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Clean Energy Fuels Sees Demand Growing

Even though the pandemic reduced Clean Energy Fuels Corp.’s deliveries in the final quarter of 2020, the stock market didn’t mind as the Newport Beach-based company signed key agreements to help keep up with current and future demand.

Clean Energy delivers renewable natural gas (RNG) through compressed natural gas (CNG) and liquefied natural gas (LNG) to its network of approximately 540 fueling stations across the U.S. and Canada.

“The demand by customers for RNG continues to accelerate,” Chief Executive Andrew Littlefair said March 4.

Clean Energy said the health crisis that weighed on airports and public transport systems led to a 7% drop in fuel deliveries to 96 million gallons in the fourth quarter compared with the same period the previous year.

“RNG has gone from being a niche product to one where the demand is outpacing the current supply,” Littlefair told analysts March 9 after the earnings release according to a transcript provided by SeekingAlpha.com.

Clean Energy’s (Nasdaq: CLNE) revenue for the final three months of 2020 was $75 million, a 37% decrease from $119.6 million in the fourth quarter of 2019, primarily due to a shift in federal tax credits for alternative fuels.

Still the company’s shares have recently been trading at about 10 times the level they were at a year ago, and occasionally higher, while its market cap has gone over $3 billion (Nasdaq: CLNE). Its shares particularly took off after Joe Biden was announced as the winner of the presidential race.

Reducing Emissions

RNG is derived from capturing the biogenic methane produced by the decomposition of organic waste from dairies, landfills, and wastewater treatment plants. The fuel “allows thousands of vehicle fleets, from airport shuttles to city buses to waste and heavy-duty trucks, to reduce their amount of climate-harming greenhouse gas by at least 70% and even up to 300% depending on the source of the RNG,” the company said on March 10.

Recently finalized joint venture agreements with a BP PLC (NYSE: BP) subsidiary and the Newport Beach company’s largest shareholder, Total SE, will allow Clean Energy to increase volume of RNG to meet demand.

Clean Energy on March 10 confirmed that BP Products North America Inc. has provided $50 million to develop, own and operate renewable natural gas production facilities at dairies and other agriculture facilities to produce the clean fuel. Clean Energy will be the operating partner.

In the other agreement, Clean Energy and Total said March 4 they had formed a 50/50 joint venture to develop carbon-negative RNG production facilities in the United States, as well as credit support to build additional downstream RNG fueling infrastructure.

$400 Million

The initial $100 million firm commitment can increase to $400 million as development opportunities progress. Since Clean Energy and Total will be providing the equity portion of the investments, the actual amount of capital invested in RNG projects may be higher than $400 million depending on the amount of leverage that is deployed.

Clean Energy Fuels is the largest provider of renewable natural gas as a transportation fuel in the U.S. and Canada.

It said last month that the Los Angeles County Metropolitan Transportation Authority signed a new agreement for an estimated 47.5 million gallons of its renewable natural gas.

The company said March 11 that a new public fueling station was opened in Carson. It will provide RNG to fuel trucks in the Ports of Los Angeles and Long Beach, and service Carson-area truck terminals and warehouses. 

Kevin Costelloe
Kevin Costelloe
Tech reporter at Orange County Business Journal

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