Transportation's Role in Reducing U.S. Greenhouse Gas Emissions ...

Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2
Table 2.4 LDV Penetration and GHG Reductions Utilizing Five Percent
of Natural Gas Supply
Year
2-32
Incremental # CNG LDVs
(Millions)
Gasoline Saved
(Mgal/Year)
GHG Reduction
(mmt CO2e/yr)
2030 9.5-19.0 4.0-7.9 7-13
Cost-Effectiveness
The market price of CNG compares quite favorably with that of gasoline in general. The
AEO Reference case estimates retail national average CNG prices at $1.76 per gge in 2010,
compared to $2.14 for gasoline, including taxes. 15 After taxes and credits, the near-term
incremental cost of CNG is estimated to be 33 cents per gallon in 2010. 16
Under these
assumptions, CNG obtains a savings relative to gasoline (pretax/credit) when retail gas
prices climb above $2.46 per gallon.
A substantial cost savings for CNG is expected to develop in the long run, with CNG
prices rising only 16 percent between 2010 and 2030, while gasoline prices are projected to
17 increase by almost 80 percent over this same period. Accordingly, a $1.07 per gallon
savings is estimated for CNG relative to gasoline in 2030. Note this assessment assumes
that CNG fueling station costs are fully recovered in the fuel sales price. 18
15 See AEO Tables 12 and 13. Cost differentials are volatile, with falling gasoline prices eroding the
cost advantage of CNG substantially relative to 2008 fuel prices. The Clean Cities reports also
track the price of CNG over the past few years (U.S. DOE 2009g, p. 14). CNG prices tends to track
with gasoline and have similar seasonal spikes, in part because some of the supply comes from
crude oil refining, and in part, because natural gas experiences peak demand in the summer
similar to gasoline. Similar trends are expected for LNG as liquefaction costs are fairly constant
over the year, although a much smaller market exists and less price data has been collected for
LNG relative to CNG.
16 Assuming 18.3 cents per gge federal tax, no state tax, and a 50 cent per gge excise tax credit for
CNG.
17 AEO Tables 12 and 13.
18 Fueling station costs are roughly $500,000 per California Energy Commission (2006). The above
CNG prices assume the use of “fast-fill” retail stations. If fueling is performed using home
refueling units, an additional cost savings of about 15 cents per gge could be obtained.
(http://www.eia.doe.gov/oiaf/archive/aeo08/gas.html) Home refueling requires an additional
(Footnote continued on next page...)