Several noteworthy developments in the last 90 days demonstrate that despite a continued low oil price environment, the natural gas truck market remains resilient and strong. Major market players are showing positive financial results, new products are being announced, leading fleet operators are jumping into natural gas fueling, and several signals from the industry demonstrate a firm commitment to a long-term natural gas-based strategy.
Clean Energy, the leading provider of natural gas for fleets in North America and one of the industry’s few publicly traded companies, reported strong second-quarter financials with year-over-year growth in all segments illustrating a continuing shift to natural gas. This growth is thanks to new station construction, vehicle deployments, and record fuel sale volumes.
The company also reported significant revenue from the sale of low carbon credits under the California LCFS and Federal RPS programs, important indicators of this growing market for renewable transportation fuels and emission-friendly transportation products and services. Given the challenge of continued low oil prices, Clean Energy’s financial performance demonstrates the robust nature of the market and the long-term vision for lower emission commercial natural gas vehicles.
Most recently, FedEx Freight announced a purchase of over 100 CNG tractors and is installing a new fueling station in Oklahoma City to serve the new fleet. While big announcements like this are less frequent in these days of $2.25 diesel, FedEx’s 100-unit commitment to natural gas shows a still-sound value proposition for heavy-duty natural gas trucks.
To support customers like FedEx and many others, the recent announcement that Cummins will use Clean Energy to upgrade its maintenance facilities across North America for natural gas vehicles shows a long-term vision for the continued growth of the market.
This demand for cleaner operations from customers has led vehicle manufacturers to move in the same direction. For example, Peterbilt Motors Co. recently announced that it will offer three vocational truck options that use the Cummins Westport ISL G natural gas near-zero emission engine (certified to 0.02 g/bhp-hr. NOx). The emissions from these engines provide the equivalent of zero emission electric vehicle operations, if not better, depending on the mix of power sources serving regional electrical grids.
What, then, is the opportunity for FedEx, UPS, or any carrier to offer to a shipper the ability to haul their freight with an environmental footprint that is equivalent or better than an electric vehicle? Cleaner truck options are particularly important in areas of the U.S. that have poor air quality, such as large portions of California where the state’s Air Resources Board (CARB) released a state implementation plan to reduce emissions to meet federal standards. The plan calls for major reductions in emissions from the transportation sector by increasing market penetration of near-zero trucks by 900,000 units over the next decade.
In the face of low oil prices, the natural gas market has continued to plug along and demonstrate its resiliency and growth in some areas. While environmental considerations will inevitably drive the market forward, the stress test of the last two years has served to strengthen the market and position it for significant growth as the price of oil and diesel will certainly rise in the near future.
Fleets with existing or near-term plans to move to alternative fuels recognize that natural gas can help meet sustainability goals and will be well positioned for fuel price stability and cost savings over the long haul.
