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Executive Summaries
An Assessment of Propane as a Transportation Fuel
for Light Duty Fleets in Canada
The Study, based on the examination and evaluation of the seven Relevant Criteria, concluded:
“The evidence is clear, irrefutable, and comes from many independent sources: Propane is the best choice of transportation fuel for light-duty fleet operators in Canada, who want to reduce operating costs, while reducing harmful emissions.”
Propane is the most cost-effective transportation fuel for light-duty commercial fleet vehicles. In order to achieve payback on the cost of conversion, the fleet vehicle must consume significant quantities of fuel, either from high-mileage and/or considerable idle time. Vehicles that accumulate over 60,000 km per year (or that consume over 14,000 litres of gasoline annually) will provide fuel cost savings of 25% over gasoline. The payback period for the cost of conversion is less than one year. Propane pricing was also found to be more stable than retail gasoline and diesel pricing.
Today’s propane technology is robust and has been proven to meet the demanding requirements of severe-duty use in vehicles such as police fleets and para-transit vehicles. Propane is best suited to power light-duty vehicles (under 8,500 lbs. GVWR). Ideal applications for propane include: police vehicles; taxis; limousines; shuttle vehicles; delivery vehicles; and service vehicles. Fleet operators do not have to compromise on vehicle reliability or range to utilize propane as a transportation fuel.
In addition to fuel cost savings, propane also offers other benefits to fleet operators. It is environmentally superior to gasoline and diesel, providing lifecycle Greenhouse Gas (GHG) emissions reductions of approximately 26% relative to gasoline and providing significantly less emissions of criteria air contaminants (CACS) and air toxics when compared to diesel. Supporting the sustainability of the cost-savings over time, there is abundant propane supply and infrastructure in Canada to meet any foreseeable increase in demand. While diesel also offers fuel cost savings to the fleet operator, the savings are offset by the premium cost of the diesel-power option, which increases the payback period to greater than that of propane. Propane fuel costs, net of conversion costs, are 11% less than diesel fuel costs in a similar scenario. The availability of diesel engines is limited to ¾ ton and heavier pickup trucks and vans and there is no availability of diesel engines in the most popular commercial fleet passenger vehicles. Diesel emissions contribute to urban smog, and studies have shown the negative health effects of diesel particulate emissions. While biodiesel may offer some environmental benefits, supply is very limited and life-cycle operating costs will increase compared to conventional diesel.
Natural gas also offers fuel cost savings relative to gasoline; however applications for this alternative in the light-duty vehicle sector are constrained. Payback periods are greater than that of propane and cost, lack of infrastructure, and vehicle operating range, are significant disadvantages for many light-duty fleets. The application of natural gas vehicle technology has been greatest in urban transit buses where infrastructure can be provided and acceptable range can be met with a large number of CNG storage cylinders. Natural gas as a transportation fuel provides environmental benefits similar to that of propane.
Current information indicates that ethanol will be adopted as an oxygenate in gasoline-blends (up to 10% by volume) to provide incremental environmental benefits over conventional gasoline. Ethanol provides less energy content per volume than conventional gasoline, and ethanol-blended gasolines tend to be priced at or above conventional gasoline prices today. This combination of factors will increase the fuel costs to fleets and will reduce vehicle operating range between refuelling. Gasoline/ethanol blends such as E85 magnify this problem of higher operating costs and reduced range, and can become an even greater challenge when combined with the minimal availability of E85 refuelling infrastructure. Under current conditions, in the scenario evaluated, the fuel costs for E85 were double that of the propane option, net of conversion costs. While the fleet operator may achieve some environmental benefits with the use of E85 in place of conventional gasoline, those benefits will be at a significant cost to the owner. A major change in production technology is required before high-percentage ethanol blends such as E85 are cost-competitive with other fleet fuel alternatives. Until a strong supply infrastructure is developed, it is likely that ethanol prices will experience volatility.
Propane as a transportation fuel has great potential as a “made in Canada” solution: there is a domestic abundance of the fuel; it is readily available; it offers significant cost savings and it provides environmental benefits in terms of both GHG emissions and CAC reductions. Its use by fleet operators does not require vehicle performance compromises. There is also an opportunity for Canadian-developed technology to be marketed in the United States and around the world.