UPS embraces renewable natural gas with huge US contract

Logistics major UPS (NYSE:UPS) this week said it will purchase 170 million gallon equivalents of renewable natural gas (RNG) over seven years from Clean Energy Fuels Corp (NASDAQ:CLNE).

In the past five years combined, the company’s use of RNG surpassed 28 million gallons. Now, the contracted volumes correspond to an annual RNG demand of 22.5 million - 25 million gallon equivalents and support UPS’ strategy to lift the use of alternative fuel to 40% of total ground fuel purchases by 2025. The company also aims to cut its ground fleet’s absolute greenhouse gas (GHG) emissions by 12% by 2025.

With the new CLNE contract, UPS will reduce its GHG emissions by as much as 1.07 million tonnes through 2026, it calculates. “We hope our unprecedented seven-year commitment serves as a catalyst for wider adoption of RNG by other companies,” said Mike Casteel, UPS director of fleet procurement.

Clean Energy Fuels’ Redeem RNG achieves at least a 70% reduction in lifecycle GHG emissions when compared to conventional diesel or gasoline. RNG is produced using decomposing organic waste at landfills, wastewater treatment plants and agriculture.

UPS said it has more than 6,100 vehicles that run on liquefied natural gas (LNG) or compressed natural gas (CNG) and can use RNG in Argentina, Belgium, Canada, France, Germany, the Netherlands, Thailand, the UK, and the US.

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