The port of Long Beach in California, as everyone knows by now, is pushing hard to get drayage truckers to turn in their old equipment and upgrade to trucks powered by either 2007-model clean diesel engines or ones using liquefied natural gas (LNG). The question is, however, which of those fuels is the most cost-effective option.

(Photo of a new LNG-powered Kenworth T-800)

Right now, despite the higher premium for 2007 engines (which adds up to $10,000 to the sticker price on a new Class 8 tractor) and the extra cost per gallon for ultra low sulfur diesel (ULSD) fuel (between five and 10 cents per gallon more), diesel still seems to be the less costly of the two options. Not only is the price tag for an LNG-powered truck far and away more pricey than even a 2007-engine equipped tractor, there’s the cost of the LNG refueling infrastructure to consider, too.

The Diesel Technology Forum (DTF) – a research group headquartered out near my neck of the woods in Frederick, MD – recently published an “LNG vs. Clean Diesel” analysis, looking at the costs the port itself would shoulder to get truckers to switch to one fuel or the other. And yes, while the DTF is indeed completely biased in favor of diesel (I mean, please, the group has ‘diesel’ in its name!) their research is usually spot on.

And Allen Schaeffer, the DTF’s executive director, stresses that in this particular case, it’s not which fuel is better: it’s a matter of which fuel will cost the public taxpayer less to achieve clean air goals. “With cleaner [engine] technology and ULSD fuel, on average new diesel vehicles now have near equivalent or lower emissions compared to LNG vehicles – and LNG vehicles cost nearly twice as much to purchase and require new multi-million dollar fueling station infrastructure,” he said in a recent statement.

(One of five new LNG-powered tractors bought by California power company PG&E)

And as the port of Long Beach harbor commissioners want to replace at least half of current port drayage diesel trucks with ones powered by LNG, the “expenditure of public funds” as Schaeffer noted becomes a big issue.

According to the Port of Los Angeles presentation at the 2008 Faster Freight, Cleaner Air conference February 25 this year, new clean diesel drayage trucks cost approximately $110,000 each, which is significantly less than comparable LNG vehicles at $210,000. And both Ralph Appy, director of environmental management at the port of Los Angeles and Robert Kanter, director of planning and environmental affairs at the port of Long Beach, feel that emissions levels of the two types of trucks are “very, very close.”

Compare 2007 engine emissions data with LNG for example. On average, clean diesel is lower than natural gas in four of five emissions categories – particulate matter, carbon monoxide, methane, and non-methane hydrocarbons, according to DTF’s research. Diesels are just 2.4% percent higher in emissions of nitrogen oxides (NOx) but in terms of particulate matter, on average, 2007 natural gas vehicles emit levels 233% higher than clean diesels.

The other major hidden cost of natural gas technology is the need for infrastructure, said Schaeffer. Clean diesel vehicles are able to use the current refueling infrastructure while new LNG vehicles require new fueling stations, costing over $5 million each (an estimate worked out by California’s South Coast Air Quality Management District). “It is reasonable to suspect that the economics … will substantially delay cleaner air for the surrounding communities, since for every LNG truck ordered, nearly two clean diesel trucks could be on the road today,” said Schaeffer.

(Refueling an LNG-powered truck requires caution, as LNG must be stored at super-cold temperatures in order to turn natural gas into a liquid. Photo courtesy of PG&E.)

“The Port’s decision is further at odds with the California Air Resources Board (CARB) that has maintained a fuel-neutral and competitive playing field approach,” he added. “Clean diesel equipment exists today in the form of CARB [California Air Resources Board] certified new engines and trucks and proven emissions control technology to help clean up older diesel trucks. By focusing on the most cost-effective, quickest route to cleaner air, California will be able to maximize its investment in cleaning up the air faster while keeping vital freight moving.”

For example, last year CARB presented data that showed Level 3 emissions retrofit equipment costs about $30,000 and should reduce pollution in older trucks by 85%. CARB proposed that $25 million in early grant projects for goods movement air quality improvements should be allocated primarily to truck retrofits and replacement due to its low-cost nature. Now, under the Highway Safety, Traffic Reduction, Air Quality and Port Security Bond Act of 2006, CARB is authorized to spend a total of $1 billion on air quality improvement projects in California’s major trade corridors – which includes the Los Angeles/Inland Empire Region, the Central Valley, the Bay Area and the San Diego/Border Region. That means a lot more trucks could be retrofitted versus how many LNG-fueled rigs for that money.

Then look at the port grant structure vehicle costs alone: according to the port of Long Beach, grants for LNG trucks will range from $90,000 to $120,000 while clean diesel truck grants could be from $60,000 to $75,000. In addition, cargo owners will further subsidize natural gas vehicle users through exempting LNG vehicles from the ongoing cargo fee, while selectively imposing a $35.00 per loaded 20 foot equivalent container (TEU) unit on clean diesel trucks. The LNG truck approach, the DTF said, has public implications since the ports indicate they plan to use taxpayer funds through the South Coast Air Quality Management District and the state Proposition 1B transportation bond funds to fund technology choices. In effect, said the DTF, California taxpayers will be subsidizing a pre-selected and favored technology – LNG – rather than allowing competitive free market forces to determine the most cost effective technology.

This isn’t to slam LNG, by the way. It’s a fuel whose time is coming for heavy trucks. I mean, with the cost of oil up over $105 per barrel these days, and with diesel costs in excess of $4 at the pump in many spots across the U.S., we need to look at every alternative to petroleum to fuel the trucking industry. The question we need to answer is, should it come courtesy of direct payment of public tax dollars as we grapple with a slowdown in the economy? Is it the best use of tax dollars?

This is also where two big issues collide: cleaner air vs. energy security. The question can also be asked whether clean diesel trucks at the port should be fueled exclusively with B100, a 100% biodiesel fuel blend. I mean, California’s warm weather creates an ideal operating environment for this fuel, made from soybeans and other organic materials, plus there’s no need to build expensive refueling infrastructure. So if we’re going to mandate something that cleans up the air and makes us less reliant on imported oil, shouldn’t biodiesel be the most cost-effective option?

I am not sure where to go on this one. What I do know is that this is a huge effort to radically change the equipment base serving California’s major ports. It’ll be interesting to see how this plays out in the days ahead.