In a deal that signals the growing importance of low-carbon transportation fuels, BP has agreed to pay $155 million for Clean Energy Fuel’s existing biomethane production facilities, its share of two new facilities and its existing third-party supply contracts for renewable natural gas.
The existing facilities are in Canton, Michigan and North Shelby, Tennessee. The two under construction are in Oklahoma City and Atlanta, Georgia.
BP will also sign a long-term supply contract with Clean Energy giving the firm continued access to renewable natural gas fuel, which the firm will continue to sell at almost 600 fueling stations in the US under its Redeem brand.
Renewable natural gas fuel, or biomethane, is derived from sources including decomposing organic waste in landfills, wastewater treatment and agriculture. As a fuel for natural gas vehicle fleets, including heavy-duty trucks, it is estimated to result in 70 percent lower greenhouse gas emissions than from equivalent gasoline or diesel fueled vehicles.
“Demand for renewable natural gas is growing quickly and BP is pleased to expand our supply capability in this area,” said Alan Haywood, chief executive officer of BP’s supply and trading business.
Clean Energy sold 60 million gasoline gallon equivalents of Redeem in 2016 to customers across multiple states including UPS, Republic Services, Ryder, Kroger and the City of Santa Monica’s transit agency.
In an earlier interview, Clean Energy president Harrison Clay said renewable natural gas presents a “very unique opportunity” for medium- and heavy-duty fleets because “there are very few cost-effective ways for them to cut carbon emissions. This is one — especially in fleets that already use natural gas, like refuse vehicles.”