United Parcel Service (UPS) plans to spend $450 million over the next three years to buy 6,000 natural gas-powered trucks. The new vehicles will run on compressed natural gas, CNG, which it will buy from Agility Fuel Solutions, a subsidiary of Hexagon Composites ASA based in Norway. Hexagon trades on the Oslo Stock Exchange (HEX.OL) and closed a $124 million deal last year to acquire Agility.
The new trucks will also be able to run on renewable natural gas RNG, produced from landfills, dairy farms and other bio sources, according to a statement from UPS.
“Building CNG truck capacity is vital to increasing our use of RNG and ultimately meeting our 2025 sustainability goals,” said UPS Chief information and engineering officer Juan Perez, in a company press release.
UPS announced a deal in May 2018 with Clean Energy Fuels Corp (CLNE) to purchase 170 million gallon equivalents of renewable natural gas through 2026. UPS plans 40% of its total ground fuel to come from alternative sources like CNG and RNG by 2025.
Cleaning up on deliveries
UPS said the new deal will make it the largest consumer of RNG in the transportation industry. The company has set a goal to reduce its greenhouse gas emissions by 12% within six years.
Agility Fuel Solutions already provides natural gas fuel storage and delivery that fuels 1,700 UPS trucks running on CNG. According to UPS, trucks that use CNG fuel systems are just as easily fueled with RNG.
UPS has already invested more than $1 billion in alternative fuel vehicles, storage facilities and fueling stations. The company is expected to report Q3 earnings on October 22 before the opening bell.
Adam Shapiro is co-anchor of Yahoo Finance On the Move.