The U.S. Department of Energy announced the recipients of $30 million in grants for natural gas vehicle research, choosing 13 projects with focuses on improved gas tanks and innovative compressors, according to a July 12 news release.

The department's Methane Opportunities for Vehicular Energy, or MOVE, program will concentrate on engineering lightweight, affordable natural gas tanks and developing compressors that can efficiently fuel NGVs at home, circumventing the need to establish a network of fueling stations.

"These innovative projects will leverage the ingenuity of U.S. scientists, engineers and entrepreneurs to develop breakthrough technologies to fuel cars with natural gas," Deputy Secretary of Energy Daniel Poneman said in a statement. "These projects could transform America's energy infrastructure and economy by utilizing domestic energy sources to power our vehicles, reducing our reliance on imported oil, and increasing American energy security."

Current NGV technology requires tanks that can withstand high pressures and are often too large or expensive to be practical for smaller passenger vehicles, the department said. The projects DOE chose will try to eliminate those barriers, the agency said.

For instance, the Gas Technology Institute, which will receive awards of $1.5 million and $875,000 for two projects, plans to identify new porous materials for low-pressure gas storage tanks and to develop a low-pressure gas storage tank specifically for light-duty vehicles. The projects aim to increase storage capacity while also cutting vehicle costs, the agency wrote.

NGV America President Richard Kolodziej said low-pressure gas tanks hold great potential to lower the cost of not only the vehicles themselves but also their fueling by reducing the need to compress the gas.

"The idea is to improve significantly the economics of fueling and storage," Kolodziej said in a July 13 interview. "There's been some work in this area, but [the grants] would really jump-start it because it provides federal money and co-funding from the [organizations] that get the grants. I think it's significant."

However, Kolodziej argued that if the government wants to bolster the NGV market sooner, purchase incentives would provide swifter results than research and development grants. Increased public interest in alternative-fuel vehicles would spur research on its own.

"The more customers you have, the more competition, the more money gets put in into R&D," Kolodziej said. "R&D [results] are three, four, five years down the road."

But Greg Staple, CEO of the American Clean Skies Foundation, said the program is a smart one because by lowering the up-front cost for purchasing an NGV, the DOE initiative would reduce future need for tax incentives. Staple said he was heartened by how quickly the DOE moved to decide on grant recipients - the department announced its plans for the program in February - and by the range of organizations that expressed interest in the grants.

"[MOVE] underscores the administration's willingness to offer consumers greater choice in the vehicle market and put this abundant resource to work," Staple said in a July 13 interview. "The solicitation has encouraged a number of nonprofits and universities to seek funding for new ideas that might not otherwise have had a chance to come to the market."

One project, the University of Texas at Austin's Center for Electromechanics, will receive $4.3 million to develop an at-home refueling system that compresses gas with a single piston, rather than four pistons as current compressors use. The new design would probably be more reliable, lighter and more cost-effective, the agency said.

Staple applauded the DOE's interest in tapping into the roughly 65 million homes that could use their own natural gas connections to be able to refuel their vehicles at home. So far, he said, there has not been a low-cost, mass-produced refueling system that can deliver at-home fueling quickly, but the department's initiative could change that.

But even if the administration encourages the development of NGV technology, Staple said, the government will still need to show support to auto manufacturers to ensure that the technology is implemented. The administration ought to allow NGVs to count toward upcoming corporate average fuel economy, or CAFE, standards, much as electric vehicles do, Staple said.

"I think the DOE program underscores the need for the administration to harmonize the incentives for manufacturers to produce these vehicles under the forthcoming CAFE standards, so that the DOE program isn't for naught," Staple said.

America's Natural Gas Alliance, which praised the program for fostering alternative-fuel innovations, agreed that NGVs need to be viewed as a key contributor to reducing vehicle emissions.

"This also highlights the need for natural gas vehicles to receive equal consideration with other alternative transportation fuels under the light duty vehicle fuel economy and greenhouse gas emission standards," Tom Hassenboehler, ANGA vice president of policy development and regulatory affairs, said in a statement. "The approach could help our nation lead the world in next generation natural gas transportation while also deriving the many jobs, national security and environmental benefits natural gas brings."

Copyright 2012 SNL Financial LC. All Rights Reserved.

(Originally published July 16, 2012, in SNL Daily Gas Report.)