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Monday, August 15, 2022

CTA Says LNG Has Potential But Requires Tax Incentives for Investment

The Canadian Trucking Alliance (CTA) says that a new report released today by the federal department of Natural Resources, entitled Natural Gas Use in Transportation Deployment Roadmap is a good assessment of the potential benefits and the obstacles to liquefied natural gas (LNG) as a fuel in trucking. The report makes clear a key point that the Canadian Trucking Alliance has tried to drive home to policy-makers over the past several months – that without significant incentives it will be difficult for carriers to justify the increased costs for LNG equipment. The current premium for an LNG tractor is in the neighborhood of up to 100 per cent or even greater over that of a conventional unit. Moreover, the distribution network is in an embryonic state and needs to be developed.

According to the CEO of the alliance, David Bradley, “LNG has the potential to serve as an important niche in the trucking marketplace. It won’t be suitable for every type of operation given the limitations on its distribution and the costs of purchasing LNG tractors. It will be of most interest to carriers with dedicated return to destination routes. But as part of a broad, comprehensive strategy for reducing GHG emissions from trucking, it definitely has a role to play. It is certainly of more potential benefit than biodiesel, for example.”

“The GHG reduction benefits of LNG are real and at current prices it is an attractive alternative to diesel fuel. However, it will require investment on the part of the producers in the distribution infrastructure and it will require significant tax incentives as well as price guarantees to allow and encourage those carriers who are interested to make the shift,” he said.

Throughout the Roadmap process, facilitated by Natural Resources Canada, end users were consulted, including CTA and a number of interested carriers, gas and oil companies, and environmental groups. Long-haul trucking operators are identified as an attractive potential market for LNG use. But it also recognizes the impediments facing the widespread use of the fuel:

Trucking fleets tend to be conservative in adopting new technology, and natural gas (particularly LNG) is unfamiliar and unavailable to most fleets. The uncertainty about fuel availability and prices, combined with the high incremental vehicle prices, limited marketing and lack of financial incentives for natural gas  trucks, explains the low level of uptake. The potential for market growth for natural gas vehicles will not be realized unless the attitudes, knowledge and key concerns of end-users are understood and addressed.One of the significant recommendations contained in the report is the use of government fiscal measures to reduce the upfront and ongoing capital risk for carriers investing in LNG technology. CTA says that greater use of LNG fits well with its proposed program of voluntary measures designed to complement the proposed heavy truck fuel efficiency regulations currently under development by Environment Canada. The CTA program would also include incentives for voluntary investment in tractors certified to reduce GHG, and aftermarket technology for new and existing trailers.

“We’d much rather that the federal government focused on these real solutions than trying to push things like biodiesel down the industry’s throat,” says Bradley.

A copy of the report, which also examined compressed natural gas issues, can be requested at publicaffairs@cantruck.ca. For further explanation on the potential of LNG use by the trucking industry, please view this video featuring CTA Senior Vice President, Stephen Laskowski