What happened

Shares of Clean Energy Fuels (CLNE -3.37%) had jumped more than 16% by 10:30 p.m. ET on Wednesday. Driving the stock of the cleaner transportation fuel provider was its strategy update. 

So what

Clean Energy Fuels provided investors with details on its five-year strategic and financial plan today, including the development of its renewable natural gas (RNG) supply business. RNG is a sustainable fuel produced by organic waste at landfills, farms, and other facilities. Capturing this methane sharply lowers carbon emissions, the company says.

A biogas plant at a farm.

A biogas plant at a farm. Image source: Getty Images.

The company currently sources RNG from third-party producers, which it distributes along with natural gas at more than 550 fueling stations across North America. However, it plans to expand its RNG business significantly by getting into the supply side. It's starting by constructing a methane capture project at one of the largest dairy farms in the country. Energy giant BP (BP -2.95%) is its partner on the project, which will be able to produce 5 million gallons of low-carbon LNG that will flow into Clean Energy's refueling network.

The company sees RNG helping fuel significant growth in the coming years. It forecasts its overall volumes rising at a 13% compound annual rate by 2026, driven by 25% growth in RNG supplies. That has it on track to grow its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) from a projected $65 million this year to $555 million by 2026. It estimates its growing RNG supply business will provide $253 million of that EBITDA by 2026.

Now what

Clean Energy Fuels believes RNG can be an important solution to reduce carbon emissions. It eliminates organic methane emissions at the source and uses the captured fuel to replace other fossil fuels like diesel and natural gas. The company believes that getting into RNG supply can accelerate emissions reduction and EBTIDA growth, creating value for all stakeholders in the process.