Shares of renewable, compressed, and liquefied natural gas supplier Clean Energy Fuels (NASDAQ:CLNE) are surging in early afternoon trading Wednesday, up a cool 38% at the 12:30 p.m. EDT mark. The surge in stock price follows a joint announcement from Clean Energy and oil major Chevron (NYSE:CVX) yesterday afternoon saying that the two companies will partner on a project to supply renewable natural gas (RNG) automotive fuel to truck operators servicing the ports of Los Angeles and Long Beach, California.
Their goal: to cut nitrogen oxide pollution levels at the ports by 98% by replacing trucks fueled by diesel with trucks running on clean natural gas instead.
The Clean Energy and Chevron initiative is dubbed Adopt-a-Port, and the two companies will have very different roles in it. Chevron's job will be to "subsidize the cost of buying new RNG-powered trucks" for truckers -- and produce the RNG that will fuel those trucks. Clean Energy's job will be to "manage the program, including offering fueling services for qualified truck operators."
"Switching trucks to fuel with RNG is vital to improving air quality and fighting climate change in our country's largest port complex," said Clean Energy VP Greg Roche. "We're proud to partner with Chevron on the Adopt-a-Port initiative that will put additional clean, carbon-negative trucks on the road and lessen the environmental impact on operations in the region."
Importantly for investors, Clean Energy isn't putting up a lot of cash for this project -- having instead convinced Chevron to pony up to help create new customers for its natural gas offerings by helping to subsidize the purchase of new trucks that run on the fuel. Chevron, meanwhile, is expanding the market for the natural gas it produces, enabling Clean Energy to buy more of its product for resale to the truckers.
Thus, this deal looks like a win-win for both parties involved.