China’s heavy-duty truck market is undergoing a significant transformation as sales of liquefied natural gas (LNG)-powered trucks surged in the latter months of 2023, capturing up to 30 per cent of the market share.
This shift has led to a notable displacement of road diesel demand, with over 220,000 barrels per day of diesel consumption replaced by LNG, according to a report by Wood Mackenzie titled The threat to diesel from LNG trucking in China.
The report highlights that LNG trucks now account for more than 9 per cent of the heavy-duty trucking fleet in China, which consists of approximately 8.76 million vehicles.
The increase in LNG truck sales is attributed to various favourable conditions, including government policies aimed at reducing air pollution and carbon emissions.
“China has been implementing various policies to promote LNG trucks and restrict diesel trucks as part of its efforts to reduce air pollution and lower carbon emissions,” said Shiqing Xia, a Consultant for Oils and Chemicals at Wood Mackenzie.
The expansion of refuelling infrastructure and the current low prices of natural gas have also made LNG-fueled vehicles more appealing to end-users.
As of 2023, the price spread between LNG and diesel has widened, with natural gas prices declining while diesel prices have risen due to global crude pricing.
This economic advantage has propelled the sales of LNG trucks, particularly in the logistics sector, where they are increasingly favoured for medium and long-distance freight transport.
Xia noted that LNG trucks offer several benefits over their diesel counterparts, including lower emissions of sulphur and particulates, which can enhance engine performance and lifespan.
However, the report cautions that while LNG trucks are gaining traction, this trend may not be sustainable in the long term.
As battery technologies improve, electric vehicles are expected to become the primary alternative to diesel, with diesel demand for road transport projected to drop from 2.3 million barrels per day in 2023 to just 0.7 million barrels per day by 2050.
“LNG-powered trucks are gaining in popularity, but should only be seen as a bridging solution,” Xia concluded.
He emphasised the importance of investing in electric or hydrogen fuel cell trucks to meet future market demands and maintain a competitive edge in the evolving transportation landscape.
