It costs about $80,000 per truck to set up, but the Conference Board of Canada says natural gas is a viable fuel for the trucking industry and will save money in the long run.
In a report released Tuesday called Cheap Enough? Making the Switch From Diesel Fuel to Natural Gas, the authors say converting trucking fleets to natural gas could generate savings of $150,000 per truck over a 10-year period.
"Our models indicate that while the capital costs are high, the savings from lower fuel costs make natural gas an economically viable fuel for the trucking sector," co-author Vijay Gill said in a release. "Trucking firms could reap significant net benefits in operating costs while also reducing their environmental impact."
The authors of the report said the financial impact includes operating cost savings over the life of the truck, the additional upfront capital costs, and the impact of fuel taxes and capital cost allowances.
The conference board notes historically, natural gas has traded at about half the price of crude oil per unit of energy.
Other than converting trucks so they can run on natural gas, the report says other hurdles include tax policy and refuelling infrastructure.
"Nearly half of the estimated savings from natural gas vehicles are in the form of fuel tax savings, as natural gas is currently exempt from the equivalent of a road diesel excise tax. Uncertainty over whether natural gas could lose its tax exemption compounds the disincentive created by the high capital cost of converting to natural gas engines," the release about the report says.