Foresight Group backs CNG Fuels with £80 million to build nationwide network of stations offering zero carbon fuel for HGVs
Company to develop 14 new stations as demand from major brands soars
Foresight Group is providing an initial £80 million in funding to CNG Fuels in a partnership to build a nationwide network of refuelling stations that will allow HGVs to run on carbon neutral fuel, the companies announced today.
CNG Fuels opened its fifth refuelling station near Birmingham last week, and the funding will see it develop at least 14 further public access stations on major routes over the next two years, quadrupling the company’s capacity and enabling it to refuel 8,000 vehicles a day. They will make carbon neutral fuel available from Glasgow to Bristol, meeting growing demand from major brands eager to switch their high-mileage, heavily emitting HGVs away from diesel.
The company is the UK’s leading supplier of Bio-CNG (compressed natural gas), the lowest carbon, most cost-effective alternative to diesel for HGVs. The fuel is 35%-40% cheaper than diesel and cuts vehicle greenhouse gas emissions by up to 85%. It will gradually become fully carbon neutral from 2021 as the biomethane is increasingly sourced from manure, a heavy emitter of greenhouse gas.
Richard Morse, Chairman of JLEN, Foresight Group’s listed environmental infrastructure fund, said: “We are pleased to make this investment into biomethane refuelling infrastructure, helping to decarbonise one of the most emission-intensive parts of the transport sector. We consider that the two pillars of better environmental performance and lower cost operations for customers combine to support our investment case and we look forward to supporting the growth of a national biomethane refuelling network.”
Matt Hammond, Partner at Foresight Group, said: “Foresight is delighted to be supporting and working with CNG Fuels. It is very pleasing to see attractive investment opportunities right across the sustainable infrastructure sector and that our investments have real impact in the decarbonisation of the transport sector.
Foresight Inheritance Tax Fund and JLEN Environmental Assets Group Limited, Foresight Group’s listed environmental infrastructure fund, have provided the initial £80 million funding line for a joint venture with CNG Fuels. It follows the launch of the UK Government’s ten point plan for a green industrial revolution, which included the proposal of a consultation on the phase out of new diesel HGVs to put the UK in the vanguard of zero emission freight.
HGVs account for 4.5% of total UK greenhouse gases , so decarbonising the sector is essential to meet the UK’s goal of achieving Net Zero emissions by 2050. Bio-CNG is the leading commercially available solution at scale to reduce these emissions. Fuel duty on biomethane is lower than on diesel and the government has committed to maintain a clear advantage for gas-powered vehicles until 2032.
Baden Gowrie-Smith, Chief Financial Officer of CNG Fuels, said: “We expect the number of CNG trucks on UK roads to double in 2021 as fleet operators take action to support the government’s Net Zero targets. This exciting partnership with Foresight demonstrates their enthusiasm for biomethane as a solution to decarbonise heavy transport at scale, and the near-term development of more stations will enable us to serve our customers even better by delivering carbon neutral Bio-CNG nationwide. We hope this will give even more brands the confidence to switch from diesel.”
CNG Fuels is already able to supply 2,000 vehicles a day from its five public access refuelling stations, and a sixth station at Knowsley, near Liverpool, is due to open in January. Its newest station, close to the M6 at Erdington, east of Birmingham, can refuel up to 500 HGVs a day and will support a virtual pipeline, using gas trailers to supply the John Lewis Partnership’s depot at Magna Park, near Milton Keynes.
CNG Fuels has secured a pipeline of development sites on major trucking routes to serve fleet operators throughout Great Britain. Stations due to open next year include major trucking hotspots such as Eurocentral, near Glasgow, Milton Keynes, Avonmouth and Wakefield.
100% of the fuel supplied by CNG Fuels is renewable and sustainable biomethane, approved under the Department for Transport’s Renewable Transport Fuel Obligation (RTFO) scheme. It is delivered to stations via the existing gas grid where it is compressed into fuel. Low processing, transportation and electricity costs make it a low-cost, clean solution.
Bio-CNG is currently sourced from food waste but CNG Fuels is securing supplies of gas derived from manure to create a fuel that will be carbon neutral overall. It expects to introduce carbon neutral biomethane across all sites in 2021 at the same price.
Manure gives off methane, a greenhouse gas 28 times more powerful than carbon dioxide. Using methane as an HGV fuel prevents it from going into the atmosphere and reduces overall emissions. The EU’s revised Renewable Energy Directive (RED II) recognises biomethane from manure as a carbon negative fuel, and the UK is expected to adopt it in 2021 regardless of Brexit.
Ernst & Young LLP acted as financial adviser to CNG Fuels in connection with the transaction and the structuring of the investment from Foresight.
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About CNG Fuels
CNG Fuels was established in 2014, and is today the UK market leader for the supply of Bio-CNG (renewable and sustainable biomethane fuel) for commercial vehicles. Its gas is sourced entirely from renewable and sustainable biomethane, which is cheaper and emits less carbon overall (well to wheel) than any other HGV fuel. The biomethane is made from a waste feedstock, approved under the Renewable Transport Fuel Obligation RTFO), and generates Renewable Transport Fuel Certificates (RTFC).
From late 2021, the company will increasing amounts of carbon neutral biomethane derived from manure at the same price as the renewable biomethane fuel it currently supplies. It is also consulting on how its network of refuelling stations can best accommodate low-carbon hydrogen and battery electric technologies for HGVs, so that it can support customers when these become commercially viable.
CNG Fuels is also the country’s only dedicated provider of public access Bio-CNG refuelling infrastructure. It operates the UK’s five highest capacity CNG stations, at Warrington, Northampton, Leyland (Lancashire), Crewe (Cheshire) and Erdington, near Birmingham. It is developing a nationwide refuelling network. For more information on CNG Fuels, visit www.cngfuels.com.
About Foresight Group (“Foresight”)
Foresight is a leading independent infrastructure and private equity investment manager which has been managing investment funds on behalf of institutions and retail clients for more than 36 years.
Foresight has over £6.5 billion of Assets Under Management, of which £3.8 billion relates to renewable energy infrastructure. It currently manages more than 290 renewable generation assets globally, with a total generating capacity of 2.7GW.
Foresight manages more than 160 solar plants and has more than 1.5GW of solar generation assets under management around the world. Foresight has more than 800MW of wind generation assets across the UK, France, Spain, Germany and Sweden of which 665MW are operational.
Foresight manages more than 40 bioenergy and waste projects processing some 1.8 million tonnes of waste every year, having mobilised more than £1 billion of capital investment into the sector. In addition, Foresight manages 210MW of Reserve Power assets and three utility scale Battery Storage projects providing 46MW of Enhanced Frequency Response services to National Grid.
Foresight is headquartered in London with regional offices in Manchester, Nottingham, Edinburgh, Cambridge, Milton Keynes, Leicester and Guernsey and international offices in Sydney, Rome, Madrid and Luxembourg.