There has been a furious debate on this website and elsewhere about the future use of natural gas in large trucks. Essentially, Clean Energy Fuels (NASDAQ:CLNE) has made a big bet on the adoption of liquefied natural gas (NYSEMKT:LNG) as a fuel for Class 8 (very large) trucks in the United States by building a number of fueling stations and some LNG processing plants. A number of authors have contended that this bet is a loser because (they contend) the Class 8 trucking market will turn to compressed natural gas (CNG) rather than LNG.
In this debate a big issue is the percentage breakdown between LNG and CNG in new Class 8 trucks using natural gas. The Class 8 truck market is huge with up to 200,000 new trucks deployed each year and each truck consuming a tremendous amount of fuel. It is generally agreed that natural gas is making inroads in this market and that we are reaching the point at which 4 or 5 percent of this market will go to natural gas. The big issue is - what percentage of this natural gas truck market will go to LNG?
CLNE bears have argued that LNG will get only 10-15% of the new natural gas truck market whereas CLNE and CLNE bulls have argued that the percentage will be more like 50%. This makes a huge difference in terms of the viability of CLNE's LNG strategy as discussed in more detail in this article as updated here.
The latest news on this issue is in the form of the transcript on Westport Innovations (NASDAQ:WPRT) recent conference call. WPRT - which licenses and joint ventures the actual technology used by the natural gas trucks - indicated that the split will be 50/50 or 60/40 (not completely clear whether 60 LNG or 60 CNG). This tends to confirm CLNE's position and is one important piece of evidence in this puzzle.
Readers should be aware that the debate continues and evidence must be evaluated as we go through the year. This is only one piece of that evidence but it does tend to support CLNE's position and the bull case for CLNE.
Disclosure: I am long CLNE.