Friday, October 28, 2011

What Is Clean Cities?

"Clean Cities is a government-industry partnership that reduces petroleum consumption in the transportation sector. Clean Cities contributes to the energy, environmental, and economic security of the United States by supporting local decisions to reduce our dependence on imported petroleum." (Click this link to read the full PDF)

Andrew Littlefair Testifies In Support of HR 1380

(Video of the entire hearing is available here.)

Testimony of Mr. Andrew Littlefair President & CEO Clean Energy Fuels Before the Subcommittee on Select Revenue Measures and the Subcommittee on Oversight House Committee on Ways & Means

September 22, 2011

Mr. Chairmen, Members of the Subcommittees. My name is Andrew Littlefair. 1 am the President and Chief Executive Officer of Clean Energy Fuels which is the largest provider of vehicular natural gas (both Compressed Natural Gas and Liquefied Natural Gas) and related services in North America. I am also the immediate past Chairman of the NGV America, a national trade association of over 120 companies involved in natural gas vehicles and related production, distribution and transmission.

I am here to speak in favor of HR 1380 – the NAT GAS Act, introduced on April 6 by Rep. John Sullivan. I am pleased that so many members of the Subcommittees have co-sponsored the legislation, including both Chairmen. I would like to focus on the advantages to our economy of jump-starting a natural gas vehicle industry in the United States. The change over from diesel to natural gas is going to happen over the next 10 to 15 years. What I am suggesting is, with this short-term boost, we can accelerate that to just five years and achieve our goal of energy security.

In addition, I will touch on job creation, revenue generation, national security implications, and environmental advantage of moving a significant number of vehicles from largely imported diesel to domestic natural gas. The benefits of natural gas are numerous, wide ranging, and vital to America's national interests. I believe that is why, as of today, HR. 1380 has 183 bipartisan co-sponsors. With what you have just gone through, having that many members from both sides and from all regions ofthe country coming together on a single piece of legislation is noteworthy in, and oi itseltf

Natural Gas is Abundant.

Natural gas is one ofthe most abundant natural resources in America. In the summer of 2009, the "Potential Gas Committee" under the auspices of the Colorado School of Mines released its groundbreaking report calculating the enormous amount of natural gas contained in the vast shale deposits in Texas, Louisiana, Arkansas and the Appalachian basin states. The Marcellus Shale, extending through Pennsylvania, West Virginia, southern New York and eastern Ohio, has received the lion's share of attention over the past year.

We in business and in government don't think strategically as often as we probably should. It is one thing for report after report to state we have a 100-year supply of natural gas, or a 150-year supply or a number that continues to grow with advances in drilling technology. It is something else for us to consider how best to deploy such a domestic natural resource – a resource with so many uses, which is already so widely distributed, and which can benefit all Americans by providing more jobs, a cleaner environment, a reduction in our trade deficit, and cheaper food and commodity prices.

Unlike battery and hydrogen technologies which are works in progress, natural gas is a proven vehicle fuel. There are some 13.2 million natural gas vehicles operating in the rest of the world. Globally, over 4,000 NGVS are being put on the road and eight new natural gas fueling stations are being opened every day. However ofthe 250 million cars and light trucks on America's highways only about 110,000 are NGVs.

The argument against moving from gasoline or diesel to natural gas as a principal transportation fuel has been a matter of infrastructure. If there are not enough fueling stations to support NGVS, then the public won't buy them. If the public won't buy NGVS then companies like Clean Energy Fuels won't build facilities to fuel them.

This "closed loop" thinking has stymied us for decades.

We can talk about the availability of natural gas refueling facilities, as opposed to gasoline stations, for passenger cars but the fact is as long as gasoline was so relatively cheap, there was no need for people to ask for natural gas vehicles (N GVS), there was no reason for the automobile manufacturers to build them, and no need for fueling stations to put in natural gas islands.

My focus today will be on medium and heavy-duty trucks which currently burn imported diesel. In the jargon of the Transportation Department these are Class 3 through Class 8 trucks – everything from express delivery and utility company vehicles all the way up to refuse and recycling trucks; and 18-Wheelers.

Even if we built a million passenger cars per year to run on natural gas, that would represent only four-tenths of one percent of the U.S. fleet.

However there are only about eight million class five through eight – heavy-duty – trucks in the U.S. These trucks range from refuse recycling trucks to over-the-road 18-wheelers and use upwards of 35 billion gallons of fuel annually. Helping the owners of these vehicles replace their diesel trucks with trucks running on CNG or LNG can have an immediate, measurable effect on our trade deficit, our environment, and on the profitability of these fleets.

Over-the-road trucks tend to run the same routes on a regular schedule. We have determined that the beginnings of a nationwide network is possible with only 150 natural gas stations at existing truck stops along Interstate highways can provide fuel coast-to-coast and border-to-border. Refuse recycling trucks, municipal buses, dump and cement trucks, and express delivery and`utility trucks all go home to "the barn" every night and so refueling them is a simple matter.

The private sector is doing its part. Recently my company announced an investment by Chesapeake Energy to help build 150 strategically located LNG truck stops. This process, too, can be greatly speeded up though common sense incentives in the bill.

All that is left is to help trucking companies in the short term defer the additional cost of buying vehicles which will run on natural gas. Because there has been a trickle of a market for heavy trucks running on natural gas, the costs of manufacturing them is far higher than the highly developed lines building diesel engines. H.R. l380 takes direct aim at the premium which keeps many truck owners and manufacturers from making the change to natural gas. The cost of a basic Class 8 truck – which includes regional tractors, drayage trucks, and refuse and recycling trucks – built to run on diesel is approximately $125,000. A similar truck manufactured to run on natural gas will cost between $35,000 and $40,000 more.

To demonstrate that the economies of scale I am suggesting will, in fact, work, we should note that just three years ago the incremental cost of a natural gas truck over a diesel was between $60,000 and $100,000. l believe that, by providing this modest tax credit for truckers to purchase NGVs that differential will quickly disappear as the benetits of natural gas as a transportation fuel become obvious to users.

In this era of debt limits and spending reductions we should keep in mind that the relatively low cost of H.R. 1380 and its strict time limit of not more than five years will yield many times the amount of the tax credits involved.

There are 360,000 trucking companies in the United States. 82 percent of these operate six trucks or less. One in ten over-the-road truck drivers are independent and most own their own rigs.

I recite these statistics, Mr. Chairman, to show that H.R. 1380 is not a hand-out to major corporations, grocery chains, and retailers. It is a way to give a hand-UP to small businesses from Maine to California by providing meaningful incentives to our transportation infrastructure.

These small businesses will retain a larger share of their earnings in the form of a tax credit to purchase natural gas trucks. That, plus the saving of $1.50 per gallon by running on natural gas instead of diesel, provide a significant life-cycle reduction in costs and will go a long way in helping to create additional demand for trucks and engines built in America.

As these companies ramp up to meet the expected demand, the per-unit cost will drop to the point where a tax credit is no longer necessary.

Yet the manufacturing facilities and the workers who build these new vehicles within them, designers, engineers, tool-and-dye makers, mechanics and after-market entities, will remain and will grow in a market sector which is crucial to the economic health of states throughout America. Studies have shown that moving America's heavy-duty truck fleet from diesel to natural gas will have the effect of providing over 400,000 direct and indirect new jobs over the next live years, further demonstrating the long-term benefits of this legislation.

The elements of the President's Jobs Bill – both the job creation and the pay-for sides of the equation – are on everyone's lips here this week. Proposals like the NAT GAS Act are not in competition WITH, but are complementary TO, whatever form of the jobs bill comes out of the Congress.

Every person we hire – every position we create – has to make sense for us, so it can help us make dollars. Yet, we believe that 400,000 number of new, permanent and good-paying jobs to be very conservative. These jobs will be created through an anticipated investment of up to $50 billion over that five year period.

As a national security issue all we need to do is to look at the scale of oil imports and the list of our major oil trading partners. Natural gas vehicles can play a significant role in displacing foreign oil.

In June, 2011 we imported 343 million barrels of oil at a cost of $39 billion. That is one million dollars per minute, every minute of every day. For the first half of this year we have imported 2.1 billion barrels of oil costing S227 billion; over a quarter of a trillion dollars. Not only is the scale of the amount of money we are shipping offshore sobering, but a look at the list of countries to which we are sending it is chilling: After Canada and Mexico, the next largest suppliers of oil to the United States are:
  1. Saudi Arabia
  2. Venezuela
  3. Nigeria
  4. Iraq
  5. Columbia
  6. Russia
  7. Angola

This is a list of countries we should beware of supplying our national requirements for bubble gum, much less oil.

In April of this year, oil imports accounted for about 60 percent of our three-year high trade deficit of $50.2 billion.

Converting America's heavy truck fleet of about 8 million vehicles to Liquefied Natural Gas would save 2.5 million barrels of oil per day, meaning we could reduce our reliance on OPEC oil by half. At $100 per barrel that means $250 million per day stays in the United States to circulate through OUR economy, rather than being shipped off the governments of Venezuela, Saudi Arabia, or Nigeria.

Mr. Chairman I am in the business of promoting natural gas as a major component of America's transportation fuel future. lt is not the perfect fuel, and every fuel has benefits and drawbacks, but natural gas is the cleanest fuel on the American roads today.

Natural gas is abundant – As I noted eminent researchers from the Colorado School of Mines, Cambridge Energy Research Associates, IEA and MIT on down – have shown we have between a 100- and 150-year supply just in the United States.

Natural gas is available – it is the most widely distributed natural resource in the nation.

Natural gas is safe – it is used for cooking, heating, and hot water in over 70 million homes.

Natural gas is cleaner than gasoline or diesel. According to the California Air Resources Board NGVs produce between 20 and 30 percent fewer greenhouse gases than vehicles burning diesel or gasoline. Converting just one trash truck from diesel to natural gas is the equivalent of taking as many as 325 cars off the road in terms of pollution.

Natural gas is cheaper – it costs about 40% less than diesel on a gallon-equivalent basis. For an over-the-road truck burning about 20,000 gallons of fuel per year – that is a savings of up to $40,000 per year per truck. In an era where commodity prices are on the rise – and a substantial portion of that rise is shipping costs – lowering those shipping costs should be reason enough to jump-start the NGV industry in the United States.

Natural gas is working. This is an historic opportunity to pass and implement an achievable tax credit that will immediately have a positive and dramatic impact on our energy and national security and greatly reduce our reliance on OPEC. This can happen and can happen NOW.

Thank you for your time and attention. I would be happy to answer any questions.

Friday, October 7, 2011

Is CNG in Your Future?

Alabama Clean Fuels Coalition
October 6, 2011

Compressed Natural Gas (CNG) is one of the alternative transportation fuels outlined in the 1992 Energy Policy Act that may help America reduce its dependence on foreign oil. Please read Bob Strickland's opinion piece below that appeared on in September. It is a great overview of the benefits of CNG!

Is CNG in Your Future?

With the advent of hybrid cars, more and more people are rethinking American energy dependence and choosing alternative energy. While we still have a long way to go toward true energy independence, most of our gasoline and diesel vehicles could be replaced by vehicles fueled by compressed natural gas (CNG).

We need to find ways to reduce our dependence on foreign oil and use our own natural resources in order to ensure energy security for our country. The use of CNG in natural gas vehicles (NGVs) can play an important role in addressing these challenges.

Corporate America continues to look for ways to balance the social, economic and environmental needs of all stakeholders by rethinking the use of alternative energy in its fleets such as taxis, buses, and delivery vehicles.

Economic Benefits to NGV Fleets

Any business with a fleet of vehicles is a good candidate for natural gas vehicles - transit, garbage, laundry supply, and food and beverage trucks are common users of natural gas.

While there are upfront costs to buying or converting to a natural gas fleet, the fuel costs are considerably lower making them much more affordable over the long run. In the U.S., we are paying more than $3.60 per gallon for gasoline. The price of natural gas ranges from just over $1.00 to around $2.00 per equivalent gallon.

That's why AT&T, UPS, Verizon, Waste Management and others are switching to natural gas; they can save millions on fuel costs.

Reduced Maintenance Costs & Emissions

Gasoline and diesel engine lives are shortened because of the build-up of carbon. Natural gas engines, on the other hand, have virtually no carbon build-up, so ring wear is reduced and engine life is extended.

Tune-ups and oil changes for natural gas vehicles aren't needed as frequently because compressed natural gas burns so much cleaner than gasoline or diesel. Some fleet owners report service lives two to three years longer than gasoline or diesel vehicles.

According to Mitchell Pratt, chief operating officer, Clean Energy, their CNG-powered taxis measure near zero emissions at the tailpipe and will reduce greenhouse gases by almost 30 percent when compared to petroleum powered vehicles.

CNG Availability Regionally

At the end of 2010, there were nearly 1,000 natural gas stations in the U.S., and there are efforts underway to build more. There are five regional corridors where public and private entities are working hard to get stations built near intersections of major interstates and highways:
  1. Texas Triangle - Dallas to San Antonio to Houston
  2. Colorado Rockies Corridor - Colorado, Wyoming, Utah
  3. Southeastern Corridor - Georgia, Florida, Alabama, North Carolina, South Carolina, Kentucky, Tennessee, Florida, Mississippi, Arkansas, Virginia
  4. Eastern Corridor - Runs north of Virginia into the New England States
  5. I-75 Corridor - Runs along I-75 from the northeastern U.S. down toward the southeastern states

In Alabama, the goal is to have as many as 12 public stations by the end of 2012. We're building natural gas stations primarily for Alagasco's fleet for now, but will be opening stations to the public as well. This means that if all the planned public stations are open for business, you could drive across Alabama from the Tennessee line all the way to the Florida coast in a natural gas vehicle.

Recently, California's first CNG-powered Ford Transit Connect taxis have gone into service in the greater Los Angeles area and, since 2001, the number of CNG filling stations in Orange County has tripled to about 30.

CNG & Natural Gas Vehicles Good for Economy

Americans spend about $1 billion dollars each day on foreign oil. In addition to taking advantage of the numerous benefits of running our vehicles on natural gas, keeping our dollars in the U.S. should also be a priority.

Certainly we will create additional jobs as we produce more NGVs and stations, but we can also reduce our trade deficit and benefit our economy significantly by reducing our foreign oil imports and using the money saved by keeping it here at home. As an example, the money we spend on oil imports in an average month, around $30 billion dollars, could be used to hire 443,000 teachers, fund highway repairs for eight years, or build 39,500 new elementary schools.

Since the beginning of the current economic recession, American citizens and corporations alike are seeking a more balanced and sustainable co-existence. We think natural gas will play a large role in our overall economic recovery and financial independence.

Bob Strickland
Manager of Clean Transportation

Thank you for considering CNG in your mix of alternative transportation fuels to help us reduce our dependence on foreign oil, increase economic development (JOBS) and improve our air quality!

If you have questions regarding CNG or any alternative fuel or advanced technology vehicle please contact us.


Mark Bentley
Alabama Clean Fuels Coalition