AGL wants more trucks to use CNG

ONE of Australia’s leading energy retailers, AGL, has teamed up with major transport group Toll Holdings to promote the use of compressed natural gas (CNG) as a more mainstream road transport fuel for Australia.

The giant gas distributor and electricity generator has revealed plans to open a series of CNG refueling stations in east coast capitals to supply the trucking industry and reduce Australia’s reliance on imported diesel.

But AGL managing director Michael Fraser does not believe that CNG is automatically the best fuel for passenger cars, even though Australia is now reliant on imports for 90 per cent of its petrol and diesel needs.

Mr Fraser also took aim at Canberra, saying he thought it was amazing that Australia was the only industrialised country that did not have a strategic reserve of transport fuel.

AGL has decided to build a network of public refueling stations after reaching an agreement with Toll Holdings for the transport giant to take an agreed volume of gas.

The first refueling stations will be built at Tullamarine in Melbourne and Dandenong, to the south-east of Melbourne. Further stations will be built in NSW and South Australia, at a cost of round $1 million each.

The move into public refueling stations will build on AGL’s position as a major supplier of CNG to the bus industry. The company already fuels 700 CNG buses in Sydney and 500 CNG buses in Brisbane using in-depot facilities.

AGL has been fuelling Sydney buses with CNG since 1990.

“Our research shows that there are savings of up to 40 per cent on fuel costs for fleet operators who convert across to CNG, depending on the class of vehicle and the location,” he told a gathering at the International Truck, Trailer and Equipment Show in Melbourne.

“Those kind of productivity gains are significant.” Mr Fraser said a refueling station would need between 20 and 30 customers a day to reach breakeven, but that if there were 50 to 60 fills a day “the economics would really start to hum”.

Not only was CNG cheaper than diesel, but switching to gas from diesel would help make Australia more self-reliant for transport fuel, Mr Fraser said.

“At the moment, almost all the energy used by the Australian road and transport sector is imported petrol and diesel and our reliance on imports is really put into perspective by one statistic,” he said.

“Australia’s quarterly imports of fuel and lubricants reached $10.9 billion in the December quarter last year. That’s more than a 300 per cent increase since 2003.” That translates to more than $40 billion a year.

Apart from being cheaper and helping to improve fuel security in Australia, switching to CNG would also help keep fuel costs down by using the existing gas reticulation network, Mr Fraser said.

“We see a greater utilisation of our gas networks and that will lead to lower costs, which will have flow-on benefits right across the whole community.” But he did not see CNG becoming popular for passenger vehicles.

“If I think about the transport sector more generally, I think about it in terms of passenger vehicles and commercial and heavy road transport.

“We see a very significant role for electric vehicles (EVs) and plug-in hybrid EVs (PHEV) for passenger cars and a major role for natural gas to power commercial and heavy transport road vehicles.” He said he believed the internal combustion engine would soon come to be seen as old technology.

“With respect to passenger vehicles, today there are around 150 different models around the world that are either EVs or PHEVs.

“I am absolutely convinced that one day we will look back on the international combustion engine for passenger vehicles in exactly the same way as today we look back on the horse and buggy.” AGL has several electricity generation operations, including the Loy Yang A power station in the LaTrobe Valley, as well as the largest wind farm and the largest solar farm in the Southern Hemisphere.

“That transfer across to EVs is going to have flow-on benefits right across the broader community in terms of lower electricity prices because we have got a lot of infrastructure in place in the electricity sector already and greater utilisation of that will lead to lower costs for everyone.” Mr Fraser accepted that electric vehicles were too expensive at present, but was confident that would change.

“The real key to it goes to battery technology,” he said.

“I know the Japanese Government has announced a big subsidy program around batteries in Japan and our in-house experts said just watch batteries fall down the cost curve now.

“Battery technology is going ahead in leaps and bounds. It’s not the vehicle itself (that’s expensive), it’s the battery technology.

“You bring down that cost, the range issues, and the ability to recharge quickly, and everything else is in place.” While he conceded that Australia had an abundance of energy reserves, Mr Fraser was concerned about the lack of any cohesive national energy policy for Australia.

“I find it amazing that we are the only country without a 90 day strategic fuel reserve. That’s quite remarkable.” He said that was partly due to the fact that for the last few years the energy industry has been used as a political football.

“If you just look at it over the last few years with Rudd/Gillard/Abbott, the energy industry has been a political football, no doubt about that.

“Carbon debates, renewables debates, coal seam gas debates in NSW, there is a whole range of things. We need to work out energy policy in this country and it goes to everything from energy security to where do we genuinely want to go in terms of our carbon footprint.

“What are the genuine emission targets we want to get to and what are the policy settings we need to put in place to ensure we have got reliability of supply? “Energy security is absolutely an issue for Australia.”