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 (CLNE -2.21%) and Westport Innovations (WPRT -4.84%) that are carving out their niche in the space. Let's take a closer look.
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:
- The state of Florida incentivizes natural gas fleet vehicles.
- Colorado secured a $30 million grant from the federal government for NGVs and related infrastructure.
- UPS (UPS -0.66%) expands its fleet of natural gas-powered trucks to 800.
- General Electric (GE -1.42%) and Statoil are beginning to harvest methane in the Bakken Shale to fuel NGVs.
- Ford (F -2.44%) releases the natural gas F-150.
- General Motors manufactures a bi-fuel Chevy Impala.
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.