Talk about alternative fuels, and people will often think of electricity or hydrogen. But more and more fleets are adding renewable biomethane fuel, also known as Bio- Compressed Natural Gas (Bio-CNG) to their mix. Bio-CNG is pressurised methane produced from a renewable source, and offers a cleaner alternative to diesel and petrol for powering vehicles. Few know more about it than Philip Fjeld, CEO of CNG Fuels, a company at the forefront of the Bio-CNG industry in the UK. As part of our ongoing series on alternative fuels, we spoke to Mr Fjeld about the possibilities of Bio-CNG, as well as the barriers to greater uptake.
What vehicles can use BIO-CNG?
Bio-CNG can be used for any vehicle: passenger cars, vans, trucks, buses, refuse vehicles or anything else, really. In theory, any vehicle that runs on petrol or diesel could, today, run on gas.
This is being demonstrated in countries such as Italy, where hundreds of thousands of passenger vehicles run on gas. But here in the UK the focus has been almost exclusively on larger vehicles such as HGVs and buses.
As for numbers, there are around 120 HGVs in the UK that run either entirely on Bio-CNG or on both Bio-CNG and diesel (‘dual-fuel’). That may not sound like much, given that there are about 500,000 HGVs in the country, but the number is growing fairly quickly.
As well as these HGVs, there are about 100 gas buses in the country, and there’s growing interest from councils in using it for refuse collection vehicles. Leeds City Council recently decided to replace about 80 refuse trucks with gas alternatives, for example.
Why the focus on HGVS and other larger vehicles in the UK?
This is for two reasons. First, when it comes to smaller vehicles, such as cars and vans, Government policy has been mostly about encouraging the uptake of electrics and hybrids. The Plug-In Car Grant is an example of this. There haven’t been any equivalent policies for smaller gas vehicles.
Second, Bio-CNG is one of the only viable options for HGV fleets looking to go green. There simply aren’t electric or hydrogen alternatives when it comes to HGVs. So that only leaves biodiesel or gas – and there are plenty of reasons to choose Bio-CNG.
How clean is the BIO-CNG?
When it comes to air pollution, Bio-CNG is much cleaner than diesel, as it produces much lower NOx emissions.
When it comes to carbon dioxide, it’s important to remember that it’s not just tailpipe emissions that matter. Take an electric car, for example. It may have zero emissions on the road, but that doesn’t account for all the fossil fuels that will have been burnt to produce the electricity in the first place.
100% of the fuel we supply is renewable and sustainable. Bio-CNG is renewable gas captured from various forms of waste – including food waste.
This creates a very nice circular economy for some of our customers, including Waitrose. They, of course, distribute food all across the country. Some of that food inevitably goes to waste, and would normally produce methane as it decomposes – which has a 25 to 30 times higher global warming potential than CO2. Instead, we turn that food waste into biomethane to power their lorries. Those lorries emit CO2, but that’s more than offset by sparing the atmosphere from all that harmful methane.
Looking at everything put together, Bio-CNG lorries are about 65 to 85% less carbon-intensive than running diesel lorries.
What are the costs associated with BIO-CNG?
The upfront cost for an HGV running on Bio-CNG may seem high. Because they are currently manufactured in fairly low numbers, each one might cost around £25,000 - £30,000 more than their diesel equivalent.
But the savings come with the fuel. Bio-CNG is a lot cheaper than petrol or diesel, and costs the same as fossil gas and is about 40% cheaper than diesel.
So, how much a fleet could save by switching to Bio-CNG depends on its mileage and how long it keeps its vehicles. Waitrose, for example, see a big benefit because they tend to keep their lorries for a long period of time, and – most importantly – because their mileage is so high.
What is preventing companies from adding BIO-CNG to their fleets?
First of all, there is a lot of inertia. Companies have been running diesel vehicles for decades, and are reluctant to change from something that currently runs well for them.
This inertia is compounded by other factors. The upfront cost for a Bio-CNG vehicle is obviously daunting, particularly for smaller fleets operating at very small margins. For them, an extra £25,000-£30,000 can make a lot of difference to their budget.
That’s why it is so important to consider more than just the upfront cost – you’ve got to look at the operating costs too. Fleets should have a ‘payback period’ policy, and look at overall costs across that period. For many – especially those with high mileage – the big savings on fuel costs will outweigh the higher purchase costs.
There are the environmental benefits of switching from diesel to Bio-CNG, too, of course, and those are important to companies like Waitrose. But Waitrose is, ultimately, a for-profit company. They wouldn’t be choosing Bio-CNG unless it was a sound business decision. The economics of going to Bio-CNG are actually very compelling, once you consider overall costs.
But there also need to be people at the top of organisations championing this change. Changing perceptions and culture is a tough task, and you need people at the executive or senior management level who are prepared to take it on.
Are residual values a concern?
The evidence from America is very instructive here. Five years ago, people in the US were worried about residual values because gas vehicles were new and there wasn’t really a functioning second-hand market for them. Well, as it turns out, residual values for CNG vehicles are now considerably higher than for diesel, largely because the fuel costs are so much lower.
The same will apply here in the UK, but it’s early days, of course. It’ll take time for the Bio-CNG second-hand market and residual values to develop. That’s where companies like Hitachi Capital Vehicle Solutions can play an important role in effectively managing the whole-life cost of vehicles.
What about infrastructure?
Well, we have plenty of gas. It’s an abundant resource: there’s a lot of it in the grid currently, and it can be generated from renewables such as food waste, as I said earlier.
The bigger problem is a lack of CNG refuelling stations. Most hauliers in Britain today don’t have a CNG station nearby. Of course, we’re rolling out as many CNG stations as we can, but it’s a bit of a chicken-and-egg situation, really. Hauliers won’t make the switch to Bio-CNG unless there’s a refuelling station nearby, but we need a certain level of demand in an area to justify the cost of building one, which can be between £1 and £1.5 million.
But that also means it’ll get better as take-up of Bio-CNG increases. In Leyland, for example, we opened a refuelling station because of the demand from Waitrose’s fleet. As a result, a local haulier is able to buy a Bio-CNG lorry, knowing there’s a station nearby.
What could the govement do to the uptake of CNG?
What would be really helpful is Government support for a Bio-CNG vehicle similar to the Plug-In Grant for electrics. If the Government offered a £10,000 grant towards a Bio-CNG vehicle, it would immediately spark an increase in uptake.
In addition, Government funding for CNG refuelling stations would make a big difference – perhaps in a match-funding arrangement with the private sector. £30 million of Government funding, say, added to £30 million from business, could build around 50 new refuelling stations. That would be a real game-changer.
When we talk about combatting climate change, people often say that transport is a very hard sector to decarbonise. That’s not quite true. In Bio-CNG, we have a solution that’s available today, and that could allow companies to decarbonise their fleets almost immediately.
Philip was also interviewed on the BBC’s One Show, aired on 06/02/2017, for their segment on CNG fuelled trucks. View it on iPlayer.