June 4, 2015 by Canadian Underwriter
British Columbia’s Ministry of Energy and Mines announced on Wednesday changes to its greenhouse gas (GHG) reduction regulation to encourage more fleet operators to switch from diesel and gasoline to cleaner-burning natural gas to run their buses, trucks and marine vessels.
A natural gas vehicle produces 20% to 30% fewer GHG emissions compared to a gasoline or diesel vehicle, the ministry noted in a press release.
The changes will allow “utilities to expand incentives to fleet operators to convert to natural gas as their primary or secondary fuel, and advance the development of more natural gas fuelling stations,” the ministry reported.
“Natural gas is cheaper and cleaner than traditional fuels, reducing transportation costs and greenhouse gas emissions,” said Bill Bennett, Minister of Energy and Mines, in the release. “We’re updating the greenhouse gas reduction regulation to give utilities like FortisBC more flexibility to expand incentives to fleet operators to convert their trucks, buses and ferries to natural gas.“
The GHG reduction regulation under the Clean Energy Act was introduced in 2012 and allows utilities to make “time limited investments in clean energy transportation and infrastructure to reduce GHG emissions and help diversify and increase the market for natural gas in British Columbia’s transportation sector,” the release said, including opportunities to:
• Offer incentives (grants or zero interest loans) for transportation fleets to purchase compressed natural gas (CNG) or liquefied natural gas (LNG) vehicles, buses, trucks or ferries;
• Offer incentives for fleets to upgrade their vehicle maintenance facilities to be natural-gas-safe; and
• Build, own and operate compressed natural gas fuelling stations or LNG fuelling stations.
To date, the incentive program has resulted in commitments for more than 500 natural gas vehicles and vessels that will displace approximately 36 million litres per year of diesel fuel consumption and reduce carbon dioxide emissions by 42,000 tonnes per year, the ministry said.
The updates to the regulation will allow for shifts in the allocation of incentives and investments within the previously-approved total spending caps to promote continued development of a domestic market for natural gas in the transportation sector, and will:
• Extend the existing incentive programs by one year to March 31, 2018;
• Allow a utility to spend up to $5 million on pilot programs to convert diesel engines in medium and heavy duty vehicles to also use natural gas;
• Remove the existing cap of $11 million on expenditures for LNG powered marine engines to allow the incentive amounts to be applied to all eligible vehicles, including marine;
• Make the eligibility criteria and grant and loan structure for replacement of diesel engines more flexible to encourage greater use of natural gas powered engine; and
• Facilitate the construction of natural gas fuelling station infrastructure.
FortisBC has started construction of a $400 million expansion to increase natural gas liquefaction capacity at the Tilbury LNG facility to meet future domestic transportation and export demand, including LNG supply to BC Ferries.
Michael Mulcahy, president and CEO, said in the release that natural gas vehicles can save between 25 and 50% in fuel cost compared to diesel. “Natural gas also burns cleaner, helping B.C. meet its carbon reduction goals,” Mulcahy said.
In February, BC Ferries signed a 10-year contract with FortisBC to supply LNG for three new dual-fuel ferries, capable of running on LNG or diesel, that are currently under construction. FortisBC provided BC Ferries with $6 million in incentive funding toward the three new vessels, which was made possible by the GHG reduction regulation.