Issue 3, Volume VI, 2008 Korea Environmental Policy Bulletin Natural Gas Vehicles Promotion Program in Urban Areas CONTENTS Summary Summary 01. With the increase of motor vehicles on the road in Korea, transportation has become a significant I. Background of the Natural Gas Vehicles 02. source of air pollution. In particular, diesel vehicles Promotion Program emit large amounts of particulate matter (PM10) II. Natural Gas Vehicles Promotion Program 03. and nitrogen oxide (NOx), which is the reason why 1. Present status and goal diesel buses are being replaced by NGVs (natural 2. Institutional Arrangement of the NGVs gas vehicles). Pilot projects for NGVs started in Promotion Program 1998, and as of December 2007, 15,097 natural 3. Environmental and Economic gas buses and 289 natural gas garbage trucks have Effectiveness been introduced. Ministry of Environment plans to III. International cooperation for NGVs 08. replace 23,000 diesel vehicles with NGVs and Promotion install 400 natural gas stations by 2010. In order to increase the demand for natural gas buses, IV. Comprehensive Evaluation and Future 11. financial incentives and tax benefits are being plans offered for the purchase of the vehicles, or for the installation and operation of natural gas stations. The benefit of this program is estimated to reach 1.57 trillion Korean won in environmental improvement effect and 1.22 trillion Korean won in net economic benefit. Ministry of Environment is making an effort to share the experiences of its natural gas vehicles promotion program and Ministry of Environment Korea Environment Institute, Republic of Korea cooperate with other countries in introducing underway in commemoration of the 2009 NGVs and relevant equipments. A General ANGVA General Assembly and Exhibitions. Assembly and Exhibitions for the 3rd ANGVA and Ministry of Environment will organize a IANGV will be held in the city of Donghae in demonstration project and prepare a mid- and 2009 and the city of Chuncheon in 2012, long-term plan for introducing LNG vehicles in respectively. The Green Highway Project II is 2009. Background of the Natural Gas Vehicles Promotion Program The world is suffering from serious air pollution emissions from mobile sources on the road. because of the increase of automobiles and the Therefore, to reduce the emissions from motor exhaust emissions they emit. Mobile sources on the vehicles, Natural Gas Vehicles (NGVs) are being road are becoming increasingly responsible for air introduced to replace diesel vehicles. This will pollution and cause more than 65% of particulate reduce air pollutants such as particulate matter (see matter (PM10), and 51% of nitrogen oxide (NOx) in Figure 1). Recently, compressed natural gas (CNG) the Seoul metropolitan area. Diesel motor vehicles vehicles, liquefied natural gas (LNG) vehicles, and are considered to be the primary cause of air hybrid electric vehicles that run on gasoline and pollution. Although they represent only 26% of total electricity, or natural gas and electricity have been motor vehicles on the road, they account for 100% introduced in order to save energy and mitigate of particulate matter and 75% of NOx in the pollution in urban areas. Figure 1. The reduction rate of emissions from natural gas vehicles in contradistinction to diesel vehicles Source : Environmental Transportation Division, Ministry of Environment, The presentation material of “the supply policy of natural gas vehicles”, 2007. 2 Korea Environmental Policy Bulletin Natural gas is an inflammable gas mixture of lower In addition to fuel storage systems, there are also molecular weight hydrocarbons that is extracted from three types of natural gas combustion modes. Bi-fuel underground, and is mainly composed of methane vehicles use both gasoline and natural gas. Dual fuel (CH4). Unlike oil reserves which are concentrated in vehicles mainly use natural gas, and diesel is also the Middle East, natural gas resources are distributed used as auxiliary fuel for ignition. Dedicated natural throughout the world, and they are estimated to be gas vehicles use only natural gas and utilize the spark sufficient in meeting demand for a long time in a ignition method. The bi-fuel system is primarily stable way. Therefore natural gas is considered a applied to small gasoline vehicles, and the dual fuel good substitute for petroleum-based fuels. system is mainly used for medium/large diesel Natural gas combustion emits very little pollutants vehicles. Since the late 1990s, a more efficient, less- due to the removal of impurities such as particulate polluting, and optimized dedicated system has been matter and sulfur during the liquefying phase. In the introduced and commercialized. case of leaks, natural gas diffuses in the air very The development of advanced natural gas engines quickly because its density (0.6) is lighter than air. and other new technologies are crucial to meet The gas is considered to be relatively safe to use strengthening emission standards across the world and 1) because the combustion limit is as high as 4.5% also to limit CO2 emissions to tackle climate change. and ignition temperatures are high enough. Domestic CNG vehicles were developed by Depending on their fuel storage system, there are modifying 6-cylinder diesel engines in order to spark three types of natural gas vehicles. Compressed ignition(Lean-burn engines). Natural gas fueled natural gas (CNG) vehicles use compressed (200 buses are the same as diesel buses in basic bar) gas in high-pressure containers, and liquefied structure, but different in fuel supply system. High- natural gas (LNG) vehicles use low temperature pressure (20 Mpa) natural gas is stored in the (-162 C) liquefied gas in vacuum insulated vehicle’s high-pressure gas container through a containers. Adsorption natural gas (ANG) vehicles dispenser, and the amount of stored fuel can be use adsorbed lower pressure (1/3-1/5 of CNG) gas monitored by a barometer at the dashboard. In the to absorbents such as activated carbon. case of extremely high pressure, a safety system will The CNG variant is currently the most popular, but work to release the pressure through a safety valve. LNG vehicles have recently been developed and After the compressed gas passes through its supply commercialized. Though CNG vehicles have 1/4 pipeline from the container, the pressure of the gas lower MPG than gasoline vehicles due to the low is adjusted by a reduction valve, and the gas is fed energy density of CNG, LNG vehicles have three into the engine after having been mixed with air. times more MPG than CNG. Natural Gas Vehicles Promotion Program 1. Present status and goal vehicles between 1991 and 1997 as part of the “G- 7 Project” and started test operations of four urban The government of Korea developed natural gas buses in two cities (Incheon and Ansan) in July 1) Combustion limit : the minimum fuel concentration to combust in the air 3 1998. Between June 2000 and 2002, 5,000 diesel buses with natural gas buses in urban areas. As of buses in Seoul, six metropolitan cities, and the city December 2007, 15,097 natural gas buses and 289 of Suwon were replaced by NGVs. natural gas garbage trucks were introduced and 87 The central government and local municipalities natural gas stations were constructed. have been actively involved in replacing diesel Table 1. Number of natural gas buses and construction of natural gas stations and machines by year Note : Only fixed gas stations are calculated. Figure 2. Number of Natural Gas Bus by Year Source : Ministry of Environment, The updated data based on “the study on the effect evaluation of NGVs promotion program and its promotion alternatives”, April, 2007. In areas where it is difficult to install natural gas to supply natural gas to gas-charging vehicles. supply pipelines, 85 gas-charging vehicles are Ministry of Environment plans to replace 23,000 running to supply natural gas (in December 2007), diesel motor vehicles in areas where city gas is and gas stations in Dae-jon, Gim-hae, Pyeong-taek, being supplied and to construct 440 gas stations by and Go-yang are in operation as the mother stations 2010. 4 Korea Environmental Policy Bulletin 2. Institutional Arrangement of on gas station construction. NGVs Promotion Program The government provides various benefits, such as grants for the purchase of vehicles, loans, and Over the past 7 years, the central government has financial support for the construction and operation been promoting financial aid policies such as tax of natural gas stations, and tax cuts to promote the cuts to stimulate the supply of natural gas vehicles, introduction of natural gas buses. and revised related laws in order to ease regulations Table 2. Promotion Policies for the Purchase and Operation of NGVs Source : Ministry of Environment, The study on the effect evaluation of natural gas vehicle promotion program and its promotion alternatives, April, 2007. First, the price differential between natural gas and garbage trucks, airport limousines, intercity buses, diesel vehicles is covered by the grant. In the and school buses. Prime rate loans are also applied beginning, only inner city buses were eligible for the for the construction of natural gas stations. grant. However, the grant became available for Table 3. Grant-in-Aid and Loans for the Purchase of NGVs 5 Second, the government partly supports the fuel expenses and operation costs for natural gas buses and gas stations. Table 4. Grant-in-Aid Policies for NGVs and Gas Station Third, VAT, acquisition tax, and customs duty Environmental damage charges on building parking reductions are provided for purchasing NGVs. They lots and gas stations in limited development districts are also exempted from charge for Environmental can be reduced by 10-20% by amending the Improvement on diesel motor vehicles. The enforcement decrees of the “Act on special corporate tax cuts and lower industrial electricity Measures for Designation and Management of fees are also applied for natural gas stations.