Turn on the gas: the government has increased subsidies for converting cars to methane
The Russian government has increased the total amount of funding for the gas engine fuel development program by almost one and a half times. The amount of compensation from the budget has increased significantly both for the conversion of vehicles to run on compressed natural gas (CNG) and for the creation of appropriate filling stations. It is expected that by 2035, the number of such gas stations will double, and the fleet of methane-fueled vehicles will double or triple. Izvestia found out whether additional subsidies will make gas fuel popular among motorists.
The blue light
The government has adopted a decree extending state support measures for the development of gas-fueling infrastructure and the conversion of vehicles to run on gas-powered fuel. This is reported by the press service of the Russian government. According to the adopted document, the total amount of subsidies for these purposes is increasing almost one and a half times — from 36 billion rubles to 50 billion rubles.
So, for the conversion of passenger cars weighing up to 1.8 tons, the subsidy amount was increased from 32 thousand to 47 thousand rubles, for cars weighing 1.8–2.5 tons — from 40 thousand to 54 thousand rubles. For heavier models, the subsidy increases from 49 thousand to 57 thousand rubles. 90 thousand rubles (previously 74 thousand rubles) will be compensated from the budget for the modernization of buses up to 8 m long, and if the bus is longer, the subsidy will amount to 150 thousand rubles instead of 130 thousand rubles. For trucks, the maximum subsidy for retrofitting for CNG operation has been increased from 1 million rubles to 1.5 million rubles. State support for the conversion of cars to gas fuel applies to vehicles that have been produced for no more than 15 years, according to the document.
"For citizens and representatives of small and medium—sized businesses, a double increasing coefficient remains, that is, the maximum subsidy amount is multiplied by two," the government's press service said.
In addition, the list of expenses for the creation of infrastructure of gas filling stations, which are covered by the state subsidy, has been expanded. Now it includes expenses for the purchase of mobile automobile gas tankers and the construction of stationary sites for their use. This will expand the possibilities of refueling in territories remote from the infrastructure of transportation and distribution of natural gas, the government's press service explains.
Economics and production
The expansion of state support measures was adopted within the framework of the Gas Engine Fuel Market Development Concept approved in September last year until 2035, which provides for two forecast options: basic and target. According to the first one, in nine years the number of methane gas stations in our country should double — from 1,170 to 2,213 units. The second option assumes the appearance of more than 2.7 thousand such gas stations.
The basic forecast provides for the production of 347.3 thousand CNG-consuming vehicles in our country by 2035 and the conversion of 369.5 thousand vehicles for this type of fuel. The target scenario includes even more impressive figures — the issue of 528 thousand. Vehicles and remotorization of 525 thousand cars. As of 2024, a total of about 345 thousand methane-powered machines are in operation in Russia.
Models using CNG as fuel are mass-produced in Russia by AvtoVAZ (Largus and Vesta), KamAZ (dump trucks, flatbed trucks, chassis and tractor units), GAZ Group (from light trucks and vans to large buses). You can also order a number of UAZ methane models.
The geopolitical component
The situation on foreign markets is currently not developing in favor of domestic producers of blue fuel. The Europeans, for example, plan to abandon Russian gas starting in 2027. It is not certain that they will succeed in this maneuver, especially given the crisis in the Persian Gulf, which has already led to the fact that a considerable part of the LNG infrastructure has been out of service for several years. Nevertheless, the threat is quite real, and Russia needs to take some steps to avoid significant production cuts. Reorientation to the domestic market in this context looks like a logical step. This may also be beneficial for consumers themselves, given that gas prices in Russia are regulated by the state and are poorly dependent on global conditions.
At the moment, the expected effect looks rather limited, despite the fact that gas consumption in Russia will undoubtedly increase. According to Ivan Timonin, senior manager of the Implementation consulting company, the gas engine fuel market is currently estimated at about 3 billion cubic meters. m per year and continues to grow, but still from a low base.
— Even within the framework of the current strategic guidelines, we are talking about an increase to about 10-14 billion cubic meters by 2035, that is, several times from the current level. At the same time, the total gas production in Russia is about 650 billion cubic meters per year, so even in the target scenario, the share of transport is only a few percent. In the coming years, additional demand from this segment will be measured in units of billions of cubic meters, since the transfer of the fleet and the development of infrastructure are taking place gradually, the expert notes.
He added that the effect of switching transport to gas-powered fuel is not comparable with the falling export volumes. By 2022, Russian gas supplies to Europe exceeded 150 billion cubic meters. m per year, after which they decreased by a multiple. As a result, we are talking about tens of billions of cubic meters of unrealized gas annually. Thus, even in an optimistic scenario, the growth of gas consumption in transport is able to compensate for only a small part of these volumes.
"The development of gas—powered transport is a useful but niche tool for increasing domestic demand, which cannot significantly balance the market against the background of export restrictions,— Ivan Timonin believes.
According to Pavel Gribov, Associate Professor of the Department of Economic Security at the Faculty of National Security at the Institute of Law and National Security of the Presidential Academy, the private transport market is more likely to consider hybrids as an alternative to gasoline and diesel, as they are easier to operate, more affordable, and the infrastructure is developing more dynamically.
At the same time, according to a study by the Center for Strategic Research, among cars using alternative energy sources (gas fuels, electric cars and hybrids), in our country, methane-powered cars are the most economical in terms of total operating costs. Savings are provided primarily due to government support measures for retrofitting, as well as the low cost of CNG compared to other fuels.
Nevertheless, prices for CNG, as well as for gasoline with diesel fuel, are gradually rising. So, according to the St. Petersburg International Mercantile Exchange, if in April last year the wholesale price of natural gas was 5574 rubles per 1 thousand cubic meters, now its index is 7259 rubles.
We need propane
An increase in subsidies for the conversion of vehicles to run on CNG and for the creation of the necessary refueling infrastructure should have a beneficial effect on the growth in the number of vehicles using this fuel, says Igor Morzharetto, partner of the analytical agency Autostat. In his opinion, methane is the most promising type of automobile fuel in our country. However, it will be quite difficult to increase the popularity of the KKE with subsidies alone, he believes.
— First of all, we need a clear strategy in this direction. In the meantime, we have certain issues: gas is a priority today, electricity tomorrow, and gas fuel again the day after tomorrow. This wastes resources and reduces the effectiveness of government programs," Igor Morzharetto believes.
As an example, he cited China, where since 2004, a policy of electrification of vehicles has been chosen as a priority at the state level, which has borne fruit. The vast majority of new cars in China are electric cars or hybrids, the expert recalled. In his opinion, Russia should follow a similar scenario, but in relation to gas-engine fuel.
— Our country is a world leader in natural gas reserves. It is logical for it to become our main type of fuel for transport," the expert noted.
The low share of methane-fueled vehicles in the Russian fleet is also due to a very poorly developed network of gas stations, according to Maxim Kadakov, editor-in-chief of Za Rulem magazine. He calls the increase in subsidies for their creation, as well as the expansion of state support measures for mobile refueling complexes, a serious help. However, the adopted resolution is unlikely to be able to radically change the situation with the development of gas-powered transport, he believes.
— Methane is of interest primarily for freight transport and buses. This is due to the peculiarities of the gas cylinder equipment for this type of fuel — it is heavy and massive. That is why propane is much more common in passenger transport," Maxim Kadakov notes.
Anton Shaparin, Vice President of the National Automobile Union, agrees with him. In his opinion, the expansion of state subsidies for the conversion of cars to run on propane will give a tangible boost to the development of the entire gas engine industry.
Security and bureaucracy
Experts call a rather complicated procedure for approving the retrofitting of machines a serious retarding factor. Switching to gas often scares motorists away with the prospect of running around certification laboratories and departments of the State Traffic Inspectorate to make appropriate changes to the documents for the car, Igor Morzharetto believes.
— Of course, switching a car to gas fuel requires the most thorough inspection of both the equipment itself and how it was installed on the car. This is a matter of safety for both the car owner and others. But still, the procedure should be simpler. For example, if certified equipment is installed in an accredited technical center, then it is probably worth avoiding the necessary visit to a special laboratory to obtain a conclusion that everything is safe," he believes.
According to the expert, in this case it makes sense to allow changes to be made to the documents for the car based on certificates from an accredited technical center that was engaged in the conversion of the car.
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