Insights from BCC Research

Alternative Fuels Competitiveness For Commercial Vehicles is Regional

Posted by Jon T. Gabrielsen on Apr 13, 2016 6:00:00 AM

This is one article in a series that discuss key findings from a newly completed market and competitive economic analysis of ten potential alternative fuels for commercial vehicles. The analysis covered natural gas in both compressed (CNG including Bio-methane) and liquefied (LNG) forms, liquid propane gas (LPG a.k.a. Autogas), dimethyl ether (DME), Hythane®, hydrogen in both compressed and liquefied forms, (bio)ethanol, biodiesel, and methanol. Each of these fuels becomes competitive at different oil/diesel prices in each of the four global regions; North America, Latin America, Asia-Pacific, and EMEA (Europe, Middle-East, and Africa). This exercise has uncovered valuable insights and profitable opportunities for all the stakeholders in this exciting emerging sector.

How many and which alternative fuels are competitive at a given oil/diesel price varies tremendously by which global region one is speaking of. Determining the comparative competitive positions is also a simultaneous equation since both oil/diesel, and each of the alternative fuels, do move in price in relation to the price of oil. Some alternative fuel prices just don’t move nearly as much with changes in the price in oil as diesel moves. Hence they cross over and become cost competitive with a 3-year payback as the price of oil increases.
The EMEA region has such high taxes on diesel fuel, and so many incentives on alternative fuels that two-thirds of all the possible alternative fuels are cost competitive no matter how low the price of oil/diesel is. In the EMEA region it is not a question of whether to opt for an alternative fuel, it is all about choosing between the options.
In Latin America two alternative fuels are consistently cost competitive against diesel fuel regardless of oil/diesel prices. But none of the others ever become competitive no matter how high the price of oil/diesel goes.
(*) See discussion for Asia-Pacific in the paragraph after the next paragraph.
The markets for both traditional and alternative fuels in North America operate the closest to free market behaviors. Thus the number of alternative fuels that become competitive as the price of oil/diesel increases very substantially from one to five fuels over that range.
In Asia-Pacific, at the total region combined level, no alternative fuel appears to be competitive against diesel fuel. But in this region, looks are deceiving. At the individual country level, and/or sub-portion of individual countries, a number of alternative fuels are cost competitive. And particularly in the Asia-Pacific regions there are reasons other than cost competitive that drive fuel choices. A long list of alternative fuels are being pressed upon the users for national strategic, security, and air pollution reasons, for example, in China.
For much more very in-depth details on the market and competitive economics, paybacks and breakeven points, which fuels become competitive at what oil prices, fuel production processes, supply chains, technical application information, and 5-year commercial vehicle forecasts, for each of the ten commercial vehicle alternative fuels, in each of all four major global regions, please go to the full market research report at: 

Topics: Environment