Issues to Consider for Converting Your Garbage Truck Fleet to Natural Gas

Issues to Consider for Converting Your Garbage Truck Fleet to Natural Gas

ARTICLE OVERVIEW
This article looks at the practical implications for waste management firms and organizations, both private and public sectors, for moving their fleets to alternative fuels including what the options are, as well as some of the challenges and the benefits. This Article provides a high level of key issues to consider and “how to” guide on the subject looking at the practical considerations of making the switch including infrastructure. Many fleet managers and owner/operators are weighing their options when it comes to purchasing natural gas trucks vs. diesel trucks. The big question is “When it comes to diesel or natural gas trucks, which is best for my bottom line?” If fleet managers and owner/operators want to make an informed decision about their business, it is crucial to understand the differences between diesel and natural gas trucks.

A growing number of fleets have already made the switch to natural gas after weighing the benefits and challenges. Private waste companies such as Waste Management and Republic Services are buying thousands of new natural gas vehicles (NGVs), based mainly on the economics of switching. The public sector is lagging behind private haulers in making the switch largely because governments have a harder time securing the capital needed to buy the new equipment, even though there is typically an eventual payoff. However, some cities and other local governments are moving in the same direction as the private sector in order to generate the economic and environmental benefits that are available from compressed natural gas (CNG).

INTRODUCTION
Every day in every major City, Town or Community, one vehicle type, besides school buses, passes through every residential street – the garbage / recycling collection truck. Garbage Trucks (aka as refuse collection vehicles – RCVs) operate daily in various parts of every residential part of every City, collecting garbage, green waste, recyclables, food waste and bulk waste. In most cities or towns, these trucks are still powered by traditional diesel or biodiesel, spewing tons of carcinogens and relatively high amounts of CO2 into our atmosphere and our communities.

Those plumes of diesel exhaust emit dangerous levels of CO2 and in the United States alone approximately 180,000 refuse trucks operate and burn approximately 1.2 billion gallons of diesel fuel a year, releasing almost 27 billion pounds of the greenhouse gas, CO2. Every gallon of diesel fuel burnt emits more than 22 pounds of CO2.

In the U.S., there has been increasing interest in fuelling waste and recycling collection fleets using alternative fuels, primarily either from CNG from the gas-utility grid, or in some cases from landfill or biogas (aka bioCNG) captured at their own waste processing facilities.

CNG OR LNG FUEL
There are two types of natural gas fuels – compressed natural gas (CNG) and liquefied natural gas (LNG). Each has its own advantages and disadvantages. CNG is the lower priced of the two fuels and is much more readily available. CNG requires somewhat more payload displacement for equal fuel capacity vs. LNG. However, the disparity had been reduced in recent years due to lighter CNG-storage cylinders and more efficient cylinder configurations on the trucks. The other major challenges with LNG are the fuel delivery, storage and actual vehicle fueling. For the purposes of discussion, this article focuses on CNG, since it is a more readily available both in terms of fueling facilities and vehicles, the abundance of infrastructure, and lower cost.

FUEL ECONOMY & COSTS COMPARED TO DIESEL
Garbage trucks have poor fuel efficiency, typically around 3 miles per gallon, which has been compounded in recent years since the price of diesel has hovered around $4+ per gallon for the last five years.

Currently, CNG is competitively priced with diesel. The price of a diesel gallon equivalent (DGE) of CNG has steadily fallen compared to the price of a gallon of diesel. Although the market price of natural gas was fairly volatile in the previous decade, it has stabilized due to significant increases in discovery and production of natural gas in the U.S. It now appears the price of natural gas has decoupled from the price of oil and has therefore not been as volatile as gasoline and diesel prices.

The expansion of natural gas vehicle (NGV) usage holds the promise of reducing carbon emissions, lessening dependence on foreign oil, and lowering fuel and transportation costs. Viability of natural gas as a transportation fuel has grown partly because the availability of shale gas resources has dramatically expanded and gasoline and diesel prices have spiked. NGVs are also appealing because the high-pressured fuel system is sealed, so very little fugitive emission occurs during fueling and use.

Natural gas trucks can save on fuel costs, but the up-front costs are significant. The most costly element is installing a natural gas fueling station, which depending on its size, can cost several million dollars to permit, design, and construct. An alternative to constructing a new fueling facility is to locate a nearby facility that allows third-party access for fueling. In addition, fleet maintenance facilities have to be upgraded to accommodate CNG fleet maintenance, which requires gas detection as well as improved ventilation to manage possible gas leaks that can be ignited through an inadvertent spark.

The trucks themselves can also cost between $30,000 and $50,000 more than their basic diesel counterparts. However the savings for operating NGVs add up quickly. A DGE of CNG costs less than $1.15 to produce, including the cost of the gas commodity, electrical power for system operation and a maintenance allowance .

LANDFILL BIOGAS (BIOCNG) & RENEWABLE NATURAL GAS (RNG)
Fueling a vehicle with food waste was a concept made famous by the movie Back to the Future in the 1980s. Now, almost 30 years later, what was once a futuristic idea has become a reality. In some places, garbage trucks run on the methane captured from the same landfills where they drop off their payloads.

Biogas, also known as renewable natural gas (RNG), produced at locations such as landfills dairy farms, or anaerobic digesters can supply gas to onsite fueling infrastructure for vehicles such as refuse haulers and dairy trucks. Bacteria breaks down organic waste to produce the methane, which is then filtered and compressed for use in the trucks as a vehicle fuel creating RNG.

There is equipment costs associated with refining RNG for use as vehicle fuel, which includes processes to remove moisture, CO, CO2 and heavier hydrocarbons. Once the RNG has been refined, equipment and installation costs for a fueling station using RNG are similar to those for a fueling station that is connected to a utility pipeline. Increased use of CNG vehicles opens the door to use of RNG. The great news it that RNG is a fully sustainable fuel and with over 30 percent of municipal solid waste (MSW) being food waste and green material, refuse fleets are uniquely positioned to capitalize on a “closed-loop” approach, collecting and processing organic waste to produce RNG for fueling vehicles hauling the same waste.

Producing RNG captures greenhouse gas (GHG) emissions from agricultural waste and landfills that would otherwise migrate into the atmosphere, turning a costly pollution problem into a revenue-generating product that serves regional climate goals. In fact, RNG has the lowest carbon intensity (CI) values of all fuels rated for California’s Low Carbon Fuel Standard. According to the California Energy Commission (CEC), CNG from landfill gas and dairy-digester biogas reduces life-cycle GHG emissions to 85–90 percent below those of diesel fuel, while biomethane derived from high-solids anaerobic digestion can reduce life-cycle GHG emissions to roughly 115 percent below those of diesel. And the operating economics are good, as the cost of the gas commodity is zero, though the processing system does have capital and operating costs.

The use of landfill gas as a vehicle fuel is becoming more common as organizations seek to cut their greenhouse gas emissions and take advantage of the availability and sale of renewable energy. In July 2014, the EPA finalized the Renewable Fuel Pathways II Final Rule to identify additional fuel pathways under the Renewable Fuel Standard (RFS) Program.

 

BENEFITS OF CNG
The expansion of natural gas vehicles (NGV) usage holds the promise of reducing carbon emissions, lessening dependence on foreign oil, and lowering transportation costs. Viability of natural gas as a transportation fuel has grown partly because the availability of shale gas resources has dramatically expanded and gasoline and diesel prices have spiked. NGVs are also appealing because the high-pressured fuel system is sealed, so little evaporative emission occurs during fueling and use.

MUNICIPALITIES ARE REQUIRING CNG TRUCKS
Cities, Counties and States are increasingly requiring that CNG refuse trucks be used as a condition of granting solid waste and recycling collection contracts. While California jurisdictions have been leading the charge, the town of Smithtown, NY also pioneered this approach in 2006, becoming the first locality outside of California to mandate use of CNG trucks for refuse collection. The approach has since become commonplace elsewhere. Even in communities that do not mandate use of CNG trucks, proposing to use a CNG fleet can improve a firm’s competitive position in the bidding and evaluation process, with the promise of lower contract costs for fuel, reduced emissions and lower noise pollution.

FLEET OPERATIONAL ASSESSMENT
In determining whether it is practical and cost effective to consider converting a garbage truck fleet to CNG, it is necessary to perform the proper due diligence by reviewing the operations and fleet needs as follows:

  • Existing vehicle requirements for conversion to CNG / fleet vehicle-replacement schedules;
  • Typical fuel use per day including travel routes, mileage, stops, capacity by vehicle type;
  • Maintenance capabilities including facilities operational requirements, location, and personnel knowledge and training;
  • Expected growth in services, customers, etc. as related to future vehicle numbers and use; and
  • Proximity to customers with the potential for CNG fueled fleets.
    Feasibility of locating a CNG-fueling facility at the fleet yard, including consideration of adequate space, electrical power, and vehicle circulation.
  • Evaluation of fast-fill (fueling 1-3 NGVs simultaneously within 5-10 minutes, similar to a conventional petrol fueling sequence) vs. time- or slow-fill (fueling the entire fleet simultaneously with individual dispenser hoses installed at NGV-parking spaces, typically over 8-10 hours each night).

The answers to these primary factors are critical in assessing the practicality of converting a fleet to CNG.

FLEET VEHICLES COST – BENEFITS ANALYSIS
In addition to the due diligence collected from the fleet operational assessment, fleet managers should assess the qualitative and quantitative comparisons of using CNG for new RCVs such comparisons to include:

  • Cost of new vehicles;
  • Lead time between vehicle order and delivery;
  • Cost of diesel fuel;
  • Five (5) and ten (10) year spreads on a miles per equivalent gallon basis based on projected supply/demand of fleet use in the US of various fuels;
  • Fuel tank capacity, fueling frequency, and mileage;
  • Expected vehicle performance in terms of productivity, number of stops, starts, unit life, speed, performance, acceleration, vehicle range, etc.;
  • Emissions based on expected use of the fueling options;
  • Cost per mile comparison;
  • Payload capacity impacts;
  • Gross Vehicle Weight, weight difference and impact on route numbers or timing of routes;
  • Noise generation comparison; and
  • Analysis on issues stemming from the mounting of the fuel tanks to the body, specifically addressing:  1. Height restrictions; and 2.Tank serviceability by mechanics and required fall protection.

OPERATIONAL AND FINANCIAL IMPACT ANALYSIS
Conducting a operational and financial impacts analysis includes reviewing personnel (headcount) requirements for repairs, fleet maintenance, and operations of the fleet assuming vehicle replacement schedule for the next five (5) and ten (10) years with CNG vehicles, including the following:

  • Expected service life of the vehicle
  • Routine/scheduled maintenance requirements including timing and materials;
  • Required maintenance including maintenance facility requirements/modifications and personnel;
  • Vehicle inspection requirements (including fuel tanks) and licensing fee comparisons;
  • Cost and availability of replacement parts, including if vehicle fuel type increases in use or is phased out of manufacture;
  • Number and skill level of personnel for maintenance;
  • Initial and ongoing training requirements for service and maintenance personnel;
  • Comparison of cost of in-house maintenance and/or outsourcing maintenance;
  • Modifications to the maintenance garage as needed to make the garage CNG-safe;
  • Initial and ongoing training requirements for mechanics and drivers; and
    Identifying local private sector repair and service facilities and providers.

FUELING FACILITY SITE ANALYSIS
The US Department of Energy Alternative Fuels Data Center website offers a free alternative fueling station locator for finding alternative fueling stations near a specific address or ZIP code or along a route in the United States. It allows users to enter a state to see a station count and specific fueling facility locations (see http://www.afdc.energy.gov/locator/stations/)

In the event a local CNG fueling facility is not available, a fueling facility will need to be designed and constructed. In this scenario, it is important to consider the following as part of the decisions as to where to site the facility:

  • Location of natural gas distribution lines in relation to the planned CNG facility and requirements to adequately serve the compressors;
  • Location of electrical service in relation to the planned CNG facility and the cost and requirements to adequately connect and operate the compressors;
  • Footprint of the locations to house the entire solid waste fleet;
    Footprint of the locations to house required vehicle maintenance structures and the requirements and costs for those maintenance structures/changes to existing structures;
  • Logistical comparison of each with respect to ingress and egress as related to CNG fueling;
  • Operational cost impact including any route modifications required of each CNG refuse trucks based on vehicle fueling requirements;
  • Operational cost impact including any route modifications of all non-CNG refuse trucks including vehicle fueling requirements;
  • Design-engineering and permitting requirements including timing;
    estimated infrastructure costs;
  • Maintenance and operational costs for the station(s) and related equipment;
  • Useful life of major station equipment and estimated replacement cost;
    Consideration of developing a coop or shared-use CNG facility with nearby fleet(s), as well as consideration of the public sale of CNG as a revenue stream;
  • Suitability of time-fill and fast-fill CNG station(s) and/or a combination thereof; and
  • Should procuring for such services be required, estimating the timing for the possible design, permitting, and construction for all locations, including a temporary station (if applicable) needs to be considered.

If a fueling facility is to be designed and constructed, it is necessary to determine a baseline for function and performance for the needed CNG fueling facility, as required to meet the planned use. Once the key design parameters have been determined – i.e. number of fast and/or time-fill dispensers, standard cubic ft. per minute (SCFM) capacity of the compressor system, compressor-redundancy levels etc. – site-specific configurations and conceptual equipment layouts will be prepared that account for variations in gas-supply pressure, total available space, and even shape of the space (perhaps a single duplex skid would fit better than two separate skids at a given site). This would also include assessing cost and operational factors for fast-fill vs. time-fill solutions, such as reduced fueling-labor costs for time fill, verses reduced dispenser costs and improved fuel-use tracking for fast-fill configurations.

Once the equipment configuration and conceptual site layout for two or three candidate locations has been established, that information can be used to prepare preliminary construction-cost estimates for the fueling facility. This needs to include site-specific allowances for ancillary factors, such as paving, fencing, lighting, supply-utility upgrades, and added sound-mitigation requirements.

FUELING FACILITIES LOCATION IMPACTS
In the event a local CNG fueling facility is not available, a fueling facility will need to be designed and constructed. In this scenario, it is important to consider the following as part of the decisions as to the optimal location(s) of permanent fueling station(s). Some of the critical factors that need to be included in the analysis are:

• Permitting, design and construction costs;
• Timing of permitting;
• Selection of a suitable design-consulting firm to prepare engineered drawings and specifications;
• Selection of Equipment;
• Operational and maintenance costs of the station(s);
• Analysis of the long term costs or operational benefits;
• Operational impact (if any) on the routing of the RCVs.

Optimal projects should assume a RCV fleet-replacement schedule for the next five (5) and ten (10) years is accomplished with CNG vehicles.

Optimal fueling facility locations should also consider opportunities to provide service to the public and/or commercial customer(s) whose fleets may be served by a conveniently sited station(s). With a production cost of less than $1.15 per DGE and a typical sale-price range of $2.00 to $2.90 per DGE, a reasonable margin per DGE is available.

It is also important to note that it may be necessary to determine if a temporary (or mobile) fueling facility will be required, and if so, the costs, operational requirements, timing of completion, location, and the vehicle fueling capacity of the temporary station.

GRANT AND FUNDING OPPORTUNITIES
It is important to conduct research and identify funding and grant opportunities as well as any tax or government rebates or credits for which a specific fleet may qualify. Various incentives may be available in the forms of tax credits, grants, rebates and voucher-based vehicle price buy-downs which can further accelerate payback period for fleet conversions.

Along with Federal incentives, several states such as California, Colorado, Florida, Texas and Indiana offer strong incentive programs for purchasing vehicles that run on CNG. Other states offer incentives as well, and some states offer incentives for building CNG fueling infrastructure.

The federal government has for several years provided for an excise tax credit of 50 cents per gasoline gallon equivalent (GGE) of CNG used as a transportation fuel to be claimed on tax filings, as well as a tax credit of up to $30,000 of the cost of building CNG fueling infrastructure. The federal tax credits expired on the last day of 2014; however there is a high likelihood that during its current session, Congress will renew these tax credits retroactive to the first of January 2015. Depending on the type and amount of incentives received, ROIs for fleet conversions to CNG RCVs can be reduced to just two or three years. A listing of incentives available for deploying CNG trucks can be found at http://www.afdc.energy.gov/laws and at ngvamerica.org/government-policy/federal-incentives/.

OTHER CONSIDERATIONS
The recent discoveries of massive natural-gas reserves in the U.S. are creating greater scales of economy in support of long-term planning and fleet conversions to NGVs. NGVs are helping the U.S. and Canada to break free of dependence on foreign oil. According to the Environmental Protection Agency, NGVs typically emit 25 percent less greenhouse gases than diesel-powered vehicles.

In addition, natural gas is lower priced than diesel, approximately $1.50 to $2.50 less per gasoline gallon equivalent (DGE), depending on whether the CNG is purchased at a retail location or is produced at a fleet’s own facility. About 50 percent of new garbage trucks and 25 percent of new buses in the U.S. operate on natural gas. In several cities, all RCVs and buses are now running on natural gas, either in city collection fleets or contracted private-sector fleets.

While diesel prices have declined in recent months, fleet owners and managers need to take a long-term view about petroleum costs and fleet conversions to CNG. The U.S. Energy Information Administration (EIA) has projected that natural gas prices will remain significantly lower than the price of petroleum for at least the next two decades and that natural gas prices will exhibit only one-third the price volatility of diesel fuel.

Fleet standardization in terms of vehicle type, manufacturer, model, chassis, body and other specifications is an excellent way to gain greater productivity out of fleet operators, fleet maintenance, reducing spare parts inventory, and increased utilization the fleet.

If you are considering the switch to a natural gas fleet, work with experienced experts such as WIH Resource Group to assist you in deciding what is best for your business.

ADDITIONAL RESOURCES
Alternative Fuels Data Center (AFDC)http://www.afdc.energy.gov/ – The Alternative Fuels Data Center (AFDC) is a comprehensive clearinghouse of information about advanced transportation technologies. The AFDC offers transportation decision makers unbiased information, data, and tools related to the deployment of alternative fuels and advanced vehicles.

Alternative Fuels Vehicles Group on Linked Inhttp://goo.gl/SvYYTN – The Alternative Fuel Vehicles (AFV) Group on Linked In was created as a catalyst for sharing information on AFVs and promoting the use of AFVs and fleet conversions. The AFV Group was founded and is sponsored by WIH Resource Group (http://www.wihrg.com). The AFV welcomes new members and encourages member participation in the Alternative Fuel Vehicles Group (AFV) discussions.

California Natural Gas Vehicle Partnershiphttp://www.cngvp.org/ – The California Natural Gas Vehicle Partnership is an alliance of air quality, transportation and energy agencies; vehicle and engine manufacturers; fuel providers; transit and refuse hauler associations; and others interested in supporting and increasing deployment of natural gas vehicles throughout California. The website provides additional NGV facts, general industry news and success stories.

CNG Nowhttp://www.cngnow.com/ – The official Pickens Plan site promotes natural gas for transportation and provides information on vehicles, fueling and energy news.

NGVAmericahttp://www.ngvamerica.org/ – This national trade association promotes development of the U.S. market for natural gas vehicles, and advocates for supportive federal policies, publishes a weekly newsletter and provides fact sheets and other resources for NGVs and CNG facilities.

NGV Global – http://www.ngvglobal.com/ – The International Association for Natural Gas Vehicles provides news and information on the industry from around the world.

Natural Gas Vehicle Technology Forumhttp://goo.gl/RZAgSA – Run by the Clean Vehicle Education Foundation and supported by the Department of Energy and the California Energy Commission, the NGVTF aims to advance natural gas vehicle and infrastructure technology and deployment.

Natural Gas Vehicle Institutehttp://www.ngvi.com/ – The Natural Gas Vehicle Institute provides training and consulting to address a full range of natural gas vehicle and fueling needs.

CALSTARThttp://www.calstart.org/ – The nonprofit CALSTART works with the public and private sectors to develop advanced transportation technologies and help clean transportation companies succeed.

Energy Information Administrationhttp://www.eia.gov/naturalgas/ – Statistics on and analysis of natural gas supply, production and use from the U.S. Department of Energy.

ABOUT THE AUTHORS
Bob Wallace, MBA is the Founder and a Principal of WIH Resource Group, Inc. and has over 27 years of experience in waste and recycling collections programs management, transportation / logistics operations, alternative fuels (CNG, LPG, RNG, LNG & biodiesel), Fleet Management, Operational Performance Assessments (OPAs), Waste-by-Rail programs, recycling / solid waste operations, transfer stations, landfills, planning and development. Mr. Wallace has extensive experience in working with clients in both the private and public sectors. Prior to WIH Resource Group, Mr. Wallace served as the Director of Transportation & Logistics for Waste Management, the largest provider of waste management and recycling services in North America. He can be reached at bwallace@wihresourcegroup.com or 480.241.9994. For more information visit http://www.wihrg.com

Reb Guthrie is a Principal and co-founder of Fuel Solutions Inc. He has managed most of the projects performed by the company since its inception 1n 1994, including the assessment, specification, development and installation of more than 130 CNG fueling stations for municipalities, transit authorities, counties, school districts and federal agencies throughout the U.S. Reb’s recent project-management work includes providing lead technical consulting to the Los Angeles County MTA in the procurement of a $6.2 million fast-fill CNG facility at Division 13 in downtown Los Angeles, and the design and construction supervision of a $2.1 million fast- and time-fill fueling facility for the City of Denver Sanitation Department. He has also been certified by the NGV Institute and Southern California Gas Company as an NGV Fueling Facility Planner. Reb has a BS in Economics from the College of Business at Arizona State University.

Published & Written by: WIH Resource Group, Inc.

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ABOUT WIH RESOURCE GROUP
WIH Resource Group is a global leader and provider of comprehensive waste management consulting, recycling, transportation / logistical and business solutions, specializing in, among other services, waste management operational performance assessments, financial analysis. transportation / logistics, alternative fuel solutions, solid waste planning, waste and recycling market studies, business development, business valuations, due diligence and Mergers and Acquistions (M&A) transactional support and environmental services.

WIH Resource Group’s experience includes the oversight of operations, maintenance, finance, human resources, business development, sales, safety and environmental compliance while maintaining responsibility for multi-million dollar publicly and privately held assets including: a variety of collection operations, Sub-title D and hazardous and Class II landfills, transfer stations, intermodal facilities, recycling centers, buyback centers, material recovery facilities, vehicle and container maintenance operations, call centers and payment processing operations.

Based in Phoenix, Arizona, the company serves both private companies and public sector Agency clients throughout North America and internationally.  To learn more about WIH Resource Group, Inc. visit http://www.wihrg.com .

For Additional information on WIH Resource Group, Inc. contact:
Bob Wallace, Principal & VP of Client Solutions
WIH Resource Group – Waste Management, Recycling and Logistical Solutions
Email: admin@wihrg.com Phone: 480-241-9994

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Should you have any questions about this news or general questions about our diversified services, please contact Bob Wallace, Principal & VP of Client Solutions at WIH Resource Group and Waste Savings, Inc. at admin@wihrg.com

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