UPS (NYSE:UPS) has entered into an agreement to purchase renewable natural gas (RNG) for its delivery vehicle fleet from Clean Energy Fuels Corp. (NASDAQ: CLNE).
The deal signifies UPS's plan to significantly expand its use of renewable natural gas for its alternative fuel and advanced technology fleet. The company has a goal of driving one billion miles using its alternative fuel and advanced technology fleet by the end of 2017.
Clean Energy Fuels, co-founded by T. Boone Pickens, is the exclusive producer of Redeem, the first RNG made available in commercial quantities.
UPS fueling stations in Sacramento, Fresno and Los Angeles will utilize Redeem RNG for refueling tractors and delivery vehicles in UPS's fleet beginning this month. UPS and Clean Energy Fuels Corp. estimate that the three stations will provide approximately 1.5 million gallon equivalents annually of RNG fuel to nearly 400 UPS CNG vehicles in California.
RNG, also known as biomethane, can be derived from many abundant and renewable sources, including decomposing organic waste in landfills, wastewater treatment and agriculture.
"Renewable natural gas is critical to our effort to minimize UPS's environmental impact while meeting the growing demand for our services," said Mitch Nichols, UPS senior vice president of transportation and engineering. "Our rolling laboratory approach provides a unique opportunity for UPS to test different fuels and technologies. Today's RNG agreement will help mature the market for this promising alternative fuel. This commitment also positions UPS to use RNG in its extensive natural gas fleet which includes more than 2,500 medium and heavy duty vehicles."
"This step by UPS sends a clear message that RNG is a viable, cost-effective alternative to traditional diesel," said Harrison Clay, Clean Energy Renewables president. "Redeem reduces environmental impact because it captures naturally occurring methane before it is released into the atmosphere as a greenhouse gas emission, turning that methane into a safe, useable fuel that displaces the diesel fuel, and its carbon emissions, that would otherwise be used."
UPS currently operates natural gas tractors on RNG in the UK, through a partnership with Mercedes Benz.
In addition to its growing commitment to RNG, UPS uses several other alternative fuels and advanced technologies. UPS is developing the cleanest, most effective pathways to support the company's effort to reduce emissions and dependence on fossil fuels while improving efficiency. These pathways involve deploying advanced technologies and alternative fuels in real-world applications, and advocating for rational incentives and tax policies that lead to market parity among alternative fuels. The company's actions are aimed at developing economically viable lower carbon alternatives to traditional fuels for use in its extensive transportation fleet.
The first package delivery company to introduce alternative fuel tractors into its fleet, UPS operates one of the largest private alternative fuel and advanced technology fleets in the U.S. Its fleet includes nearly 5,500 all-electric, hybrid electric, hydraulic hybrid, CNG, LNG, propane, biomethane and light-weight fuel-saving composite body vehicles.