Farmers, waste management companies and the energy industries have long experimented with converting methane, a byproduct of decomposing organic matter, into transportation fuel.
Those efforts have met with mixed success, and a renewable natural gas fuel has not been widely available in the United States. But now, one leading supplier of natural gas transport fuel is taking a big step toward changing that.
Clean Energy Fuels will announce on Thursday that it has started selling a fuel made of methane from landfills and other waste sources at its more than 40 filling stations in California. The company, which is backed by T. Boone Pickens, is developing a nationwide network of natural gas pumps and plans to introduce the fuel elsewhere as well.
The company expects to sell 15 million gallons of the fuel in California this year, more than double the amount of similar fuels the Environmental Protection Agency projected would be produced nationwide.
Its customers include companies like AT&T, Verizon, Mattel and Williams-Sonoma as well as large fleet operators like SuperShuttle and Hertz.
To many in the industry, the pace of the fuel’s development has been something of a surprise.
“Though California and others have been investing in the development of this fuel, I don’t think people were expecting there to be a significant public supply or access this soon — maybe not even this decade,” said Tim Carmichael, who leads the California Natural Gas Vehicle Coalition, a trade group.
A big factor in methane’s rise is the surge in natural gas production from shale drilling, which had already nudged the transportation industry to begin shifting to vehicles that can run on the cleaner-burning fuel, making it easier to meet emissions standards.
Another reason is powerful government incentives, especially in California, that have imposed strict regulations intended to help reduce carbon emissions to 1990 levels by 2020. Under the program, suppliers that reduce emissions during the production, transportation and use of the fuel are awarded tradable credits.
These and similar federal incentives are allowing Clean Energy to sell the fuel, which is called Redeem, at the same price as its conventional natural gas fuel even though it is more expensive to produce.
The new fuel is also cheaper than diesel fuel and it provides the companies some insulation from the geopolitics that can drive up petroleum prices.
But because of its source, the fuel counts as renewable and takes less energy to extract and process, making it more attractive to companies seeking to burnish their green credentials.
The fuel’s environmental benefits also include capturing the methane before it is released into the atmosphere. When the methane-derived fuel is burned, it is far less harmful to the atmosphere than petroleum fuels. But the methane that escapes directly from decomposing waste is more potent as a heat-trapping gas than carbon.
For this reason, many large-scale farms, wastewater treatment companies and garbage companies have developed systems to capture escaping methane — known as biogas — for both transportation and electricity, and several start-up companies are working on systems of their own. There are projects in Europe as well, where biogas for transport is more common.
Although many of the methane-capture projects in the United States and Europe have been geared toward producing electricity, those markets have been declining, said Mackinnon Lawrence, principal research analyst at Navigant Research.
Looking to make transportation fuel was a logical alternative, he said, because producers can take advantage of federal and state incentives. The push has its risks, however, because the credit values have been so volatile that it is difficult for companies to commit to long-term investments.
Beyond the bottom line, customers are increasingly interested in how clean the fuel is, said Andrew J. Littlefair, the chief executive of Clean Energy, adding that Redeem can burn 90 percent cleaner than diesel. “We’re seeing from these heavy-duty trucking fleets, and these shippers that hire these trucking fleets, they’re really interested in sustainability,” he said. “It’s gotten to be a very important part of the sale.”
John Simourian, chief executive of Lily Transportation, which uses a nationwide network of trucks to move a range of products, including construction materials and groceries, said that only a small portion of his fleet ran on natural gas but that the company was shifting over.
Not only is the fuel less expensive, but it gives the company a competitive advantage with customers on price and environmental concerns. “It’s just a win all around,” he said.