Concerns over global warming prompting the automotive industry to reduce vehicle emissions and higher fuel prices are driving the development of alternative and more environmentally-friendly fuels such as liquefied petroleum gas (LPG) and compressed natural gas (CNG), according to analyst Frost & Sullivan.


New F&S research showed that the number of LPG/CNG kits sold globally was 2.9m in 2006 and estimated this will reach 8.0m by 2012.


“The global automotive industry is making emission reduction a top priority and this is leading to increased development of LPG/CNG as alternative fuels and associated conversion kits,” according to Frost & Sullivan research analysts.


“With the provision of appropriate infrastructure and strong support from governments and fuel suppliers, LPG/CNG will gain greater acceptance as alternative fuels across the globe.”


Several initiatives and legislative measures implemented by the governments of various countries reflect their commitment to promoting more eco-friendly fuels. The European Union, for instance, is introducing more stringent next-generation emission standards (Euro 5 by 2009) and plans to apply further restrictions on CO2 emissions for new vehicles.


In Asia, India and Pakistan have enforced mandatory conversion to alternative fuels for all public transport in certain local regions. Both these countries as well as Iran are expected to record the highest growth in LPG/CNG sales.


Latin American countries are also moving toward large-scale use of CNG vehicles with Argentina and Brazil being the largest consumers of CNG kits in the world.


LPG kits will continue to dominate the market in the EU, Russia and Turkey, and also other markets in the rest of the world. India and Iran accounted for 20% of global sales of CNG kits in 2006, and this is likely to increase to more than 42% by 2012.


While aftermarket sales of LPG/CNG kits currently hold more than 85% of total global kit sales, original equipment manufacturer (OEM) kit sales will steadily increase to reach more than 27% by 2012.


Competition from other alternative fuels, such as ethanol and bio fuels that are just as eco-friendly, could challenge the growth of the LPG and CNG markets. The lack of appropriate infrastructure for the distribution and refuelling of these fuels and low levels of customer awareness about the benefits of alternative fuels are other factors hindering market development.


“It will require the combined efforts of car manufacturers, fuel suppliers and local governments to address these challenges,” said Frost & Sullivan.


“Providing the required infrastructure and raising awareness levels by promoting the advantages of alternative fuels will considerably enhance the growth prospects of LPG and CNG vehicles and of associated conversion equipment.”