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Recently, UPS and Agility Fuel Solutions announced one of the most important compressed natural gas (CNG) deals in the trucking industry. For context, UPS began its transition to natural gas in 1989 and sees it as a way to improve its carbon footprint while lowering costs.
UPS’s new $450 million investment contributes to a market projected to grow to 1.2 billion gasoline gallon equivalents (GGE) by 2025. With investments of this caliber, it’s no wonder CNG is poised to become a leader among alternative fuels, presenting a realistic solution for greenhouse gas (GHG) reductions because of low costs and existing infrastructure.
Here are four key reasons why we think fleet owners should strongly consider CNG when planning for conversions and new purchases:
1. CNG supports fleet sustainability goals.
Compressed natural gas contains methane (CH4), which burns cleanly from fossil fuel deposits or the decomposition of food waste, sewage, refuse or manure.
The latter — non-fossil, renewable natural gas (RNG) — is also referred to as biogas or biomethane and transported from its source to the point of use by pipeline, then compressed to high pressures and stored on vehicles as CNG. UPS’s newly procured trucks, featuring Agility Fuel Solutions’ CNG fuel systems, can interchangeably use conventional natural gas or RNG.
As a low-carbon, clean-burning fuel, CNG can reduce GHG emissions up to 17 percent compared to conventional diesel or up to 90 percent when using RNG produced from landfills, dairy farms and other bio sources.
This is a large part of why UPS is relying on CNG to help meet its target of reducing absolute greenhouse gas emissions by 12 percent across its global ground operations by 2025.
“The reasons UPS went with RNG as an alternative fuel to power its fleet involved the fuel becoming more widely available, its ability to seamlessly integrate into an existing natural gas system and its very good emissions profile,” said Mike Casteel, UPS director of fleet procurement, in an interview with Supply Chain Dive earlier this year.
By the end of 2019, UPS will operate 61 natural gas fueling stations, and, as of October 2019, UPS has agreed to purchase 230 million gallon equivalents of RNG during the next seven years, making the company the largest consumer of RNG in the transportation industry.
Between drastically reducing UPS’s carbon footprint and the fact that this alternative fuel reduces a fleet’s operating cost, it is easy to see why CNG is one of the best options for incorporating alternative fuels into fleet operations.
“UPS has agreed to purchase 230 million gallon equivalents of RNG during the next seven years, making the company the largest consumer of RNG in the transportation industry.”
2. CNG has cost benefits compared to diesel.
Running CNG trucks instead of diesel can save fleet operators significant amounts of money.
First, CNG fuel prices at the pump are significantly lower than diesel, partly because the fuel is cheaper to begin with, and, in the case of biogas, because of renewable fuel credits (“RINs”) and California low-carbon fuel standard (LCFS) credits partially passed along to the end user to incentivize fleets to convert to CNG.
Second, just a small part of the cost of CNG at the pump is natural gas or biogas as a commodity — most of the cost is fixed, particularly depreciation of the station equipment and the energy cost of compressing the gas.
By contrast, a large part of the delivered price of diesel fuel is the underlying price of crude oil. As a result, as crude oil and natural gas prices move up and down, CNG costs are much more stable than diesel prices.
Third, CNG can help fleets reduce their maintenance and operating expenses. Because natural gas is a small molecule that burns cleanly, emissions after treatment on a CNG truck are a simple three-phase catalyst. There’s no need for expensive and maintenance-intensive diesel particulate filters or selective catalyst reduction systems (SCR) systems.
“As fleets follow UPS’s lead and invest in alternative fuel and advanced technology vehicles and fueling stations, they will reap the benefits of lower emissions, cost benefits and staying ahead of industry trends.”
3. Picking the right clean transportation provider can enable success.
After a fleet chooses CNG, there are additional opportunities to save money by selecting the right clean fuel systems provider.
Because CNG on-board fuel takes up to approximately four times the volume of diesel, CNG storage can be a large and complex system on a truck. Having a lightweight, durable and reliable CNG storage system helps keep costs down.
Agility Fuel Solutions is a vertically integrated manufacturer of fuel storage systems, as well as lightweight carbon composite CNG cylinders. With end-to-end design, manufacturing and in-house aftermarket support, Agility Fuel Systems delivers quality, low-cost, reliable products to fleets.
In medium-duty vehicles, Agility Fuel Systems supplies not just storage systems but also the certified natural gas engine conversion systems. This enables a fleet to have a single source for the entire natural gas fuel system, keeping costs down and ensuring simple, comprehensive support from a vendor with expertise in all parts of the natural gas systems on their vehicles.
4. The moment for CNG is now.
The best part about CNG? You don’t have to wait for new technology to be ready for the market. CNG is available today and already deployed at scale by major fleets like UPS.
According to ACT Research, sales of natural gas-powered vehicles are gaining 10 percent month over month, with no sign of slowing down.
In addition to being as clean or cleaner (with biogas) and cheaper to operate than other fuel options, CNG is widely used already in transit and refuse fleets, as well as in tens of thousands of trucks in North America.
It makes economic and environmental sense to deploy CNG trucks right now. The low cost and maturity of the technology makes it possible to do so at scale.
As fleets follow UPS’s lead and invest in alternative fuel and advanced technology vehicles and fueling stations, they will reap the benefits of lower emissions, cost benefits and staying ahead of industry trends.
Longitudes explores and navigates the trends reshaping the global economy and the way we’ll live in the world of tomorrow: logistics, technology, e-commerce, trade and sustainability. Which path will you take?