The Chinese government is expected to launch a program to research and promote the use of liquefied natural gas (LNG) as a vehicle fuel as it attempts to address the problems of a soaring number of cars clogging its roads and worsening air pollution clouding its skies.

Hou Fushen, an engineer working for both the National Clean Vehicle Coordination Leading Group Office ("the coordination office"), and the China Automotive Technology and Research Center, said the government will invite bids later this month for research work to develop LNG engines and vehicles, as well as factory contracts to build new designs of engines and vehicles.

"The aim is to increase the technical level of LNG vehicles while decreasing costs and emissions," Hou said. "We're planning to do some technical research and development work and demonstrate products, such as buses, in some cities."

The project is backed by the Ministry of Science and Technology, and the coordination office, which is made up of more than 10 government departments.

China's new middle-class consumers in the world's fastest-growing vehicle market bought 5.9 million new cars last year, more than the country's total vehicle population in the 1990s, making it the second-largest car market in the world after the US.

All those additional cars are guzzling an increasing amount of oil - which China is heavily dependent on imports for - and accounting for a sizeable share of the country's urban pollution problems. Finding new vehicle fuels not only addresses environmental concerns but also helps to diversify China's fuel consumption.

LNG is a natural gas that has been super-cooled and compressed, turning it into a liquid. It is transported in high-pressure tanks and costs more than natural gas that is delivered via a pipeline. It is widely used as a power-generation fuel.

Hou says there are only about 300,000 gas-powered vehicles in China, including those burning liquefied petroleum gas (LPG) and compressed natural gas (CNG).

"CNG vehicles account for more than 50 per cent of that and I think the number of cars using gas will grow very fast," Hou said.

LPG, stored in canisters is commonly used as fuel in taxis across Asia but is more dangerous in case of accidents and less environmentally friendly than CNG or LNG.

The cost of operating a vehicle on LNG compared with one burning CNG, LPG or petrol will depend largely on the price at which China can secure LNG supplies and the taxes that are applied to the fuel.

"Pricing will be the major concern because how will you get bus and taxi companies to use LNG or other gas instead of oil if it costs more than oil? The government would have to offer some sort of subsidy," said Matthew Kong, a car analyst with Fitch Ratings.

Engines designed for CNG or LNG use are the same, said Brenda Smith, managing director of consultancy group Gas Advisers and a board member of the Asia-Pacific Natural Gas Vehicles Association. However, gas-burning vehicles remain expensive because they are built in small numbers.

"The buses are significantly more expensive at the moment, with prices about 35 per cent or more above that of a normal bus. That's not because the components are much more costly, but because they're not being built in large numbers. If mass-produced, they'd only be five to 10 per cent more, and that would be because the fuel storage system is a bit more expensive," Smith said.

She added that using LNG for urban vehicles would make the program unique. Other countries experimenting with LNG have focused on long-haul vehicles. But some Chinese cities are unable to tap into piped gas, making LNG a more suitable option.

Several Chinese cities including Beijing, Guiyang, Changsha and Urumqi are already running small experiments using LNG in buses. Changsha was also one of the first cities in the world to experiment with LNG-fuelled taxis.

The Sichuan Air Separation Plant has built a factory with capacity to build as many as 5,000 LNG tanks per year. The tanks, made in varying sizes, are designed as fuel tanks for cars and buses. CMIC Zhangjiagang Shengdayin Cryogenic Equipment in Jiangsu province has also built a factory to make LNG containers for vehicles.

The government is trying several strategies to battle transportation's contribution to air pollution and create a cleaner image before the Beijing Olympics in 2008. In March, it introduced higher taxes on big cars and cut taxes for smaller models. The new rules aim to convince Chinese drivers to swap their petrol-guzzling sport-utility vehicles and luxury sedans for smaller, more efficient cars.

China opened its first LNG importing terminal in Guangdong province in June, and numerous other LNG import terminals are planned for China's eastern coastline. There are also small LNG plants in Xinjiang and Guangxi. But the fuel is finding it difficult to compete with cheaper piped gas and China's huge coal reserves, which produce 70 per cent of the energy used in the country

"In our opinion, CNG will be more important than other alternative fuels, so we are investing more in CNG than in other fuels," Hou said.

(China Daily October 16, 2006)