Global Trends in

Transport Fuels and the

Role of Natural Gas
Tony Pytte
Australian Institute of Energy
Perth October 2003

The world wants future transport fuels

and technologies that deliver:
Lower toxic emissions
Lower greenhouse emissions
Greater energy efficiency
Less dependence on foreign oil
Affordable transport

For many, this evokes visions of a Hydrogen

Economy requiring major technological
breakthroughs and infrastructure investments.

Incremental technology improvement is

the lower risk pathway to efficiency
CO2 Well to Wheels [g/km]

300
Lower technology risk pathway;
incremental technology improvements

H2 engine/Stop/Start
250
H2/Mild Hybrid
200

2002 TDI

APU@4Kw
H2 Parallel Hybrid

150
100

Higher technology risk pathway;

Forced early hydrogen

Stop/Start

H2 Fuel Cells?
Regen
Mild Hybrid

50

Further reduction
requires H2 fuel
without GHG cost

Diesel Parallel Hybrid

0
2000

2005

2010

2015

2020

2025

2030

Source: Ricardo Consulting Engineers, Carbon to Hydrogen Roadmaps for Passenger Cars, 2002

2035

Europe is leading the way to

sustainable transport
European policy promotes ultra-clean diesel fuels and
advanced diesel engine technologies because:

Diesel cars use 30-50% less fuel than petrol cars

Diesel engines last longer and require less maintenance
Greater engine efficiency lowers emissions of CO2 and
reduces petroleum consumption
The latest diesel technology requires no performance
sacrifice
A combination of tax incentives and emissions regulations
has shifted industry and consumers.

Europeans are shifting to diesel cars

9000

60

8000

55

7000

50
45

6000

40

5000

35
4000

30

3000

25

2000

20

1000

15

10
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Source: AID: Diesel Car Prospects to 2008; Nov,2002

% Market Share

1000 units sold

Forecast: CAGR 7%

Growing demand for diesel is shifting

the fuels market
45%

Middle distillates share of oil consumption

40%
35%
30%
25%
20%

World (excluding ex-Soviet Union)

15%

Europe
Asia-Pacific

10%
5%
0%

1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
Source: BP Statistical Review of World Energy, June 2002

Sulphur is being regulated out of diesel

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
United States
EU
Japan
Australia
Bangladesh
Cambodia
PRC
Hong Kong
India
Indonesia
Korea
Malaysia
Pakistan
Philippines
Singapore
Sri Lanka
Taiwan
Thailand
Vietnam

Key:

500
500
500
2000

15
350

50
50
500
5000

10
10
50

2000
5000
2000 500
5000
5000
2000
5000
10000
5000
5000
5000
500
2500
10000
>5000ppm

2000
50
2500

500

500
3000

350

430
500
5000
2000

500

500
3000
350
500
2000
3001-5000ppm 501-3000ppm

500
51-500ppm

16-50ppm >15ppm

Changing fuel demand/specifications is forcing major investments

GTL diesel can supplement refining

Total
Aromatics
(%)

USA
Europe

CARB

35

1993
1997
1998

15
10

2000
2005
2007

GTL
diesel

50
15
5

350 500

Sulphur (ppm)

Over 40% of new cars purchased in

W. Europe are diesel
Austria
Belgium
France
Luxembourg
Spain
Italy
W. Europe
Germany
Portugal
Great Britain
Netherlands
Denmark
Switzerland
Norway
Finland
Ireland
Sweden
Greece

10

20

30
40
50
60
70
80
Diesel penetration in percent for year 2002

90

100

Diesel cars are reducing CO2 emissions

in Europe
240

European Petrol Fleet*

European Diesel Fleet
European Total

CO2 [g/km]

220

* Diesel penetration greatest in medium/

large cars magnifying apparent improvement
in Petrol fleet efficiency

200

180

172
164

160

153
140
Target of 140 g/km by 2008
120
1994

1996

1998

2000

2002

2004

Source: Ricardo Consulting Engineers, Carbon to Hydrogen Roadmaps for Passenger Cars, 2002

2006

2008

Diesel advances are impacting USA

OEMs are lining up:
Volkswagen
Major US campaign for its
diesel-powered cars:
VWs Touareg SUV to be
launched as a diesel version
Bora, Beetle and Golf
diesel options

Regulators are moving:

Dingell Bill
Will encourage the sale of
diesel cars by tax credits
Sulphur Law
Legislation passed to
reduce sulphur content in
diesel by 96% by 2006
Source: After BERU, 2002

DaimlerChrysler
Introducing diesel engines
into its US line-up:
Mercedes Sprinter will be
available as a diesel version
Chrysler to double dieselpowered models over the
next five years
Jeep Liberty to be launched
as a diesel version

Consumer appeal:
Want affordability
Rising crude oil and fuel
prices are driving search for
cheaper options
Diesel is at least 30% more
efficient than petrol

Ford
Launching a Focus diesel
version
New generation of V-6 and
V-8 diesel engines in pickup segment

Will the US follow

Europe?

ea
y
0

rs
40%

2-3%

US Diesel Share 2001=

Europe Diesel Share 1972

Europe Diesel
Share 2002

Gasoline Equivalent Giga-Gallons Demand/ year

Increasing fleet efficiency will reduce

fuel demand
40

Business
As usual

35
Efficient Tires / Govt Fleets
+Vehicle Maintenance

30
30 mpg
Fleet
Efficiency

25

40 mpg
Fleet
Efficiency

20

15

10
2000

2010

2020

2030

2040

2050

2060

Source: California Energy Commission and California Air Resources Board 2003, Reducing Californias Petroleum Dependence, California US

Modeled direct net benefit of fuel

substitution options
Biodiesel (2%)
Fischer Tropsch Diesel
LNG for Heavy Duty Vehicles
CNG for Heavy Duty Vehicles
CNG for Med. Duty Vehicles
E85 for Flex Fuel Vehicles
LPG for Light Duty Vehicles
CNG for Light Duty Vehicles
Grid Con Hybrid LDV
Electric Battery LDV
Gasoline Fuel Cell
Methanol Fuel Cell
Direct H2 Fuel Cell

-12

-10

-8

-6

-4

-2

Cumulative (2002-2030) Direct Net Benefits (Billion 2001US$)

Source: California Energy Commission and California Air Resources Board 2003, Reducing Californias Petroleum Dependence, California US

Gasoline Equivalent Giga-Gallons Demand/ year

CEC/CARB strategy to reduce

petroleum demand
45
40
35
Forecast Demand

30
25
20
Strategy

15
Target 15% below 2000 Demand

10
5
0
2000

2010

2020

2030

2040

2050

2060

Source: California Energy Commission and California Air Resources Board 2003, Reducing Californias Petroleum Dependence, California US

Australian energy market greenhouse

gas emissions Aviation 7%
Rail 5%

Maritime 3%

Electricity
52%

Road 85%

Transport
14%
Other
16%

Agriculture
18%

Australias declining oil production

800

Total Australia
724 kb/d

Production (000 bbl/d)

700
600

10%

500

453 kb/d

400

50%
313 kb/d

300
200

209 kb/d

Gippsland
90%

100

Actual

Forecast

1975

1980

1985

1990

1995

Year

2000

2005

2010

160

140

140

120

Years of Reserves

120

100

100
80
80
60
60
40

40
20
0

Reserves/Production Ratio - Years of Reserves Remaining

Australian Natural Gas Reserves - Trillions of Cubic Feet

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

20
0

Reserves Volume (TCF)

Australias growing gas reserves and

production

Australias Refinery Position

4000

Refining capacity/domestic demand equilibrium

0
50 KBPD
-2000

Growing Deficit

All Refined Products

Capacity Less Demand (ML/yr)

2000

-4000
150 KBPD

-6000
-8000

250 KBPD
-1000
-1200
-1400
'00

'01

'02

'03

'04

'05

8 refineries

'06

'07

'08

7 refineries

'09

'10

'11

'12

'13

6 refineries

'14

'15

Strategic benefits of a clean diesel

from natural gas industry
Secure domestic supply of clean transport fuel for
decades to come, replacing dwindling crude
reserves and a declining refining industry.

Diversification of gas industry, providing a new

opportunity to commercialise and add value to
remote gas reserves, with sales into a growing
commodity market.

Lower net greenhouse emissions and improved air

quality for the Australian transport sector.

Global Trends in
Transport Fuels and the
Role of Natural Gas
Tony Pytte
Australian Institute of Energy
Perth October 2003