Is This Already the End for Natural Gas Vehicles?

A new study on methane leakage casts a shadow on the future of natural gas as a transportation fuel.

Feb 15, 2014 at 12:45PM

A joint study, published in the journal Science on Friday has revealed that natural gas as a transportation fuel provides no net benefit to the climate, when compared with diesel. The report, written by numerous researchers from some of the United States' most prestigious universities, as well as NOAA and the Department of Energy, flies in the face of what most of us have come to believe about "clean-burning" natural gas. This could yield big problems for companies like Clean Energy Fuels (NASDAQ:CLNE) and Westport Innovations (NASDAQ:WPRT) that are carving out their niche in the space. Let's take a closer look.


A truck fills up on natural gas at a Clean Energy station. Photo Credit: Clean Energy Fuels.

First and foremost, the scientists aren't disputing that natural gas burns cleaner than diesel. That remains absolutely true, as natural gas, or methane, produces 30% less carbon dioxide than diesel when burned. The problem comes on the production end of things, where methane leaks during the drilling and extraction process negate the benefit of using the commodity as a transportation fuel. Methane traps 30 times more heat in the atmosphere than carbon dioxide, a dangerous level of potency despite the fact that methane doesn't last as long in the atmosphere as carbon dioxide does.

The study also revealed that methane emissions are 25% to 75% higher than previous estimates by the Environmental Protection Agency.

So what does this mean for Clean Energy Fuels? The company is building America's Natural Gas Highway and its success very much depends on long haul trucks buying into the natural gas story. The same is true for Westport Innovations, the company that upfits many trucks with natural gas engines. 

Here's a quick recap some of the biggest story lines from the past year:


Bi-fuel Chevy Impala. Photo credit: General Motors.

In other words, there's a lot of economic activity surrounding natural gas as a transportation fuel right now; dollars are saved, and jobs are created. Now that much of corporate America is finally embracing natural gas vehicles, does this study mean that it's suddenly time to abandon ship?

Not necessarily. Methane leakage is an important issue, but it is also an addressable issue. The conclusion of the report suggests that investment by the oil and gas industry to prevent leakage during production and processing could significantly curb emissions. In fact, USA Today has reported that a previous survey of natural gas processing plants revealed that of the 75,000 components at such facilities, 50 faulty parts result in roughly 60% of the methane leakage.

That said, it would be a mistake to dismiss the findings of this report out of hand. Again, this is a preventable problem, and it would behoove the industry to begin addressing it very quickly -- and very publicly -- on account of the sheer number of businesses and state governments that have made a significant push for natural gas vehicles. That should be the way forward.

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Aimee Duffy owns shares of Ford. The Motley Fool recommends Clean Energy Fuels, Ford, General Motors, Statoil, UPS, and Westport Innovations and owns shares of Ford, General Electric, and Westport Innovations. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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