Spanish oil and gas company Cepsa in January announced it was partnering with BeGas, a Madrid-based manufacturer of autogas engines for heavy-duty vehicles (HDVs). The pair plan to help decarbonise urban HDV fleets by fitting engines that can run on LPG, bio-LPG or other renewable fuels. Argus' Waldemar Jaszczyk spoke with Cepsa LPG director Filipe Henriques and BeGas chief executive Pedro Silva about the partnership and its plans:
How did the partnership between Cepsa and BeGas come about?
Henriques: Cepsa and BeGas have been collaborating on the development of the autogas market since 2015, when both companies belonged to the Spanish autogas cluster. We have remained in contact since, and when BeGas presented its new Euro 6-certified engines at the European LPG Congress and we outlined our commitment to bioautogas for professional transport, we began to prepare this agreement to lead a comprehensive offer for this sector.
What are the main goals of the collaboration?
Henriques: To promote the decarbonisation of professional urban transport, such as buses, delivery vehicles, waste collection trucks and other municipal services. This partnership aims to integrate the entire value chain of this sector — engine manufacturers, vehicle manufacturers, energy producers and consumers — with a common goal of fighting climate change by reducing the sector's carbon footprint and reducing pollution in cities.
Why are you only targeting urban HDVs?
Henriques: Currently, [urban HDVs] account for 10pc of the fuel consumption of the total professional transport fleet. So we can achieve important decarbonisation right away. It is also a sector where the impact of the European and Spanish transport legislation in the cities is greater, which is why they need this solution for their fleets before others.
To what extent could these efforts contribute to Spain's and the EU's energy transition goals?
Henriques: Bio-autogas is renewable, reducing CO2 emissions by up to 90pc and the emission of suspended particles and NOx, which cause urban pollution, by more than 90pc compared with traditional fossil fuels, as well as reducing noise pollution. This CO2 reduction enables vehicles to meet the requirements of the 2050 agenda today.
Do you expect bio-autogas prices to be competitive with fossil fuels?
Henriques: Bio-autogas prices are uncertain at the moment because there isn't much of a market. But based on our experience, and taking into account production costs, tax exemptions for this product and conventional autogas, our forecasts are that the price range of this bio-based product will be similar to the final price of fossil diesel.
How much bio-LPG would Cepsa direct towards this venture?
Henriques: Cepsa currently has a production capacity of 7,000 t/yr of biopropane at its industrial facilities and, as part of its positive motion strategy, the company expects to produce more than 100,000 t/yr of this sustainable gas by 2030. For the time being, we are making this product available to fleets of vehicles that have a base supply. Under a second phase, we will be able to supply it at service stations with professional customers who request it.
What is BeGas' production capacity for its LPG engines?
Henriques: BeGas will be able to produce 1,000 engines in 2023 at its Ortuella plant in Vizcaya, reaching production of more than 3,000 engines per year by 2025.
Do you expect to receive government support for the venture?
Henriques: We need all available decarbonisation technologies and solutions to meet the ambitious targets set in Spain and Europe, and the combination of BeGas' Euro 6-certified engines and Cepsa's bio-autogas is a solution that would make it possible today to achieve 2050 targets, and the technology is Spanish. Technological neutrality is a principle included in the European directive on alternative fuels.
Are you expecting the partnership to grow?
Henriques: Seven other organisations in the professional transport sector value chain have already signed up to this agreement. This solution provides end-users with a technology that contributes to decarbonisation at a very competitive cost and without the need to change any of their current operations. This is generating huge interest in the market and we expect the number of organisations signing up to the agreement to grow very quickly.
How much does the BeGas engine cost compared with alternatives?
Silva: BeGas LPG engines are targeted for professional transportation use and are compared with other engine technologies that use alternative fuels. Firstly, CNG/LNG vehicles typically cost 10-12pc more to purchase than a vehicle with a BeGas engine. But the difference with [HDV] electric vehicles is much greater, with the price of this type of vehicle 3-4 times higher.
Are there any other HDV sectors you are targeting?
Silva: With new engines that BeGas plans to launch, it could be a solution for long-distance transport as well. The share in these markets will depend mainly on the capacity of customers to renew their fleets with this type of technology.
