Webinar on Global Overview of Natural Gas Vehicle Markets and Poli-Techs (Text Version)

This is a text version of the video for Webinar on Global Overview of Natural Gas Vehicle Markets and Poli-Techs presented on Oct. 6, 2014.

COORDINATOR: Welcome and thank you for standing by. At this time, participants will be on a listen-only mode until the question-and-answer portion. If, at that time, you'd like to ask a question, press star 1.

Today's conference is also being recorded. If you have any objections, please disconnect at this time. And now I'd like to turn the call over to your host today to Marcy Rood Werpy Argonne National Laboratory. Ma'am, you may begin.

MARCY ROOD WERPY: Thank you, Melissa. Hi. I am Marcy Rood Werpy of Argonne National Laboratory and my team supports the Clean Cities program at the Department of Energy headquarters and also the Clean Cities program at the local level.

I am very pleased to introduce our guest speaker for a first in a series of webinars we will be hosting on natural gas vehicles, learning from someone who has been in the business for 30 years.

I've worked with Dr. Jeff Seisler for a number of years but more recently, Jeff has been a valuable asset in serving as our lead training in our national gas vehicle workshops that we've hosted in Kazakhstan

He is a strong proponent of the Clean Cities model and speaks to international audiences, not only about NGV technology but the importance of the Clean Cities network for building a sustainable NGV industry.

Dr. Seisler is CEO of Clean Fields Consulting and an internationally recognized expert in global NGV development process. His efforts are reflected in legislation and regulations in the US Congress, the European Commission and parliament and the United Nations and their work on harmonization of regulations of the NGVs.

He was the director of the NGV coalition in DC. He was the first director of the European NGV Association and is founder and past president of NGV Global.

Dr. Seisler received a BA in International Affairs and Communications from George Washington University. He received his advanced degrees from the University of London in International Relations where he specialized in studies on communication, decision-making and conflict resolution. So I'm going to welcome Jeff, and you may begin.

JEFF SEISLER: Great. Marcy, thank you very much for the kind introduction and welcome to those people who are out on the—in cyberspace listening in. This is lessons learned to create deployment strategies for commercializing natural gas vehicles, NGV's past and prologue.

We're going to look back a little bit to the future. And I want to first acknowledge the people who've been involved in this. I'm having trouble moving the screen here. Let's see, here we go.

Okay, I really want to thank the Department of Energy for their support and particularly, their Clean Cities program, also international DOE who's been involved in this. Dennis Smith and Linda Bluestein and Mark Smith and, of course, Marcy—a very special thanks to you, and also to Dan Santini and Argonne National Labs.

Dan has spent a lot of time working with me on this presentation. It's a very long presentation, very comprehensive, covering a lot of areas. So he was very instrumental in reviewing, coming back with good questions.

So it's a collaborative effort which we're very, very pleased about. Okay, the structure and the dynamics of the—this presentation and the way this whole thing is set up, it's basically set up in three specific parts, plus an introduction.

Today, you're going to hear the overall introduction and the kind of world view of national gas vehicles. And then we're going to focus on the poly-techs and standards and regulations.

And it's got a bit more of an international flavor because we're talking about United Nations regulations and things that are using United States materials and we all share in those, but we're talking about standard regulations from a little bit more of an international perspective.

Then there's also going to be another webinar. We're going to talk about technology and politics. All of these things that are at the top of the screen, impact upon the markets and impact upon the stakeholders—the availability of technology, the political policies that are used to innovate and help motivate the market.

So the customers are impacted, businesses, equipment suppliers, the fuel suppliers, all of the stakeholders involved in this process. So as I said, this is the first of three. We don't have an exact date—the week of November 17th but we'll be notifying people of that shortly.

And then on the 15th of December, we're going to talk about the role of government policymaking, infrastructure concepts and strategies and other best strategies.

And the one in November is going to focus specifically on technology. Okay, to get on the same page of the same book, I like to just start off and say what are the factors that are required to promote and motivate the markets for national gas vehicles?

Clearly, economics is the key one, and that's mentioned over and over again. And that has to do with the cost differential between national gas and the petroleum fuels, as well as the price differential of the vehicle itself versus a gasoline or a diesel vehicle.

In all cases, the natural gas vehicles are more expensive than the traditional vehicles, although that price differential is dropping particularly with some of the diesel vehicles as diesel vehicles become more expensive.

And natural gas has the benefit in that it, as well as LPG, are the two cheapest of the fuels, of the alternative fuels, than petrol or diesel. So there is an advantage on the economics side.

Obviously you have to have support from the energy business. The gas industry and the oil industry, as well, we have to partner with them because they're very much involved in the retailing of fuels to the consuming customer.

So the gas industry has to be there as well as the other fuel suppliers and those can be large oil companies, independents, et cetera. The availability of vehicles—obviously you don't have a market unless you have a piece of technology.

Now I say real and not implied support by the manufacturers because over the years, we've seen various degrees of, quote, "support," from the manufacturers. Sometimes they put a toe into the market to get involved but they have not really made a commitment.

On the other hand, it's very challenging for the OEMs to make a full commitment to go with a factory-built vehicle because they have to have security in the fact that they'll have continued and growing demand for the vehicles.

So while the demand is going up and down, so too does the support of the vehicle manufacturers but that's changing. It's changing fairly dramatically. Government commitment—there are very few places around the world that have had successful NGV programs that have not had government commitment, in fact, probably only one that I can think of in Argentina.

Most every marketplace has had some input from government incentives, sometimes penalties and there're a lot of different things they can do that'll be talked about in the third of these workshops.

The last thing—also very important—environmental policies, driving lower emissions. It's been traditional with natural gas vehicles that the tougher the admissions regulations are, the better it is for natural gas vehicles.

So that is something that's very beneficial because we're very lucky in that natural gas vehicles has a very good story to tell about emissions. Okay, the reality check on new fuels. Transitions to new fuels can affect our ability to compete in the world market.

There is, as you know now, with the idea of shale gas, with shale gas coming on, this has made a major dramatic impact on the United States' ability to compete in energy markets.

And if all of the sudden we transition away from one fuel into another, that's clearly going to have an effect. Fortunately for natural gas vehicles, the advent of things like shale gas and new sources in abundance, it makes it very, very attractive.

So that is going to affect the ability of natural gas in the worldwide context. While it is tempting to make quick decisions, we really have to do good analysis to make the best decisions. And governments sometimes, they try to do the analysis and they try to use the best information available.

But sometimes popular thinking overtakes them but really we need to think the process through because it's a long process. Technology breakthroughs and major world events are also going to cause reevaluations.

When the energy markets change worldwide, when prices go up and prices go down and new technology comes onboard, for example, looking back in history, the difference between steam engines and internal combustion engines and internal combustion engines and fuel cells and electric motors.

So all of these different kinds of technology changes are going to change how natural gas vehicles, and all the vehicles, compete. Also, clearly transition is going to take many years to complete. If you're commercializing a new technology and you also need an infrastructure, it can take 30 to 50 years just to achieve about a 25% market share.

So we see that this transition is going to take a long time. It comes slow, steady. Sometimes it comes faster than other times, depending upon these other factors involved that we just talked about.

And even a wildly successful new fuel is going to have to coexist with gasoline and diesel for many decades while the older vehicles are phased out. The oil industries, car industries are two of the strongest industries worldwide.

They don't change easily and nor should they. It's a very long process to change an innovation for them as well. So we're going to see diesel and gasoline at least through the end of this century in my view.

And that's okay because all of these industries have something to gain by the promotion of natural gas vehicles. Now, this next slide, on the critical stakeholders, I don't want to spend a lot of time on this. People are very familiar with this, but this is a coordinated effort to motivate and to commercialize natural gas vehicles.

But each of these players has to be motivated. So it's the gas industry customers, the governments, be they national or city authorities, the auto industry, et cetera. It's a team effort and it doesn't happen if only one—or if there's missing gaps.

Now, thinking about the stakeholders and the impacts upon them and what really needs to be achieved in the market, I put this slide together with this circle, again, stressing the position of government.

And they touch all the different polls, and here we have just three coordinates on either end of the triangle. So you have to have a natural gas infrastructure, of course. You have to have vehicles. And I put OEM production because long term we are going to have to have the OEMs involved.

Clearly, retrofit is going to play a very important aspect in this industry but you're not going to get the OEMs if you don't have the fueling infrastructure and vice versa, the traditional chicken and egg.

And the consumer demand is not going to occur until both of those factors are in place. All of this plays on each other but inside, really, the effect of the prices of diesel, the prices of gasoline, the new technologies that they're developing, as well as the quality of the different fuel, all of these things are going to impact the speed of the commercialization process.

And as I show here, government touches every single sector of those aspects that are going to change the market outlook for natural gas vehicles. Now, NGV success is—for customers, we talked about already, is based on cost.

Natural gas is 30% to 50% cheaper than gasoline depending on taxes and that offsets the first cost of the vehicle. The vehicles are more expensive, as I said. Typically they can be $2000 to $5000 more than gasoline vehicles.

They can be a lot more in the United States if we're talking about retrofit vehicles that are now in compliance with the EPA. Conversions on the open market, internationally, can be much less expensive but, of course, then there're questions about quality.

So it really depends upon the market, and I'll touch upon that in other webinars. And the trucks and buses are much more expensive. Minimum is 30,000 to 70,000 US dollars, plus.

So we can see the importance that the price of fuel is going to play. And the availability and price, they go hand-in-hand. Typically natural gas has historically tracked the price of oil and then it began to decouple with the economic crisis of 2009.

Changes in different ways that governments around the world are looking at the energy industries on bundling, separating out their production from distribution and transmission, et cetera.

So a lot of factors have played into the price of natural gas, not the least of which is, as I said, the advent of shale gas. So the US is extremely lucky in having very low retro gas prices at this point. Europe, there's good availability generally speaking, however, the impacts on prices are different so the price is higher.

Asia, being further away from some of the primary energy markets, have to pay transportation costs so it's more expensive there. But the price is still favorable compared to the competing fuels and that's the petroleum products.

In the end, the running costs of the natural gas vehicles is what's going to make a difference and that's the way the consumer looks at the overall price advantage for natural gas.

And in this slide, I've used—it's a slide that comes from Italy but I like it because, number one, it shows that the energy costs for natural gas are cheaper than for the competing products, but it also has a very important message in the impact of taxation.

So we've got a good story to tell on energy price. Taxation is going to vary and there, again, that's where politics comes in. So it's how far are you going to be able to go on a liter or a gallon of gasoline versus a liter equivalent or a gallon equivalent to natural gas that's really going to make a difference for the consuming public.

Okay, now, with that preliminary overview out of the way, let's have a look at some of the numbers and what we see on a worldwide basis for natural gas vehicles. Now, these are based upon numbers that we took from the gas vehicle report which probably has the most—some of the best access to some of these worldwide numbers.

And they're based upon numbers from April 2014. The first country to become involved in natural gas vehicles, we can see it in the center of that slide, is Italy. They have a very active program since the mid-1930s when their price of gasoline was going very—getting very high. Also because of the impending war situation in Europe at that time.

Natural gas was discovered in the Northern part of the country. It was fairly abundant and very cheap. And that's what started the natural gas movement worldwide. It was based upon the Italians.

China has a very large and growing program. Iran, 3 million—3-1/2 million vehicles, much because they had a very strong mandated NGV program. The Egyptians also had a program, very strong program, that started because of their emissions and the air quality that was in Egypt.

And, of course, in South America, very strong programs there, starting with Argentina, picked up by the Brazilians and then following through the continent through some of the other countries who started seeing the benefits of this.

And back in the United States, we were talking—depending who you listen to, between 120,000 and 142,000. It doesn't seem, you know, as robust as some of these other countries but then the United States is a very large country and getting a fueling infrastructure across that entire country is a real challenge.

So I think that's had some of the effect on the growth prospects for the United States compared to some of the others. And as we'll see in future presentations, each country has different factors that is going to impact the way these numbers grow and the pace by which they grow.

And some of them go up and some of them go down. Okay, now if we look at the ten top NGV countries based on total number of natural gas vehicles, you can see the list there. And so it's pretty straightforward.

I don't have to read you all the numbers. You can see them and go back on them. The message in this slide, however, is on the right column in the yellow. And it's the price differential of how much less natural gas is than the competing petroleum fuel.

So you can see in Iran, that natural gas is 75% less expensive than gasoline. China, it's half price. So in each of these countries, we're closing in on either 50% or higher—or above 50% cheaper than gasoline. And this becomes a critical factor, clearly, as we've talked about in terms of the economics.

And we found worldwide, that generally if natural gas is about 30% to 50% cheaper, that's the area where you talk about good economics and where natural gas starts to make sense economically.

Now, looking at these top ten countries again—or still—then we look again at the right column and we look at the vehicles per fueling station, another critical number. And we're going to see some differences as I go through some of these charts.

In Iran, at 1800 fueling stations—I'm sorry, vehicles per fueling station, is a great number to keep the economics high. Typically we have found that you need about 600 to 1000 vehicles per fueling station to make the fueling station truly economic.

Now, vehicles per fueling station, if I look in Europe and what's happening here where I'm based at the moment, we're calling—I'm doing this from Brussels, this is the tougher situation for the Europeans because, except in Italy, where they have 800—just over 800 vehicles per fueling station, and Bulgaria and the Ukraine, which are unusually different markets.

They're mostly retrofit markets. Apart from that, some of these other countries, while they may have some decent numbers of natural gas vehicles, that proportion is not quite there, so this is kind of the struggle as fueling operators, fueling station operators, put in stations. They want to make sure they've got enough vehicles to make this economical.

Now, we look at the top ten countries in terms of percentages of market share. This becomes very interesting. As I said, it takes, you know, to build an infrastructure, a new technology, can take 30 to 50 years to get up to 25%.

And we still see that even though, you know, there are 3-1/2 million vehicles in Iran, you know, the NGV percentage of vehicles I not as high as it could be. Argentina has 21% vehicles. Once you start moving into—in fact, those numbers look like they're—on the Iran. It's probably 30%.

But once these numbers start to achieve over 10% generally speaking, that's when you're going to have fairly good market penetration and market stability so that's going to be, you know, critical in determining the ultimate success.

And people say, "Well, are we successful?" Yes, if you get 10% or more of the market share then we're really moving forward with the proper kind of direction.

And then the other way to look at the success and measure that success with some kind of quantitative way, to be fair to countries that have smaller populations and smaller infrastructure, maybe smaller—just generally the land mass is smaller, we start looking at the numbers of vehicles per capita and you can see per thousand people how many NGVs there are.

So, again, this is looking at the statistics, you can look at the raw statistics in a number of different ways. And if you start wanting to try to measure the success of a program, I think the fact is that we've just shown in these various charts, those are the ways to start to answer the question have you been successful in your marketplace?

And you can probably do the same thing—even breaking this down to a local level, to a state level, to a city level, these are the kinds of things that we look at to make the determination of successful commercialization.

Okay, I've already gone over and showed the world view and some of the numbers in Europe. Again, I don't want to focus on these too much but just to give you an idea of the kinds of vehicle penetration that we've gotten here in Europe, and again, as I said, the critical thing here is getting those numbers of vehicles per fueling station increased. That's the real challenge on this side of the pond.

Yes, the other interesting thing is the outstanding growth rate, and I've just looked at these numbers from 2006 to 2014 and the growth has been, you know, very dramatic in numbers of places particularly in China.

So even across the world, you can see the growth from 4-1/2 million vehicles to 19-1/2 million vehicles, 326% growth. These are the kinds of numbers that the original equipment manufacturers, and also the fueling industry, these are the kinds of growth rates that people look at and it really begins to motivate the growth of the natural gas, you know, vehicle market and pull more and more consumers in, to pull more and more manufacturers in.

Of course, these growth rates are not going to be able to sustained at these high levels and that's what you can see in this next chart on world NGV growth from 2002 to 2014.

You can see the steady rise in the blue of the natural gas vehicles. And, of course, then, the growth rate itself, and this is on a worldwide basis, can vary and drop. That's okay as long as that blue line continues.

So the actual growth rate has still been fairly stable with the only change in that 2009/2010 economic worldwide dip that occurred. But, again, the numbers have been, you know, fairly strong in terms of growth if you look on a worldwide basis.

The fueling stations have the same kind of pattern in it where you've got a steady growth of those fueling stations and, again, the growth rate is going to change because the more and more vehicles you have, you can't continue to add huge growth rates because the exponential rate gets way too much.

So we have to anticipate the rate going down while the numbers go up. So we start talking about projections. This—we get into all kinds of gray areas that are based upon assumptions and you can make a lot of different assumptions as to where the growth is going to be anticipated.

And what I tried to do on this slide is to show just a number of different companies or institutions that have looked at NGV growth rate and started trying to do some projections.

So you can see in the middle of the red line, the actual growth rate from 1991 to 2005 was about 17-1/2% on an annual basis. And then the growth rate, 2006 to 2020, if you keep that same basic growth rate, notwithstanding some of these dramatic growth rates that we've seen in some of the other countries, but on a worldwide basis, these ae the kinds of slopes that we can see.

And so you have differences along the way. Of course, pipe research in 2011 said that there'll be, you know, 20,000 natural gas vehicles. Navigant Research, another company that does projections for natural gas vehicles and other things, you can see, you know, their numbers are, you know, quite substantial.

But when you look at the actual pattern and at the bottom, you'll see 11.3, 15.3, 17.2, those actual numbers have not been too far off. So somewhere in between these various projections, clearly is going to lie the truth. So it's very, very difficult to make accurate projections and we know that equipment suppliers and fuel suppliers, their future business and current decisions, they really are reliant upon these kinds of projections.

But they're very, very difficult because of all the wide range of factors that are involved in making an accurate prognostication of where the market is going. And here's some—just another view. We got this from a study on CNG from Honda R&D. And you can see here—and from Cambridge Energy Research.

Their numbers are based—this is sort of a conglomeration of these numbers. And, again, the large growth rate we see is going to be in Asia, India, China, all the non-OECD countries—Thailand, et cetera.

The Middle East also shows some strength, along with South America. And, you know, down there at the bottom of the chart, we still have the United States that's coming along. Europe is coming along and those growth rates and the sales volume outlook is just not quite that same dramatic level but it's not insignificant.

And so we still have a very, very positive outlook for the growth of natural gas vehicles on a total worldwide basis, and even still, there are—is enough of a growth projected that this will be a sustainable market for natural gas vehicles.

Now, again, here looking just the forecast of registrations in the United States, and these numbers were taken from Navigant Research. And, again, if you look just at the US, even though that number that we showed in the previous slide, and you see the US is kind of at the bottom of that chart, still, there's a significant amount of growth for US registrations of NGVs and Canadian to be able to drive the market forward, to be able to drive OEMs to the manufacturing these and to help create the thrust that we need to get the fueling infrastructure in.

But now, if we kind of look back, and again, this is the past and prologue, to just show how different conditions can change and drive the market, this was put together by the Gas Research Institute, not too long after the passage of the Clean Air Act Amendments of 1990.

So this slide goes back to 1991. And it shows there, based upon the numbers, that we worked out coming from the legislation, there was fuel conversion requirements for fleets, et cetera, and there you can see that projections and prognostications, et cetera, how good can they be?

Well, they can be good at the time but when you're looking forward, you really—as we said at the very beginning of the presentation, there are so many other factors that can weigh upon that growth rate, you know, that we just can't always anticipate.

So here, this projection was by 2005/2006, we should've had 10 million vehicles in the United States at the best and even at the minimum, just over 4 million vehicles.

And instead, in the US, we've got 140,000 vehicles. So with our best guestimates and our best judgments doing the best job we possibly could at the time, we're still making these predictions and trying to figure out where we're going.

It's still a very, very challenging business. So that's the first part of the overview. And I now would like to shift to the section on what I call poly-techs and I call it poly-techs because where we get into standards and regulations, it is technically based but there is a lot of politics that goes on to the development of the standards and regulations.

And between countries, between companies, so I put these two words together. It's not just politics, it's poly-techs. And we see that over and over, particularly when we get into the International Standards Organization and the United Nations framework.

Now, talking about standards and regulations and just to make sure we're all on the same page at the same in book, I like to sort of just clarify what we're talking about in terms of the basis and also the definitions.

These are really a foundation for getting commercial technologies into the marketplace. It's kind of a rulebook on safety, on reliability, on durability, on testing. Standards and regulations are absolutely critical.

We cannot get technology into the market until we have the rules of engagement for technology completely laid out. There are very complicated international networks. And these work for every, single thing that, you know, we have in our households.

Every appliance, you know, vehicles, almost everything has had some kind of impact from standards and regulations. And the harmonization of these is what we're really trying to do because if we have different standards and regulations for equipment in every different country, then the manufacturers have to build different gizmos for every different market.

So one of the main objectives, for example, or the goals of the NGV global is to look at standards and regulations on an international basis and try, to the best extent possible, to harmonize these regulations so that manufacturers can build one vehicle for many, many markets.

Now, that's not going to happen completely—they're going to build one vehicle. But if they can, you know, look at regional markets and minimize the number of engines, the number of platforms to make these things more acceptable in more countries, that's another factor that is going to really help the growth in the marketplace.

But to be successful, the work that we've done to develop these standards and regulations, implementation and enforcement are critical and in the industry, we talk a lot about the different ways that different countries implement or don't implement or enforce and don't enforce their standards.

And this becomes, for safety, it becomes a critical factor in how these things were enforced. Now, standards and regulations, just so we know what we're all talking about—standards are not binding. They're not, quote, "legal."

They're intended to be real models for codes. Codes and regulations are more or less the same. So we're looking at standards that can be either performance based or prescriptive. We try, in the NGV industry, to make performance based standards.

So here's the bar you have to jump over. We don't care how you jump over it. Just make sure your technology is going to conform to these standards. We don't generally like to tell manufacturers how to do what they're supposed to do.

We don't want to prescribe to them to do things. So that's just a basic philosophy where we move forward in dealing with standards and developing them that we try to be more performance than we do prescriptive.

It's not always possible. Sometimes you have to say here's how many cycles you're going to test a piece of equipment before we know it's going to be safe. So it's a mix and match.

Regulations are the legal de jour. These have enforcement implications. We put them into law. We know them as codes. We can adopt the standards that are developed by reference or amendment. And that gets into a detail which I don't want to belabor right now.

But very, very often, for example, with the United Nations, we look to the ISO standards. We also look at SAE standards and NFPA and a lot of these are shared. So we do refer to other standards that have already been created because there's been a consensus process that goes into creating those things.

And if somebody's already invented the wheel, we don't want to have to reinvent the wheel just because we may be speaking in different languages or we may be in a different country. We try to want to look at what other professionals have done.

And that, on a worldwide basis, is what makes this whole system and this whole network work. So anyway, just to keep in mind, because these terms are used interchangeably, people talk about emission standards. Well, they're not.

They're regulations. So standards are the model. Regulations are the law. Now, I put these things into categories here. Safety equipment, fabrication testing—this is why we need these things, to promote the best practices.

This has to do with a company's accountability with the quality of their equipment. And as I said, the profit aspect comes into the harmonization. We have harmonized standards and regulations to foster economic, not cheap, equipment.

As more critical mass occurs, the equipment sold across the international markets, the prices would drop over time. We have actually seen this. Here are some very good examples of how this critical mass is working once our standards begin to get harmonized.

If you have no regulations, you're not going to have markets because countries don't want unsafe, dirty vehicles coming into their marketplace. That's why regulations exist. And there's kind of a love/hate relationship between the regulators and the equipment suppliers and that's a natural kind of environment.

There's always a push/pull between those two groups. Now, on an international level, this gets a little complicated because this is a real patchwork quilt of organizations.

At the very top, we've got an international level and there's a global level at the United Nations. And those show in the centers, as regulations. So the United Nations are making regulations to which other countries have joined the UN with certain treaties and they decide which of these regulations they're going to incorporate into their own national regulations.

Then you have, at the international level, the International Standards Organization. In Europe, you have a regional group called the Committees for European Normalization. So these are the upper level groups that are engaged at that international level.

Now, in every country, you have a National Standards Institute. And those countries are what make up the development of the standards and regulations. Below that, you then also have specialty standards organizations like the Compressed Gas Association or other types of organizations that are just focused on specific technologies for cylinders, for meters, for all kinds of different things.

And then at the very bottom, which is almost the most important, is the private sector participants. These are the companies that put their experts into this process and it's really a bottom-up driven process.

It's the expertise of the fabricators, of the equipment suppliers, the people with, you know, many years of expertise, many years of experience at making the equipment.

These are the people that we look to, to make these standards and the regulations that are going to work for them and work for the market. You mix that up with the government institutions, and that's where you end up with the poly-techs.

Now, I'm not going to go into great depth but this is kind of one key feature that explains the importance of what goes on at the United Nations. This work goes on in Geneva. It's the working party 29 which is on the World Harmonization Vehicle Regulations.

And it's within the United Nations economic condition for Europe in the England Transport Committee and then you've got this working party 29 which has a bunch of different groups that do work on safety and all kinds of different things related to cars and trucks.

For us in the NGV business, we've got two key groups. One is the group of experts on pollution and energy and is a Regulation 115 which happens to deal with the emissions quality of the vehicles.

And then the other side is the group of experts on general safety and that's Regulation 110 for natural gas vehicles and Regulation 67 for liquid propane vehicles, for LVG vehicles.

The 110 specifies components of the CNG systems and their installation on the vehicles. And as I said, 115 is more oriented toward how the systems behave and what the emissions is going to be.

So when we work at the UN, those are two critical areas. The 110 provides the background for all of the safety measures, the testing, how many cycles are needed, what kind of materials, et cetera, so that is a very critical aspect but they all work together in sort of a synergistic way.

There are other areas of the United Nations that we're engaged in. For a few years, we were involved with this working party one on road traffic safety. The Germans came to us some years ago, around 2002, 2003, when they're fueling network was expanding.

And they said, "We want to have a road signage for fueling stations." So we went to the UN and indeed, it took us three years but we created the sign for CNG and LNG and as we did, along came our colleagues on the LPG and the hydrogen side and they have road signage that is also similar to this kind of stuff.

So the UN has a very large impact on a worldwide basis, probably less so on the United States because the United States has its own highly complicated and very sophisticated network of standards institutions.

And because of that and because of the size of the country and because of, really, the ethnocentricity in certain ways of the United States in their view, they don't look as strongly upon the UN work as, you know, as some of the other countries who don't have the same kinds of resources as the United States to put into developing a complete system of regulations and standards.

But, like I said, we do lean very, very heavily upon the work done by other countries, and particularly, the United States because of the quality of the standards that are coming out of the system.

And this process is a very, very slow process. I'm not going to go into the details of this but when we start work at the UN, quick is 15 months to get some of these regulations in place.

You have to put a proposal in. You have to talk about it. These committees only meet a couple of times a year. So if you can't get something done in the first meeting, it gets put over six months later.

And that's just the way these things are. Some people would rather watch paint peeling off the walls than get involved in the regulatory process. But it is a very laborious process. It's a complicated process and it does take a long time.

But once we have these things in place, they tend to last a long time. But we're subject to amendment and that's the interesting and flexible part about these regulations. They're not a static group of rules. They're always changing.

Now, another little diagram for ISO, these are the standards. Again, I'm not going to go into this in depth but ISO has a very complicated network and you can see the different things in the boxes for fueling stations, cryogenic vessels, road vehicles.

There's a whole host of different committees that are working very hard in all kinds of different countries where they meet on developing the standards, again, not legal.

These are the models and then these models are taken by countries and used, if they're not part of the UN system, they use these to create their own regulations.

And the ISO process equally is a very long process. It could take three to four years to get a standard into place. And that's what's happened with the up and coming—the fueling station standard.

For CNG, LNG and also LCNG, this has been many years in the making and it goes through many, many steps, many iterations before a final standard can be created.

So it's a long process but it seems to work. And once we have those things in place, then we know that we have an environment for getting safe equipment into the marketplace.

We've had regulations recently for heavy duty LNG trucks and for dual fuel engines. I've been very, very heavily engaged in this activity. I do the regulatory work for the NGV global, for the International Association for NGVs.

And we spent a year and a half working on regulations to allow LNG trucks to come in place. We were working on heavy duty dual fuel regulations as well. And as we move closer to the final formulation of these engine regulations, it became clear very quickly that we didn't have the vehicle regulations.

So it's nice to have the engine regulations but then you need the regulations for the tanks, for the piping, for everything else that goes on. So those were finished in 2013 for LNG trucks. We now have worldwide regulations that govern the truck technology using LNG.

For the original equipment manufactured heavy duty dual fuel, there are now regulations in place for Euro 5 as well as Euro 4 that are coming into force and right now, we're in the middle of working on dual fuel retrofit regulations.

Again, for the United States, you have your own set of regulations and sometimes we do go back and forth and borrow each set of regulations but some of this has already occurred, like for example, for dual fuel retrofits, there are also existing regulations.

But for the rest of the world, outside the United States, ISO and the UN become much more highly visible and more important than what you do see in the United States.

Now, again, still staying with the UN regulations, very importantly, have been changes in the International Maritime Organization which is going to help drive the market for the shipping industry.

And here's just a quick overview of showing how the emissions regulations are getting tougher and tougher. These, for NOX, are going down over a period of years and the regulations for sulfur are going down.

And in the maritime industry, they're using bunker diesel—bunker fuel which is basically the bottom of the barrel of the barrel of oil and it's very dirty, heavily laden with sulfur and the percentage of sulfur reductions is going to be—is going to result in a much higher cost of fuel for the maritime industry.

And because they use enormous quantities of fuel, the entire economics of the maritime industry is about to change. Further impacting that, because of the United Nations rules—and here's where we do have an effect on the United States—if you look at that map, you can see there are these red areas there on both coasts of the United States.

You can't see them clearly but to the east of—in the English Channel and all the waterways between England and Norway and the Baltic Sea, these new emissions for sulfur content are going to even be stricter in what they call emission control areas.

So, again, it's going to be very tricky to implement and enforce these new regulations but this is beginning to make a wholesale change in the way the marine industry is looking at fuels and natural gas vehicles are—or natural gas as the vehicle fuel for shipping is becoming much, much more popular and much more on the radar screens.

But, having said that, we go back to the idea of standards and regulations. Standards and regulations don't fully exist, so now that industry, the marine industry and very often working with the cryogenic industry because we're talking about LNG, are developing their own complicated sets of standards and regulations for the shipping industry.

And this is just—this slide is just an example of different ways that a ship will be able to be fueled from a terminal tank that has LNG in it, that was probably delivered by another ship or maybe by a truck. You can bring an LNG truck tanker up to the ship and fuel it from that.

Or you can bring another ship that's filled with LNG and go ship to ship. But all of these things require regulatory action because right now, we're just—the industry is just at the beginning stages of developing these things.

There are a lot developed but there're still lots of gaps. Very much, it mirrors what has happened on the vehicle side for natural gas vehicles. So LNG is going to be very, very good also, not just for shipping, but we do believe for trucking and eventually into the railway applications as well.

Now, the interesting thing between the United States and Europe, between trucks and ships, in Europe, the trucking market is beginning to develop. It's not developing quite as rapidly as the United States, although there are some very good LNG technologies for heavy-duty trucks in Europe from Mercedes, Iveco, Scania, Volvo.

So there're a range of manufacturers who are making natural gas trucks. They can run on C&G. They run on L&G. But those trucks go to ports and that's where the ships are coming in, where there's going to be large scale bunkering of fuel.

And because those trucks are coming back and forth into the ports, clearly there's an opportunity for synergism. Now, in the United States, where the trucking market is strong, the shipping market is not so strong.

You know, we've got Europe. The Norwegians are very active. The Dutch are getting active, putting LNG into Rotterdam. But that hasn't happened in the United States.

So what we would like to see is kind of a synergy created between these two major markets of ships and trucks. Ports are always going to be a good place to put NGV fueling stations, whether they're seaports or whether they're airports. These are central locations for these types of different vehicles.

Safety continues to be a critical issue for regulators and customers. And what we see is what is known is liked. If you're familiar with something, you like it. What's unknown is disliked.

So what now we have to do in these other industries is make the unknown known so people are more comfortable with it. Industry has to understand the reasons for the failures and they have to fix their problems.

And that's what we tried to do with some of the incidents that have occurred with CNG cylinders, for example. We don't want to let incidents occur, failures occur and then just not give attention to them.

Our industry is concerned about safety and we try to remedy and improve the situation so the same problems don't continue to happen. We're going to need a lot of scientific studies, particularly for this—for the area of marine applications, in-land waterways, ports over the high seas.

We're going to—and they're starting to happen, these hazardous operations. Studies are being done to put in LNG fueling stations at ports and inland waterways.

So it's just a matter of getting the policies in line with the safety standards because sometimes the policies are advocated before the standards and the regulations are written.

So the policies may have a horizon of when they want to accomplish certain goals but if they don't take into consideration the standards and regulations and the time it takes for those to develop, then the policies are going to be a failure.

Videos help educate people at all levels, training is going to be absolutely critical. So some selected summary points here. Alternative fuel sources—they must be pursued on a timely basis because these transitions are going to take a long time.

The transitions, we want to keep them as few as possible. If we start trying to talk about, you know, hydrogen and natural gas and methanol and electricity and all these different fuels, policymakers become overwhelmed. The consumers become overwhelmed and the equipment suppliers are all the sudden having so much competition they can't get their systems into the marketplace.

A realignment of the ongoing fuel shifts are necessitated by major changes in technology. International relations is going to play a role. And, of course, the world supply and the world pricing of fuels is going to play a major role in the continued and accelerated continuation of the commercialization process for NGVs.

So this—I also have to plug our associations. I've been—you know, I started my association career in 1983 with the American Gas Association. And then we moved on to start the NGV coalition. And, thereafter, the European NGV Association and then advocated the worldwide associations in Asia Pacific and in Latin America.

So we now have this network, a worldwide network of associations for natural gas vehicles. These become the lightning rods and the catalysts for NGV growth. They provide a focus for the advocacy work particularly at the national level, developing marketing strategies and helping the development and the advancement of the technologies.

So the stakeholders need to continue and expand their support of the associations because it elevates the commercialization efforts. And part of the beauty of the Clean Cities program is to become engaged with, not only the associations, but with the federal government and then together, these features is what's going to make a really robust market.

Methane—we're very lucky. It's a very diverse fuel. It's a very flexible fuel for the transportation sector. Not only is it a fossil gas but it's a renewable resource that hasn't become as—quite as popular in the United States as it has now in Europe.

But we can see turning garbage into automotive fuel, whether it's that cultural waste or municipal waste, that is definitely going to be one of the things that is going to blend into the future.

CNG, it's compressed, liquefied to be cryogenic. So we can get more mileage on the vehicles. This is the beauty of the flexibility of natural gas as a vehicle fuel.

So we keep our eyes focused on the road ahead. We want to make sure that good policies today, we make those because that's where we want to go into the future.

And as I say, the future's a very big place. It's going to take a long time to get there. But if we work together on all these different things, for sure, we'll get there faster.

Okay, I'm done with the basis of the presentation. And if we want to go to questions and answers now, I'll turn this back over to Marcy to try to navigate any questions that you might have.

MARCY ROOD WERPY: Thank you, Jeff. Very interesting presentation and really a good perspective worldwide on your experiences globally with the NGV industry. Melissa, are there any questions on—in the queue?

COORDINATOR: No, ma'am, but once again, if you would like to ask a question, please press star 1 and record your name. Once again, to ask a question at this time, please press star 1.

MARCY ROOD WERPY: Great. Thank you. While you're waiting, Jeff, I just want to throw out a question to you I've received via email actually. And you may have touched on this a little bit. But if you could elaborate, the question is, will there be more growth in CNG or LNG and why?

JEFF SEISLER: Okay. I have to say more. I guess more is a relative question. I think that you're going to see CNG develop for many of the vehicle markets. LNG is going to develop for the high horsepower markets, for the marine applications, for the rail applications.

I think you'll probably see CNG in terms of quantity of fueling stations, probably the quantity of the fuel that's consumed. I think that will have a more rapid growth rate because the applications are going to be much wider.

You've got off-road vehicles, whether tractors or construction equipment. We still have, you know, passenger cars which will, by and large, rely on compressed natural gas and not on LNG.

And, even, there are trucks that are going to be municipal trucks, buses, school buses, garbage trucks, all of those things which consume huge amounts of fuel. You know, we say a bus is—consumes the same amount of gas, depending on where you live and what climate, as 30 to 50 houses.

So I think the CNG growth is going to—you're going to see a strong—and LNG growth is also going to be strong but within its own context in those heavier vehicles.

And for the marine and rail, it's still going to take a longer period of time, A, because the standards have to be written and the regulations have to be written, and, B, the turnover of these very expensive vehicles is much, much greater.

These—you know, a car lasts five years, eight years, ten years. A truck will be turned over in six years. A ship is going to go 20 years, 30 years. So it's much more difficult to retrofit those vehicles. So I see good, strong growth for both but probably CNG is going to be, for the applicable markets I've talked about, they're a real strong growth market.

MARCY ROOD WERPY: Great. Thank you. Melissa, do we have any questions on the phone line?

COORDINATOR: No, ma'am. I'm showing no questions over the phone.

MARCY ROOD WERPY: Okay, so Jeff, we're getting a few on the online Q&A. I'll go ahead and read—feed this out to you. The first one here is, do you see GHT concerns about methane inhibiting future uses of CNG and LNG? Will they dampen the growth projections shown earlier?

JEFF SEISLER: That's a very good question. Greenhouse gas, global warming emissions, you know, methane is subject to a lot of criticism, and we, as advocates, try to put the greenhouse gas impacts of natural gas into perspective.

I think one of the fortunate things are, when we look at it, a light duty vehicle can—a natural gas vehicle compared to a gasoline vehicle, we're talking about global warming gases in the 20% to 25% range less than gasoline.

For the heavier duty vehicles, probably the percentage is a little bit less. It's probably 10% to 15% less greenhouse gases on heavy duty trucks than diesel. But natural gas vehicles are blessed with that advantage of having lower total greenhouse gases, notwithstanding that methane is a more potent greenhouse gas than carbon dioxide.

But one of the things we think may change is—and something that we've been trying to advocate and it's happening in the United States and it can happen in Europe, is not just a focus on methane or CO2.

If people are concerned about global warming, they should be looking at the bundle of global warming gases and that would be N2O, natural gas, CO2 and then start to look more holistically at how they write the regulations.

And like I say, EPA is doing that, the European Commission is doing that. And I think that is going to be ultimately very good news for the natural gas vehicle industry.

We want to do everything possible to minimize methane into the atmosphere so LNG, got to worry about boil off, methane slip in ships, for example, unburned methane which is what that is.

So, yes, we are concerned. Will it stop the growth? No. I think the focus on greenhouse gases will enhance the growth as long as policymakers understand the realities of what an NGV and what natural gas can do favorably, not just listen to people who are just attacking the gas industry for having methane in the atmosphere.

MARCY ROOD WERPY: Great. Thanks Jeff. We have another question online here, especially specific to Slide 11.

JEFF SEISLER: Okay.

MARCY ROOD WERPY: How—yes. If you want to just scroll through that. You don't have to but…

JEFF SEISLER: No, that's—I'm going to go back to it.

MARCY ROOD WERPY: Okay. How does this relate to US dollars? In other words, is this information available in the US dollar per mile or US model?

JEFF SEISLER: Yes, it's—I think if you go and you talk to the folks at the NGV America, I believe that they will have, you know, similar diagrams, you know, as this kind of diagram.

When you look at the price of the fuel, you know, the gasoline and diesel, you can compare LPG if you like, and CNG, do the same thing that we've had here, look at what that price of fuel is and of what the taxes on top of that is.

And then you can very clearly see on a gasoline gallon equivalent or a diesel gallon equivalent of either CNG or LNG because they're different, it's not a difficult thing to create or to recreate this chart using US dollars and US figures.

It can be done on a state-by-state basis. It can be done on a federal basis. So yes, this is an interesting kind of diagram to show customers, is what you're getting for your money and how far you're going to go.

MARCY ROOD WERPY: And, Jeff, we also have the Aslee tool available for US participants to use to develop the total cost of ownership of natural gas vehicles. That's on the AFTC toolbox—tool page.

JEFF SEISLER: Okay, and then people should avail themselves of these kinds of tools. It takes a lot of time to make something that works simply. So that's—I forgot to mention that. Good thinking to mention that, Marcy.

WOMAN: Okay, great. Melissa, do we have any questions on the phone lines?

COORDINATOR: No, ma'am, I'm showing nothing at this time.

WOMAN: Okay, and we don't have any additional in the online Q&A. So Marcy, and Jeff, if you—any final words. We could go ahead and wrap up the webinar for today.

JEFF SEISLER: No, I think we've got the first sector here, as talked about, sort of a background with standards and overview of the world. The next one that we'll do, the week of the 17th of November, that's going to be extremely interesting talking about different kinds of—the technological aspects, talking about engine technology, cylinder technology, compressor stations and a little bit about cost reduction and where we've been and where we're headed.

And then the last one we're going to do is going to be talking about the political and institutional side of commercializing in the market. All these pieces fit together and none of them can be taken in a vacuum.

And I think overall, if we look at the way the growth has been going in the world and the various socioeconomic conditions and energy costs, I think natural gas vehicles is definitely going to be a key player.

We're not going to replace diesel and gasoline but if we can achieve 10%, 15% or higher market share or on a worldwide basis, there will be a lot happier people in the energy business and a lot happier people in the car manufacturing and other equipment supplier business.

And consumers will be making a much better contribution to reducing greenhouse gases and lower emissions. So we're still very enthusiastic about what we see for NGVs in the future.

MARCY ROOD WERPY: And, Sandra, I don't know if you've said this, but you're planning on posting this webinar and its recording.

SANDRA LOI: Yes, ma'am. Thank you for reminding me. So, yes, today's webinar will be posted on the Clean Cities webinar archives pages, and we'll go ahead and send out a follow-up email after this webinar once the recording and the PowerPoint have been posted.

So this webinar and the next two in the series will also be placed in the same location in our Clean Cities webinar archives pages. So look for those. But, like I said, I will go ahead and send out a follow-up email to everyone, or you can send myself an email at sandra.loi@nrel.gov.

You likely received the notification from me at some point, so feel free to reach out to me directly if you have any additional questions. But thank you for the reminder, Marcy. And thank you, Jeff, for your presentation today. We really appreciate it.

JEFF SEISLER: Thank you. And thank you for all the people who have spent the time to come online and to share in this information. We are greatly appreciative of your participation.

SUSAN LOI: Wonderful. Thank you.

MARCY ROOD WERPY: Thank you.

COORDINATOR: Thank you, and this does conclude today's conference. All parties may disconnect.