CNG Compressor Market

Market Overview

The global CNG compressor market size was valued at USD 3.7 billion in 2023 and is projected to reach a value of USD 5.6 billion by 2032, registering a CAGR of 4.6% during the forecast period (2024-2032). Demand is expected to rise due to increased use of variable-speed systems, low maintenance costs, efficient operation, retrofitting for existing systems, and energy-efficient compressors, key market drivers boosting CNG Compressor market growth.

A Compressed Natural Gas (CNG) compressor is an essential part of the natural gas fueling infrastructure, compressing natural gas to high pressures suitable for storage and transportation in CNG vehicles or injection into natural gas pipelines.

The global CNG compressor market is expected to expand significantly in the coming years, driven by rising environmental concerns, government initiatives to promote clean energy, technological advancements, and the expansion of refueling infrastructure. Stringent environmental regulations aimed at reducing emissions from vehicles and industrial processes encourage using cleaner fuels such as natural gas, increasing demand for CNG compressors. However, the initial costs of purchasing and installing CNG compression infrastructure, such as compressors, storage tanks, and dispensers, can be significant, creating a barrier to market entry for some stakeholders.

Highlights

• Positive Displacement generates the highest revenue share by technology.
• Industrial application dominates the market by application.

Market Dynamics

Global CNG Compressor Market Drivers:

Increasing Adoption of Natural Gas as a Transportation Fuel

Natural gas vehicles (NGVs) have significantly lower emissions than traditional gasoline and diesel vehicles. This makes CNG a more environmentally friendly option, and it is increasingly being used by countries and businesses looking to reduce their carbon footprint. According to the US Environmental Protection Agency (EPA), NGVs emit 13-21% less greenhouse gas than comparable gasoline and diesel vehicles. This environmental benefit is a major driving force behind the use of CNG in transportation.

Additionally, natural gas powers over 175,000 vehicles in the United States and 23 million globally. It's a great alternative to gasoline and diesel in heavy and medium-duty applications. These include freight trucks, buses, and garbage trucks. Natural gas engines deliver horsepower, acceleration, and cruise speed comparable to traditional fossil fuel engines. This fuel can also replace gasoline in smaller applications like forklifts and commercial lawn equipment. Furthermore, natural gas is available from nearly 900 compressed natural gas (CNG) stations.

In addition, India is a leading proponent of CNG adoption. The Indian government's efforts to promote CNG have significantly increased the number of vehicles on the road. The price difference between CNG and petrol or diesel increased CNG vehicle sales, including cars and auto-rickshaws, during 2023. This shift has reduced urban air pollution and fuel import costs, demonstrating CNG use's economic and environmental benefits.

Global CNG Compressor Market Restraints:

Limited Infrastructure

The global shortage of CNG refueling stations significantly impedes the growth of the CNG compressor market. This limited infrastructure limits the adoption of CNG vehicles, lowering the overall demand for CNG compressors. India has witnessed a significant increase in CNG stations, driven by government initiatives to promote CNG as a cleaner alternative to petrol and diesel. The country's total number of CNG stations has risen to more than 6,200, but more is needed for a country of over 1.3 billion people and millions of vehicles. The distribution of CNG stations is also uneven, with urban areas having more stations than rural areas. Companies with large fleets, such as delivery services and public transportation systems, are likelier to use CNG vehicles with adequate refueling infrastructure. CNG fleet expansion is limited due to a need for consistent and convenient refueling options.

Furthermore, while still in its early stages of development, hydrogen fuel cell infrastructure is attracting significant attention and investment. Countries such as Japan and Germany are heavily investing in hydrogen refueling stations to help the growth of hydrogen fuel cell vehicles (FCVs).

Global CNG Compressor Market Opportunity:

Expansion in Emerging Markets

Emerging markets, particularly in Asia-Pacific, Latin America, and Africa, offer significant growth potential for the CNG compressor market. These regions are rapidly urbanizing and industrializing, creating a demand for cleaner, more cost-effective energy solutions. With its environmental benefits and cost advantages, CNG is becoming a popular alternative fuel in these markets. The Indian government is actively encouraging the use of CNG to combat urban air pollution and reduce reliance on imported oil. The government's goal of establishing 10,000 CNG stations by 2030 is a more significant effort to transition to cleaner fuels. Delhi, India's capital, has converted its entire public bus fleet to CNG, significantly improving air quality and lowering particulate matter and NOx emissions.

Furthermore, China's emphasis on reducing urban air pollution and commitment to cleaner energy sources drive investments in natural gas infrastructure, such as CNG. The Chinese government promotes the use of CNG with favorable policies and subsidies. China is the world's largest market for natural gas vehicles, with millions of CNG vehicles in use. The expansion of CNG infrastructure is critical to sustaining this growth, which drives demand for high-quality CNG compressors.

On the other hand, countries such as Brazil and Argentina have well-established CNG markets driven by the desire to reduce fuel costs and emissions. These countries have extensive CNG refueling infrastructure and many CNG vehicles. The success in Brazil and Argentina demonstrates the potential for other Latin American countries to adopt CNG, creating opportunities for CNG compressor manufacturers to enter these markets.

Regional Analysis

North America Dominates the Global Market

The global CNG compressor market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

North America is the most significant global CNG Compressor market shareholder and is estimated to grow at a CAGR of 4.2% over the forecast period. This is due to ongoing government investments in infrastructure development and rapid industrialization. Furthermore, the United States CNG Compressor market had the largest market share, while Canada's CNG Compressor market was the fastest growing in the North American region.

Furthermore, North America has vast natural gas reserves, making it a low-cost and readily available fuel. The abundance of natural gas has prompted investments in CNG infrastructure, such as compressors, to capitalize on this domestic energy resource. Various government incentives, including tax credits, grants, and subsidies, support the development of CNG refueling infrastructure. For example, the US Department of Energy's Clean Cities initiative provides funding and technical assistance to help expand the CNG market. By 2023, the United States will have over 700 public compressed natural gas (CNG) fueling stations. Approximately 50 liquefied natural gas (LNG) fueling stations, most of which serve the long-haul trucking industry.

However, according to a National Renewable Energy Laboratory report, the cost of a CNG fueling station can range from USD 1 million to USD 1.8 million, depending on size and application. Smaller fueling units cost around USD 10,000, including engineering, equipment, and installation. These costs may impede market growth during the forecast period. Furthermore, private companies such as Clean Energy Fuels and Trillium continue investing in CNG refueling networks to serve commercial fleets and individual customers.

Asia-Pacific is anticipated to exhibit a CAGR of 4.8% over the forecast period. Demand for CNG Compressors from various industries, including food and beverage, manufacturing, home appliances, and oil and gas, drives market growth. Furthermore, several compressor manufacturers in China and India, as well as major industrial bases for producing electronics and semiconductors in China and Taiwan, are expected to drive market growth. Furthermore, China's CNG Compressor market had the highest market share, while India's CNG Compressor market was the fastest growing in the Asia-Pacific region.

Additionally, rapid urbanization and industrial growth have resulted in poor air quality in many Asia-Pacific cities. CNG is viewed as a viable solution for lowering vehicle emissions and improving air quality, which drives demand for CNG compressors. According to the International Energy Agency (IEA), the Asia Pacific region will account for more than half of global gas consumption growth in the coming years, owing primarily to gas development in China and India. While natural gas prospects remain favorable for these two markets, the outlook heavily relies on China and India's future policy direction and recovery path in the post-crisis environment. Despite the current economic headwinds and uncertainty, natural gas continues to receive strong policy support in both countries, with ongoing reforms to increase gas's role in the energy mix.

Europe's CNG Compressor market has a healthy market share. Increased investment in Eastern Europe is expected to boost the growth potential of CNG compressors. Furthermore, customer demand for easy-to-use and energy-efficient products is expected to accelerate market growth. Furthermore, the German CNG Compressor market held the largest market share, while the United Kingdom CNG Compressor market was the fastest-growing market in the European region.

Segmental Analysis

The global CNG compressor market is segmented based on technology and application.

The technology is further segmented into Positive Displacement and Dynamic.

The positive displacement segment had the highest revenue share in 2023. Positive displacement compressors are gas compressors that work by mechanically reducing gas volume to increase pressure. These compressors work by trapping a specific volume of gas in a compression chamber and then reducing its volume. Positive displacement compressors are preferred in applications that require precise pressure control, and they are especially useful in small to medium-sized CNG refuelling stations. Their ability to withstand various pressures makes them suitable for various industrial and automotive applications. This is because these compressors are widely used in the manufacturing industry. These compressors are also widely used in the oil and gas industry to power pneumatic machinery for pipelines, oil extraction and refining, and other applications.

Dynamic compressors, or turbo compressors, transfer kinetic energy to the gas via a rotating element (impeller) and convert it to pressure. These compressors work on the principle of dynamic action, which involves increasing gas velocity and then slowing it down in a diffuser to build pressure. Dynamic compressors are ideal for applications that require high flow rates with moderate pressure increases. They are widely used in large industrial processes, such as gas transmission pipelines and large-scale CNG refuelling stations. Their efficiency and capacity to handle large gas volumes make them ideal for large-scale and high-demand operations.

The segment can be bifurcated by application into Industrial, Residential, and Transportation.

The industrial segment dominated the CNG Compressor market in 2022. The industrial segment accounts for a significant portion of the CNG compressor market. CNG compressors are used in industrial settings to supply compressed natural gas to various applications such as manufacturing, power generation, and chemical production. Industries frequently require large volumes of CNG to power machinery, heating systems, and other equipment, necessitating powerful and high-capacity compressors. This is due to the rapid industrialization of developing countries such as Brazil, China, and India and the increasing demand for sophisticated and energy-efficient CNG compressors in the manufacturing industry.

The sheer volume of consumption and the critical nature of operations in these industries ensure that demand for CNG compressors remains high. Furthermore, industrial users are more likely to invest in advanced and high-capacity compressor technologies to improve efficiency, dependability, and operating costs. This high demand and the ongoing need for reliable and clean energy demonstrate the industrial segment's dominance in the CNG compressor market.

CNG compressors are used in public refuelling stations and fleet operations. This segment is critical to supporting the growing number of CNG vehicles, which include buses, trucks, and passenger cars. Compressors in this segment are built for high throughput and durability to withstand the demands of frequent refuelling. Companies with large fleets, such as logistics companies and public transportation systems, use CNG compressors to maintain their vehicles. These compressors help fleet operators save money on fuel and reduce their emissions.

Recent Developments

• May 2024- Atlas Copco Group acquired Tecturbo, a Brazilian service company and manufacturer of centrifugal compressor parts.
• February 2024- Wärtsilä lead a EUR 200 million collaboration ecosystem to develop autonomous zero-emission balancing solutions for energy transition.