Arzà, Assogasliquidi-Federchimica: LPG and LNG have all the credentials for incentives focusing on sustainability
The proposals put forward by the association include incentives for conversion of Euro 4 and Euro 5 petrol vehicles to gas and the construction of supply infrastructures
Interview with ANDREA ARZÀ, President of Assogasliquidi-Federchimica
The liquefied gas sector, despite continuing operations even during the lockdown as an essential service, nevertheless saw an on-going fall in consumption. However, companies have continued to invest, especially in LNG, and may also benefit from EU recovery funds if they are used to promote the restart in the name of sustainability. In an interview Andrea Arzà, President of Assogasliquidi-Federchimica, the Federchimica association representing companies in the liquefied gas distribution sector, describes the difficulties affecting this field, as well as highlighting its potential and suggesting a number of incentives.“Federchimica-Assogasliquidi represents companies in the entire LPG and LNG liquefied gas supply chain and, inasmuch, our sectors are a public utility service ensuring supplies of energy products. Consequently, our companies (right from the first local council closure measures in the so-called ‘red zone’) have always ensured uninterrupted supplies of LPG and LNG gas to end consumers for primary needs such as heating, cooking, domestic hot water and mobility with light and heavy duty vehicles,” Arzà pointed out.
Arzà added: “Our companies have continued carrying out their business – in full compliance with the prescribed safety protocol – with dedication, a sense of social responsibility towards the country and consumers despite all the many difficulties of an operational/managerial and economic nature given the impact of the lockdown situation in terms of falling demand for energy products.” Nor did the impact of the lockdown, said the President of Assogasliquidi-Federchimica, spare this sector: “Unfortunately, during the hardest months of the lockdown, we experienced a drastic and continuous decline in consumption of LPG and LNG which (albeit to a lesser extent) still persists today.”
Arzà detailed the damage suffered by the supply chain: “The LPG automotive sector sustained very substantial losses (more than 50% in March compared to March 2019), with a negative trend that continues even today: the latest surveys by the Ministry of Economic Development (Mise) indicate a consolidated decrease in the period January-August 2020, compared to the same period 2019, of about 23%. In the LNG sector, the spread between the pre and post pandemic forecasts settled at significant values in the order of 25% of total consumption: in more detail, these forecasts suggest a fall in volumes for heavy road transport of 20% and losses of about 30% in sales in the light transport channel.”
Arzà also mentioned that “storage facilities, both coastal and inland, during the lockdown months, drastically reduced their handling of LPG, with peaks of up to 80% for the automotive LPG sector” and that “this entailed significant operational and logistical difficulties in that a complete rescheduling of supplies from abroad had to be implemented with consequent payment of penalties and higher freight charges, as well as higher operating costs not offset by revenues.” On the other hand, “fuel distribution systems for both LPG and LNG have seen their sales plummet, alongside significant management problems and the impact cost impact.”
However, the President of Assogasliquidi-Federchimica also highlighted one positive aspect: “Nevertheless, it can be said that our companies – with a great sense of social responsibility – continue to invest, mainly in the emerging LNG sector, and confirm investments in the supply infrastructure and the distribution network alike. The latest survey of the sector by the Ref-e Observatory, in fact, confirms a 12% increase in the network in the first half of 2020: the driving force behind this development largely concerns the distribution infrastructure serving heavy road transport. Depots associated with small canalised networks remain stable, at 2 plant installations.”
Arzà nevertheless feels that short-term prospects are still uncertain: “The overall picture is still complex because it is difficult to foresee how the health crisis will develop and – let’s hope not – any further lockdown measures.” Arzà also hopes for virtuous use of EU recovery funds: “We believe that the economic resources which will be made available to Italy through the EU Recovery Fund (or any other methods that may be identified and implemented) must support the relaunch and growth of production sectors that not only represent national excellence but which also have a strong focus on environmental sustainability seen not only in terms of de-carbonisation but also of improving air quality. This topic is the subject of important studies and analysis given its links even with the dynamics of the spread of corona virus. With this in mind, we are convinced that the LPG and LNG sectors have all the necessary credentials to merit incentive policies that promote the use of environmentally sustainable energy resources”, said the President of Assogasliquidi-Federchimica.
Speaking of the initiatives already implemented, Arzà noted a number of gaps: “Unfortunately, no specific instruments have been adopted as of today and this, in our opinion, is a vulnerable aspect precisely in view of Italy’s manufacturing fabric. Mention need only be made of the excellence represented by Italian companies in our sector as world leaders in components for LPG and natural gas vehicle engines.” As regards of for the sector, “Assogasliquidi-Federchimica has brought to the attention of the government and Parliament the need for specific measures to be envisaged lasting at least three years starting immediately for ensure economic support for people who decide to convert their petrol and diesel cars to LPG or natural gas.”
“Our incentive proposal,” Arzà explained, “focuses on the conversion of Euro 4 and Euro 5 petrol vehicles to gas, by ensuring an incentive (for each single vehicle) of 600 euros for conversion of vehicles to LPG and 900 euros for conversion to methane. Analysis of the history of gas conversions clearly suggests that the proposed incentive measures would ensure the conversion of approximately 363,000 vehicles, 300,000 more than would be the case at current trends, with significant advantages from an environmental point of view that can be quantified as a reduction of about 7.5 tons of NOx, about 120,000 tons of CO2, about 1.3 tonnes of PM2.5 particulate matter and about 1 tonne of PM10 over the period considered in the proposed regulatory intervention. The positive environmental effect will obviously be consolidated even in the years following such specific action with an average annual reduction of more than 38,000 tonnes of CO2, more than 2 tonnes of NOx, about 0.5 tonnes of PM2.5and about 0.3 tonnes of PM10,” Arzà added.
“As regards the LNG sector,” Arzà went on, “we believe it is vital – as soon as possible and even in this case by making the best use of the resources made available through the Recovery Fund – to define effective measures designed to provide fiscal and/or economic support for business investments in the construction of LNG supply infrastructures (small scale LNG depots and micro-liquefaction plant), in order to avoid that the current situation and consequent cash flow crisis could otherwise give rise to half for these initiatives that, on the other hand, are absolutely vital in terms of achieving the objectives set in the National Energy and Climate Plan concerning the environment and energy security.”
The President of Assogasliquidi-Federchimica also indicates “that the introduction of support measures for shipbuilding and shipping companies is also fundamental as regards the conversion of ships to LNG-powered systems, in relation to the environmental improvement objectives for maritime fuels, through tax concessions (such as tax credits) and cuts in taxes for port services. Assogasliquidi-Federchimica is working to ensure that the measures indicated above can become operational as soon as possible, in the awareness that the efforts implemented by our companies so far during this particular period must be fairly rewarded in the form of support from institutions, with the shared goal of ensuring a prompt, effective and environmentally sustainable recovery in Italy,” Arzà concluded.