Nearly all heavy duty trucks in the Unites States run on diesel. However, with an abundant and cheap supply of natural gas from shale plays there is growing interest in replacing diesel fuel in heavy duty tucking, as we have discussed in our recent blogs and reports. LNG will likely be adopted at a regional level before its use grows across the country. California offers several unique features that position it as a region to pilot and advance LNG use as a heavy-duty trucking fuel.
Diesel prices in California are higher than the rest of the country: A driving force behind adopting LNG for heavy-duty trucking is the price differential between diesel fuel and LNG. With the recent drop in the price of oil this differential has narrowed. The narrower gap between the price of LNG and diesel fuel makes the switch to natural gas less attractive. However, diesel fuel prices in California are higher than the rest of the country. Assuming that the price of LNG will not be higher in California than the rest of the country, this difference in price should make switching to LNG more attractive.
California’s Interstate 5 offers an insulated roadway for infrastructure: Lack of a national infrastructure for LNG refueling is a major roadblock in LNG use as a transportation fuel. California’s Interstate 5 offers a feasible corridor for constructing LNG refueling infrastructure because it is a location where the refueling stations can serve an extensive fleet and be implemented cost effectively. Many of the trucks traveling along Interstate 5 only travel along that corridor which enables a fewer number of refueling stations to serve most of the fleet. As a result, the investment required to create the necessary infrastructure to serve LNG trucks is lower in comparison to that in other regions across the United States. UC Davis has estimated the cost of constructing an LNG infrastructure along Interstate 5 at $100 million.
Carbon credits offered in California incentivize fleet owners to switch to LNG: California’s history of supporting alternative fuels further increases the potential of fleet owners to consider switching to LNG. Further, California offers incentives for the use of lower emission fuels such as LNG. Carbon credits are also available for natural gas use in the state. These incentives may soften the cost impacts of an LNG refueling infrastructure in California.
-Tyler Wilson and Uday Turaga
