Energy Policy 62 (2013) 531539

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Energy Policy
journal homepage: www.elsevier.com/locate/enpol

The development of natural gas as an automotive fuel in China

Linwei Ma a,n, Jia Geng a, Weqi Li b, Pei Liu a, Zheng Li a
a
State Key Laboratory of Power Systems, Department of Thermal Engineering, Tsinghua-BP Clean Energy Center, Tsinghua University,
Beijing 100084, PR China
b
School of Automation, Beijing Institute of Technology, Beijing 100081, PR China

H I G H L I G H T S

 An overview of the natural gas development in China.

 A systematic introduction of the development of natural gas vehicles in China.
 A review of the technological performance of natural gas vehicles.
 Policy suggestions to promote the development of natural gas vehicles in China.

art ic l e i nf o a b s t r a c t

Article history: This manuscript aims to systematically review the development of natural gas as an automotive fuel in
Received 21 March 2012 China and to draw policy implications for decision making. This manuscript presents a brief overview of
Accepted 18 June 2013 natural gas development and the potential of natural gas as an automotive fuel in China, followed by an
Available online 1 August 2013
introduction to the development of various technology pathways for using natural gas as an automotive
Keywords: fuel, including CNG (compressed natural gas) vehicles, LNG (liqueed natural gas) vehicles, and others.
Natural gas This material suggests, a large potential to increase the use of natural gas as an automotive fuel,
Vehicle especially for CNG and LNG vehicles. The following activities will promote the development of natural
Policy gas vehicles: prioritizing vehicle use in the utilization of natural gas, supporting the construction of
natural gas lling stations, developing a favorable pricing policy for natural gas used in vehicles, and
enhancing the research and development to further improve the technology performance, especially for
the technology of LNG vehicles.
& 2013 Elsevier Ltd. All rights reserved.

1. Introduction
The rapidly increasing amount of road trafc in China has led to
a huge new oil demand, which has increased the pressure on
energy security and environmental protection (Ma et al., 2011,
2012). In 20002010, the civil ownership of vehicles in China
increased from 16 million to 70 million (NBS-National Bureau of
Statistics of China, 2011), while road vehicles contributed to 48% of
the total increase of oil demand in China between 2000 and 2009
(Ma et al., 2012). In 20002010, the oil import dependency of China
increased from 28% to 54% (DESNBS-Department of Energy Statis-
tics of National Bureau of Statistics of China, 2012), which increased
energy security concerns throughout the country due to the
complicated issues involved with the uctuating international oil
price. In addition, vehicle emissions have become a major source of
n
Corresponding author. Tel.: +86 13910319095; fax: +86 10 62795736.
E-mail address: malinwei@tsinghua.edu.cn (L. Ma).
air pollutants in the metropolises (He et al., 2008) and major source
of greenhouse gases (GHGs).
Natural gas, which is generally considered to be a clean and
efcient fuel (Li et al., 2011; Lin et al., 2010; Xu and Wang, 2010),
has received a substantial amount of attention as an automotive
fuel, and its use has increased rapidly in recent years in China.
Although China launched natural gas vehicle (NGV) development
programs as early as 1988 through the rst introduction of
compressed natural gas (CNG) vehicle technology from New
Zealand (Yang and Kraft-Oliver, 1997), the total number of NGVs
was only 2000 in 1999 according to the International Association
for Natural Gas Vehicles (IANGV-International Association for
Natural Gas Vehicles, 2011). However, in 2010, the number of
NGVs reached 450,000 or more.
Previous studies have reported key information regarding various
aspects of the development of natural gas as an automotive fuel in
China, including the development of the natural gas industry (Qiu
et al., 2011; Lu, 2009; Li et al., 2010), the development of a liqueed
natural gas (LNG) industry (Lin et al., 2010; Guo et al., 2010),
natural gas consumption (Li et al., 2011; Xu and Wang, 2010), the

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532 L. Ma et al. / Energy Policy 62 (2013) 531539

Nomenclature LCA life cycle assessment

LNG liqueed natural gas
CBM coal bed methane NGV natural gas vehicle
CNG compressed natural gas PM particulate matter
DME dimethyl ether R&D research and development
GHG greenhouse gas VOC volatile organic compound
GTL natural gas to liquids WTW well-to-tank
HC hydrocarbon

development of NGVs (Lu et al., 2003; Li and Zhou, 2008; Yang, 2009;
Zhou and Li, 2009; Meng, 2010; Zhou et al., 2010) and their regional
applications (Zhang, 2009; CSTI-China Science and Technology Infor-
mation, 2008), and the development of automotive fuels (Chen et al.,
2009; Ou et al., 2010a, 2010b). However, based on the perspectives of
long-term national energy development, some remaining issues
deserve further discussion to assist in decision making regarding
NGVs. The rst issue is determining how much natural gas can be
used for vehicles because China is relatively poor in natural gas
resources. The second issue is determining which technology path-
way should be prioritized because there are many possible choices,
including CNG vehicles, LNG vehicles, and natural gas to liquids (GTL).
The third issue is determining what type of policy is predominantly
required to promote these technologies. It is difcult to nd satisfying
answers from any individual study published in the literature.
This paper attempts to systematically analyze these issues, mainly
through a literature review, and to determine important policy
implications. First, we present a brief overview of natural gas
development in China and provide an estimate of the potential of
natural gas as an automotive fuel. Then, we describe the develop-
ment of CNG vehicles and LNG vehicles from four perspectives,
including the technical mechanisms, technological performance,
market application, and the key policy issues involved. This descrip-
tion is followed by a brief introduction to the development of other
technology pathways, with GTL as the focus. Based on this knowl-
edge, we then propose policy suggestions that promote the devel-
opment of natural gas as an automotive fuel in China.
2. The development of natural gas in China
times the currently proven amount. Moreover, unconventional
natural gas, such as coal bed methane (CBM), shale gas, and natural
gas hydrate, represent a large amount of potential reserves. The
ultimately recoverable reserves of CBM were estimated to total 11
trillion cubic meters, those of shale gas totaled an estimated 2.23.0
trillion cubic meters, and the prospective reserves of natural gas
hydrate totaled 8.4 trillion cubic meters (Qiu et al., 2011). Although
these data will be further updated with the progress of the
exploration of natural gas resources in China, the potential of both
conventional and unconventional resources of natural gas are
undoubtedly quite large.
2.2. Production and transportation
Driven by a series of signicant advancements in gas eld
discovery and long-haul gas pipeline construction (Lu, 2009; Dai
et al., 2008a, 2008b), natural gas production and transportation in
China has entered a stage of rapid development. Referring to
Table 1, from 2000 to 2010, the annual production of conventional
natural gas increased from 27.2 billion cubic meters to 96.8 billion
cubic meters (BP-British Petroleum. BP Statistical Review of World
Energy, 2011). Moreover, the National Development and Reform
Commission (NDRC) planned an annual production of 10 billion
cubic meters of CBM in 2010 (CNPC-China National Petroleum
Corporation, 2011), while the rst CBM pipeline was built in 2009
(Li et al., 2010). Considering the potential of both conventional and
unconventional resources, the annual natural gas production in
China is predicted to be 220 billion cubic meters in 2020 and then
300 billion cubic meters or above it after 2030, as indicated in
Table 2 (Qiu et al., 2011).

2.1. Resource exploration 2.3. Import

Referring to BP's statistical review of world energy, the proven In addition to domestic production, the natural gas supply in
reserves of conventional natural gas in China totaled 2.8 trillion China can be further increased by imports. In 2010, the annual
cubic meters in 2010, and the reserve-production ratio was only 28 natural gas imports into China totaled 16.35 billion cubic meters,
years compared to 64 years for the global average (BP-British while 78% of the imports were through overseas LNG imports, as
Petroleum. BP Statistical Review of World Energy, 2011). However,
there is still a high potential for China to increase its reserves in Table 2
the future because natural gas exploration in China is still in the The projection of natural gas production in China (Qiu et al., 2011); units are in
billions of cubic meters per annum.
very early stages, having started 30 years later than oil exploration
(Qiu et al., 2011). As evidence of this potential, from 2000 to 2010, Year 2020 2030 2050
the proven natural gas reserves of China almost doubled.
Predicted by the new national oil and gas resource assessment Conventional natural gas 200 250 250
CBM 20 40 50
conducted by the Ministry of Land and Resources (MLR) in 2007
Shale gas and other unconventional resources 10
(Xinhua Net, 2008), the ultimately recoverable conventional natural Total amount 220 300 Above 300
gas reserves totaled 22 trillion cubic meters, which is almost eight

Table 1
The production of natural gas in China (BP-British Petroleum. BP Statistical Review of World Energy, 2011); units are in billions of cubic meters per annum.

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Production 27.2 30.3 32.7 35.0 41.5 49.3 58.6 69.2 80.3 85.3 96.8
 L. Ma et al. / Energy Policy 62 (2013) 531539 533

listed in Table 3 (BP-British Petroleum. BP Statistical Review of
World Energy, 2011). In addition to the three LNG terminals that
are already in operation, the Central Asia natural gas pipeline,
which is a strategic channel of natural gas imported from Central
Asia to China, started its operation in 2011. If all of the natural gas
import projects planned, as listed in Table 4, can be successfully
implemented, the annual natural gas imports into China will be 80
billion cubic meters in 2020 and 150 billion cubic meters in 2030
(Qiu et al., 2011).
2.4. Consumption
The natural gas market in China has been rapidly growing in
recent years. Table 5 lists the total amount and portions of the nal
consumption of natural gas in China (DESNBS-Department of
Energy Statistics of National Bureau of Statistics of China, 2012).
In 2000, natural gas was used mainly for industrial fuel and
chemical production; a smaller amount was used for city gas
(domestic and commercial use), and even less was used for power/
heat generation and in vehicles. However, the situation changed
signicantly in 2010 because city gas became the largest
Table 3
The natural gas imports into China in 2010 (BP-British Petroleum. BP Statistical
Review of World Energy, 2011); units are in billions of cubic meters per annum.
Type By LNG
Amount 12.8
consumption market and the portion of power/heat generation
and vehicle use both increased dramatically.
With the rapid economic growth and urbanization process, the
natural gas demand in China is predicted to continue to grow
rapidly (Li et al., 2010; Xu and Wang, 2010). The current small scale
of natural gas consumption, which only accounted for 4.4% (based
on the coal equivalent method) of the total primary energy
consumption of China in 2010, was mainly due to the low
availability of natural gas. Although some regions have large
natural gas elds or LNG terminals or can be reached by long
natural gas pipelines, numerous small to medium-sized cities in
China still did not have gas available from a natural gas pipeline,
which has resulted in a rapid development of domestic LNG-based
gas supplies in recent years (Lin et al., 2010; Guo et al., 2010).
3. The potential of natural gas to be supplied as an automotive
fuel
Referring to the natural gas utilization policy enacted by NDRC-
National Development and Reform Commission of China (2007),
city gas and vehicle use are both considered to be high-priority
uses of natural gas. Considering their comparatively high eco-
nomic affordability and signicant environmental benets, city gas
and vehicle use were recognized as the most promising markets
for natural gas in China; their total portion of natural gas use is
expected to be 41% in 2030 (Qiu et al., 2011). If the Chinese natural
By pipeline gas supply is 450 billion cubic meters in 2030, as predicted, and if
only 510% of this supply was used for vehicles, then the total
3.55
amount of natural gas resources available for vehicles would be

Table 4
The projection of natural gas imports into China (Qiu et al., 2011); units are in billions of cubic meters per annum.

Project 2020 2030 2040 2050 Remark

Sino-Russia pipeline 30 60 80 Planned

Central Asia pipeline 30 30 30 30 Partially in operation; the annual transport capacity reached 17.7 billion cubic meters
in April 2011 (CNPC-China National Petroleum Corporation, 2011)
Sin-Burma pipeline 10 10 10 Planned
LNG import 50 80 100 130 In 2010, there were three LNG terminals already in operation, and 79 terminals
were under construction or planned a
Total amount 80 150 200 250

a
The three LNG terminals already in operation in 2010 were located in Guangdong (Shenzhen), Fujian and Shanghai. In addition, there were two terminals located in
Liaoning (Dalian) and Jiangsu that were under construction. Moreover, the NDRC had approved the construction of an LNG terminal in Zhejiang and approved preparation
work for the terminal in Shandong (Qingdao) in 2009. Furthermore, there are an additional 35 projects already planned (Li et al., 2010; Lin et al., 2010).

Table 5
The nal consumption of natural gas in China (20002010); units are in billions of cubic meters per annum.

Item 2000 2005 2006 2007 2008 2009 2010

a
Total nal consumption, billions of cubic meters 24.3 46.0 55.2 69.6 80.3 88.9 106.4
Portion for industrial fuel b 40.2% 33.7% 29.2% 26.7% 29.7% 28.9% 27.7%
Portion for chemical production c 36.8% 31.2% 32.6% 30.1% 25.4% 20.4% 18.2%
Portion for city gas d 17.1% 26.0% 27.9% 29.0% 30.6% 30.6% 31.5%
Portion for vehicle use e 1.8% 4.1% 4.3% 3.4% 4.4% 5.1% 5.0%
Portion for power/heat generation f 4.1% 5.0% 6.0% 10.8% 9.9% 15.0% 17.6%
Total portion 100% 100% 100% 100% 100% 100% 100%

a
These entries are estimated based on the table Consumption of natural gas and its main varieties by sector in the China Energy Statistical Yearbook 2011. The total nal
consumption is calculated by the total consumption minus the consumption of the sector Production and Distribution of Gas.
b
This line includes all of the other sectors in addition to those included in chemical production, city gas, transportation and power/heat generation, and accounts for 95%
of the consumption of the sector Extraction of Petroleum and Natural Gas.
c
This line includes Manufacture of Raw Chemical Materials and Chemical Products, Manufacture of Medicines, Manufacture of Chemical Fibers, Manufacture of
Rubber, and Manufacture of Plastics.
d
This line includes Construction, Wholesale, Retail Trade and Hotel, Restaurants, Others, Residential Consumption, and half of the consumption of Transport, Storage
and Post.
e
This line gives estimates of half of the consumption of Transport, Storage and Post. In 2005 and 2008, the portion of natural gas used for vehicles in this sector was 52%
and 46%, respectively (Wang, 2010); thus, 50% is taken as the default value.
f
This line includes Production and Distribution of Electric Power and Heat Power and 5% of the consumption of Extraction of Petroleum and Natural Gas.
534 L. Ma et al. / Energy Policy 62 (2013) 531539
22.545 billion cubic meters in 2030, which is approximately 49
times the 2010 amount. Based on evaluations of the vehicle energy
demand, the motor vehicle population of China is predicted to be
338.1 million in 2030 (Ou et al., 2010b), which is over ve times
that in 2009. The vehicle energy consumption is predicted to be
approximately 450 Mtoe (million tons oil equivalent) in 2030,
which is over three times that in 2009.
In summary, although China is not very rich in natural gas
resources, there is a large potential for natural gas as an automotive
fuel before 2030 because of the rapid development of natural gas
production, transportation and consumption, and the rapid growth of
the vehicle population and vehicle energy demand, and this use of
natural gas is especially needed as vehicular particulate matter (PM)
emissions in Chinese urban areas need to be reduced signicantly.
Once the natural gas supply and the vehicle energy demand are
both ensured, market competitiveness becomes the major issue for
the development of natural gas as an automotive fuel. This issue is
closely related to the technical performance, market situation, and the
government policies governing the technology pathways for the use
of natural gas as an automotive fuel. Therefore, we introduce the
development of various technology pathways for the use of natural
gas as an automotive fuel in the following sections.
4. CNG vehicles
4.1. Technical mechanism
In a CNG vehicle, natural gas is compressed to a pressure of
approximately 20 MPa and stored in a high-strength gas tank. For
refueling the vehicles, CNG lling stations are required. Fig. 1
illustrates a typical process of a CNG lling station and a CNG
vehicle (Meng, 2010).
LNG can also be used to refuel CNG vehicles. In such a case, an
L-CNG lling station is required, in which natural gas is stored as
LNG but sold as CNG by moving rst through a low temperature
and high pressure pump, then through the gasication device, and
nally through the CNG sales machine. In addition, a CNG vehicle
can be a gasolineCNG dual-fuel vehicle, in which the standard
gasoline system of the vehicle remains installed and a CNG system
is added, allowing the driver the choice of using gasoline or CNG.
4.2. Technology performance
Primarily using natural gas, CNG vehicles have the advantages
of reduced conventional air pollutant emissions, reduced GHG
emissions, and reduced fuel costs compared to conventional
Fig. 1. A typical process of the technical system of a CNG lling station and a CNG
vehicle.
oil-fueled vehicles. CNG vehicles have the advantage of generating
less particulate matter than conventional oil-fueled vehicles
(McCormick et al., 2000), and they can signicantly reduce CO
emissions, hydrocarbons (HCs) emissions (Chen et al., 2009; Aslam
et al., 2006), and NOx emissions (Chen et al., 2009).
Previous studies on the technical performance of natural gas
vehicles in China are mostly limited to natural gas buses. Based on
a life-cycle assessment (LCA) of the alternative fuel buses currently
in use in China (Ou et al., 2010a), the well-to-tank (WTW) fossil
fuel use per kilometer driven of the CNG buses is approximately
the same as that for diesel buses, but the GHG emissions is lower.
For the fuel cost, referring to an investigation of the CNG price and
the gasoline price in 9 Chinese cities in 2009, the vehicular CNG
price per cubic meter is only 36.459.8% of the gasoline price per
liter, while the mileage per cubic meter of CNG is approximately
the same as that per liter of gasoline (Zhou et al., 2010).
However, there are two main disadvantages of CNG vehicles.
First, the mileage of CNG vehicles is only approximately 150 km
because of their limited energy storage capacity caused by the low
energy density of CNG (Chen et al., 2009; Meng, 2010). Another
problem is the high investment and land use of CNG lling
stations, which also depend on the natural gas pipeline system.
To build a standard CNG lling station in China, with a capacity of
supplying 1520 thousand cubic meters of CNG per day, requires
an investment of approximately 2.2 million US$ (2009 price) and a
land area of 3 thousand square meters. Moreover, for security
concerns, a station should be kept 100 m from public buildings
and 2030 m from civil buildings. Therefore, it is difcult to build
CNG lling stations in a downtown area, in which the population
density is usually high, especially in large cities.
In addition, the environmental performance of CNG vehicles is
challenged in some respects. For example, the emission of HCs,
volatile organic compounds (VOCs), and NOx of CNG vehicles in
some cases can be higher than comparable oil-fueled vehicles
(McCormick et al., 2000; Pastorello et al., 2011). Note that, if there
are not strict environment regulations, the CNG vehicle exhaust
gas can be composed of potentially toxic substances that will
inuence public health (Sohail et al., 2009).
4.3. Market application
Early in 1999, China launched a program called Clean Vehicle
Action of Air Purication Engineering to promote the demonstra-
tion of CNG vehicles in 12 cities, which was expanded to 19 cities
in 2005. After over 20 years of technology research and develop-
ment (R&D) effort, China has developed an entire CNG vehicle
manufacturing industry, which can produce most of the devices
required by CNG vehicles and the required lling stations. In 2007,
the total production of CNG vehicles in China was 57 thousand,
and there were 58 companies producing CNG vehicles and 18
companies producing CNG engines (Li and Zhou, 2008).
Stimulated by these efforts and others, over 100 cities in China
had deployed CNG vehicles in 2008 (Zhou et al., 2010). According to
the statistics of IANGV-International Association for Natural Gas
Vehicles (2011), the total population of NGVs in China increased from
2 thousand to 450 thousand during 20002010, with most of them
being CNG vehicles, while 1350 natural gas refueling stations were
built. Referring to personal communications with NGV experts in
China, the actual number of CNG vehicles is much more than the
number reported in the IANGV statistics.
However, compared to other countries, the population of NGVs in
China is still at a low level (Fig. 2). Moreover, the regional develop-
ment of CNG vehicles is quite imbalanced in China. Over half of these
vehicles are concentrated in 16 provinces or cities, especially in
regions that are rich in natural gas resources, such as Sichuan
province, Chongqing province (previously a part of Sichuan), Urumqi
 L. Ma et al. / Energy Policy 62 (2013) 531539 535

in Xinjiang province, and Xi'an in Shaanxi province. In 2010, Xinjiang,
Sichuan, and Shaanxi were ranked as the top three provinces for
provincial natural gas production and together produced 75% of the
natural gas in China (DESNBS-Department of Energy Statistics of
National Bureau of Statistics of China, 2012).
To further understand the imbalanced regional development of
CNG vehicles, we consider Shanghai and Chongqing (next to Sichuan)
as two typical cases for comparison. They were both focused regions
in the 1999 clean vehicle action. However, their recent situations with
respect to CNG vehicle development are quite different.
In 2006, Shanghai had only 281 CNG buses, which was 1.6% of its
bus population, and only four CNG stations. The main reasons for the
slow development of CNG buses appear to be the following: (1) the
CNG buses were all imported, and the purchasing cost was much
higher than that of diesel buses; (2) the natural gas prices are high,
and the vehicle natural gas supply is unstable; (3) the CNG lling
stations were located far from downtown, making it inconvenient for
refueling, and they were not protable with small CNG sales; (4) there
was insufcient policy support from the local government, with the
only policy being the one-time 80,000 RMB subsidy for the purchase
of each CNG bus (Zhang, 2009).
In Chongqing, over 90% of the buses and taxies were using CNG
in 2007, including many private cars and motorcycles, and the total
population of CNG vehicles in Chongqing was over 40 thousand.
The main reasons for the rapid development of CNG vehicles are the
following: (1) the purchase and operating costs of the CNG vehicles
were low, with strong support from the local CNG vehicle manu-
facturing industry, which occupied 30% of the market in China; (2)
the Sichuan basin is rich in natural gas resources, and the natural
gas price was low; (3) 61 CNG lling stations had been built, which
made it convenient for refueling; (4) there has been strong policy
support from local governmentan ofce of the leading group of
natural gas vehicles was founded by 16 departments of the
12000
China
11000
10000 India
9000 Brazil
8000 Argentina
7000
Iran
6000 Pakistan
5000
World
4000
3000
2000
1000
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Fig. 2. The NGV population of China, the total world, and six countries with the
largest NGV population. Units are in 1000s.
municipal government, and a series of standards, favorite policies
and R&D policies were enacted and implemented (CSTI-China
Science and Technology Information, 2008).
With an on-site investigation, we further proved the economic
advantage of CNG vehicles in regions with abundant natural gas
resources. Table 6 lists the investigation results of the economics
of CNG vehicles in a small city of Sichuan province. Because of the
low price of local natural gas, the fuel cost of the taxi driver was
reduced by over half after a retrot into a CNG vehicle. In addition,
almost every town in Sichuan province had built at least one CNG
station, and the networked CNG lling stations made it convenient
to run CNG vehicles within the entire province.
4.4. Key policy issues
Referring to the practices in China, the main barriers to the
large-scale development of CNG vehicles are summarized as
follows:
 Insufcient policy support for CNG lling stations. Some cities
even canceled the policy favoring the land use of CNG stations
in recent years (Zhou and Li, 2009), while in Europe and South
America, the policy support for CNG vehicles normally includes
a favorable policy and a subsidy for CNG lling stations (Wang
and Xu, 2010).
 Increasing natural gas prices. In 2010, the baseline wellhead
price of natural gas was adjusted by NDRC from 0.925 RMB per
cubic meter to 1.155 RMB per cubic meter, which is a 25%
increase. With increasing natural gas imports, the natural gas
price in China tends in the long run to rise continuously to
nally converge with the international market, while in some
European countries, the vehicle CNG is usually tax exempted or
reduced.
 A lack of planning for CNG home stations (connected with the
pipeline), CNG sub-stations (with CNG supplied by gas tankers)
and CNG distribution infrastructure (gas tanker eets) in the
development of natural gas transportation and storage systems,
combined with the typical requirement of a CNG home station
for the large-scale deployment of CNG vehicles.
2009 2010 Therefore, we can summarize that the land use and cost of CNG
lling stations and the vehicle natural gas prices are the key policy
issues for the deployment of CNG vehicles in China.

Table 6
An economic analysis of the CNG vehicles in a small city of Sichuan province.

Item Cost (2009 Remark

price)

Natural gas 0.146 $/cubic The gas eld is only approximately 100 km away and is owned by the China Petrochemical Corporation (Sinopec)
wellhead price meters
Natural gas sales 0.263 $/cubic The natural gas pipeline is owned by the China National Petroleum Corporation (CNPC). The price listed to the left is the price
price meters sold to the CNG station, while the price of city gas is only 0.19 $/cubic meters
CNG sales price 0.395 $/cubic This price is from one of the only two CNG stations in the city. It was constructed in 2000 with an initial investment of $1.75
meters million while the land was occupied by its operator. The life time is expected to be 2030 years. The CNG sales are 130,000 m3 per
day
Vehicle fuel cost 3.79 $/day The result of interviewing CNG taxi drivers. The taxi is retrot into a CNG vehicle with a cost of only $439, which is primarily paid
(CNG) by the CNG station and is returned back from the driver by the extra cost of refueling. The fuel economy is roughly estimated to
be 8 m3/100 km, and the mileage is estimated at 120 km/day
Vehicle fuel cost 8.54 $/day The gasoline price is $0.89 per liter. The fuel economy is estimated to be 8 l/100 km, while the same mileage is assumed
(gasoline)
Vehicle fuel cost 4.75 $/day Using CNG costs 55.6% lower than using gasoline
saving
536 L. Ma et al. / Energy Policy 62 (2013) 531539
Fig. 3. A schematic of the technical system for a typical refueling process of a LNG
station and a LNG vehicle.
5. LNG vehicles
5.1. Technical mechanism
LNG is a liquid mixture that is obtained by refrigerating natural
gas to 162 1C under atmospheric pressure. One cubic meter of
LNG can usually contain 620 standard cubic meters of natural gas,
which is approximately 2.5 times the amount in one cubic meter
of CNG under 20 MPa pressure. In a LNG vehicle, natural gas is
stored in the liquid phase at a very low temperature and must rst
be heated and vaporized before being burned in the gas engine; as
a result, unique technologies are required. Typically, the pressure
before the engine is 0.3451.035 MPa, and the temperature is
between 40 1C and 90 1C, while the pressure of the fuel tank is
0.41.6 MPa (Lu et al., 2003).
Special gas stations are also required for refueling LNG vehicles.
In addition to an LNG station, a CNG station could also provide LNG
if it is installed with a small-scale liquefaction plant. For an LNG
station, the LNG is typically supplied by LNG tankers because on-
site liquefaction is not very economical. A typical refueling process
for a LNG station and a LNG vehicle is illustrated in Fig. 3. Because
of the high density of LNG and the elimination of the gas
compressor, an LNG station is typically more compact, makes less
noise and is also less expensive than a CNG station. Moreover, a
LNG station can be pre-assembled in the factory and then shipped
to the site, making the installation much easier.
5.2. Technology performance
To produce LNG, the natural gas must rst be dehydrated and
then be subjected to the removal of hydrocarbons, sulfur and CO2,
which produces a high purity of methane; thus, LNG vehicles
produce even lower amounts of conventional air pollutant emis-
sions than CNG vehicles and almost no toxic emissions. Moreover,
the fuel economy of LNG vehicles is also better than that of CNG
vehicles. Referring to the experiences of LNG buses used in Beijing,
and comparing them to comparable diesel buses, the use of LNG
buses could reduce energy consumption, CO emissions, and CO2
emissions (Yang, 2009). Based on an LCA of the LNG heavy-duty
vehicles in Europe (Arteconi et al., 2010), when LNG is purchased
from the regasication terminal, it provides a 10% reduction of the
WTW CO2 emissions compared to diesel vehicles; when LNG is
produced by the on-site small-scale liquefaction plant, the emis-
sions are nearly the same as for diesel vehicles. The CO2 reduction
benet of LNG vehicles compared to CNG vehicles is primarily the
result of the vehicle combustion phase, while emissions caused by
its production are the same and the emissions caused by the
transportation phase are higher.
Furthermore, the most important advantages of LNG vehicles
are the greatly improved mileage, the reduced refueling times, and
the reduced size and weight of the vehicle fuel supply system
because the volume of LNG per unit weight is only 1/3 that of the
CNG. A LNG bus used in Beijing with a fuel tank of 335 l that can
contain 135 kg of LNG (190 m3 of natural gas) can travel 450 km
after one refueling (Lu et al., 2003). A LNG heavy-duty truck in the
U.S. or Canada, with a fuel tank of 680 l can travel 800 km after
one refueling (Zhou et al., 2010). Moreover, the time cost for
refueling LNG vehicles is only 1/31/5 the cost of CNG vehicles,
and LNG can be used as source of cooling for refrigerated trucks
and air-conditioned cars.
Moreover, the investment and land use of an LNG station are
much less than those of a CNG station, and it is easy to network
the sites because the LNG system does not depend on the natural
gas pipeline system (Lin et al., 2010). Currently in China, an LNG
lling station occupies only 8001000 m2 of land, and the invest-
ment is 1.21.5 million US$, with a supply capacity of 1224
thousand cubic meters of natural gas per day.
The main disadvantages of LNG vehicles are the comparatively
high purchase and operating cost of the vehicle and the higher
price of LNG compared to CNG. Furthermore, once LNG leaks into
the air, it can cause environmental and safety problems. In
summary, although LNG vehicles look very promising, because
they are still in the early stages of development both in China and
the rest of the world, their technology performance can only be
improved with more experience.
5.3. Market application
Because of the high vehicle cost and the requirement for lling
stations, LNG vehicles are more suitable for long trips and heavy-
duty vehicles. In the U.S. and Canada, LNG heavy-duty trucks using
high-pressure direct injection technology have already been
placed into commercial operation.
In China, the Clean Vehicle Action also supported the demon-
stration of LNG buses. Currently, buses powered by LNG are in
operation in four major cities, Beijing, Urumqi, Changsha and
Guiyang (Lin et al., 2010; Guo et al., 2010), and are in operation
in other cities. Referring to the information from 2009, there were
over 400500 LNG buses in use in China: 50 LNG buses in Beijing,
290 LNG buses in Guiyang, 39 LNG buses in Fuzhou, and 70 LNG
buses in Zhengzhou. In addition, other regions took ambitious
actions or made plans to deploy LNG vehicles. For example,
Shijiazhuang (Hebei province) purchased 600 LNG buses, Huizhou
(Fujian province) purchased 50 LNG buses, and the construction of
the rst Chinese LNG-vehicle demonstration area was well under-
way in Hainan province.
Since 2003, China has been conducting R&D on LNG vehicles
and their accessories. For example, a prototype bus powered by
LNG was developed by Shanghai Jiao Tong University and Shanghai
Sunwin Bus Corporation (Lin et al., 2010). With the domestic
availability of LNG fuel tanks, the cost of an LNG vehicle has
become only marginally higher than the cost of a gasoline-fueled
vehicle. What mainly restrains the development of LNG vehicles
today is not the cost of the vehicle or the price of LNG; instead, the
constraint is the lack of availability of LNG. However, with the
rapid development of the LNG industry in China, there are great
opportunities for future LNG vehicle development.
5.4. Key policy issues
The main barriers to the development of LNG vehicles in China
can be summarized as follows:
 L. Ma et al. / Energy Policy 62 (2013) 531539
 Domestic LNG vehicle and lling station technologies are not
mature, and more R&D support is required.
 There is a lack of national standards for LNG vehicles and LNG
lling stations. Two national automobile business standards, QC/T
755-2006 and QC/T 754-2006, were issued by the NDRC-National
Development and Reform Commission of China (2006) for LNG
buses. However, other technical standards, especially standards
for LNG lling stations, are urgently needed.
 There are issues on the land use of lling stations and the
natural gas price, which are similar to those for CNG vehicles,
even though LNG lling stations have the advantage of less
land use.
Therefore, the domestic technology availability, technical stan-
dards and natural gas price are the key policy issues of LNG
vehicles development in China.
6. A brief review of other technology pathways
Other technology pathways for using natural gas as an auto-
motive fuel are all indirect pathways, such as GTL, natural gas to
methanol, dimethyl ether (DME) and the use of electric vehicles,
which all rst convert the natural gas into other types of energy
carriers. Among them, GTL has received more attention because it
can produce high-quality diesel with extremely low sulfur content
and nearly no requirement for retrotting conventional oil-fueled
vehicles and gas stations. While new projects involving natural gas
to methanol and DME are currently prohibited by the NDRC's
natural gas utilization policy and GTL is only restricted, the
domestic production capacity of coal to methanol and DME were
already in states of overcapacity in recent years. The barrier to the
development of electric and hydrogen cars lies mainly in the
vehicle technology and other aspects, such as infrastructure, other
than the natural gas supply itself.
The technology mechanism of GTL (indirectly) is similar to coal
liquefaction because the key technology of both is the Fischer
Tropsch synthesis. Globally, three well-known GTL plants are
already in operation, including the largest plant, which is located
in the Mossel Bay of South Africa and was built in 1999 with a
capacity of 12 million tons of liquid produced per year. Currently,
there are two new large GTL plants in operation in Qatar by Sasol
and Shell, both of which separately. The natural gas used for GTL is
predicted to increase from 5 billion cubic meters in 2006 to 50
billion cubic meters in 2030 (IEA-International Energy Agency.
World Energy Outlook, 2008); however, recent activities of GTL
development have been primarily concentrated in major natural
gas export countries.
Although GTL can greatly reduce conventional emissions in the
vehicle combustion phase, it will increase the LCA fossil fuel
consumption and GHG emissions compared to petroleum-
derived diesel buses, which mainly results from the low conver-
sion efciency of the fuel synthesis phase. For buses running in
Beijing, the WTW energy consumption of GTL is 31.274.2% higher
than petroleum-derived diesel buses; the CO2 emissions are 7.4
27.3% higher, while the main uncertainty is the synthesis efciency
of GTL, which is between 54% and 70% (Hao et al., 2010).
Furthermore, GTL is not as economically competitive compared
to the rapidly developing coal liquefaction infrastructure in China.
The rst direct coal liquefaction plant, with a capacity of 1.07
million tons of liquid per year, has already started operations in
Ordos Basin in 2009, and three pilot plants of indirect coal
liquefaction have been built in China.
537
7. Policy implications
7.1. Keep natural gas vehicles as a prioritized area for natural gas
utilization in China
With the rapid development of natural gas production, import-
ing and transportation infrastructure, the regional natural gas
availability in China will be greatly improved in the near future,
while the vehicle natural gas consumption will continue to rapidly
increase. Having the benet of reduced conventional air pollutant
emissions, GHG emissions and fuel cost relative to oil-fueled
vehicles, the deployment of natural gas vehicles, including CNG
vehicles and LNG vehicles, should remain a high priority of natural
gas utilization policy at the national level because of the following
reasons:
 Natural gas vehicles are not only an expedient alternative for
gasoline-fueled and diesel-fueled vehicles (Ma et al., 2009;
2011; 2012), but they are also unique among the various
alternative choices. If one only considers the potential scale of
replacing gasoline/diesel and the requirement of cost-competi-
tiveness, coal-derived fuels, such as direct/indirect coal lique-
faction and coal to methanol, are better choices than natural
gas in the near term. However, their application is always
disputed because of the extra energy consumption, water
consumption, and CO2 emissions caused by the relatively
inefcient conversion processes of generating liquid fuel from
coal. Although bio-fuels and the use of EVs (electric vehicles)
are desirable alternatives to gasoline/diesel for sustainable
development, they are difcult to deploy on a large scale in
the near term because of various technical and economic
problems. By considering both the cost-competitiveness and
the reduced emissions and energy consumption, natural gas
vehicles appear to be the most realistic choice of all of the
gasoline/diesel alternatives in near- and mid-term (Qiu et al.,
2011).
 Using natural gas, as an automotive fuel (compared to petroleum-
derived fuels) is more cost-competitive than using it for power
generation (compared to coal-red power plants) in the near- and
mid-term. However, in the long term, environmental concerns of
coal-red power plants may make displacement of coal by natural
gas in the power sector attractive.
Therefore, referring to the analysis in Section 3, signicantly
increasing the scale of the market application of natural gas
vehicles before 2030 is recommended at possibly 39 times that
of 2010 as measured by natural gas consumption to help relieve
the pressure of urban environmental protection and national
energy security caused by gasoline/diesel consumption of vehicles
before 2030.
Referring to the different technical characteristics of CNG and
LNG vehicles, we recommend the promotion of the use of CNG
vehicles on short-trips and for light-duty vehicles, such as city
buses, taxis, and even private cars, and the promotion of the use of
LNG vehicles on long-trips and for heavy-duty vehicles, such as
inter-city buses and heavy-duty trucks.
7.2. Support the construction of natural gas lling stations and
implement a pricing policy that favors vehicle natural gas
The lack of natural gas lling stations and increasing natural
gas prices are the major barriers to the further development of
CNG and LNG vehicles; the former barrier is caused mainly by the
difculty of obtaining land resources and the high investment of
natural gas lling stations. Thus, the promotion of a policy that
favors the land use, investment and operational costs of natural
538 L. Ma et al. / Energy Policy 62 (2013) 531539
gas lling stations is recommended to build a network of natural
gas lling stations; such a policy is especially useful in large cities
to enhance the planning and construction of CNG home stations
during the construction of the natural gas pipeline network and
the planning of LNG or L-CNG lling stations during the construc-
tion of LNG plants and LNG terminals and to complete the
technical standards of LNG lling stations. In addition, it is
essential to promote a favorable pricing policy of vehicle natural
gas for the large-scale development of natural gas vehicles across
the country. Otherwise, it will still be limited to regions with
abundant natural gas supplies, as is the current situation.
7.3. Enhance the technology R&D for LNG vehicles
LNG vehicles are more advanced than CNG vehicles in some
respects, especially their high mileage and lower emissions, although
the technology performance needs further improvement. To promote
the development of LNG vehicles, enhanced R&D of domestic LNG
vehicles and LNG lling station technologies is required to lower the
cost, while more R&D efforts must be made to further improve the
environmental performance of CNG vehicles.
Although GTL has almost no requirements for new infrastruc-
ture and there are supplies of high quality and low sulfur diesel for
vehicles, GTL has a higher life cycle energy consumption and GHG
emissions and thus can be only treated as a strategic reserve
technology.
8. Conclusions
In this work, the potential of natural gas used as an automotive
fuel in China has been discussed through a brief overview of
natural gas development and the future demand of automotive
energy. The development of CNG vehicles and LNG vehicles are
reviewed from aspects including technical mechanism, technology
performance, market application, and key policy issues, and the
development of other technology pathways are briey discussed.
The potential of increasing the use of natural gas as an
automotive fuel is quite large in China, and the 39 time increase
in the natural gas supply for automotive fuel from 2009 to 2030
that is likely to occur should be encouraged. To promote the
development of natural gas as an automotive fuel, in addition to
the increase of the natural gas supply, it is important to support
the construction of natural gas lling stations, develop a favorable
pricing policy for the natural gas used in vehicles, and enhance the
technology research and development of natural gas vehicles to
further improve the technology performance.
The uncertainties of this work are primarily the lack of
statistical data and technical performance data of natural gas
vehicles in China because natural gas supply and utilization,
including natural gas vehicles, currently is not managed as an
independent industry. However, it is more important to judge the
policy directions of natural gas as an automotive fuel based on the
available knowledge at the early stage of the rapid development of
natural gas supply and utilization in China rather than to wait for
more accurate and systematic research in the future.
Acknowledgements
The authors are grateful for the sponsorship of the China
Automotive Energy Research Center (CAERC) of Tsinghua Univer-
sity for this study.
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