Thousands of Colombian car owners are converting their vehicles to natural gas as the nation’s first left-wing government strips away gasoline subsidies that had been in place for decades while providing tax breaks for cars that run on natural gas.
As more people in Colombia seek less-expensive fuel alternatives, demand for fuels derived from natural gas is expected to climb by 8% a year until 2030, said Luz Stella Murgas, president of Naturgas, an association funded by the nation’s main gas producers and distributors.
Statistics that Naturgas compiled show that 23,300 vehicles were taken to workshops in Colombia in 2023 where they were adapted to run on natural gas—a 63% increase from 2022. Sales of large cargo trucks that run on gas rose by 12% last year, with 310 units sold around the country.
This comes as the retail price for gasoline in Colombia soared to $3.75/gallon this month from about $2.15/gal in August 2022, when President Gustavo Petro entered office. The increase results from a Petro adminstration policy to slowly end gasoline subsidies.
Switching to natural gas can save Colombians about 50% of their monthly expenditures on fuel, according to Naturgas, which has made it a popular move among taxi drivers, who are paying around $1,000 to convert their cars to natural gas, but are seeing long-term savings from the switch.
Colombia has seven million registered vehicles, including cars, buses, and trucks, but currently fewer than 130,000 vehicles can run on natural gas.
Murgas said she expects the number of conversions to natural gas to “accelerate” this year, because it will be the first full year in Colombia without gasoline subsidies.
Naturgas also expects more cargo truck owners to make the transition as the government pushes ahead with plans to remove subsidies for diesel, the main fuel trucks use in Colombia.
The Colombian government is also promoting the use of natural gas vehicles to fulfill a commitment to cut the nation’s carbon emissions in half by 2030.
New vehicles that run on natural gas currently are exempted from Colombia’s 19% sales tax. In December, the Petro administration expanded incentives for cargo companies to scrap old diesel trucks. Now owners of old cargo trucks who have their vehicles scrapped can get 90% of the value of those trucks reimbursed by the government.
Murgas said Naturgas is also providing low-interest loans to cargo companies that purchase natural gas vehicles. She said her sector is aiming to play a bigger role in Colombia’s efforts to reduce carbon emissions.
“The transport sector accounts for 12% of Colombia’s emissions,” Murgas said. “And one way we can have a quick impact on emissions reductions is by switching to vehicles that use natural gas and electricity. This is the low-hanging fruit.”
According to Naturgas, around 5% of all gas consumed in the country is used for transport. The nation currently consumes around 1 Bcf/d, and has only been importing gas for electricity generation, when hydroelectric plants slow down in periods of dry weather.
Commercial gas production in Colombia averaged 966 MMcf/d in January.
A Unit for Mining and Energy Planning report from Colombia’s Ministry of Mining calculates that, by 2030, production could fall below 400 MMcf/d if drilling continues at current rates in the nation’s fields, which would increase the need for gas imports.
If offshore and onshore projects are expanded, however, and proven reserves are exploited, the ministry of mines calculates Colombia has the potential to produce 1.2 Bcf/d by 2030, likely eliminating the need for gas imports.
Source: Platts
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