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# **Alternative Fuels and Global Warming**

Carbon dioxide and chloroflurocarbons are considered to be significant contributors to global warming. Studies [Jackson et al. 1987] have demonstrated that natural gas has about 30% lower CO2 emissions per equivalent volume of oil; methanol produced from natural gas has about 10% less; while methanol from coal produces twice as much CO2 in the aggregate. It has been estimated that the use of natural gas either directly or as a feedstock for methanol could gradually lower CO2 emissions. The benefits would be quicker using natural gas directly, assuming no difference in fuel economy. However, some evidence indicates that at the same power output and NOx emission levels, methanol-fueled vehicles would achieve better fuel economy than vehicles fueled with natural gas. Methanol from coal, however, would quickly lead to increases in CO2 because of the aggregate emissions. It is unrealistic that methanol from coal would make a significant penetration in the marketplace unless energy prices were dramatically higher than today.

# The Economics of Alternative Fuels

The economics of alternative transport fuels depends on the cost of production and the additional cost of storage, distribution, and end-use. Production costs are a function of abundance or scarcity of the resources from which the fuel is produced, as well as the technology available to extract those resources. The additional costs of storage, distribution and endvehicle-use is important since gasoline and diesel fuel made from heavy oils or natural gas require relatively minor changes to existing distribution and end-use systems, whereas CNG and alcohol fuels require major modifications.

The estimated cost ranges (inclusiv.e of production, distribution and end-use) of alternative fuels based on current oil and gas prices and the technology are shown in Table 41. According to OECD's International Energy Agency, CNG and Very Heavy Oil (VHO) products may be economically competitive with conventional gasoline at present. Methanol and synthetic gasoline made from natural gas may be close to competitive, under optimistic assumptions about gas prices. Methanol from coal or biomass and ethanol from biomass have a cost at least double that of gasoline at current oil prices and with current technology [IEA 1990].

A study by the World Bank [Moreno and Bailey 1989] has shown that at crude oil prices of $10 per barrel or lower (in 1988 prices) alternative fuels are generally uncompetitive. Between $10 and $20 per barrel custom-built propane-fueled high mileage vehicles and retrofitted vehicles using CNG trickle-fill refueling (mostly applicable to captive vehicle fleets -- urban buses, taxis, and delivery trucks -- with a relatively high annual mileage but restricted range), become competitive. Between $20 and $30 per barrel, CNG fast fill and propane-fueled low mileage vehicles would be competitive. Methanol from natural gas becomes competitive above $50 per barrel while synthetic gasoline and diesel guel do not become competitive until the price of crude oil reaches $70 per barrel. For CNG-fueled vehicles, the high cost of fuel transport in tube trailers suggests that CNG would become competitive at the crude oil prices indicated above only if filling stations are located close to a high-pressure pipeline.