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China explores LNG use in cars to cut pollution

(South China Morning Post)
Updated: 2006-10-16 14:04

"Pricing will be the major concern because how will you get bus and taxi companies to use LNG or other gas instead of oil if gas costs more than oil? The government would have to offer some sort of subsidy," said Matthew Kong, a car analyst with Fitch Ratings.

Engines designed for CNG or LNG use are the same, said Brenda Smith, managing director of consultancy group Gas Advisers and a board member of the Asia-Pacific Natural Gas Vehicles Association. However, gas-burning vehicles remain expensive because they are built in small numbers.

"The buses are significantly more expensive at the moment, with prices about 35 per cent or more above that of a normal bus. That's not because the components are much more costly, but because they're not being built in large numbers. If mass-produced, they'd only be five to 10 per cent more, and that would be because the fuel storage system is a bit more expensive," Ms Smith said.

She said using LNG for urban vehicles would make the programme unique. Other countries experimenting with LNG have focused on longer-haul vehicles. But some Chinese cities are unable to tap into piped gas, making LNG a suitable option.

Several Chinese cities including Beijing, Guiyang, Changsha and Urumqi are already running small experiments using LNG in buses. Changsha is also one of the first cities in the world to experiment with LNG-fuelled taxis.

The Sichuan Air Separation Plant has built a factory with capacity to build as many as 5,000 LNG tanks per year. The tanks, made in varying sizes, are designed as fuel tanks for cars and buses. CMIC Zhangjiagang Shengdayin Cryogenic Equipment in Jiangsu province has also built a factory to make LNG containers for vehicles.

The government is trying several strategies to battle transportation's contribution to air pollution and create a cleaner image before the Beijing Olympics in 2008. In March, it introduced higher taxes on big cars and cut taxes for smaller models. The new rules aim to convince Chinese drivers to swap their petrol-guzzling sport-utility vehicles and luxury sedans for smaller, more efficient cars.

China opened its first LNG importing terminal in Guangdong province in June, and numerous other LNG import terminals are planned for China's eastern coastline. There are also small LNG plants in Xinjiang and Guangxi. But the fuel is finding it difficult to compete with cheaper piped gas and China's huge coal reserves, which produce 70 per cent of the energy used in the country

"In our opinion, CNG will be more important than other alternative fuels, so we are investing more in CNG than in other fuels," Mr Hou said.


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