Clean Energy Fuels Corp. &nbsp;has played a substantial role in pioneering the use of renewable natural gas (RNG) as a transportation fuel in the United States. To keep growing and moving forward, the company forges strong partnerships and maintains a flexible outlook.As a distributor of RNG, Clean Energy helps fleets reach their sustainability goals and decarbonize their operations, working closely with engine manufacturers to help fleet customers—including UPS and Amazon—make the switch to RNG trucks, explains Clay Corbus, head of renewable fuels and senior vice president of strategic development with Clean Energy Fuels. “Our whole business has really been working with heavy-duty fleets that burn a lot of fuel and transitioning them from using diesel to using renewable natural gas,” he says.Replacing diesel with RNG sourced from a landfill has a carbon intensity (CI) score of 45.9, according to data from the California Air Resources Board’s Low Carbon Fuel Standard pathway. The carbon reduction benefits are even more drastic when using manure-based RNG, dropping down to negative 330 CI points on average.A Brief History&nbsp; At the start, Clean Energy was primarily a distributor of fossil-based natural gas. As stated on the company’s website, T. Boone Pickens, one of the company’s cofounders, was a champion of natural gas as a cleaner alternative for heavy-duty trucks that burn substantial amounts of gasoline and diesel. “Boone was involved in natural gas, and he always thought that a higher value for natural gas was to vehicles, rather than going into electric power generation,” Corbus explains. “His whole idea was, ‘Let’s take the natural gas, it’s really clean relative to diesel, it’s cheap on a commodity basis, it’s much cheaper than diesel or gasoline, and it’s all-American—you don’t have to import it.’”In his former job as an investment banker, Corbus played a role in bringing the company public in 2007. Recognizing the available opportunities, he joined the Clean Energy team shortly after. He explains that RNG started to become a focus in 2008, when exploring the fuel was included in the company’s strategic plan. Several things happened after 2008 that further increased Clean Energy’s interest. In 2011, California’s LCFS was put into place, followed by the Renewable Fuel Standard’s renewable identification number (RIN) program amendments in 2014 that allowed landfill gas and other RNG to generate a D3 RIN. “Those two factors are what really started to accelerate the transition from what we call blue gas or fossil natural gas, to renewable natural gas,” Corbus says.Clean Energy first entered the RNG production space through the purchase of a project at one of the country’s largest landfills, the McCommas Bluff Landfill, near Dallas. Corbus explains that it is common for landfills to burn the methane collected from the landfill to generate electricity, then sell it to the grid. However, because the McCommas Bluff Landfill was so big, it made more sense to clean the gas and put it in a pipeline to be sent to a cogeneration facility. “It costs a lot of money to put that cleanup equipment in, but once you have it [installed], you can upgrade the gas to a higher quality, making the process more efficient and making more money off of it,” Corbus says. But rather than sending it to a local cogeneration facility, Clean Energy successfully navigated the process of transporting the RNG across state lines to California, which was appealing because of the renewable energy requirements in place there. Prior to the maturation of the LCFS credits market, the California utilities were the primary buyer, with any extra RNG being sold into the vehicle market. “The LCFS credit market matured over time, and then when the RIN market developed, we [put] all that gas directly into the vehicle fuel market,” Corbus says. “Because you could just get a lot more money for the gas taking it to the vehicle fuel market with those credits than you could in ... the voluntary market, taking it to utilities.”Market Dynamics&nbsp; Clean Energy utilizes offtake agreements to supply RNG demand at its stations and make money doing so. Corbus outlines an example of how these offtake agreements work. “Say there’s a landfill in Tennessee, and it can sell its renewable natural gas to the local utility for $20 per thousand cubic feet. If you put it into a vehicle in California you can get double that, $40. But how do they get it into a vehicle in California? That’s where we show up,” he says.The company could offer to take the RNG to California for 20% of the fuel’s value, which would be $8 in this scenario. After the fuel is sold into the Californian fuel market, the producer gets $32 per thousand cubic feet, rather than the $20 they would have received selling it locally, and Clean Energy gets the remaining $8. “We get a commission basically, we get a cut of the profits for bringing it [to the market], and that’s important because we have to pay for the station—we need to make money, too,” he says.In 2010, when oil prices were high and the cost benefits of natural gas versus diesel were very significant, Clean Energy seized the opportunity to increase the number of fueling stations across the country. Most of the landfill gas assets were sold to companies such as BP during the “lean years” after oil prices dropped, according to Corbus. However, the company continued to distribute the landfill gas produced at the various sites by arranging offtake agreements with the buyers.Fueling Logistics&nbsp; Currently, 90% of Clean Energy’s natural gas volume sold into the transportation fuel market is RNG, explains Corbus. Nearly all of that RNG is purchased through offtake agreements with third parties and not produced by the company itself; however, Corbus hopes that dynamic will soon shift as more of the RNG facilities developed by the company come online. &nbsp;Clean Energy sold 14 million gallons of RNG to fleet vehicles in 2013 when the company was the first to introduce it as a transportation fuel, compared to 225 million gallons in 2023.Corbus explains that RNG-powered vehicles are useful in a wide range of sectors, including trash removal, shipping, metropolitan buses and airport shuttles. Companies with large fleets of vehicles, such as transit agencies in Los Angeles and New York, waste companies like WM and Republic Services, and companies that move goods like FritoLay and PepsiCo, use Clean Energy’s 600 stations across the country to operate. The engines for these vehicles are made for the buyer at the OEM’s factory and have same power and torque as their diesel counterpart, and are covered by the same warranty as a diesel-powered engine.Although these engines are more expensive than standard heavy-duty diesel engines, the fuel cost savings are worth it for fleets in the long run, according to Corbus. “If a fleet like UPS ... is saving $40,000 a year on fuel, but the engine cost $60,000 more, you’ve got a year and a half where you’re paying it back. If you keep that vehicle for 10 years, you’ve got eight and a half years of savings,” he says.The hundreds of fueling stations scattered across the U.S. and Canada offer a similar fueling experience to diesel, with some key differences. The nozzle used for fueling is clamped on when filling the tank because the fuel is gaseous. There are also different ways to fuel—for example, a truck driver or fleet could choose to refuel slowly overnight to save on the electricity costs of refueling in the middle of the day.Developing Partnerships and Production&nbsp; Clean Energy is the touchpoint for many companies as they pursue sustainability goals and look to access the opportunities provided by RNG. Corbus explains that though Clean Energy is not a huge company, it is a significant and well-known player in the RNG space, with its hundreds stations fueling 50% to 60% of the natural gas fueled vehicles on the road.As Low Carbon Fuel Standard credit values climbed, Clean Energy began getting phone calls from RNG production project developers seeking assistance in getting their RNG into the California market. These developers would sometimes inquire about investors who would like to be involved in making an RNG project a reality. “We were getting all this inbound interest in [entering] into the California fuel market, and meanwhile, our stock price had recovered, we had raised money, and we were fiscally healthy,” Corbus says. “So, we thought this might be a good opportunity for us to get back into the production business—what we call the upstream side—where we’re generating the RNG as well.”Clean Energy has joint ventures in place with BP and TotalEnergies to invest in RNG projects. These partnerships help the company access more capital and benefit from their partners’ technical expertise in the global energy market. “It also helps us from a due diligence standpoint, where sometimes we might be more aggressive and more risk tolerant, and they’re usually more careful, so it helps keep everybody on a level playing field,” Corbus says.Over the past three years, Clean Energy has invested in several dairy-based RNG projects. Six of them are online, with the seventh planned to begin operations soon and several other projects in the pipeline. These projects require lot of time, Corbus says. “There are &nbsp;a lot of engineering and design that goes into a project, because you should be near a natural gas pipeline, and if you’re not, you have to figure out how you’re going to get it to the pipeline. These projects are complicated.”Generally, the size of the dairy needed is 5,000 cows, or a combination of multiple smaller dairies that have their manure collected together. However, this number is only an estimate. “There are many variables that go into what the minimum size dairy is,” Corbus says. “It’s the manure collection techniques, it’s the distance from a pipeline. It’s the type of digester you’re using, whether it’s a covered lagoon or a big tank digester.” And, he adds, the timeline can stretch longer due the delay associated with getting verified in the state, a window stretching from 15 to 24 months.Right now, RNG is the only practical solution for heavy-duty vehicles on the road, Corbus explains. However—true to its name—the company is interested in pursuing any clean energy solution that will fulfill its customers’ needs. “As we look further down the road, hydrogen certainly might be something that’s viable, and when it is, we’ll be there,” he says. Clean Energy has built and is operating a few hydrogen stations, which operate similarly to RNG stations. Hydrogen is not quite ready for “prime time” due to the high barrier-to-entry cost around the vehicles, he says. RNG also provides an opportunity to adapt, should the market move toward electric heavy-duty vehicles, since that RNG could also be used to make electricity. “I think ... in the immediate-term, RNG going directly into an RNG truck—a natural gas truck—is the most immediate opportunity and the one that we see growing the fastest,” Corbus says.Throughout the history of Clean Energy, the company’s goals have remained focused on providing a cleaner and more affordable option for customers, targeting both environmental and economic sustainability. This adaptive approach that leverages partnerships and innovation to move forward has enabled Clean Energy to become a key player in the RNG fuel space, realizing Pickens’ dream of a cheaper, cleaner, American-made transportation fuel.Author: Katie Schroeder&nbsp; Katie.schroeder@bbiinternational.com&nbsp;

2024-07-02 - Accelerating A Cleaner Future (Biomass Magazine)

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An RNG producer and distributor is helping decarbonize heavy-duty engines with low-carbon-intensity fuel

Accelerating A Cleaner Future

Accelerating A Cleaner Future

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