This paper (reference below) compares the performance of natural gas and conventional diesel buses, and outlines the barriers to the adoption of natural gas buses in developing countries. In the absence of emissions standards that effectively require natural gas, natural gas-fueled buses are unlikely to be adopted because they are more expensive to operate relative to diesel buses. This is partly because diesel is a very cheap fuel in most developing countries it is lightly taxed or may even be subsidized. Even if diesel were sufficiently taxed, however, it is not obvious that natural gas buses would be cheaper over their life cycle than diesel buses: they cost more to purchase, are less fuel efficient, and are often less reliable.

The above implies that the social case for replacing diesel with natural gas as a fuel for buses rests on environmental grounds. If a local government decides that the reduction in air pollution associated with the substitution of conventional diesel with natural gas for use in buses is worth the cost, then it needs to adopt policies to encourage the switch to natural gas. These policies might include emissions standards for buses, or fuel and vehicle taxes that reflect marginal social costs. In order to do so, the contribution of exhaust emissions from buses to the ambient concentrations of harmful pollutants needs to be quantified so that associated health damage costs can be estimated the benefits of reducing emissions from buses must be higher than incremental costs incurred.

Further, successful implementation of fuel switching requires that a number of additional conditions be met: sufficient incentives for natural gas bus fleet operators, regulatory and administrative arrangements in place to ensure the financial sustainability of transit operators who would be using natural gas, large fleet operations converted to natural gas to exploit economies of scale, proper regulatory framework including enforced safety and performance standards, strong and long-term commitment and involvement of the fleet management, extensive training and education of mechanics and drivers, and regular preventive maintenance and prompt repairs.

	[.pdf, 419.5Kb]
	60 pp.