Water is wet. Fire burns. Volga flows into the Caspian Sea. And one of the largest crises in the history storms in 2020. During it demand for hydrocarbons was enormously reduced, futures for WTI reached unknown depth in minus forty dollars for barrel in the USA outstanding rates, but thus oil production absolutely «integrally» fell off, and demand for new vehicles record-breaking fell.

On it abounding with all shades black background it is difficult to imagine, but 2019 was not remarkable from all directions too, including for a car market in general and a segment of alternative motor fuels in particular. The current crisis designated earlier designated priorities of various countries simply more accurately and opened a number of problems which can lead to the fierce inter-fuel competition in the next years.

Falling driver

According to the International organization of car makers (Organisation Internationale des Constructeurs d’Automobiles, OICA), already in 2018 the sales volume of vehicles decreased for the first time in ten years on 1 million (to 95 million units). And last year falling was accelerated, and demand was reduced to 91.36 million sold cars. Decrease happened at the expense of an automobile segment demand in which fell from 69 million in 2018 to 64 million in 2019. Sale of commercial motor transport on the contrary, without wishing to hand over a position, grew up from 26 million to about 27 million.
The country which was the main driver of growth before — China became the main driver of falling no matter how there was paradoxically this definition. About 28% of all the world demand accounts for this country that makes it the largest car market on the planet. And in 2019 this market, according to OICA, contracts from 28 million to 25.77 million cars. And at the beginning of 2020 a miracle does not happen –falling proceeds. It was sold on 400 thousand cars less in January here than for the same period of last year – 1.6 million. For understanding of scale we will note that for all 2019 1.78 million cars were sold in Russia. And our market takes the fifth place on capacity in Europe (after Germany, France, Great Britain and Italy).
It is interesting that last year 25.72 million vehicles were made in China. There can be an impression that the People’s Republic of China is the closed system in which it is made as many cars, as it is consumed, and therefore this country should not render special impact on the world car market. But specifics of the local market consist in great demand for «foreign cars» (most often made in China). The first three positions are taken by Volkswagen, Toyota and Honda. The most insignificant stirs in the Chinese market affect indicators of the world brands.
Unfortunately, we began with banality about crisis, and we will continue it. After the People’s Republic of China took measures against coronavirus infection in the first quarter, having sharply reduced industrial production and demand for energy carriers, falling on a car market proceeded.

Wide limits of optimism

But already by the beginning of the second quarter the most part of restrictive measures was removed by the Chinese management. In April production rose to 2 million cars thereof about a quarter accounted for a share of commercial transport that, by the way, became a record. At the same time demand for local brands in an automobile segment continued falling — to 34.6% that according to the Chinese association of producers of cars corresponds to sales level of July, 2014.
But in general April interrupted two years’ decline in demand for motor transport in the People’s Republic of China. Production quickened. But the depth of falling was so impressive that it is softly possible to call forecasts for 2020 restrained: if the pessimistic scenario assumes reduction of the market on 25% in relation to not the safest 2019, the optimistic forecast assumes falling on 15%»only».
There is nothing surprising that the world car market also prepares for decline in demand. But the dispersion of expectations is slightly broader here, as well as statistics is less consolatory. According to OICA, in February world car sales fell on 23% that it is just possible to explain with drastic restrictive measures in China. And in March falling reached the bottom — 39%. In April when the People’s Republic of China showed growth, global sales were lower last year’s on 38%. In general in six months demand fell on 26%.
On this background the People’s Republic of China already starts looking a stability island. And if to mention that in August in China sales of automobile transport increased on 8.9% in relation to August 2019, it is possible to express also a shy hope for the fastest restoration of pre-crisis indicators on a global scale. «The falling driver» again became growth driver.
This hope is shared also by the International Power Agency (IPA) which within Global EV Outlook 2020 expressed quite optimistic expectation that total sales of cars in 2020 will be approximately on 15% that is on 13 million cars below than in 2019. Yes, in this case the word «optimistic» is used in very broad sense which can be used only in the context of crisis when the concept «optimism» most widely moves apart the borders.
And let gloomy forecasts of the first half of the current year most likely will be excessively pessimistic and we will not see any reduction of demand for a quarter, but even more moderate falling will become the largest for the last decades. And in absolute measures the largest in the history at all.

Slightly for 55

It is possible to call growth of a gas engine segment last year moderate. To the middle of 2019 the world vehicle fleet of the gas cylinder cars (GCC) working on methane grew to 27.8 million. And by the end of the year, according to NGV Global, it overcame a mark of 28.54 million units. At the same time, according to World association of the liquefied hydrocarbon gases quantity propane-butane amounted 27 million. That is the global gas engine vehicle fleet officially stepped over a mark of 55 million.
Our country traditionally kept one of the leading positions in propane-butane segment. And there are three leaders in methane including China, Iran and India. India in general shows the extremely laudable rates of gasification of transport and also very ambitious plans. So, till 2030 it is planned to increase quantity of GCC from 3.2 million to 15 million and gas stations — from 1.5 thousand to 10 thousand in this country. For additional stimulation of development of this direction the Ministry of oil and natural gas of India in December of last year achieved reduction of a tax on goods and services on gas engine transport from 28% to 5%.
A little lack of fresh statistics on methane transport in China surprises. If to judge according to the international organizations, GCC in this country stood the last two years on a mark a little more than 6 million units. But earlier the plans to bring their quantity to 10 million in 2020 were made public. Certainly, 2020 has not finished yet, but if these plans were close to an embodiment, dynamics of growth of world methane vehicle fleet would be higher. However, it is early to sum up the results on this matter if we give a discount for objectively existing difficulties of the current year.
Anyway, the People’s Republic of China still remains the leader of the gas engine direction whom someone hardly will be able to displace from its pedestal. Also it should be noted that the Pacific Rim in general dominates in the world gas engine market. For the beginning of this year here, according to NGV Global, about 20.5 million vehicles working at natural gas, as well as 20.3 thousand gas stations were registered (there are 33.4 thousand of those are in the world). For comparison: Europe on the volume of methane vehicle fleet concedes to ATR ten times in general and three times to China in particular. Thus there are about 200 million cars in China and about 320-330 million are in the European Union. That is a share of the installed gas transport in the People’s Republic of China is much higher.
The main lagging behind region in a gas engine segment is North America which by quantity of GCC (224.5 thousand) concedes even to Africa (295.4 thousand). Here it would be possible to use an excuse, standard for such a situation, that methane is a fuel of mainly poor countries. But this excuse does not work if we remember a level of development of China or, for example, Italy. Dynamics of gasification of transport depends on a level of development of national economy and welfare of its population and also on the price of traditional motor fuel.
In other words, the high price of fuel and is lower welfare, more people willingly transfer those transport to natural gas. Though it is impossible to call this specified formula full as it does not considered an important factor about which it will be told below. So far we will notice that in North America (first of all in the USA) welfare of the population is quite high, and petrol prices are low. That is there are no obvious incentives to transfer transport on gas.
But thus at the beginning of 2010 the government of the United States actively dramatize the thesis about the future gas engine breakthrough. But, probably, it did not happen. Of former plans here reminds the lowest indicator of cars number per a gas station — 121. In ATR this ratio gives much bigger size — 1009 cars per a station. Though to be fair we will note that some states nevertheless do not give up a hope for development of gas engine direction. So, in May of last year the government of the State of Oklahoma prolonged privileges for methane cars until the end of 2027.
According to Association of vehicles on natural and biogas fuel (NGVA Europe) in 2019 69.9 thousand new methane cars were sold in Europe that on 6% exceeded a similar indicator of 2018. Traditionally more than a half (55.2%) of new GCC was registered in Italy. Another 10% were registered in Germany and 7% — in Spain. It is remarkable that the volume of the heavy-load transport working at the liquefied natural gas in Europe within last year was arranged and reached 4,510 thousand units.
According to the data sounded within the Forum of the export countries of gas (The Gas Exporting Countries Forum, GECF), for the last two decades demand for natural gas on motor transport increased from 4 billion cubic meters to more than 60 billion cubic meters. The main contribution to growth of a segment was made by China, India, Pakistan, Iran, Argentina and Brazil. Today natural gas occupies about 2.5% of the total amount of the energy consumed by vehicles.

Special type of electric car

Development of a segment of alternative motor fuels is also influenced by specific factors, such as ecological agenda and inter-fuel competition.
The ecological agenda is that important factor about which it was mentioned above. It is impossible to estimate prospects of gasification of these or those countries authentically without it. That, by the way, leads us to a fair thought of strongly pronounced regionality of this factor. After all, on the one hand, at the whole all of us, the whole world has the uniform ecological agenda: we irreconcilably fight against global warming to the last gram of CO2. And, on the other hand, everybody has different methods of environmental problems solution. Some large economies refuse to join the Parisian agreement. And others on the contrary – made increased commitments for decarbonization.
In this sense the pioneer of mankind is the European Union with it «Green transaction» and «Hydrogen strategy». The first stage of the transaction is 2030 by which it is planned to reduce emissions of greenhouse gases at least on 40%. By the same moment the total volume of production of hydrogen has to reach 10 million tons (111 billion cubic meters). Besides it is not about banal economically reasonable hydrogen which is made of natural gas today and about «pure», «green» hydrogen which is desirable for making directly of water by means of the renewables (R).
By the way, production of 10 million tons of hydrogen will require about 90 billion liters of fresh water. For some reason it was remembered a thesis about biofuel sounded earlier: it is better to eat food but not to fill cars with it. Possibly, it is recollected because last year the World Health Organization and Children’s fund published the report according to which 2.2 billion people have no access to clear drinking water. But, probably, this global insignificant problem for the last year was somehow solved by itself. It is certainly convenient.
Anyway, the hydrogen subject began to have impact and on motor transportation sector, besides, sometimes from an unexpected side.
It was actively started talking about hydrogen technologies after global oil crisis of the 1970s. And in 1980s various concepts of hydrogen power were studied. An important component of these concepts is power installations on fuel elements. A principle of work of fuel elements is as follows: oxygen and hydrogen are passed through the porous electrodes divided by electrolyte, thus there is a connection of atoms of hydrogen with the hydroxyl rest of OH received as a result of dissociation of electrolyte on ions. As a result of this process water is formed and electrons are released. In final, as a result we receive electric current. On amusing coincidence of this subject our edition touched upon exactly ten years ago — in the tenth issue of 2010.
In fact, having connected hydrogen and fuel elements on transport we will receive a close relative of electric car. It is not surprising that hydrogen cars started being gradually involved in reports of the large research organizations on electro transport.
For example, IPA calls cars on fuel elements a type of electric cars (!). Also the agency makes specification that though the level of emissions on this type of transport aspires to zero but general emissions of greenhouse gases of hydrogen cars depend on a way of receiving hydrogen. Two ways are admitted eco-friendly: electrolysis with application of RES (or other «low-carbon» generation) and production from fossil fuel in combination with catching and storage of carbon. The second way opens for the traditional energy companies a door to the bewitching world of the hydrogen future if it, of course, comes.

Hydrogen rescues electric cars

Today sales of hydrogen cars make some thousand a year, the model range is extremely poor, and the prices traditionally bite. Optimistic forecasts speak about reduction of prices of hydrogen transport after deployment of large-scale productions. But for some reason annually noted reduction in cost of accumulators does not bring to reduction in cost of electric cars. But, probably, in this case the scale effect works somehow differently.
In view of complexity of work with hydrogen the filling infrastructure demands more investments than traditional gas stations and charging stations. By the end of 2019 only 470 hydrogen gas stations around the world worked (20% more than in 2018). They were situated in Japan, Germany, the USA and China.
It is possible to assume that requirements of the European hydrogen strategy will urge on development of filling infrastructure on hydrogen in the territory of the EU soon. And in this plan the attention of the same IPA to cars on fuel elements is quite explainable. The actual ecological agenda openly hints at the future explosive growth of this segment. But hydrogen is also hope for an embodiment of earlier sounded forecasts for development of electro transport. So, the prospect of growth of number of electric cars to 125 million or even to 220 million by 2030 was in all seriousness discussed two years ago. But the results of 2019 are transparent hint that forecasts about modest 30-36 million electric cars by 2030 are closer to truth.
On the one hand, three records were broken at once last year in an electro segment. The world electric vehicle fleet reached a point of 7.2 million units. The sales volume exceeded 2.1 million. And a share of electric cars in sales volume of new vehicles for the first time reached 2.6%. In the conditions of decline in demand it is Pyrrhic victory.
On the other hand, growth rates of an electro segment were slowed down. If in 2017 it was sold on 422 thousand electric cars more than in 2016 and in 2018 on 808 thousand more than in the 2017.  In 2019 this indicator made only 121.5 thousand. Especially colorfully looks let and insignificant, but a decline in demand for electric cars in China — from 1.1 million in 2018 to 1.06 million in 2019. The difference is small, but this is the first falling of sales in this country for all contemporary history of electro transport. Let’s add also that 47% of all electric cars in the world accounts for a share of the People’s Republic of China, and the country leaders sounded very ambitious plans concerning this type of transport.
Also the situation in the USA is not less indicative (the second for volume market of electric cars) where sales were reduced from 361 thousand in 2018 to 326.6 thousand in 2019. Besides the United States carry out stage-by-stage refusal of the program of granting federal tax privileges for producers of electro transport. Though there are local programs of support in some states.
And only in the countries of Europe (from the largest markets) last year growth of sales of electric cars — for 50% was observed (to 561 thousand on the region).
Of course, it is possible to refer to that last year was abnormally unsuccessful for a car market, as well as current. For example, according to IPA, in February of 2020 sales of electric cars in China fell to 60% — to 16 thousand. And in April, against the general growth of sales, they reached only 80% of indicators of April, 2019. In the States at the same time double decline in demand was observed. It is possible to tell that after crisis the electro mobile segment will surely jerk forward and will reach unknown heights. But all of us expect that its role will be no more significant for the world market than the role of the gas engine direction. And in this situation hydrogen cars can quite give some time additional acceleration to an electric segment. At least within statistics which and safely unite today pure electric cars with the loaded hybrids capable to go by gasoline as well.
Europe in this way sets an electric segment some kind of positive example.

Insufficiently climatically neutral fuel

Germany in February increased subsidies for purchase of electric cars that favorably affected the market. Other countries also applied the stimulating methods and as result sale of electric cars grew on 90% and exceeded 145 thousand in Germany, Great Britain, Italy and France for the first four months of 2020.
Against catastrophic decline in demand for cars in Europe, in the second quarter of 2020, according to the European association of producers of cars (ACEA), electric cars in the sum occupied 7.2% of total sales of cars in the EU (in the second quarter of 2018 – 2.4%).
In general for the first half of the year the European consumers gave preference mainly not to pure electric cars (7% in sales volume of all vehicles), and to the loaded hybrids (9.5%). That is they received not only compensation from the state for purchase of electric cars but also an opportunity to use gasoline. It is extremely rationally.
Also according to ACEA, in the second quarter of 2020 sales of the cars working at other alternative types of motor fuel including methane and propane-butane were reduced on 50.5% (to 34.7 thousand). Generally falling was connected with a collapse in the largest gas engine market of Europe — in Italy.
Against the problems generated by the pandemic and not clear future for gas motor fuel in the EU market in view of tasks which put new ecological directives and readiness of European officials to pour money into hydrogen, the Association of vehicles on natural and biogas fuel tried to comprehend prospects. And as hydrogen becomes the savior for electric cars and biomethane, according to NGVA Europe, will become the savior for methane — the admission in the new decarbonized future.
Biomethane is a mix of usual natural gas («from a pipe») and the biogas received at biomass fermentation. Its status is “renewable gas» in Europe. According to NGVA Europe, 17% of all gas motor fuel consumed in the EU accounts for its share. In the certain countries (for example, in Sweden) this share exceeds 90%.
Increase in a share of biomethane in the market of the European Union is represented by NGVA Europe as a compromise between development of a gas engine segment and observance of strict environmental standards, after all «the vehicle which refuels renewable gas, is actually climatic neutral». According to NGVA Europe, use of 40% of biomethane mix in gas vehicles leads to reduction of emissions of greenhouse gases on 55% in comparison with traditional types of fuel.
If to look at the world market in general, GECF Global Gas Outlook 2050 assumes steady increase in demand for natural gas as motor fuel approximately to 272 billion cubic meters by 2050, and in this case a forecast appeals to a priori high ecological characteristics of methane which correspond to the strictest requirements even without biogas component.
It is supposed that about 45% of a gain accounts for Asia-Pacific countries, especially for China and India which can provide additional demand of 75 billion cubic meters. The same GECF Global Gas Outlook assumes that the European region by 2050 will come to the second place on consumption of natural gas on transport, having increased demand from 3 billion cubic meters to 41 billion cubic meters. Besides in this forecast parameters European «the green transaction» and aspiration of the region to climatic neutrality are also considered.
But at the same, time methane as motor fuel started being criticized as insufficiently climatic neutral fuel.
Strictly speaking, so far only gas engine program of China is exposed to criticism. In September of the current year the Nature magazine published article in which it was claimed that emissions of the Chinese GCC were allegedly 90% more than maximum permissible values. And as methane in itself is greenhouse gas (as well as water vapor, to the point), gasification of transport in the People’s Republic of China since 2000 led not to decrease but to increase in emissions of greenhouse gases. In any case, authors of article in Nature insist on it.
China, most likely, will ignore this attack in the party and will continue developing gas engine direction, as well as adjacent sectors. For example, here it is planned to increase production of the cars working on methyl alcohol.
However in the next ten years some regional markets can face the local inter-fuel conflicts. It should be taken into account that at an aggravation of the inter-fuel competition in the key markets (for example, in the European Union) the argument about greenhouse properties of methane even in a separation from real volumes of emissions can be used for pressure upon gas engine branch and redistribution of financial support in favor of hydrogen transport and electric cars.

PS. Nearly one billion

For our country the first quarter of the current year, according to OICA and Merger of car makers of Russia, was a period of restoration, which came after small recession in 2019. Sales grew on 14.4% and made 414.8 thousand cars, but in the second quarter natural recession followed.
Our country also watches a fashionable hydrogen trend for a variety of reasons. So, under conditions of crisis the Russia’s first hydrogen gas station opened this summer.
For domestic gas engine branch consequence of the crisis were mixed. On the one hand, the most obvious minus — fell demand for fuel and rates of a gain of gas cylinder vehicle fleet decreased. On the other, at the beginning of summer the government decided to increase the volume of subsidies, which can receive the natural person or the small business person for compensation of costs of re-equipment of the vehicle on gas.
Earlier the amount of compensation made a third of the incurred expenses, now was decided to compensate two thirds. And taking into account marketing programs of Gazprom re-equipment can be carried out less than on 10% of cost. And it considerably reduces payback periods of the transfer of transport to methane which is today not only the cheapest motor fuel (is 2.5 times cheaper than gasoline) but also the most stable from the price point of view.
The filling network grows dynamically. The Gazprom Gas Motor Fuel Company plans to bring to 150 a number of annually put into operation automobile gas-filling compressor stations by 2023.
Consumption of natural gas on transport in our country closely approached a mark of 1 billion cubic meters — almost double growth for the last five years. By 2030 it is planned to reach a point of 11 billion cubic meters (18% of current level of the world consumption of gas motor fuel).