-Why don’t Melbourne’s buses use LPG?

The rail line that never was.....

I have a heightened consciousness about diesel buses and 4WDs belching carcinogens because I’ve just finished reading Siddhartha Mukherjee’s excellent book, The Emperor of all Maladies: a Biography of Cancer.

Melbourne’s fleet of 1700 buses is powered almost entirely by diesel engines. Each year they collectively travel around 80 million kilometres, each bus consuming 90 litres of diesel per 100 km. That’s more than 70 million litres p.a. in aggregate.

Melbourne’s taxi fleet, on the other hand, is comprised mainly of LPG powered vehicles. LPG offers a small saving in CO2 emissions compared to diesel (about 10%) but its main advantage is much lower pollution. Compared to ultra-low sulphur diesel, LPG produces less than a fifth as many particles and less than 1% as many ultra-fine particles. It also produces less than one tenth as much oxides of nitrogen (NOx).

One company estimates the cost of converting the engines in the existing bus fleet to LPG at around $55,000 per vehicle. The company says buses that use LPG consume about 100L/100km (about 10% more than diesel buses) but there’s a significant saving in the cost of fuel.

The price of LPG is currently less than half the price of diesel. A bus that covers (say) 100,000 km p.a. would cost $130,500 p.a. in diesel (at today’s price of $1.45 per litre) but only $60,000 p.a. in LPG (at $0.60 per litre). That means the cost of conversion could be recouped within a very short period. This difference depends on factors like distance driven and fluctuations in relative prices. For example, a new excise on LPG of 2.5c a litre comes into effect from July this year, rising to 12.5c over the next four years. On the other hand, the current troubles in the Middle East have increased oil prices.

This highlights another singular advantage of LPG over diesel – it’s less dependent on international price fluctuations. Australia has immense reserves of natural gas from which the propane and butane in LPG are derived. Proponents of LPG also argue that it extends engine life, reduces maintenance and makes buses less noisy.

There appear to be many good reasons for bus operators to shift to LPG so why hasn’t this happened?

The reason might partly lie in the contracts the Government has with the private bus operators (remembering that operators are subsidised). I’ve had a quick look at this contract for one of the major bus companies, which I take to be typical of contracts with all 32 bus operators in Melbourne (all contracts are publicly available).

I’m only a bush lawyer, but it seems to provide a payment based on a standard set of costs. There doesn’t seem to be a really strong incentive for a bus operator to reduce energy use, pollution or emissions (in fact hopefully someone with a legal eye can point out where this contract provides a strong incentive for the operator to maximise passenger numbers).

If that interpretation is right, then the obvious answer is to look at a new form of contract that provides stronger incentives for more environmentally sustainable practises. That’s important because buses are mostly used on marginal routes with low load factors, giving rise to per passenger emissions, pollution and energy consumption that on average are little or no better than those of cars.

I recognise it’s often easier to propose an incentive-based form of contract than to design one that is acceptable to all parties. There could very well be other important considerations that are best met by the apparently simple form of payment that has evolved. But equally, the purchaser and the provider can sometimes get overly ‘comfortable’, so I incline to the view that this issue needs to be explored further.

I think buses get a bad rap and are likely to play a much bigger role in Melbourne in future years, including on main trunk routes. It would be a positive move if they were designed to emit less pollution and noise and weigh less heavily on the nation’s balance of payments. LPG is a proven technology with an existing supply infrastructure – it seems like a logical short term strategy, given the right incentives.

By the way, don’t be put off The Emperor of all Maladies by the depressing subject matter. It’s an engrossing read about the way understanding and treatment of cancer evolved from ancient Egypt to today. The author is an oncologist who also knows how to write in an engaging way.

P.S. Here’s another Unfinished London – this time about ring roads (“ringways”)

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7 Comments on “-Why don’t Melbourne’s buses use LPG?”

  1. Dave says:

    Certainly Canberra already runs quite a few buses on CNG. I gather there were a few issues to overcome with refueling etc but they obviously worked out ok. You can’t tell riding them that they’re any different. On those price differences and say a 20 year operational life it does seem like there should be more to the story given very few buses run on CNG or LPG.

    Perhaps the issue of contracts and incentives is worth another post – certainly I find it surprising (or not, on reflection) that there’s no incentive to try and reschedule or otherwise innovate to improve customer numbers or usage experience.

  2. David Walker says:

    A better solution might be to simply raise the price of running the fuels and the vehicles to a level which reflects the environmental harm they do. This would avoid the need to calculate a complex set of environmental costs, to rewrite contracts and (to some extent) to monitor compliance. In fact, it would be a good idea to do this for all sorts of transport.

    In short, carbon pricing and pollution penalties.

  3. Peter in Sydney says:

    A large number of the Sydney Busses fleet is run on compressed natural gas (CNG). CNG is plentiful in Australia and it’s use would save significant amounts of imported oil.
    I would expect that an economic case as above is still valid.

  4. brisurban says:

    Brisbane had many LPG buses but for some unknown reason have now switched to ultra low sulphur diesel…

  5. brisurban says:

    * Correction: CNG, not LPG.

  6. Gabriel says:

    Melbourne used to have busses running on CNG at one time. “This is a cleaner bus” was the slogan, IIRC, circa 1993. What happened to them is anyone’s guess. But I have been told it has to so with taxation, i.e there was little, if any, tax on CNG etc. so the VIC govt stopped / discouraged its use …


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