Industry News

September 26, 2003
The New York Times

Ford Parks Its Natural Gas Bandwagon

By Chris Dixon

AFTER a decade spent preaching the gospel of clean-burning natural gas and winning converts among air-quality regulators and vehicle fleet operators, Ford is leaving the congregation.

The company produced its final natural gas vehicles last month. Once those cars and trucks are delivered to customers, Ford says it will turn its full attention to the development of other types of green cars, including those that would run on hydrogen fuel cells. But existing customers and natural gas proponents say the move will have serious consequences, since Ford was the sole supplier ofseveral types of vehicles.

Cars and trucks that run on compressed natural gas, or C.N.G., have distinct environmental benefits compared with gasoline or diesel vehicles. The combustion produces fewer greenhouse gases, less soot and lower smog-causing emissions. The differences are so significant that a number of state and local governments, as well as many corporations, have added C.N.G. vehicles to their fleets.

And in contrast with crude oil, natural gas is a domestic energy source; nearly all of what is consumed in the United States is produced in North America.
Before Ford announced its withdrawal from the market, in January, interest in natural gas vehicles had seemed to be growing. Next year, Honda will offer a home-fueling device for its lone natural gas automobile, the Civic GX, which the American Council for an Energy Efficient Economy has rated the world's greenest car. Ford of Europe is preparing to put natural gas versions of the Ford Focus and Volvo S40 on the road. And increasingly, municipal buses and garbage trucks are running on natural gas.

In the United States, Ford has been the leader in natural gas vehicles, having produced nearly 30,000 since 1997. Its models - including the Crown Victoria sedan, F-150 pickup and Econoline vans - are used by taxi companies, municipalities, police forces and utilities.

Thus, Ford's decision to pull out of the market has left many green-fleet vehicle operators and planners in the lurch. It has disappointed natural gas proponents, who say it is environmentally short-sighted and a blow against energy self-sufficiency.

"What gets me is that Ford made a lot about being an environmental company," said Andrew Littlefair, president of Clean Energy, the leading distributor of natural gas for vehicles. "Then the same month that they decided to shut down the natural gas vehicle deal, they decided to produce the Excursion for another year." The Excursion, the nation's largest mass-market S.U.V., is a particular target of environmentalists.

Last weekend, at a San Antonio meeting of the Natural Gas Vehicle Coalition, a group of equipment manufacturers, suppliers and lobbyists, many of the delegates conceded that there was little chance of persuading Ford to reverse itself. But some held out hope that the automaker might at least certify other companies to convert its vehicles.

But David Henry, business strategy manager for Ford's alternative fuel vehicle program, said the automaker was unlikely to license any aftermarket company to do the $5,000 to $8,000 conversions in the near future. He said Ford would continue to cover its own natural gas cars under warranty, but if a car converted by another company had a problem caused by the conversion, that specific repair would not be covered.

Ford's decision to stop making natural gas vehicles is "a huge deal," said Mike Eaves, president of the California Natural Gas Vehicle Coalition, adding, "The taxi market wants a big four-door sedan with rear-wheel drive, and the Crown Victoria is the only one in North America."

Jim Harger, senior vice president of Clean Energy, noted that Crown Victoria taxis were in use around airports at Los Angeles, Phoenix, Seattle and San Francisco, among others. "Ford's reluctance to continue the C.N.G. Crown Victoria will negatively impact clean-fleet policies at these airports," he said.
Mr. Henry of Ford said that while the company's natural gas vehicles were profitable, they were not selling well enough to justify the program.
In addition, he said Ford wanted to shift its engineers and resources to combined gas-electric vehicles like its new Escape Hybrid, to cleaner-burning gasoline technology like its very clean "partial zero emissions" Focus and to fuel-cell vehicles.

"Although we led the market in C.N.G.," Mr. Henry said, "the total volume compared to our other product lines was very minimal."

Of the estimated 130,000 natural gas vehicles on American roads, some 20,000 are in California - including about 5,000 in the hands of individuals - where they can refuel at more than 200 stations. The vehicles are legal in the state's high-occupancy lanes, even without passengers.

In New York City, some 6,000 natural gas fleet vehicles, many of them operated by Consolidated Edison or by city agencies, can use about 20 fueling stations. Natural gas is also used in city transit fleets in Atlanta, Washington, Boston, Cleveland and Phoenix, and by many utilities.

Compared with gasoline, combustion of natural gas in cars produces 70 percent less carbon monoxide and 87 percent less nitrogen oxide. According to the Union of Concerned Scientists, an environmental advocacy group, the most affordable shuttle vans and school buses are often diesel-fueled. The cleanest of these produce five times the soot and twice the smog-forming compounds of comparable natural-gas vehicles.

Diesel combustion also produces some 40 toxic air contaminants, while natural gas combustion is safe enough for heating and cooking in millions of homes. Natural gas vehicles produce about 20 percent less emissions of the greenhouse gases that cause global warming, principally carbon dioxide, than comparable petroleum-fueled vehicles.

This figure is quite significant, Mr. Harger said, because air resources boards in California, New York and New Jersey are considering whether to require automakers to reduce greenhouse gases by as much as 30 percent in coming decades. Natural gas vehicles could help considerably in meeting such a standard.

"People ask us why we are fooling with this technology," said Mr. Littlefair of Clean Energy, "Well, you have 7,000 C.N.G. trash trucks in Southern California. That's like taking two million vehicles off the road."

Compared with gasoline and diesel, natural gas customers pay around 20 percent less per gallon, but the operating cost is comparable because the mileage of C.N.G. vehicles is about 20 percent lower.

Automotive C.N.G. tanks have a good safety record, but their smaller capacity generally means that the vehicles cannot travel as far without refueling as a gasoline or diesel car can go. And though natural gas costs less per gallon today, demand has been rising even as safety and environmental concerns raise potential hurdles to new wells, import terminals and storage facilities.
Ford was one of the first companies to offer natural gas vehicles. In 1984, the automaker delivered 27 modified Ranger pickups to North American utilities. The company invested in fueling infrastructure and expanded to a full line of natural gas cars, light trucks and medium-duty trucks, including a "bi-fuel" F-150 pickup that runs on either gasoline or natural gas. The C.N.G. Crown Victoria is the only full-size car powered by natural gas.

Chrysler produced a few C.N.G. minivans and a shuttle in the early 1990's, and General Motors stepped in with a limited line that included full-size pickups and a van, which has since been discontinued.

In 1993, Honda introduced its Civic GX, and the bulk of its sales have been to fleet operators, including New York City. Early next year, Honda plans to step up its GX marketing while offering its FuelMaker home-fueling system. By tapping into residential natural gas lines, FuelMaker can be used with any C.N.G. vehicle, not just Hondas.

Until then, refueling typically involves taking the vehicle to a dedicated filling station with high-pressure hoses that attach to special fittings on the vehicle. Fueling is not considered dangerous, but filling stations remain sparse.
This is one reason Ford pulled out, Mr. Henry said. "Despite our best efforts, one of the things that was a real inhibitor was a lack of infrastructure," he said. "It was our customers telling us that it was just too inconvenient, and not knowing where the next fueling point was."

Mr. Henry also said that the company had other demands on its resources. "It's no secret that Ford is going through a revitalization plan," he said. "We had to focus on rebuilding our product lineup."

Mr. Henry said that if hybrid vehicles sold well, their volume would reduce oil imports by more than a relatively small number of C.N.G. vehicles. He added that while Ford would keep an eye on Honda's fuel-at-home system, the future eventually belongs to hydrogen and fuel cells.

Mr. Littlefair said he wondered how that future would arrive if Ford never took further steps away from gasoline cars. "I think a lot of this is public posturing," he said. "In California, you've got natural gas pipelines running up and down every street. In populated areas, it's everywhere. It's a day at the beach compared with creating an infrastructure with hydrogen."

Mr. Eaves of the California natural gas coalition expressed frustration that a vehicle technology financed in part through utilities in that state, and thus its customers, was now heading overseas.

"The Focus showing up in Europe is kind of a slap in the face of the U.S.," he said. "A lot of California rate payers helped finance Ford's N.G.V. development program. Now they're pulling out and using that expertise somewhere else."

Copyright 2004 The New York Times Company

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