BC regulations change urges switch use of LNG as fuel

The Government of British Columbia revealed changes to the greenhouse gas reduction regulation to encourage more fleet operators to switch from diesel and gasoline to cleaner-burning natural gas to run their buses, trucks and marine vessels.

A natural gas vehicle produces 20% to 30% fewer greenhouse gas emissions compared to a gasoline or diesel vehicle, BC government said in a statement.

The changes will allow utilities to expand incentives to fleet operators to convert to natural gas as their primary or secondary fuel, and advance the development of more natural gas fuelling stations.

The greenhouse gas reduction regulation under the Clean Energy Act was introduced in 2012 and allows utilities to make time-limited investments in clean-energy transportation and infrastructure to reduce greenhouse gas emissions and help diversify and increase the market for natural gas in British Columbia’s transportation sector, including opportunities to:

• Offer incentives (grants or zero interest loans) for transportation fleets to purchase compressed natural gas or liquefied natural gas vehicles, buses, trucks or ferries.
• Offer incentives for fleets to upgrade their vehicle maintenance facilities to be natural-gas-safe.
• Build, own and operate compressed natural gas fuelling stations or LNG fuelling stations.

To date the incentive program has resulted in commitments for more than 500 natural gas vehicles and vessels that will displace approximately 36 million litres per year of diesel fuel consumption and reduce carbon dioxide emissions by 42,000 tonnes per year.

The updates to the regulation will allow for shifts in the allocation of incentives and investments within the previously-approved total spending caps to promote continued development of a domestic market for natural gas in the transportation sector, and will:

• Extend the existing incentive programs by one year to March 31, 2018.
• Allow a utility to spend up to $5 million on pilot programs to convert diesel engines in medium and heavy duty vehicles to also use natural gas.
• Remove the existing cap of $11 million on expenditures for LNG-powered marine engines to allow the incentive amounts to be applied to all eligible vehicles including marine.
• Make the eligibility criteria and grant and loan structure for replacement of diesel engines more flexible to encourage greater use of natural gas powered engines.
• Facilitate the construction of natural gas fuelling station infrastructure.

FortisBC has started construction of a $400 million expansion to increase natural gas liquefaction capacity at the Tilbury LNG facility to meet future domestic transportation and export demand, including LNG supply to BC Ferries.

In February 2015, BC Ferries signed a 10-year contract with FortisBC to supply LNG for three new dual-fuel ferries, capable of running on LNG or diesel, that are currently under construction. FortisBC provided BC Ferries with $6 million in incentive funding toward the three new vessels. The incentive funding was made possible by the greenhouse gas reduction regulation.