By John Kemp
LONDON May 25 Widespread use of alternative
motor fuels has been hampered by lack of fuel distribution
infrastructure, despite strongly favourable economics for
alternatives to gasoline and diesel, and a range of financial
incentives offered by U.S. federal and state governments.
The U.S. federal government's commitment to alternatives,
coupled with renewed interest among large commercial fleet
operators, encouraged by the big spread between cheap natural
gas prices and the high cost of petroleum-derived fuels, could
provide the critical mass of demand to support the roll out of a
nationwide alternative fuel system.
But effectiveness will be maximised only if federal agencies
and private fleet operators settle on a relatively limited
number of alternative technologies, at least in particular
areas, rather than fragment their consuming power across the
full range country wide. Early indications are not hopeful.
ALTERNATIVE FUELLED VEHICLES
Federal law defines alternative fuel vehicles broadly to
include both those running on alternative fuels such as
compressed natural gas (CNG), liquefied natural gas (LNG),
hydrogen and high blend ethanol (E85) as well as certain
qualifying hybrid electric vehicles run on a combination of
regular petroleum and electricity (42 USC 13211).
In 2010, there were nearly 1 million vehicles running on
alternative fuels in use across the United States, according to
the Department of Energy's Alternative Fuels and Advanced
Vehicles Data Center, up from less than 400,000 a decade
earlier. In addition, more than 2 million hybrid electric
vehicles had been sold over the same period.
Alternative fuelled vehicles are still a tiny minority of
vehicles on U.S. roads, but the number is increasingly rapidly.
The problem is that few are actually filling up with
alternatives to gasoline owing to the lack of outlets actually
selling alternative fuels such as E85 or LNG.
There were just 10,000 fuelling stations dispensing
alternative fuels in 2011 (up from less than 7,000 in 2010). Of
those, a little over 3,300 were supplying electricity (six times
as many as in 2010 making this the fastest growing segment of
the alternative fuel infrastructure).
But less than 1,000 dispensed compressed natural gas, and
just 45 dispensed LNG. Even E85 was available from fewer than
In contrast, there are almost 160,000 retail gasoline
stations across the country, and many more private refuelling
facilities owned by large fleet operators such as UPS, transit
systems, and the federal government.
Availability problems are compounded by the uneven
distribution of alternative fuelling stations. There are lots in
California, the nation's biggest vehicle market, and another
concentration in the ethanol-producing states of the Midwest
such as Illinois, Indiana and Minnesota, but not many in the
rest of the country.
Drivers in Ohio have access to just 74 dispensing E85, nine
providing CNG, and none selling LNG, according to the Energy
Department. The result is that even when cars are capable of
running on alternative fuels, many are actually filling up with
regular gasoline and diesel, defeating the object of having them
in the first place.
ACHIEVING CRITICAL MASS
Commercial incentives to adopt alternative vehicles
(including electric hybrids) have never been greater, especially
for fuels derived from natural gas, as oil prices have remained
stubbornly stuck above $90 per barrel while natural gas has
slumped to its lowest in more than a decade, and seems set to
remain low owing to fracking.
The challenge for alternative fuel advocates and
policymakers keen to reduce dependence on petroleum-derived
fuels is how to encourage the uptake of alternative fuelled
vehicles without the infrastructure in place and how to
incentivise the rollout of the infrastructure without the
vehicles (the familiar coordination problem).
One obvious solution is to encourage take up by operators of
large vehicle fleets who could help provide the critical mass of
consumption that would justify large-scale investment in an
alternative fuelling infrastructure.
Some large fleet operators are already converting to the use
of alternative fuelled vehicles, according to an excellent
analysis in the Wall Street Journal on Wednesday ("Will truckers
ditch diesel? Surplus of natural gas prompts some fleets to
switch; lack of fuelling stations" May 23).
The Journal cites conversion and purchasing programmes at
garbage collector Waste Management Inc, UPS and AT&T.
But the biggest boost to alternative fuels could come from
the federal government, which is the largest fleet operator of
FEDERAL GOVERNMENT FLEET
The federal government owns more than 650,000 vehicles,
across civilian agencies (250,000), the postal service (212,000)
and the armed forces (190,000). The federal fleet inventory
includes 250,000 passenger cars and over 400,000 trucks, as well
as nearly 10,000 other vehicles. The vast majority are in the
United States itself, according to the General Services
Federal vehicles drove 5.2 billion miles in 2010, about
7,850 miles each, and consumed the equivalent of 414 million
gallons of gasoline. The fleet used 322 million gallons of
actual gasoline (accounting for 77 percent of the total) and 75
million gallons of diesel (18 percent), with just 8 million
gallons (2 percent) each of low-blend biodiesel and E85.
In fact the government has a large number of alternative
fuelled vehicles. Of the total stock of more than 650,000
vehicles in the federal fleet, almost 160,000 (23 percent) could
run on E85, but most were actually run on conventional gasoline
and low ethanol blends, mostly because appropriate fuelling
facilities were not available.
Another 85,000 were diesel hybrids and 10,000 gasoline
hybrids, with less than 6,000 able to run on CNG and just 7 on
LNG, according to GSA's annual Federal Fleet Report.
But it could all be about to change.
In October 2009, President Barack Obama signed Executive
Order 13,514 which directs GSA to issue government-wide guidance
on fleet management, including acquisition of alternative
fuelled vehicles and purchase of alternative fuels, improvement
in fuel economy and limits on the overall size of the fleet as
well as cutting miles travelled and other strategies to reduce
That has now been backed up by a Presidential Memorandum on
Federal Fleet Performance issued in May 2011. It directs that by
the end of 2015 all new light duty vehicles purchased by the
federal government must be alternative fuelled vehicles, and
they must be operated on the fuel for which the vehicle was
The memorandum also instructs the Energy Department to work
with the United States Postal Service to evaluate the best
alternative fuels for the post office fleet.
Policy is developed and enforced by the GSA and the Federal
Fleet Policy Council (FEDFLEET), which brings together
representatives from agencies and functional bureaus that
operate federal motor vehicle fleets.
Uptake of alternative fuelled vehicles has been swift, even
if most of them are E85 vehicles (up from 96,000 to almost
160,000 between 2006 and 2010), and not yet actually running on
But the federal fleet turns over relatively rapidly. The
average age of civilian passenger vehicles is just 4.4 years,
while for trucks it is 6.8 years. For all vehicles in the
federal fleet, military as well as civilian, the average age is
10.5 years (basically reflecting the much greater average age of
postal service vehicles at 15.5 years).
The federal government buys more than 60,000 vehicles per
year. Almost half were E85 vehicles in 2010, up from a third in
2006. If agencies comply with the president's direction, almost
the entire fleet except postal vehicles will switch to
alternative fuels by 2025.
CONCENTRATION IS CRITICAL
Potentially, the conversion of the federal fleet, as well as
large private fleets, could provide the critical mass for a more
extensive roll out of the alternative fuel delivery network.
But concentration is crucial, and it may prove difficult to
achieve. While private fleet operators contemplate converting to
gas (either CNG or LNG), the federal fleet is converting to E85.
It has actually been buying fewer CNG vehicles over the last
five years (purchases dwindled to just 60 in 2010 from 243 in
2006) and there is no widespread LNG conversion programme in
The postal service might be the most promising place to
start but the agency's financial problems present a tough
The federal government and big private operators will
probably support roll out of private fuelling stations, at least
initially. That could still help build out the necessary
marketing and distribution infrastructure, but only if there is
some rationalisation of the alternatives supported in each