As the most advanced designer of engines powered by natural gas, Westport Innovations (NASDAQ:WPRT) is a small company with a big goal: to lead the world in transitioning away from traditional oil-based fossil fuels in favor of abundant, cheap, and clean natural gas. The company has a price tag large enough to match its ambition, and will need to grow revenue quickly in order to justify sky-high expectations. To help you determine whether Westport Innovations is right for your portfolio, The Motley Fool has released a premium research report breaking down the company's opportunities, competitive advantages, and risks. Today, you can get a free sneak peek at the report, detailing two key developments for Westport Innovations. Enjoy!

One of the biggest impediments to natural gas engine adoption is the scarcity of natural gas infrastructure. That's why Westport's biggest successes so far have been with vehicles that return to a base every day where they can refuel: municipal buses, garbage trucks, forklifts and the like. To break out of the return-to-base model, vehicle operators need to be sure they can refuel out on the road. Luckily, Westport Innovations has some help here.

Oil tycoon T. Boone Pickens has put his weight behind Clean Energy Fuels (NASDAQ:CLNE), a natural gas refueling infrastructure provider with a plan to construct 150 LNG stations nationwide by the end of 2013, allowing long-haul truckers to run LNG vehicles on fixed, cross-country routes. North of the border, Royal Dutch Shell (NYSE:RDS-A) is building LNG refueling stations on a 900-mile stretch from Vancouver, British Columbia, to Fort McMurray, Alberta, near the epicenter of Canada's oil producing tar sands.

These infrastructure initiatives are critical for Westport. With a broad and growing network of refueling stations, Westport's addressable market could expand to include the lucrative trucking market in the short term, and every vehicle with an engine in the long term. Without a refueling infrastructure, natural gas engines will be resigned to a small and ultimately unprofitable niche market.

Government Policy
Politicians on both sides of the aisle like natural gas. Liberals like natural gas because it's better for the environment than oil, releasing fewer greenhouse gases and fewer particulate matter emissions known to be hazardous to human health. American carbon emissions have declined 14% since 2007, largely due to natural gas replacing coal as an electricity source.

North America also has vast reserves of the stuff, so a shift toward natural gas consumption over oil use decreases American dependence on foreign oil and fits into a "North American energy independence" scenario favored by national security conscious conservatives.

Put together, there's enormous potential for governments to use policy to incentivize the adoption of natural gas vehicles, whether through tax credits, infrastructure subsidies, or even direct purchasing requirements. Just recently, the governors of a coalition of 22 states declared their willingness to jointly purchase as many as 10,000 CNG vehicles every year. While the case for natural gas vehicles doesn't depend on government largesse, any move to encourage mass adoption would be a boon to Westport and its investors.