environmental benefits,Beach says. Compared to diesel fuel, compressed natural gas (CNG) and liquefied natural gas (LNG) produce 80 percent less particulate matter, 20 to 40 percent less carbon monoxide, and 10 percent less volatile organic compounds (VOCs). 

“VOCs are important because, in combination with carbon monoxide and particulate matter, they are what give you ozone and smog,” Beach says. “These are the primary problems we have in major urban areas because of transportation, and diesel transportation in particular.” 

The Texas Triangle

Beach identifies the “Texas Triangle” — a 57,430-square-mile region that encompasses Houston, San Antonio, and Dallas/Fort Worth — as an ideal area to expand the adoption of natural gas fuel in the trucking industry. More than 70 percent of the state’s population resides within the Triangle, and 84 percent of Texas’ GDP is generated within it.

“Naturally, if you have 84 percent of the GDP in that Triangle, that’s also where some of your air quality issues are going to come from, because that’s where most of your heavy industry is,” he says.

Beach says if just 10 percent of the medium and heavy trucks in the Texas Triangle ran on compressed or liquefied natural gas, Texas would become the top state in CNG and LNG use in transportation. California is the current leader, with less than 1 percent adoption. He estimates that it would take 0.04 trillion cubic feet (TCF) of natural gas to reach that goal — a relatively small figure considering that overall natural gas consumption in the U.S. varies 1.5 TCF annually based solely on market fluctuation. 

Challenges

Some obstacles must be overcome before natural gas becomes a standard fuel option in Texas. One issue is energy density: vehicles can travel fewer miles on a tank of natural gas than they can on a gasoline tank of the same size. Because of this restriction, Beach says fleet vehicles with larger tanks such as buses and garbage trucks are ideal candidates for early adoption. Also, because fleet vehicles often refuel at the same location on a regular basis, the transition to natural gas would likely not be as disruptive as it might be for passenger vehicles.

“Natural gas is not as energy-dense as diesel fuel, even compressed or liquefied at a lower density, so you need larger fuel tanks to carry it,” Beach says.

Long-haul trucks could also support CNG-based fuel systems, but even with bigger tanks, the range of most natural gas-fueled vehicles is limited. Sheridan Titman, professor of finance and director of the Energy Management and Innovation Center at McCombs, says this could increase expenses and create logistical problems for trucking companies.

“It would be extremely costly for a long-haul truck to have to fill up every several hours,” he says.

Infrastructure is another potential problem: There are not currently enough fueling stations equipped with CNG to meet the needs of trucks traveling throughout long stretches of the Triangle.

“We do not have much of a natural gas refueling infrastructure, and for good reason: We don’t have much of a natural gas transportation fleet,” Beach says. “It’s really kind of a chicken-and-egg situation. We don’t have the vehicles because we don’t have the infrastructure, and we don’t have the infrastructure because we don’t have the vehicles. How do you ever get the critical mass to get that going?”

Next Step: Passenger Vehicles

Before natural gas fuel systems can truly take off, there must be a market for them. Some natural gas-fueled cars are already on the road: For example, Honda introduced its Civic GX model in some U.S. markets in 1998 and has been slowly rolling it out to other regions over the last decade. Like other CNG-powered vehicles, however, it has a very large fuel tank that requires frequent refills.

The auto industry has invested more resources in developing electric vehicles, as access to electrical power isn’t as much of an issue as access to compressed natural gas.

“The expectation is that the electric car will be the better option for passenger vehicles,” Titman says. 

However, new technologies could make natural gas a more viable option. The BASF Group is testing the performance of compounds called metal-organic-frameworks (MOFs) that could eventually be used to develop a methane-based fuel that gets triple the mileage of compressed natural gas.

Raymond Orbach, director of UT’s Energy Institute, says the shift to natural gas is already well underway, and the MOF breakthrough could greatly accelerate the adoption of natural gas as a fuel source in all types of vehicles.

 “My argument would be that we’re already there, and if these MOFs are stable, then we’ve got a market already to address,” Orbach says.

The logistics of refueling are also solvable, Orbach says. Owners of CNG-fueled cars could use existing natural gas connections at their homes to refuel on-site. This process would require a compressor, but with widespread adoption and mass production, costs of natural gas-fueled vehicles and on-site refueling would likely come down across the board, Orbach predicts.

“It’s just a question of making it practical for the average homeowner,” he says.

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Faculty in this Article

Fred Beach

Post-Doctoral Fellow Center for International Energy & Environmental Policy

Fred C. Beach is a Fellow in both the Center for International Energy and Environmental Policy (Jackson School of Geosciences) and the Webber...

Sheridan Titman

Walter W. McAllister Centennial Chair in Financial Services McCombs School of Business

Sheridan Titman is a professor of finance at The University of Texas at Austin and a research associate of the National Bureau of Economic...

About The Author

Rob Heidrick

Writer, McCombs School of Business

Born and raised in Austin, writer Rob Heidrick has spent several years as a contributor and editor at local magazines and community newspapers. He...

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