Alternative fuels still outpaced by petrol. Despite rising oil prices, other energy sources are not yet competitive
"Both Honda and PSA believe that fossil fuels will continue to power most vehicles for several decades to come. If that is the case in the developed world, then the penetration of alternative fuels in emerging markets is likely to be even more limited."
Financial Times, September 14
By Tim Burt, Motor Industry Correspondent
The sight of protesters blockading oil refineries in Europe, and US politicians complaining at crude prices, has reminded the world's carmakers of the potential for alternative fuels.
For more than 40 years, Ford, General Motors and others have been researching new engine technologies. Aware that the world's oil will begin to dwindle in the 21st century, the motor manufacturers have spent billions of dollars experimenting with cars and trucks powered by gas, batteries and hydrogen fuel cells.
So far, however, the in-roads made by alternative fuels have been strictly limited. One reason remains price.
Although they are cheap, the availability of alternative fuels has failed to wean motorists away from petrol and diesel. For all the protests in western Europe, forecourt prices are below their peak in many countries. In the US, a gallon of petrol still costs about Dollars 1.55- Dollars 1.75 compared with about Dollars 1.90 for a large bottle of mineral water.
As long as petrol remains cheaper than water in the world's largest car market, there will be little incentive to adopt more environmentally friendly fuels. Last year, the 10 most fuel-efficient vehicles in the US accounted for just 0.1 per cent of new car sales.
The record in European countries such as Italy and the Netherlands is far better. Datamonitor, the independent market analyst, claims the European market for liquefied petroleum gas (LPG) - the most widely available alternative fuel - will grow by 5 per cent a year over the next decade.
A total of 5m cars are expected to rely on LPG by 2009, says Datamonitor.
Even so, that remains only a small proportion of the vehicles on Europe's roads. Sceptics who doubt its growth prospects point to the experience in New Zealand, where gas became popular from the mid-1980s. However, demand weakened as petrol prices fell and conversion costs for LPG mounted.
Nevertheless, the world's leading carmakers and oil companies acknowledge that the long-term future of the internal combustion engine is limited.
Ford, the world's second largest carmaker, is planning to spend Dollars 1bn on alternative fuels and emissions research in the next five years. It has teamed up with BP Amoco to explore enironmentally friendly road transport, while also working with DaimlerChrysler to develop fuel cell vehicles.
Similarly, GM has joined forces with Exxon to pioneer technology to extract the hydrogen to power a fuel-cell driven car with regular petrol. DaimlerChrysler has an almost identical initiative under way with Shell.
The benefits of fuel cells are promising. Vehicles that generate electricity from hydrogen could deliver near-zero emissions, ultimately emitting only steam from their exhausts. But in spite of prolonged research, there is little consensus within the motor industry on the right infrastructure to provide the fuel or the right technology.
More important for consumers, the first production fuel cell cars - due on the roads by 2003-2004 - are likely to cost substantially more than petrol or diesel vehicles. Consequently, several carmakers, among them Japan's Honda and PSA Peugeot Citroen of France, have devoted as much research capital to refining existing engine technology as to developing fuel cells.
Both Honda and PSA believe that fossil fuels will continue to power most vehicles for several decades to come. If that is the case in the developed world, then the penetration of alternative fuels in emerging markets is likely to be even more limited.
In the medium term, fuel cells and natural gas vehicles may prove more popular with commercial vehicle operators - particularly municipal bus operators or garbage collection services - than private motorists. Such fleet operators can overcome the infrastructure issue by establishing central fuelling depots, and could offset initial capital costs through a mixture of grants and tax incentives.
DaimlerChrysler is planning to build 20-30 urban buses with fuel cell drives over the next three years. But Dr Ferdinand Panik, head of the group's fuel cell project, admits: "We are aware that we have to reduce the cost, volume and weight of the fuel cell systems in order to become competitive with internal combustion engines."
However, most industry analysts believe the real incentive for alternative fuels will come from new emissions regulations and controls rather than protests over petrol prices.
In the US, the state of California has drawn up the country's stiffest emissions legislation and has persuaded the big three carmakers to join a fuel cell partnership to bolster the use of cleaner fuels. Several other US states have introduced legislation demanding that a significant proportion of state government vehicles use alternative fuels.
In Europe, meanwhile, the motor industry has agreed to cut average fuel consumption to about six litres per 100km by 2008. The initiative, applied to each carmaker's product portfolio, is designed to reduce the amount of CO emissions to 140gm per kilometre, against today's average of 186g/km.
Given that fuel cells emit almost no harmful CO, while LPG and compressed natural gas cut such emissions by up to 20 per cent, the regulations could be the trigger for new fuels to gain market share. |
