CNG and LPG Vehicle Market Growing due to Strict Emission Norms

The compressed natural gas (CNG) and liquefied petroleum gas (LPG) vehicle market is being driven by government initiatives for their adoption, low operational costs of such vehicles, and strict emission control norms across the world. In 2015, 45,952.4 thousand units of such vehicles were sold, and the sales are projected to grow at a 10.1% CAGR during the forecast period (2016–2022) to ultimately number 88,947.1 thousand. As such vehicles produce less emissions compared to gasoline (petrol) alternatives, these are predicted to witness increasing popularity and adoption.

When segmented by vehicle type, the market is categorized into passenger car, bus, and light & heavy-duty truck. During the historical period (2012–2015), passenger cars dominated the LPG and CNG vehicle market in terms of the total units sold. The reason behind this was the strict emission norms in North America and Europe that are helping curb gasoline vehicle sales and promoting clean-fuel vehicle adoption. The U.S. Environmental Protection Agency (EPA) had set the maximum permissible limit of carbon emissions from passenger cars for 2016 at 225 grams per miles (g/mi).

As per plans, the emissions are to come down to 143 g/mi in the country by 2025. Similarly, in Europe, during 2006–2012, the emission from cars decreased by 160 grams per kilometer (g/km), and it has to come down further to 95 g/km by 2020. Therefore, such strict regulatory framework across the world led to the high sales of LPG and CNG-powered passenger cars during the historical period. Owing to similarly stringent emission norms, light and heavy-duty trucks are expected to witness the fastest growth in the CNG and LPG vehicle market in the forecast period.

The implementation of these norms has not only compelled people to service their old vehicles to meet them, but also promoted clean energy. Governments in several countries are running campaigns to create awareness on the rising pollution levels and ways to tackle them by adoption LPG and CNG as vehicle fuels.

Apart from raising awareness, several countries are taking initiatives to promote clean fuel-driven vehicles. For instance, in Italy, people who use LPG for their vehicles get an excise tax reduction of 58 cents/liter more than that given for gasoline and 47 cents/liter more than that given for diesel. 

Another factor leading to the market growth is the adoption of clean fuel-driven buses. Though CNG and diesel buses cost almost the same, the former emit far lesser amounts of carbon. With the growing number of personal vehicles, a large number of which are still petrol or diesel fueled, the need to reduce pollution is prompting many governments to promote mass transit driven by clean fuels. For instance, in Delhi, India, all buses, whether government or private-owned, must be CNG powered.

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Further, the Russian government announced plans in 2013 to increase the proportion of natural gas-fueled buses to 50.0% of the total buses in the country. As a result of such initiatives and the above-mentioned emission norms, Europe dominated the CNG and LPG vehicle market in 2015. However, Asia-Pacific is projected to grow at a massive pace during the forecast period and overtake Europe in terms of total vehicle sales by 2019.

Therefore, the need to save the atmosphere from harmful emissions will continue to raise the demand for LPG and CNG-fueled vehicles.