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Friday, April 20, 2012

Frito-Lay’s natural gas for diesel switch “a no-brainer”, and a “win-win” (maybe)

Frito-Lay, a division of PepsiCo that operates the seventh largest private delivery fleet in the United States, has announced that it’s deploying a fleet of trucks that run on natural gas, and that eventually, most of its longer-range vehicles would run on that fuel. Frito-Lay also uses a fleet of electric trucks.

Citing the move as a “win-win” for sustainability and costs savings, Frito-Lay said that the natural gas-powered trucks would save about $2.50 a gallon compared with diesel at current prices, and reduce greenhouse emissions by 23 percent when compared with diesel rigs. Plus, the payback for the extra cost of the natural gas trucks is a year and a half - “a no-brainer.”

Frito-Lay’s switch is powered by the development of domestic shale gas including Pennsylvania’s Marcellus Shale (and other shales). It comes as the US EPA announced new standards for natural gas production, and as a new study on methane leakage from gas production focused on one critical aspect of those standards – the methane leakage rate from gas production.

There is an important connection among all of these developments.

Burning gas for electricity production is more than 50 percent cleaner than coal when it comes to CO2 emissions. Making that switch has significant climate benefits. But because methane can be emitted in production and transmission of natural gas to market, and because methane is 25 times more potent than CO2 as a greenhouse gas, those emissions must be minimized if we are to truly realize the climate benefit of fuel switching, whether it’s for power generation or transportation.

EPA's currently assumes a methane leakage rate for natural gas production of 2.4 percent. However, EPA said this week that it’s discovered that about half of all gas wells that are completed each year now use green completions that greatly reduce methane emissions. The 50 percent number was higher than the EPA had assumed, and so their assumed 2.4 percent leakage rate may be revised downward.

That estimated leakage rate is critically important in determining if Frito-Lay’s move is really a “win-win.”

Researchers from Environmental Defense Fund, Princeton University, Rochester Institute of Technology, and Duke University say that methane leakage rate from natural gas production would have to be 1.6 percent for natural gas-fueled vehicles to produce immediate as well as long-term climate benefits. If the rate is any higher, every one of Frito-Lay’s natural gas trucks would aggravate – not improve – climate disruption.

The authors called for more data, but said out that “(w)isdom, however, counsels renewed efforts to cut methane leakage rates, no matter the current number.” And as the Natural Resources Defense Council has pointed out, the gas industry can well afford to comply with the new rules, and even make money from their application. Industry analysts agree.

So, it’s just a bit too early to pass the salsa and chips.