by Neil Abt | Apr 23, 2018
Natural gas had “lost a little of its luster,” admitted Brett Lindsay, vice president of sales at Clean Energy Fuels Corp. He is far from alone in this assessment. Executives with Trillium CNG and Ryder System were among others who told Fleet Owner that some of the initial excitement surrounding natural gas as a transportation fuel subsided in recent years. With a prolonged period of stable diesel fuel prices and new competition emerging from electric vehicles, “we’ve got to go back out and spark it again,” Lindsay said.
There are several new tools at the disposal of the natural gas industry that could make that effort successful.
“What we’ve seen in the last couple of years are major investments into renewable natural gas and renewable diesel,” Bill Cashmareck, managing director of Trillium CNG, said. “That is the glue putting this excitement back together.”
There is also the new Cummins Westport ISX 12N engine that Cashmareck and Lindsay both said would provide natural gas users performance and efficiency they have never experienced before. Combined with extended engine oil intervals and a growing fueling infrastructure, it is a moment of “reintroduction” for the industry, Lindsay said.
Chris Nordh, Ryder’s senior director of advanced vehicle technologies and energy products, said some fleets could still pause on natural gas purchases as they ponder the possibilities of electric vehicles (see sidebar, page 58). But that should not prevent natural gas growth, which Nordh said should be measured not in how many stations are built, but instead how much fuel is consumed and vehicles purchased.
Retail sales of Class 8 natural gas trucks in the United States and Canada were up 9% year to date through November 2017, according to ACT Research.
“Despite the uncertainty spurred by the current climate of changing environmental winds and low oil prices, the reading indicates continued interest in natural gas as a transportation fuel in the U.S. Class 8 market,” Ken Vieth, senior partner and general manager at ACT, said.
Owners of these vehicles will benefit from the approval of tax credits for alternative fuel vehicles and refueling infrastructure retroactively for 2017. The measure was included in the budget agreement reached in February by Congress.
Trillium’s Cashmareck, a member of NGVAmerica’s Executive Committee, said an extended multiyear credit would be more beneficial “to move the market forward,” as opposed to receiving tax credits retroactively.
As for existing sales, ACT’s Vieth said the refuse industry “has been adding new natural gas-powered trucks in significant volume.”
Looking ahead, Dave Hurst, an analyst at Pike Research, forecasted sales of natural gas vehicles to increase 10% annually. He also projected sales of propane-fueled vehicles, generally Class 4-7, to rise at an 8% clip.
“If you can save money to start, and do the right thing environmentally, that is a powerful one-two punch,” said Todd Mouw, vice president of sales and marketing with Roush CleanTech, a Michigan-based company that manufactures propane fuel systems.
Several large players in the refuse market “have established natural gas fueling stations, allowing for cost-effective overnight refueling and making refueling available to other natural gas users,” said Tom Rhein, president of Rhein Associates. “They are also strongly focused on using renewable natural gas (RNG) to further reduce vehicle emissions.”
RNG is produced from methane that is captured as organic materials decompose in renewable waste streams, such as from dairies, agriculture, landfills, and wastewater treatment plants. It can be used as a transportation fuel in the form of CNG or LNG and can reduce greenhouse gas emissions by as much as 70% over conventional fuels.
Clean Energy Fuels reported demand for its Redeem RNG product grew 32% during 2017 to 79 million gallons, compared with 60 million gallons in 2016. That represented more than half of the overall RNG in the United States, according to the Environmental Protection Agency (EPA).
Lindsay said RNG “has captured the attention” of many large fleets, including FedEx Corp., McDonald’s, and UPS Inc.
In November, UPS announced an agreement with Big Ox Energy to purchase 10 million gallon equivalents of RNG a year. During 2017, the Atlanta-based parcel giant announced a planned investment of more than $90 million for six additional CNG stations, 390 new CNG tractors and terminal trucks, and 250 LNG vehicles.
“These agreements add significantly to our investment in the use of RNG and will help put us on track to nearly triple our annual use of RNG. They are also a direct reflection of our ongoing commitment to help shape the renewable natural gas industry,” Mike Casteel, director of fleet procurement for UPS, said.
For Clean Energy, Lindsay said, “our plan for the future is driving more and more renewables.”
CNG remains a more popular choice than LNG as a transportation fuel because it is ideal for “regional or super regional fleets—those that get back to a central location nearly every night.”
But Clean Energy also remains involved in LNG, winning a four-year fueling contract late last year from Ryder for a fleet of LNG heavy-duty trucks that move goods for Toyota Motor’s largest North American manufacturing facility, located in Kentucky. The station is expected to consume 380,000 gasoline gallon equivalents annually.
“We want to look for an anchor tenant before we open [a station]—or build it,”Lindsay said.
Overall, Ryder has deployed CNG and LNG vehicles into the fleets of customers in about 20 states and several Canadian provinces. It has over 150 million miles of natural gas vehicle experience.
Nordh said the company’s rental and leasing model provides fleets a low-risk way to test out various alternative fuel vehicles to determine which ones fit best into their operations.
Ryder actively tracks incentives to further lower investment costs and has more than 20 natural gas-compliant maintenance facilities, with about a dozen additional facilities scheduled for upgrades.
Another critical factor for the growth of natural gas is the Cummins Westport ISX 12N engine, which entered full production in February.
Lindsay said that compared with just a few years ago, the engine is another example of the higher quality and more fuel-efficient equipment available to fleets using natural gas.
Roush’s Mouw also cited the new engine as a reason natural gas proponents deserve to be optimistic about the future.
The engine has received certification from EPA and the California Air Resources Board for meeting the optional low NOx standard of 0.02 g/bhp-hr., a 90% reduction from engines operating at the current limit of 0.2 g/bhp-hr.
“This move to zero emissions strategy means our customers can choose the most affordable path to zero-equivalent emissions with no commercial constraints on supply or technology readiness,” Rob Neitzke, president of Cummins Westport, said.
The engine is available with ratings from 320 to 400 hp. and up to 1,450 lbs.-ft. of peak torque. It is designed for linehaul, regional haul, refuse, and vocational trucks. The company’s L9N model has the same certifications as the new, larger engine.
Ryder’s Nordh pointed out that while traditional players may be developing natural gas engines that can be used with existing chassis, they generally are not manufacturing natural gas tank packages. That is creating “dynamic partnerships” between upstart companies and traditional OEMs, he said.
Despite the advancements, there still are maintenance, cost, and operational concerns associated with natural gas. That may be a reason other alternative fuels are also gaining traction in the freight transportation sector. For example, Roush CleanTech has seen two straight years of record sales of Class 4-7 propane vehicles and in early 2018 had the largest backlog in the company’s history, Mouw explained. Fleets can save “thousands of dollars per year in fuel and maintenance, even at today’s [diesel] levels,” he said.
Roush CleanTech has more than 18,000 propane autogas-powered vehicles on the road, with over 600 million miles traveled.
“Customers are beginning to establish propane in their fleets as a fuel of choice rather than as an alternative fuel,” said Michael Taylor, director of autogas business development for the Propane Education & Research Council.
Last year, Nestlé Waters North America added 155 Ford F-650 delivery trucks that run on propane autogas, bringing its total to 600, or 30% of its total North American fleet. The ReadyRefresh by Nestlé Ford F-650/750 beverage delivery trucks are each equipped with a Roush CleanTech propane autogas fuel system that provides 55 usable gallons of fuel.
“With propane being domestically produced, it’s proven to have a more stable cost per gallon, while the fueling and maintenance infrastructures are much more cost-effective than other alternative fuel options,” said Bill Ardis, national fleet manager for ReadyRefresh.
Bimbo Bakeries USA is another example of a large fleet that has deployed Ford trucks equipped with Roush’s propane system into urban areas.
Propane should continue to grow in popularity with alternative fuels and electricity, especially in urban areas, as more local governments crack down on diesel and gasoline emissions.