Clean Energy Fuels, a company that distributes natural gas to run vehicles and is backed by T. Boone Pickens, announced on Thursday that it will start commercially selling biogas to its fueling stations in California and fleets across the country. Biogas is methane that can be captured from decomposing waste at landfills, animal waste on farms, and water treatment facilities. It can be used in place of natural gas as a cleaner fuel to run buses, cars and trucks.
The move is notable in that Clean Energy Fuels says it will become the “first ever commercial distributor of transportational fuel made from waste.” There’s very little biogas available in most states currently in the U.S. for both vehicles and to run things like fuel cells. Last week eBay said that after wanting to use biogas for its fuel cells in Utah, it realized there wasn’t a steady enough supply available so it had to use natural gas instead.
The task of finding sources of the biogas and cleaning up the fuel are the biggest hurdles for making biogas available. Unlike with natural gas — where large amounts can be drilled out of the ground — most biogas sources are small and individual projects have to be created to capture and tap into the methane at the site. That makes biogas significantly more expensive to acquire than natural gas.
But because of federal and California incentives, Clean Energy Fuels said it can sell the biogas for the same price as its natural gas. The company is aiming to sell 15 million gallons of the fuel — called Redeem — in its first year, which the New York Times noted is “more than double the amount of similar fuels the Environmental Protection Agency projected would be produced nationwide.”
Investors weren’t impressed. Clean Energy Fuels, which trades on the Nasdaq, saw its shares drop 5.44 percent in morning trading.