CNG Fuels, which supplies compressed biomethane (Bio-CNG), has secured a £25m debt facility from investment firm The Foresight Group. The five-year deal will see CNG Fuels build three new UK refuelling facilities.
The company aims to have “at least” nine refuelling stations by 2028, with the intention being to provide enough Bio-CNG to fuel 20,000 HGVs.
Two sites have already been identified as the firm looks to expand, with stations planned for Magor, South Wales, and Swindon, Wilts.
Bio-CNG, also known as biomethane, is an alternative to diesel made from all manner of organic waste including manure, food scraps and crop residues. Methane is produced when micro-organisms break these ‘feedstocks’ down, with the gas being compressed before it is used to power engines.
Bio-CNG is one of a number of renewable fuels, including HVO, which are being put forward as alternatives to traditional diesel. The principal behind such fuels is that the carbon dioxide released when they are burnt is roughly equal to the CO2 that was absorbed when the ‘feedstock’ for the fuels was growing or alive.
By contrast, when fossil fuels are burnt the CO2 they release is considered ‘new’ to the planet, as the materials and animals that make up oil, coal and gas absorbed carbon millions of years ago.
While HVO is a ‘drop in’ fuel that can replace diesel with no vehicle modifications required, engines need either to be specifically designed to run on Bio-CNG, or else require significant modifications. Similarly, while HVO can be dispensed from traditional diesel tanks and pumps, the compressed, gaseous nature of Bio-CNG requires dedicated refuelling equipment.
In Bio-CNG’s favour is that it burns more cleanly than both traditional diesel and HVO, producing less CO2 and nitrogen oxides, and very little soot. A number of companies have introduced Bio-CNG trucks to their fleets, with Amazon rolling out 1,000 across Europe following an earlier trial with CNG Fuels. DHL, Tesco and Marks & Spencer are also making use of the fuel.
Stuart McMillan, a partner at law firm Burges Salmon, which advised CNG Fuels on the financing deal, described the £25m package as “significant”, and said it will “materially advance the decarbonisation of heavy goods transport across the UK”. McMillan also singled out the “excellent contribution” made by junior members of his firm’s team.
Alanna Flett, CNG Fuel’s general counsel, described the deal as a “complex transaction”, and said Burgess Salmon’s work on the project had been “invaluable”.
