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CNG and LNG for Me

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When it comes to clean energy, those of us who are die-hard supporters are relentlessly fighting to see our big dreams become a reality. We all know that we can make our country cleaner, healthier and safer.

The dream is for energy to be produced through a clean process, in a cost effective manner, and in abundance so that energy to be universally applicable. Naturally, as an American concerned about our national security, there's the additional caveat that we need to be able to produce our clean energy domestically.

Of course, as we continue to pursue our vision, we all know that the conversion will take place in evolutionary stages. The reality for clean energy is the practical, but evolutionary steps we can currently take to achieve as many of those goals as possible. In other words, we need to act now and make clean energy decisions that radically reduce carbon emissions with technology that already exists, not technology that we're hoping will be invented or that only makes financial sense in the distant future.

Of the clean energy options currently available to America, one of the most attractive is natural gas. Importantly, this is one of the cleanest burning alternative fuels that is also low in carbon.

Currently, about 60 percent of natural gas consumption in the U.S. is used for generating electricity and for industrial uses, according to the U.S. Energy Information Administration. But less than 1 percent of current natural gas consumption is being applied in its most advantageous way: for vehicles. Natural gas is usable in two forms for vehicles: compressed natural gas (CNG), typically a replacement for gasoline, and liquefied natural gas (LNG), typically a replacement for diesel fuel. In both cases, the gas is condensed for ease of storage and transport.

Natural gas offers great benefits to the green revolution, because there is a significant impact on the reduction of greenhouse gas emissions when replacing oil-based fuel with compressed or liquefied natural gas. The U.S. Environmental Protection Agency calculates that LNG heavy-duty engines reduce nitrogen oxide and hydrocarbon emissions (both smog precursors) by more than 50 percent, compared to diesel fuel. The same study showed that CNG engines reduce smog producing pollutants by up to 90 percent and hydrocarbon emissions by 50-70 percent, compared to gasoline. What's more, natural gas can reduce greenhouse gas emissions by up to 30 percent for passenger vehicles and up to 23 percent for heavy-duty trucks when compared to gasoline and diesel powered vehicles, respectively.

Yet, somehow, natural gas hasn't been getting the support from clean energy proponents that it deserves.

According to the International Association for Natural Gas Vehicles, there were nearly 10 million natural gas vehicles (NGVs) worldwide in 2008. But the U.S. ranked 10th globally in the number of vehicles deployed, behind countries that shockingly, have a fraction of America's economic output, including Italy, Colombia, Pakistan and Bangladesh.

Opponents of the NGV movement consistently cite the issue of infrastructure as a major impediment to the proliferation of LNG and CNG vehicles, despite the little known fact that one can actually install a small unit that can hook up to their natural gas line in their garage and never have to see a gas station again. Unfortunately, for medium- and heavy-duty applications it comes down to the chicken-and-the-egg scenario.

Here's the problem in a nutshell: there are approximately 130,000 gas stations in the U.S., according to the U.S. Census Bureau. So with a national infrastructure already built for oil-based fuels, America must find creative and innovative ways to take advantage of our domestic supply of natural gas and the cleaner energy benefits it brings.

Clearly, it's impractical to think that America can have a near-term total infrastructure conversion to vehicular alternative fuels of any kind-- electric, ethanol, biodiesel, hydrogen or even natural gas.

But it is entirely logical and rational to address the emissions problem at its heart: trucking. For all of our technological prowess and modern infrastructure, America is still a country that relies overwhelmingly on trucks and buses to transport people and goods. There are over 8 million heavy-duty, diesel-powered trucks on America's roads, and according to the U.S. Bureau of Transportation Statistics, trucks account for 60 percent of America's freight transportation (by weight).

As it is, tailpipe emissions from petroleum-based (gasoline and diesel) vehicular fuels account for more than half of overall pollution (50 percent of all hazardous air pollutants and 60 percent of all carbon monoxide pollution). Of all vehicles, though, heavy trucks contribute the most to the dangerous and destructive pollution problem.

"Trucks with diesel have a terrible reputation for releasing particulates and a myriad of other substances, many of which are carcinogens," says Mark Cox, President and Chief Investment Officer for New Energy Fund, a New York based fund investing in companies offering new energy alternatives.

And trucking's contribution to pollution is growing. The Environmental Protection Agency (EPA) reports that greenhouse emissions from heavy trucks grew faster than any other transportation source between 1990 and 2007, with those emissions projected to continue increasing.

Because of the weight of trucks and their cargo, trucks are not well suited for electric or even hybrid vehicle technology, which relies on lighter vehicles for their energy saving performance. But heavy trucks and buses are ideally suited for LNG and CNG.

So the practical solution is to move forward by converting those diesel trucking and bus fleets into natural gas powered fleets. With enough economies of scale-- enough vehicles traveling over similar refueling stops and enough vehicles being introduced into the transportation network-- it simplifies the process of building out a national network of LNG and CNG re-fueling stations.

There's already some precedent for this, with major US municipalities like Los Angeles, Washington, D.C., Dallas and Boston having meaningful natural gas bus fleets in operation.

Some in the corporate world have seen the benefits of this approach as well. Delivery company, UPS, and trash removal company, Waste Management, already use substantial fleets of natural gas powered trucks, recognizing the financial benefits that NGVs provide. They are less expensive to operate, saving up to 30 percent in fuel costs and netting them more than a 10 percent overall operating cost savings from burning cleaner fuel.

Companies like T. Boone Pickens-invested Clean Energy Fuels Corp (NASDAQ: CLNE) also jumped on this wave, operating as the largest provider of natural gas for North American transportation companies.

Of course, there are plenty of other corporate candidates who could take advantage of this concept. For example, freight companies like Con-Way Inc., a $4.3 billion freight and logistics company, could convert their fleets. With its fleet of over 8,500 tractors and 25,000 trailers in over 400 operating locations, Con-Way could have a major impact on its costs as well as the environment if a meaningful portion of their fleet converted to NGVs.

Major retailers like Safeway, Target and Wal-Mart are equally good candidates. Wal-Mart in particular, has a trucking fleet that's one of the top ten largest corporate fleets in the country, driving nearly a million miles a year to ship products to its over 4,500 stores in North America. Wal-Mart has emphasized their commitment to a greener America--therefore, their conversion to natural gas would be a major move towards fulfilling that promise.

Consider the most shocking statistic: converting just one truck from diesel to natural gas is the equivalent of taking as many as 325 cars off the road in terms of pollution reduction. Therefore, it's easy to imagine the impact on pollution reduction of converting even part of a company's trucking fleet to NGVs.

"I think it's very important that we not forget the role that natural gas vehicles can play in cleaning up emissions in the near-term," says David Garman, former Under Secretary of Energy and Assistant Energy Secretary for Efficiency & Renewable Energy at the U.S. Department of Energy. As for competitors to natural gas, Garman points out that "it's going to be quite awhile before you see either hydrogen or electric vehicles become price-competitive and give that kind of range and performance."

Clean energy supporters should be strategic and aim for these big polluters. They should push companies with large fleets of trucks and buses to convert from diesel to natural gas, because it radically reduces overall greenhouse emissions. But because the conversion can also result in substantial cost savings to these companies, their investors should push them to convert as well.

At the end of the day, America must keep fervently pursuing the dream to move toward universal and renewable clean energy. But in the short-term, we need to rally vehemently to take action with practical solutions -- like starting with natural gas for trucking fleets.

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