Renewable natural gas demand to increase with UPS purchase agreement

On May 22, 2019 United Parcel Service (UPS), a global provider of shipping and delivery services, announced that the company would increase its use of renewable natural gas (RNG) in the United States. UPS purchased 170 million gasoline gallon equivalent (gge) from fuel supplier Clean Energy Fuels to meet this commitment, which supports UPS’s sustainability goals. RNG consumption has increased significantly in recent years, and according to UPS, this agreement will be the largest commitment to RNG to date by any company in the United States.

RNG is a transportation fuel derived from biogas through anaerobic digestion at landfills and other facilities. The biogas is cleaned of impurities and upgraded to meet the pipeline specifications for natural gas. The RNG can then be consumed as fuel in CNG and LNG vehicles, a common fuel alternative for medium- and heavy-duty vehicles that would otherwise run on diesel fuel. 

RNG consumption in the United States increased significantly following a 2014 EPA ruling that allowed RNG, in either compressed or liquefied form, to qualify as a cellulosic biofuel as part of the Renewable Fuel Standard. According to the U.S. Environmental Protection Agency, nearly 270 million ethanol gallon equivalent (or about 185 million gge) of RNG were produced in 2018, a 133% increase compared with 2015 levels. More than 50 facilities are registered with EPA to produce RNG, and EIA expects additional production to enter service as a result of capacity additions already under construction.

The UPS/Clean Energy Fuels agreement requires UPS to purchase 170 million gge of RNG from Clean Energy Fuels between 2019 and 2026, amounting to sales of about 22.5 million gge per year, or about 10% of current RNG production levels. Clean Energy Fuels will supply the RNG to UPS fueling stations in 18 cities across 12 states.

UPS has been steadily incorporating RNG into its transportation fleet, consuming more than 28 million gge of RNG since 2014, including 15 million gge in 2017 alone. UPS currently owns a global fleet of 5,200 natural gas vehicles. In the United States, UPS operates 51 fueling stations capable of supplying natural gas to its ground fleet.

In 2017, UPS purchased 115 million gallons of alternative fuel (RNG, biodiesel, and ethanol), representing 21.8% of its total ground fleet operations. The company plans to displace 40% of its ground fuel (conventional gasoline and diesel) use with low carbon and alternative fuels by 2025. The company also plans to achieve a 12% reduction in greenhouse gas emissions associated with its global ground operations by 2025 relative to 2015

“Source: U.S. Energy Information Administration (July 2019)