Does Daimler not believe in natural gas for vehicles—rightly or wrongly?

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By Rodrigo Baranna – Consultant

Daimler Trucks & Buses recently announced its goal of selling only carbon-neutral vehicles in Europe, Japan, and NAFTA countries (the U.S., Canada, and Mexico) by 2039. This goal focuses on emissions tank-to-wheel, that is, CO2 emissions from the exhaust. ^[1]

With this in mind, The automaker appears to be prioritizing electric vehicle technology options, whether battery-powered or hydrogen-powered. In his speech at a conference in Berlin ^[2], Daimler Truck CEO Martin Daum reveals that the company sees no future for CNG (Compressed Natural Gas) powertrains in a low-carbon world. Consequently, with investment constraints, this has led to the decision to discontinue the development of CNG vehicles. Indeed, Several studies agree that fossil-based natural gas does not significantly reduce emissions from heavy-duty vehicles, we discussed this in a previous installment of "Décryptage Mobilité" ^[3]. But if fossil natural gas does not reduce carbon emissions in the short term, Shouldn't we still be developing NGV to prepare the heavy-duty truck fleet for the transition to bio-NGV?

To answer this question, we must first understand the potential of bioNGV to decarbonize road freight transport. Carbone 4 recently published a study on the climate benefits of biomethane. It shows that biomethane produced from the French production mix reduces GHG emissions by 40% compared to natural gas from the grid.^[4].Note:A recent IFPEN publication for the CNG sector ^[5] assumes an emissions factor for bioNGV of 28.4 kgCO2eq/MWh, representing a reduction of nearly 90% compared to NGV. This figure seems surprisingly low, but since the source is not public, it is difficult to explain why. One likely explanation is that it accounts for emissions avoided in the agricultural sector (see figure below), even though carbon accounting norms and standards clearly prohibit adding emissions avoided to emissions reductions. In other words, a transportation operator using French bio-NGV cannot claim credit for the emissions avoided through anaerobic digestion in the French agricultural system, even though these emissions are very real and contribute to the significant benefits associated with this agricultural practice. We therefore consider a reduction of -40% for biomethane compared to natural gas, rather than -90%.

Assuming that CNG engines result in a reduction of 3 to 14% compared to diesel ^[6], the use of bioNGV could reduce GHG emissions by 42 to 48% compared to diesel engines. It is based on this assumption of a renewable gas supply that the National Low-Carbon Strategy (SNBC) is placing a strong bet on NGV to decarbonize the heavy-duty truck segment in France. Its baseline scenario projects a very significant increase in the share of NGV vehicles in the heavy-duty truck sales mix by 2050, as well as a 100% incorporation rate of biomethane into the natural gas network by 2050. ^[7].

Furthermore, by creating a new source of income for the agricultural sector, Biomethane production would also have the advantage of bringing the sector into the energy transition, while decentralizing domestic production. However, transportation is not the only sector that uses natural gas as an energy source. Other sectors, such as construction and manufacturing, are heavily dependent on it. On the one hand, French natural gas consumption in 2018 is estimated at 430 TWh for all uses combined ^[8], on the other hand, France's biomethane reserves are limited to about 200 TWh/year ^[4]. Given the magnitude of this gap, energy efficiency efforts alone will not be enough for France to achieve 100% green natural gas consumption by 2050. Therefore, The allocation of biomethane production among different uses will need to be optimized based on each sector’s ability to adopt other energy sources to meet its needs. Some sectors will be able to reduce their gas consumption more easily, such as the building sector, which will need to increase the share of renewable electricity and heat in its energy mix ^[9]. Even though the use of biomethane offers significant potential for reducing GHG emissions from heavy-duty vehicles (in the range of 40 to 50%), should we make the sector dependent on this limited resource? Would such an allocation be effective? Do other sectors have alternatives to natural gas that are more efficient than those in the transportation sector for decarbonizing their energy mix?

Sources: ^[1]Daimler^[2]Bloomberg^[3]Mobility Insights^[4]Carbon 4^[5]IFPEN^[6]Transportation & Environment^[7]DGEC^[8]Ministry of Ecological and Solidarity Transition^[9]SNBC