Cheap Enough? Making the Switch From Diesel Fuel to Natural Gas

The Conference Board of Canada, 38 pages, April 23, 2012
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This report explores the potential for expanded use of natural gas as a transportation fuel in Canada, particularly as an alternative to diesel for heavy-duty trucks.

Document Highlights

This report considers the potential for natural gas as an alternative fuel to diesel for heavy-duty trucks in particular, along with some consideration of its use as a rail and marine transportation fuel. The primary focus is the potential financial impact on freight carriers. These impacts are also considered in the context of the greenhouse gas (GHG) reduction potential of the fuel. The report concludes that while carriers willing to convert their fleets to natural gas do face significant capital costs and continuing risks related to relative fuel prices, availability of fuelling infrastructure, and tax policy, they could reap significant net benefits in operating costs while also reducing their environmental impact.

Table of Contents

Executive Summary

Chapter 1—Introduction

Chapter 2—Recent Developments and Industry Background

Developments in the Trucking and Rail Freight Industries

Chapter 3—Energy Consumption and Prices

  • Transportation Energy Consumption
  • Sources of New Supply and Demand for Natural Gas
  • Natural Gas Price Stability
  • The Role of Excise Taxes on Federal and Provincial Revenues
  • The Impact of Capital Cost Allowance Rates

Chapter 4—Modelling the Financial Impact of Fuel Conversions

  • Model Inputs and Assumptions
  • Key Outputs
  • Key Scenarios
  • Capital Cost Allowance Scenarios
  • Renewable Natural Gas Considerations
  • Renewable Natural Gas Modelling Results
  • Natural Gas Locomotive Modelling Results

Chapter 5—Conclusions

  • The Potential Benefits Are There
  • Barriers to Adoption and the Role of Policy
  • Fuel Price Volatility and Access to Capital

Appendix A—Bibliography

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