Replacing CNG With LPG Is Not Good Economics

EghtesadOnline: So long as cars can run on compressed natural gas, liquefied petroleum gas (LPG) should be used for more useful purposes, head of the Iran CNG Association said.

News ID: ۷۸۵۷۳۳

07 January 2021

“Iran has some of the world’s largest natural gas resources and grids in the world. Substituting CNG with LPG in the energy mix does not make economic sense,” Ardeshir Dadras was quoted as saying by IRNA.

He said the capacity to produce LPG is limited. Moreover, there are two million households that are not yet linked to the national gas grid and need LPG for cooking needs.

Around 20,000 tons of LPG is produced in Iran every day, half of which is sold in regions that still do not have piped gas, namely in the southern provinces like Sistan-Baluchestan and Kerman.

“Each ton of LPG can be sold at $500 in international markets,” whereas CNG (compressed natural gas) has little international demand as it needs costly networks for export. LPG accounts for 3% of the energy mix in Iran while the share of natural gas exceeds 70%.

According to Dadras, LPG should “only be used as an alternative to heating oil and electricity in regions lacking gas pipelines.

In the last decade more than $2.4 billion was invested to expand CNG use, he said. “CNG kits, tanks and compressors are manufactured domestically,” he said, and added that the share of the environmentally-friendly fuel in public transport sector has reached 20%. CNG use has reached 25 million cubic meters per day up 25% compared to 2019.

Compressed natural gas stations are ready to provide at least 40 million cubic meters of fuel a day, he added. “CNG is almost 3 times cheaper than gasoline and more motorists and taxi drivers are willing to fill up with CNG.”

Dadras said raising gasoline prices is a good idea because it can help increase eco-friendly CNG consumption. However this is in stark contrast to the views of the people and economic experts who insist that rise in gasoline prices always has an inflationary impact on almost all consumer goods as seen in the past.

Each cubic meters of gas is sold for 6,000 rials (3 cents), while a liter of subsidized gasoline costs 15,000 rials (8 cents) and non-subsidized fuel twice this amount.

Lower Cost

Referring to other benefits of CNG, he said natural gas-based car engines have lower maintenance costs compared to other fossil fuel-powered vehicles. Likewise, “greenhouse gas emission from CNG-run cars is 80% less compared to gasoline vehicles.”

Natural gas disperses easily in the air and is not flammable. Hence CNG vehicles are safer than gasoline vehicles.

According to Hashem Oraee, a faculty member at Tehran's Sharif University of Technology, boosting CNG share in the fuel mix has multiple advantages, especially cutting gasoline demand, improving the environment, reducing air pollution and exporting fuel.

“Low-carbon and clean fuel can help export liquefied fuels, namely diesel and gasoline.”

The people's interest in natural gas vehicles notwithstanding, carmakers have done almost nothing to manufacture gas vehicles because they have “enough customers for their gasoline-fueled poor quality gas guzzlers.”

Although Iran has an impressive gas grid and CNG is much cheaper than gasoline, domestic carmakers continue to make poor quality gasoline-powered vehicles that contribute terribly to air pollution in the rapidly expanding urban areas.

The main disadvantage of CNG is its low energy density compared to liquid fuels. A gallon of this fuel has only a quarter of the energy in one gallon of gasoline.