Commercializing an alternate vehicle fuel: lessons learned from natural gas for vehicles

Abstract In the mid-1980s, unique conditions in Canada favored the adoption of a compressed natural gas as an alternate transportation fuel. This work focuses on the factors that limited acceptance of the fuel, and that ultimately held the rate of adoption below a critical level which would enable healthy suppliers to survive in a competitive market. The main barrier was a lack of infrastructure to support converted vehicles. Lack of refueling facilities was particularly critical; failure of existing refueling stations to achieve profitability stalled further investment, which in turn depressed sales of vehicle conversions. Other problems in the industry included excessive parts markup by conversion dealers, exaggerated claims for environmental and economic benefits, and poor design of promotional programs. Fundamental shifts in the relative values of oil and natural gas in the late 1980s removed momentum from sales of conversions. Major players, who had not achieved profitability, exited the market, and natural gas as a vehicle fuel has since remained on the fringe in Canada and the US. Today, new technologies and driving forces are creating conditions that favor different alternate transportation fuels, including electricity and hydrogen. Many of the issues regarding growth to commercial viability, in particular, the need to build a supporting infrastructure, will be the same as with natural gas.