Blog Dear gasoline and diesel prices are pushing companies and government agencies to explore alternative fuels.

Czech politicians are debating how to lower the high prices of gasoline and diesel, yet none have stepped forward to say: there is an alternative to costly conventional fuels. Perhaps in the form of automobiles, trucks, and buses powered by much cheaper compressed natural gas (CNG). Maybe all it takes is for one government official to start driving such a vehicle.

However, the reality is different. It's no surprise that the development of alternative propulsion systems in the Czech Republic remains in its early stages. When a radical shift occurs, it is likely to come from "below," by automakers recognizing the potential to expand their model ranges with CNG options, rather than from legislation. The main selling point—low operating costs—is readily apparent. CNG can cut up to 50 percent of fuel expenses compared to traditional fuels. Today, CNG vehicles are safer, more environmentally friendly, have greater range, do not compromise trunk space, and offer many other advantages.

"Undoubtedly, there are other alternative fuels besides CNG, but considering that the government resolution supporting the development of this fuel dates back to 2005, it's clear that other options still have a long way to go," says Markéta Schauhuberová, manager of the Czech Gas Association. "Many issues have already been resolved for CNG—vehicle prices, fast refueling, appropriate legislation, range, parking, and tax incentives. Globally, over 2.5 million CNG vehicles have been added in just the last year," she adds.

Awaiting a Boom

Yet, the Czech Republic is still waiting for its CNG boom. According to Zdeněk Prokopec, chairman of the NGV (Natural Gas Vehicle) Association, the economic crisis might paradoxically aid this interest.

"More and more people realize that CNG is a sensible alternative to costly, volatile oil and its derivatives, saving up to 50 percent on fuel costs and reducing emissions," explains Zdeněk Prokopec.

The share of CNG vehicles constitutes only about ten percent of the total vehicle fleet in the Czech Republic. The Czech Post is currently purchasing 412 CNG vehicles and is considering up to 2,900 such vehicles. The State Labor Inspectorate is preparing to lease 180 vehicles and 46 mobile refueling stations. The initiative aims at replacing the public administration fleet with "clean" vehicles, with a target that by the end of next year, 25 percent of government vehicles will be environmentally friendly.

Operational economics also motivate transport companies. For instance, ČSAD Autobusy České Budějovice plans to acquire its first CNG buses this year. "Last year, we helped test vehicles borrowed for city transport in Písek, and the results were very positive. So, I'm not surprised by their interest in new vehicles," says Zdeněk Prokopec.

Slíva: CNG Shows Huge Potential

Currently, about 3,600 vehicles in the Czech Republic run on natural gas, with a little over 3,000 being passenger and utility vehicles. Year-on-year, the number of these vehicles increased by a third. Correspondingly, the volume of sold compressed natural gas rose. In 2011, sales increased by more than 20 percent compared to the previous year. "In the first two months of this year, we sold 45 percent more CNG than during the same period last year in Prague," says Jan Žákovec from Prague Gasworks.

Motorists currently have access to 50 refueling stations, 37 of which are public, while at least 100 are "home" stations. Low density doesn't necessarily hinder operation. There are "home" refoners that can be connected to a gas supply, allowing self-production of CNG. This option is offered by Motor Jikov Strojírenská, part of the Motor Jikov Group.

"We see enormous potential in the CNG sector. We've identified a market niche and now operate as the only manufacturer of refueling units in the Czech market, with comprehensive customer service," says Jiří Slíva, director of Motor Jikov Strojírenská. In January this year, the company signed a cooperation agreement with the German firm Schwelm Anlagentechnik. This allows them to offer not only "home" stations but also large, public refueling stations.

"Demand is currently rising mainly among companies and institutions that want to operate CNG vehicles but are far from public refueling points. We can build their own refueling stations using mobile units, which they can install on their premises," adds Jiří Slíva. The company is also developing a more affordable model, maintaining top-quality, safety, and performance. The main difference will be in user interface—modern displays replacing basic controls. The first prototypes are expected this summer, along with other models such as more powerful compact stations and variants compatible with 220 or 120-volt power supplies.

Availability of refueling stations is one of the key factors influencing CNG vehicle purchases. Currently, public stations are primarily being built along main routes at conventional gas stations. "In January, we collaborated with Gascontrol to open a station in Ostrava–Muglinov, which is part of a Lukoil filling station," says Hugo Kysilka, marketing director of Vemex.

Low Taxes

A significant advantage of CNG vehicles is zero or low road and consumption taxes. Although after several years of moratorium, as of this year the road tax is 0.36 Kč per cubic meter of gas and will remain so until 2015, then gradually increasing to 2.36 Kč by 2020. Compared to excise taxes on gasoline and diesel—approximately 13 Kč and 11 Kč per liter, respectively—or 4 Kč per kilogram of LPG, this is negligible.

"The price of CNG has been stable over the past 3.5 years, increasing only by 1.40 Kč per cubic meter," says Schauhuberová. The average cost today is around 17 Kč per cubic meter, while gasoline and diesel are over 37 Kč per liter, with prices still rising.

And what about return on investment? "It depends on the number of kilometers driven annually. Clearly, the higher the mileage, the quicker the return—potentially within two years," says Zdeněk Prokopec from NGVA.