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.

“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.

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Source: American Recycler
By Mike Breslin