Global consumption of Autogas has been rising rapidly in recent years, reaching 25.8 million tonnes in 2013 increasing 57% in the past decade. There are now almost 25 million Autogas vehicles in use around the world, although the market converges in a few countries. The 12 countries surveyed in this report accounted for 55% of the global market. The difference in the success of Autogas in competing against the conventional automotive fuels, gasoline and diesel, is explained mainly by differences in government incentive policies.

The primary justification for supporting the use of Autogas and other alternative fuels is their environmental advantage. Autogas out-performs gasoline and diesel in the vast majority of studies comparing environmental performance that have been conducted around the world. Autogas emissions are especially low with respect to noxious pollutants. With respect to greenhouse-gas emissions, Autogas performs better than gasoline and out-performs diesel on a full fuel-cycle basis and when the LP Gas is sourced mainly from natural gas processing plants. Autogas incentive policies are most effective when there is a financial incentive for an end user to prefer Autogas over a conventional fuel. The attractiveness of Autogas over other fuels depends on

• the added cost of an Autogas variant over its gasoline baseline or the net cost of converting an existing gasoline vehicle
• the pump price of Autogas relative to diesel and gasoline and
• the availability of the fuel on the market.

The higher the conversion costs and the scarcer the refuelling opportunities are, the larger the financial incentive must be. Lower running costs, of which fuel cost is the most important, need to compensate for added upfront capital expenditure and minor inconveniences. Ideally the savings will eventually offset the capital costs. This obviously depends on fuel consumtion. The report finds that payback periods under three years have shown the greatest success. The wide variation in Autogas pump prices among the countries surveyed, both in absolute terms and relative to the prices of other fuels, mainly reflects differences in the way automotive fuels are taxed. The market penetration of Autogas is strongly correlated with the competitiveness of Autogas vis-à-vis gasoline and diesel. The breakeven distance based on 2013 data on pump prices and vehicle costs was caclulated for each of the countries studied. The results show that Autogas is more successful where the breakeven distance is lowest, especially against gasoline. In half of the countries surveyed, the breakeven distance against gasoline is under 50 000 km – or about three years of driving. But the competitiveness of Autogas is not the only factor that drives Autogas demand. For example, the breakeven distance for Autogas against gasoline in Italy, the Netherlands and Thailand is lower than that of Korea, yet the penetration of Autogas in those countries is much lower – even though Autogas is always competitive against diesel. Several factors explain these divergences:

• Government policy commitment
• Non-financial policies and measures
• Restrictions on diesel vehicles
• Availability of vehicles and fuel
• Public attitudes to Autogas safety

The role of the government in starting the simultaneous development of demand and supply infrastructure is key. Autogas will usually take off after a certain critical market penetration is achieved. Only a sufficiently large market demonstrates to potential customers that the fuel is safe, reliable, easy to use and a cost-effective alternative to conventional fuels. On the other hand there must be enough customers and potential customers for operators to invest in a refuelling network. The different circumstances affecting the best approach to designing and implementing Autogas incentive policies are amongst others budgetary considerations, the seriousness of local pollution problems, fuel-supply and cost issues, the stage of development of the Autogas market and the prevailing barriers to fuel switching, including restrictive regulations and the local cost of vehicle conversions. Read more on how policy stability and a strong, long-term commitment by the government to achieving environmental-policy objectives are crucial for the development of alternative-fuel markets.