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Strategies for growing the Autogas market in Korea

Obstacles are not obstacles when we have a strong will to resolve problems. Strategies for maintaining the current Autogas market are underway in South Korea.

By Jieun Yang, Assistant manager at Korea LPG Association (KLPGA).

This year marks the 10th anniversary of the Korea LPG Association (KLPGA). Established in September 2003, KLPGA has led efforts to encourage the use of clean LP Gas, develop advanced technologies for Autogas vehicles and strengthen the LP Gas industry in Korea. Thanks to a decade of efforts, the Korean Autogas market continues to grow and Korea has the largest number of autogas vehicles in the world. Since 2010, however, sales of Autogas vehicles have been falling and the Korean market has fallen to third place in the world behind Turkey and Poland. The use of Autogas, which accounts for about 50% of total LP Gas use in Korea, has declined slightly too.

The reason for this is because cars that were introduced more than ten years ago are now being phased out (over 1m Autogas vehicles were introduced in the South Korean market between 1999 and 2002) and are not being replaced by Autogas vehicles. The weakening of the price competitiveness of Autogas against other fuels, due to a rise in global LP Gas prices, has made it less attractive to replace an old Autogas car with a new one. In spite of these difficulties, KLPGA is trying to improve conditions for the Korean Autogas market and create growth opportunities.

Technical development of LPG vehicles

The LP Gas Direct Injection engine system that directly injects LP Gas at high pressure into each combustion chamber has been developed as a part of the Eco-star Project supported by the government’s R & D budget. It is scheduled to be commercialized in late 2017. The LP Gas direct injection engine is expected to reduce carbon-dioxide emissions by about 10% compared with the LPI system which came into commercial use in 2003 and will meet California SULEV standards.

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Also, overall performance will be comparable with conventional gasoline-driven cars. The LP Gas-diesel blending system has been under development, aimed at increasing fuel-cost savings and reducing the emissions caused by in-use diesel construction engines, such as fork lifts and excavators. The LP Gas-diesel blending system is expected to yield a 43% reduction in nitrogen oxide (NO) emissions and a 75% reduction in particulate matter (PM) emissions compared with a conventional diesel engine, through the mixing of Autogas ( Late this year, a pilot programme will be conducted by the Ministry of Environment for converting in-use construction engines to the LP Gas-diesel dual-fuel system. KLPGA is also developing an Autogas toroidal storage tank, in cooperation with a motor vehicle company. It is expected to make better use of space in the car-trunk of conventional Autogas vehicles. It is scheduled to be commercialized in 2016.

Maintaining the Autogas taxi market

In Korea, Autogas use is particularly high among taxis, over 95% of which run on the fuel. The taxi market accounts for about 40% of total Autogas consumption and is the single most important Autogas market segment. However, these days, the taxi sector is complaining about high Autogas prices. Some are considering switching their fleets to run on diesel or compressed natural gas (CNG).

As a result, KLPGA has been trying to persuade taxi companies to continue to use Autogas, emphasizing the fact that it is the most suitable fuel for a taxi because it contributes to improving urban air quality and ultimately reducing fuel costs for taxi drivers. Meanwhile, KLPGA runs aid programmes in an effort to maintain good relations with the taxi industry. For example, KLPGA provides aid in the form of scholarships for taxi drivers’ children in support of their education. The scholarship project is being allocated nearly US$830 000 to cover the educational expenses for about 250 students every semester.

Expanding the use of Autogas in private vehicles

The Korean government continues to place restrictions on the kinds of vehicle that can run on Autogas, allowing the fuel to be used only in compact cars, vans with more than seven seats, hybrid cars and commercial vehicles such as taxis and rental cars. In spite of these restrictions, more than 2 million cars in Korea run on Autogas owing to its environmental benefits and the relatively low cost of the fuel. This clearly shows that there is considerable potential for an increase in the current market share of Autogas, which could be supported by government policies. In this respect, there are several efforts to try to get the government to loosen the restrictions on the use of Autogas.

For example, KLPGA persuaded the government to introduce a new policy, in which LP Gas passenger cars owned for more than five years by handicapped people and citizens of national merit can be sold to the general public. The government also agreed to lift restrictions on the use of Autogas hybrid cars that are to be used up to 2015. KLPGA is now working on two major areas for the continuous growth of the Autogas market, within the scope of the current restrictions.

First, KLPGA has strengthened its cooperation with the rent-a-car association to encourage the use of Autogas as a fuel for rental cars. Autogas currently accounts for 49% of the total rental car market and sales are expected to grow along with the overall rental car market, which is growing at a rate of 10% annually. Second, KLPGA has made efforts to expand the Autogas hybrid car market, since such cars do not fall under the same restrictions as other vehicles and can be purchased by the general public. At present, the introduction of Autogas hybrid taxis is being considered as a part of study being undertaken by the Ministry of Environment.
To find out more about the strategies for the growth of the autogas market in Korea, please do not hesitate to contact Jieun Yang at lovesea012@klpg.or.kr