NGV programme can be a success in UAE

In Arabic we say "the beginning of a torrent is few drops" and in energy substitution things may be slow to evolve but they do produce substantial results later.

A couple of weeks ago, President His Highness Shaikh Khalifa Bin Zayed Al Nahyan reviewed a project to use natural gas as an alternative fuel for vehicles and even witnessed a trial run of a passenger car equipped to operate by either gasoline and natural gas.

Shaikh Khalifa instructed Adnoc to speed up the project for the sake of a cleaner environment and conserving energy.

A few days later, the Emirates General Petroleum Corp announced that it would help Sharjah Electricity and Water Authority (Sewa) to convert 300 of its vehicles to natural gas.

Could this be the "few drops" before the proliferation of natural gas as a fuel of transportation in the UAE?

Let us first look at the international experience.

The latest estimate by the International Association of Natural Gas Vehicles indicates that there are almost four million natural gas vehicles (NGV) around the world in 55 countries.

The majority of almost 75 per cent are in the top five countries of Argentina, Brazil, Pakistan, Italy, India and the United States.

The use of NGVs caught up in the 1970s due to the rise of crude oil prices and the increased awareness about the environmental problems in congested cities.

Most of the current NGVs are gasoline vehicles, which have been converted to run on natural gas or revert to gasoline if needed.

However, during the 1990s manufacturers produced thousands of buses designated to run on natural gas.

In the Middle East, Egypt with 52,000 and Iran with over 22,000 vehicles are setting the pace and both have programs for further penetration of the transportation market by natural gas.

The reasons for converting vehicles to NGVs may be generalised by the need to diversify energy sources and to use a locally available fuel such as natural gas instead of imported oil or products as in Pakistan.

It could also be to conserve crude oil for export as in Iran. Additionally all countries promoting NGV aspire to achieve better environment through the reduction of harmful emissions generated by the use of gasoline and diesel fuels.

Low emissions of toxins

NGVs have very low emissions of toxins and particulate emissions that are very harmful to human health. They also have negligible emissions of sulpher oxides and are more quite in operation.

The disadvantages of a CNG programme are that the distribution system is much more expensive if the country does not have a viable natural gas infrastructure.

CNG vehicles are more expensive to purchase and have shorter driving ranges. For the passenger car, the fuel tank is generally heavy and takes much of the space in the boot.

Finally, and with respect to the concern over climate change, it should be known that natural gas burning produces less greenhouse gases (carbon dioxide) than an equivalent amount of conventional gasoline or diesel.

The European programme to have 10 per cent of all vehicles running on natural gas by 2020 as part of the European effort to reduce greenhouse gases is well known.

The ordinary consumer and even companies or institutional consumers are more driven by price consideration and the economics of the fuel change.

The higher capital cost of the NGV must be offset by the running cost, especially fuel cost or the consumer will have no incentive to switch.

The fuel cost advantage on an equivalent basis in Argentina is very clear as CNG to gasoline cost is close to one third.

Some governments or municipalities give other advantages in financial support or tax deductions to encourage the use of NGVs as can be seen in Vacaville, California. When New Zealand removed the subsidies its programme died.

There is no reason why the UAE programme should not succeed when the objective is clear and the support is at the highest level. The UAE holds substantial natural gas reserves and its gas pipelines reach all the major cities.

The UAE's targeting of institutional consumers such as Adnoc and Sewa is indeed in the direction of faster change that will eventually convince the ordinary consumer, who is normally conservative and reluctant to change, of the viability and advantages of NGVs.

The UAE should also target special markets where large numbers of high use vehicles are used in a limited geographic location.

For example, it should give special consideration to its main airports where hundreds of vehicles are used around the clock inside a relatively confined area.

This will make refuelling much more practical and economic and allows the use of original NGVs rather than converted ones. Taxi fleets could be another example.

The gasoline and diesel consumption in the UAE is about 100,000 barrels a day, and therefore it is estimated that for each one per cent taken away by NGVs, the revenue from exporting the saved gasoline and diesel could be close to $20 million (Dh73.4 million) a year in today's prices.

It is therefore clear that the UAE has all the ingredients to make the NGV programme a success, provided that it is also accompanied by a public relations drive to convince consumers and vehicle dealers to make the switch and to benefit from it.

The environmental advantages will be substantial when all is accounted for. Such programmes not only provide cleaner living but actually reduce the bill for healthcare, and provide a more active and productive life for its citizens.

Saadalla Al Fathi is the former head of the Energy Studies Department at the Opec Secretariat and is currently working as an adviser.