Will CNG power tomorrow's food-transport chain?

The early betting makes compressed natural gas (CNG) the favorite in the race to replace gasoline and diesel as the dominant fuel source for moving food through tomorrow's supply chain, though CNG is hardly the only option.

Limited numbers of refueling stations are a drag on all alternative fuels, though the fuels themselves can't be described as experimental—there are just too many success stories. CNG got a high-visibility boost at the Feb. 25 ribbon-cutting ceremony at Fair Oaks Farms, where CNG will replace 2 million gallons of diesel a year that used to be burned hauling raw milk to market. The U.S. Department of Energy (DOE) pronounced the 42-truck project the largest ag-waste-to-energy project in the country.

One of the first waste-to-CNG projects began several years ago at Hilarides Dairy in Lindsay, Calif. After receiving 40% funding in 2006 to build two covered lagoons to generate methane that was converted to 500 kW of electricity, the dairy secured a second grant of $600,000 for a CNG purification and pressurization system. Spark-ignited methane burners then replaced diesel engines in the farm's trucks. Today, diesel is hovering in the $4 a gallon range. California dairy officials calculated Hilarides' break-even point was $2.50 a gallon, making the CNG conversion a financial success.

Propane is another petroleum substitute that offers solid ROI. A high-visibility example is the Schwan Food Co., which began dabbling in propane in the 1970s. The alternative fuel was temporarily torpedoed when truck manufacturers abandoned the carburetor in favor of fuel-injection systems. Propane vaporizes at the intersection of Celsius and Fahrenheit scales (-40°C/-40° F), and delivering the fuel in a liquid state to the intake manifold was a technological challenge. Bi-Phase Technologies met the challenge, and Schwan acquired Bi-Phase, enabling the conversion of the vast majority of the company's home-delivery vans to propane. To encourage more propane power, DOE gave Schwan a $500,000 grant to buy the propane conversion kits from itself from October 2009 to December 2012.

Even without the DOE gift, propane was a financial winner: five years ago, Schwan estimated tax credits helped drive down the cost of propane to the equivalent of $2 a gallon of gas, less a 50¢ a gallon credit it received by acting as a distributor when it set up refueling stations at Schwan DCs. The company estimates propane saves Schwan more than $30 million a year in fuel costs.

CNG seems a natural fit for closed loop biomass systems like the twin 900,000-gallon anaerobic digesters at Stahlbush Island Farms in Corvallis, Ore. The methane the digesters produce drives a 1.6 MW electrical generator, and although the CHP system is highly efficient, loss is inevitable when energy is converted from one form to another. Stahlbush Island dabbled with CNG in a General Motors prototype engine, but co-owner Bill Chambers says it didn't have enough muscle for his operation's needs.

Some food processors with lighter loads are more optimistic. Engineers in Frito-Lay's environmental sustainability department report disappointing results with hybrid vehicles, but they view CNG as a long-term solution to GHG reductions. In fact, an analyst at Macquarie Capital Inc. estimates 8% of big-truck sales next year will be CNG-powered vehicles. If the growth trend continues, tomorrow's processed-foods motor pools might have an easier time tanking up with CNG than finding an E85 pump.