JULY 2011

Demand grows for natural gas waste hauling

The sudden rise in the cost of gasoline and diesel fuel has sent shockwaves throughout the American economy. Higher fuel costs seep into every aspect of doing business and result in across-the-board price increases for consumer, commercial and industrial goods and services. It has also acutely impacted waste haulers, since capital equipment (primarily trucks) and fuel expenses represent the largest expense categories, excepting labor costs.

Waste handlers do have a basic, significant advantage over long-haul truckers, however. Since most collection routes are local, waste haulers with larger fleets have the option of daily fueling natural gas vehicles (NGV) with either compressed natural gas (CNG) or liquefied natural gas (LNG). While the up-front costs of buying new trucks or converting old ones to run on natural gas are much higher than diesel, and the investment to build a filling station is substantial, the long-term savings are driving waste haulers to natural gas, not just for fuel savings, but to comply with bid mandates. As the trend towards NGVs for trash collection continues, prices for vehicles and stations are expected to continue to decline as they have dramatically over the past few years.  

Once a company amortizes the costs of capital equipment necessary to get started, the fuel savings can be as much as 50 to 70 percent below the cost of diesel, according to Scott Edelbach, general manager of Vocational Energy. Edelbach’s company builds compressed natural gas (CNG) filling stations. He outlined how the savings are achieved once a fleet has its own filling station: “A diesel gallon equivalent (DGE) is 139 cubic feet of natural gas. You have to pay the gas utility to deliver the gas and, on average, that cost across the country is typically 15 to 20 cents per DGE. The cost for the electric to operate compressors runs about 15 cents per DGE. Maintenance cost on the compressing equipment run roughly 15 cents per gallon. Then you have to add road taxes, which vary depending on the state. In states like Florida, Colorado and Louisiana there is no charge for the state road tax and in many other states the CNG is taxed at a reduced level from diesel fuel road taxes. And, of course, add federal excise tax which is 21 cents per DGE.

Prices for natural gas powered vehicles have come down dramatically over the past few years. Quieter and cleaner operation are selling points.

“Adding it all together, CNG roughly equals $1.35 to $1.60 per diesel gallon equivalent, depending on where you are in the country. If you own your own station you can get a producer credit from the federal government of $0.50 per gallon. Subtract that and you are generally in the $0.85 to $1.10 range.

Vocational Energy, a relatively new company in business for a little over two years, is focused on the growing demand for CNG – particularly among waste management customers. It built 4 filling stations last year and expects to complete 15 more by the end of this year – 9 of them in the waste industry for customers such as Veolia Environmental Services, Casella Waste Systems, J&J Disposal Service, Randy’s Environmental Services, CR&R Waste and Heil Environmental. For Rumpke Consolidated Companies, Vocational is building a station that uses processed landfill gas and fills the trucks with compressed methane.

“We help the customer understand the benefits and economics of CNG, build the station to match the fuel needs and provide ongoing support and maintenance,” said Edelbach. “If you are using more than 200 or 300 gallons per day, it’s a nice starting point to build a station.” According to Edelbach, ballpark costs to build a CNG station can run from $500,000 to service a 15 truck fleet up to $1.5 million for a fleet of 100. “One of the challenges right now is that conversion costs for vehicles are quite high. You are looking at a $10-15,000 premium to convert a light vehicle and $30-50,000 for a bus or garbage truck. Typically, a new CNG powered garbage truck will cost $30-35,000 more than a new diesel truck.”

Energy Vision is a New York-based, national non-profit organization that analyzes and promotes ways to make a swift transition to the clean, petroleum-free transportation fuels of the future. Joanna Underwood, president of Energy Vision, was asked about the growth and benefits of using natural gas for waste hauling. She said, “Mandates have driven much of the progress, either the South Coast Air Quality Management District (SCAQMD) rules in southern California, or other community mandates, which are expressed through requirements on which waste haulers and recyclers bid for jobs.

“SCAQMD mandated that if you had a heavy-duty fleet of more than 15 vehicles you could not burn petroleum, you had to burn natural gas. That enabled manufacturers of natural gas engines to find it worthwhile to refine engines. Now the engines are excellent performers. The major engine was developed by Westport Innovations. Today, about 90 percent of southern California garbage trucks run on natural gas.”

Underwood continued, “When you are dealing with an intrinsically dirtier fuel like diesel, over time the pollution control equipment needed to keep that truck in good running order deteriorates. Once that diesel truck is put on the road using an approved engine, it does not ever get tested again. So the question is how clean is it years later? There is also the question of the complexity of the emissions related equipments used to meet the 2010 diesel standard. It’s more complicated to operate and more amenable to human failure.”

Underwood’s team prepared the first analysis ever done of the refuse truck sector’s alternative fuel use in 2003, Greening Garbage Trucks. She said, “We found just 240 natural gas refuse trucks were operating in the United States in 1998. But by 2002 there were 692 in 31 communities, of which 27 were in California. By 2006, when we did the second study, the number was up to almost 1,400 in 57 communities. Since the federal stimulus funding, this number has grown significantly, possibly being close to 4,000 today. We will be verifying this number in the third Greening Garbage Trucks report that will be issued close to year end.

“When Energy Vision’s program was launched in 2007, there were no modern CNG trucks on the east coast – just a few early models which did not work very well. One of our goals was to promote progress on the east coast by emphasizing the fuel security, economic and health risks related to continuing reliance on petroleum-based fuel, and the environmental and economic benefits of a shift to natural gas. In our first year, we attracted the interest that inspired the first New York fleet to go 100 percent CNG in Smithtown, Long Island. This fleet and three other fleets that purchased CNG garbage trucks brought the total to 38 on Long Island.

“Today in New York City and New Jersey there are almost 250 CNG refuse trucks, plus 190 new jitney buses and more than 40 other CNG vehicles. Almost all of these CNG vehicles were the result of municipal mandates. We are planning to release a new report in June on the New York/New Jersey region, called Fueling a Greener Future: A Regional Perspective.”

CNG waste hauling has recently spread to Vermont. In May, Casella Waste Systems opened its first CNG fueling station built with AVSG equipment. The new station will refuel Casella’s first four natural gas refuse trucks. More trucks are expected to be added in early 2012 and the station may be expanded so it can serve as many as a dozen trash or recycling trucks.

“The change in the eastern region over the past few years has been astonishing!” said Underwood. “Green waste collection and recycling operations bring with them a number of rewards like quieter vehicles and reduced pollution for communities. Natural gas trucks are cleaner than even the cleanest diesel trucks and are more than 50 percent quieter. Lower costs for waste collection and recycling because natural gas is less expensive than diesel fuel, and because government economic incentives and grants have been created to jump start the use of this new and better technology; and finally greater fuel security because natural gas is more plentiful domestically than petroleum.”

There appears to be a compelling argument for waste haulers to think about transitioning to CNG. Besides being able to reduce annual fuel expenditures considerably, a fueling station can be built in the time it takes to order and take delivery of new CNG trucks. A new CNG truck operating on an average collection route can save $15,000 to $20,000 per year in fuel costs – enough savings to pay for the premium price over a diesel truck.

Most importantly, it allows the CNG waste or recycler to have a much better control over fuel costs for the length of customer contracts, a huge advantage in competitive bidding. Natural gas prices have remained relatively stable as compared to diesel, and natural gas contracts can be locked-in for years. Best of all, natural gas is domestically produced, abundantly available and likely to be available in even greater supply, perhaps even at lower prices on the east coast as more natural gas from hydraulic fracking comes into production.

Moreover, maintenance on CNG engines is simpler and much less costly than dealing with the intricate filtration and emission systems layered upon diesel engines to meet emission rules.

Scott Edelbach at Vocational Energy commented on engines: “Cummins Westport has produced one of the most reliable natural gas engines to date with the 320 hp ISLG. It’s true that early versions of natural gas engines were underpowered and were available only in a couple of OEM chassis configurations. Today’s ISLG engine is available in 95 percent of chassis configurations used by refuse haulers.”

What began as a move to “green” to reduce air pollution looks like a move to green of another kind. And, quieter trash trucks will be universally welcomed, especially early in the morning.