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In each episode of Sustainability Insiders, Kevin Hegarty speaks to business leaders to find out how they're making their companies more sustainable. In season two, Camilla Smith, from specialist sustainability recruiter Sustii, shares what candidates and employers are looking for in this fast‑growing talent marketplace. Ian O’Donnell MBE, from the Federation of Small Businesses, talks about the challenges - and opportunities - small businesses face in operating sustainably. And one of the sector’s standout leaders, Mary Aladegbola, breaks down how she navigates net-zero challenges across NHS England. Other guests include ESG lead Ewan Donald from engineering business Ipsum, and Graham Duxbury, Chief Executive of Groundwork. Hopefully each of their stories will inspire you on your sustainability journey, and give you the ideas and tools you need to make your own company more sustainable in the very near future.
Hi, and welcome to Sustainability Insiders, the podcast that talks to business leaders to find out how they're making their companies more sustainable. I'm Kevin Hegarty.
Libby Drabble:And I'm Libby Drabble. And we both work for Cadent, a UK utility business that's on its own sustainability journey.
Kevin Hegarty:Cards on the table, we are not experts on this. But perhaps like you, we're eager to learn. Join us on our journey as we chat to business leaders who are finding the answers right now to some of the biggest sustainability challenges.
Libby Drabble:In this episode, we speak to Philip Fjalld from CNG Fuels, a company that you founded ten years ago to supply renewable and sustainable biomethane fuel, also known as BioCNG.
Kevin Hegarty:Philip tells us how he and CNG Fuels are helping HGV fleets big and small to ditch diesel, why recharging vehicle batteries is the biggest challenge facing the logistics industry today, and why most companies he works with are aiming to be net zero by 2030. Philip, welcome to Sustainability Insiders.
Philip Fjeld:Thank you, Kevin. Thank you, Libby.
Kevin Hegarty:I want to start by asking you about transport and what is the problem in relation to the impact of HGVs in particular on harmful emissions to the planet.
Philip Fjeld:Yeah, it's a good topic and it's actually quite complicated topic, but I'll try to keep it as simple as possible. It's also a topic that unfortunately, there's not a lot of, I would say, clear information out there. There's a lot of focus on passenger vehicles, which I'm sure you all know and I'm sure the listeners know. A lot of focus on electric vehicles, But you know, transport is so much more, road transport is so much more. So you mentioned heavy goods vehicles and let's just sort of take a step back first.
Philip Fjeld:If you look at the net zero ambitions, the country's got up to twenty fifty. And if you look at where we've come from as a country when it comes to decarbonizing, then the sector that used to emit the most greenhouse gas emissions was basically energy generation, coal fired power stations and so on and so forth. That's no longer the case. Transport today is by far the largest greenhouse gas emissions sector in The UK. About 26% of all greenhouse gas emissions emitted within The UK come from transport.
Philip Fjeld:Of course, transport is so many segments, isn't it? You've got passenger vehicles, you've got vans, you've got HEVs or heavy goods vehicles and so on and so forth. And what's interesting there is, if you sort of take those 26% of the overall greenhouse gas emissions from The UK economy, then you soon find out that only 1% of the vehicles on the road, are the so called heavy goods vehicles, HEVs, they make up close to 20% of that 26%. So doing the math here, you can see that 5% plus of all greenhouse gas emissions in the country come from just 1% of road vehicles. So it's a very small segment of vehicles on the road, but they do cause a lot of greenhouse gas emissions.
Philip Fjeld:And the way we've been looking at this is that it's actually despite what a lot of people are saying, it's actually one of the easier segments to decarbonize if it's done correctly. There are challenges around passenger vehicles, etcetera. But once again, taking a step back, we've got this huge sector called transport that's a bit more than a quarter of all greenhouse gas emissions. And within that, you've got 1% of the vehicles that again make up almost 20% of that. So yes, it's a bit of a mountain to climb with regards to reducing those emissions, but what we're seeing on heavy goods vehicles today is really encouraging.
Kevin Hegarty:So historically, I assume the vast majority of these HGVs will have been fueled by diesel, is that right?
Philip Fjeld:Not just historically, but also today. Yes. Yes, you're correct. I mean, you go really far back post second world war, all petrol. But then of course, they all transitioned to diesel and have essentially been running as diesel HGVs if you want for the last forty plus years.
Philip Fjeld:And even today, if you look at the amount of heavy goods vehicles on the road today, about 98 to 98 and a half percent of all HGVs on the road today still use diesel. So yes, not just historically, but even today. But fuels such as biomethane, which I'm very passionate about is now finally starting to make some serious inroads into decarbonizing that sector.
Kevin Hegarty:Well, let's talk about biomethane then. And let's not make an assumption I suppose that everybody listening to this podcast understands what biomethane is. What are we talking about when we refer to biomethane?
Philip Fjeld:So the easiest way to explain it is probably for the listeners. I mean, the majority of households in The UK today probably sort out their organic waste. So their food waste, the scraps from the kitchen and so on and so forth. Now of course, if you live in a city or live in a flat, you probably haven't got a compost heap in your garden. But a lot of us will have probably grown up with a compost heap in a garden where you can throw organic material onto that heap and pay presto two months, six months down the road, that will have turned into nice soil that you can use in your your in your garden.
Philip Fjeld:However, when that breaks down, that organic matter emits methane. The same methane chemically identical to the natural gases in the grid, so when you use a hob at home or your boiler at home, you use natural gas predominantly. That is methane and this is broken down from organic material is also methane. But because it's from a renewable and sustainable feedstock, it's called biomethane. However, it's no good to us or anyone else if it just goes into the atmosphere.
Philip Fjeld:So what happens here is organic material is collected together or whether it be food waste, it be sewage sludge, other waste streams from farming sectors such as manure and so on and so forth are gathered together. And this is then put into something called an AD plant or anaerobic digestion facility where this gas is then produced. So it is basically it's a way of taking your compost heap in your garden, putting it into an industrial process, and extracting the gas from that and then utilizing it, in transport or it can be used, for other things as well. So it is a 100% renewable and sustainable feedstock. Why?
Philip Fjeld:Because it comes from organic feed, organic wastes that would anyway break down and it will eventually come back into the cycle if you want later on. So that's biomethane. It's been Orion for a very long time. It's also known as biogas or some people use the biogas name to it. But when it's cleaned up and reaches a so called pipeline specification meaning that it can be injected into the pipeline grid here in the country, it is known as biomethane.
Kevin Hegarty:So how do we get the biomethane from that plant where it's produced into a lorry, so that it is then used to fuel a vehicle.
Philip Fjeld:So that's where we here in The UK have got such a unique advantage to many other countries because we've got a world class natural gas pipeline grid that has been developed over decades and decades and decades. And that's not necessarily the case for other European countries or other countries elsewhere in the world who might want to do what we're doing here in The UK. So typically an AD plant or biomethane production facility will be connected to the pipeline grid. It will inject it into the pipeline grid and then it becomes those methane molecules become a part of the overall UK balanced gas supply system. We have, as a company, we've developed large public access so called CNG or Bio CNG, compressed natural gas refueling stations for trucks.
Philip Fjeld:Those are connected to the pipeline grid. We take gas out from the pipeline grid. Now, it's important here to explain that this isn't necessarily the exact molecule that might have been injected from a biomethane plant in Somerset. I'm just using that as an example by the way. In Somerset and we have a station outside of Manchester.
Philip Fjeld:Alright. It's not the exact same molecules. Then people will say, well hang on, isn't this a bit of a fudge? No. Because if we take a step back and we then look at green electricity.
Philip Fjeld:Okay? A lot of people might have green tariffs at home, green electricity tariffs at home. That doesn't mean that they necessarily have green electrons coming through the wires into their homes. They might actually be getting that from some other facility probably no longer from coal fired because we're pretty much off that now, but it could come from a nuclear station, it could come from gas fired power station, could come from solar, what have you not. But you have mandated your supplier to go out and to secure a certain amount of green electricity on the grid for you.
Philip Fjeld:And that's exactly how it works with regards to to buy methane be putting into the grid. So we as a company, we we we own the rights and we buy the gas these producers put into the grid and we match that with gas that we take out of the grid. So as such, we balance it and we balance it every month and we are then audited by the Department of Transport in London every month where they check that the biomethane that we've bought does indeed match with what we've been dispensing. So as such, we are all connected to the National Pipeline Grid System, which also means that storing of biomethane, buffering of biomethane across periods is a lot easier than what you typically have with the electricity system.
Libby Drabble:That's really interesting, Philip. I wanted to ask you about change, in particular behavior change. I guess we're all a bit guilty of having a fear of the unknown sticking to what we know. So could I ask whether that's something you are noticing and having to educate your customers about? And I mean, hear both about day to day behaviors of the drivers as well as about asking people to change the types of fuel that they're used to using.
Philip Fjeld:Yes, some good questions in there I think. First of all, energy security. So we've been through and we're still going through it by the way, some pretty profound changes in Europe with regards to how energy is secured within Europe. Here, a lot of people think of energy as electricity. Well, no, it's so much more.
Philip Fjeld:And as an example, we get the majority of our gas that we use in the grid is imported today. And following the events in Ukraine in February 2022, we had some really volatile years and some really a lot of turmoil within the European gas market, because all of a sudden one of the largest suppliers of the gas market, Russia as such was no longer supplying the majority of gas and can no longer be seen as reliable supplier. And in that, there are some very interesting aspects. Security of supply doesn't necessarily mean that we have to electrify everything through, let's say, wind turbines, solar, etcetera. We have a lot of waste feedstock in this country.
Philip Fjeld:We generate a lot of waste. We will always generate a lot of waste. It doesn't matter how much we recycle because as say sewage sludge, food waste and so on and so forth. And by turning that into a valuable resource such as biomethane, we can reduce our reliance on imported and on I would say supplies from overseas, whether they be from somewhere like Russia or LNG that's being brought into to this country. If you then look at behavioral change, we have now about 170 unique haulage fleets that use our stations every month.
Philip Fjeld:Now the majority of our customers however are quite small, but we have some really, really large customers as well, your typical supermarkets and so on and so forth. What you've got to remember here is they've been running diesel trucks for maybe forty years plus. The logistics whether people want to recognize it or not, logistics in this country is the backbone of the economy. Nothing within services, nothing within manufacturing, nothing within construction works without logistics, without things being driven around the country and a lot of people don't think about this, but without basically lorries and trucks taking stuff around the country. We all know how easy it is to order stuff online.
Philip Fjeld:What most of us don't think about is how does it get from a big warehouse somewhere to our doorstep within twelve hours, twenty four hours, etcetera. All of that involves very sophisticated just in time logistics. And by just in time, I mean, this is something that these companies, whether they're supermarkets, whether they are parcel giants or whether it is smaller companies that that take manufacturing goods around the country. This is something that they've been spending decades perfecting. They've built warehouses in the right locations.
Philip Fjeld:They've they've got the right number of trucks to do it. They've got maybe smaller warehouses in other locations to break it up for your last mile delivery, etcetera. So this is a science. This isn't something that you can just mess around with and for it not to have any consequences to the economy. On on the contrary, it could have some pretty devastating consequences to the economy if we don't do it right.
Philip Fjeld:So if you look at a diesel truck and diesel as a fuel is almost the perfect fuel. Why? Because it's energy dense, it's easy to handle, it's fairly cheap, the trucks are fairly cheap and so on and so forth. As such, it's a perfect fuel. However, it's a fossil fuel, so it is causing greenhouse gas emissions.
Philip Fjeld:So that's something we need to do to to deal with. Now the ideal solution would of course to just replace it with 100% sustainable and renewable biodiesel. But that's not so easy to do because there's not enough of it, it's costly, it has potential ecological impact and so on and so forth. So that's not really a route that we as a country can go down and only arrive on that. And there's another aspect to it as well and that is that if you fiddle around too much with the logistics model and try to implement other technologies into it for vehicle technologies that can't necessarily just slot in immediately and replicate what the diesel vehicle does, then all of a sudden your finely crafted just in time model falls apart.
Philip Fjeld:So I'll use an example there. So a typical diesel vehicle takes maybe four to six minutes to refuel. And a lot of these belong to a depot. So a large distribution center that I'm sure most people listening to this will see or will know when they drive up and down the motorway, they'll see these large mega sheds alongside the motorway and they'll probably see trucks and trailers parked up there. As of today, the vast majority of those that I explained previously are diesel trucks.
Philip Fjeld:Those diesel trucks refuel on-site typically. So that means they have their own private diesel refueling station on-site. So when a driver has been out for a run, might have been 300 miles out, 400 miles out, comes back after twelve hours, fifteen hours, whatever it is, the trucks gets refueled and then is ready for the next driver to take out again. And that's how this has been running for decades. CNG or bio CNG is such a good solution because you can take a diesel truck out of service.
Philip Fjeld:You can replace it with a bio CNG truck. The refueling time isn't four to six minutes. It's six to eight minutes, but that's that's nothing. So as such, you can take a vehicle, a diesel vehicle out of service. You could put a buyer's CNG vehicle into service.
Philip Fjeld:You can do the exact same mile, 300, 400, 500 miles, and your refueling time is the same, pretty much. So as such, your your logistics model doesn't break. The only thing that does change is you can no longer refuel on-site. You will typically refuel or you'll have to refuel at one of our stations which is a multi user facility, a very large public access station which is typically within one of these industrial parks or very close to it. When we founded the company ten years ago, one of the biggest challenges we had was actually speaking to hauliers, to to the fleet engineers, to the fleet managers where they said, okay, the trucks might be okay because they're they're built by reliable manufacturers, but we haven't got our own refueling station.
Philip Fjeld:We don't know if the drivers are gonna like the trucks. We don't know if these trucks can actually cover the 300 or 400 or 500 miles. We don't know the refueling time. So it took us about six years, six to seven years. I would say 2020, 2021, we reached a tipping point where we now no longer have to convince fleets that refueling off-site at a multi user facility actually works.
Philip Fjeld:The trucks are reliable, that they can use them just as they do diesel, that the drivers actually prefer them because they're 50% quieter, the refueling is cleaner because you don't have to wear gloves and so on and so forth. So behavioral change has been a big part of what we've been doing, not only because of the, I would say, the the fear of the unknown, but also because the logistics model that is the backbone of our economy whether people want to admit it or not is so has been finely tuned over such a long time that it can't really be tinkered too much with before it breaks. And that's why our customers are so sensitive to refueling time, they're so sensitive to doing additional mileage to go to a refueling station, they're so sensitive to the actual mileage they can cover in a truck and all of that they can now do with a CNG truck just as well as they can do with the diesel truck.
Libby Drabble:It sounds like this is the case then of making small changes that can have a huge impact on their carbon emissions and the environment. So, Philip, your company is offering one solution by a CNG, but can I ask for your opinion on the other solutions out there, either now or on the horizon for logistic fleets?
Philip Fjeld:Yeah, another good question. I don't want to what I'm going to say now, I don't want to come across as being negative towards other solutions because at the end of the day, I founded this company ten years ago. We've built an industry essentially over those ten years. But at the end of the day, we are driven by our customers and our customers being the large fleet operators, the large supermarkets, the large logistics providers. Okay?
Philip Fjeld:If they want to run their trucks or if they want to use a so called different fuel vector or a different energy vector, a different source of energy, then we will find a way to provide that. Okay? So I just want to set that out that because what I'm gonna say now might sound like I'm being negative towards, let's say, battery electric trucks or so on and so forth. I'm not, absolutely not. But we are driven entirely by what our customers want and our customers again are driven and are dictated by what their logistics model can use.
Philip Fjeld:Alright? Which is why I spent a bit of time explaining that previously. So the one solution that a lot of people think about immediately when they think about decarbonizing and reducing greenhouse gas emissions is electric trucks. There's a lot of talk about it, there's a lot about it in the media, But then you have to break that down slightly because there's a lot of focus on the truck itself, which is sort of a bit irrelevant if you can't get electrons into your truck. So as of today, there are electric trucks out there that can do 200, 300 miles.
Philip Fjeld:Alright? So that's a decent distance, but it doesn't really provide the logistics industry with what they need because they need trucks that can do 300, 400, 500 miles. Okay? So there's still a way to go there. But let's now make the assumption because I I believe it will happen.
Philip Fjeld:The batteries will improve over time. Okay? So density will will will improve. You can get more energy in there. The cost will come down and so on and so forth.
Philip Fjeld:So that means that probably over time, whether it takes five or ten or fifteen or twenty years, I don't know, but over time you will have a truck that can cover the distance you need with the weight you need without having a loss of payload, which you currently are experiencing because the batteries are so heavy. So let's assume that's going to sort itself out. Then you need to turn your attention to what we see today as the major challenge, which is getting electrons or basically getting getting electricity into your batteries. And if you look at that challenge, that's a huge one, which I don't really know as we as a country are gonna sort out in a short space of time. So I'll give that a bit
Kevin Hegarty:more
Philip Fjeld:context. So we build large public access bi methane or biocNG refueling stations. These can refuel 14 trucks simultaneously, maybe 600, 800 trucks a day. Alright? But we take gas off the grid and we compress it.
Philip Fjeld:So we need a fairly large, but nothing, you know, not major, but we need a fairly large electrical connection. So we need a typical one megawatt connection, so a thousand kilowatt connection, right, which is is sizable but compared to, you know, lots of industrial applications, it's nothing. When we go about developing one of our sites, we of course need to apply to make sure that there is capacity on the gas grid, we need to get planning permission, we need to do surveys and we need to go to the electricity supply company or the DNOs that operate the grid and say we need a one megawatt connection. In the last, if we go back four or five years, it was never a problem. We would never be turned down a one megawatt connection.
Philip Fjeld:Now it is a huge problem. Now we have and I won't mention the city because I don't want to go too much into detail here, but we want to build and we are very close to getting planning approval to build a CNG or buy a CNG station at a just outside a large fairly large city, quarter of a million people live there. So this is not a small village in a remote part of the country where you might think there is an electrical capacity. There is a car manufacturing facility nearby. There's lots of other manufacturing nearby.
Philip Fjeld:So this is an industrial place. Okay? We've been told that we need to pay a million pounds now thereabouts. We will get a one megawatt connection in 2037. Now the reason I mentioned a one megawatt connection is in order for a battery electric truck to carry out the work that a diesel or a CNG truck can do today, you will typically need something called a mega charger.
Philip Fjeld:Mega charger, hence the name, will need a megawatt connection. Now if we can't get the equivalent of one mega charger of electricity before before 2037, I'm not sure how these seven or 800 trucks that call home this this place where we are, how they those are gonna get electricity. So when you look at other solutions, it's not just about the vehicle. It's about how are you going to get your chosen energy vector or your chosen source of energy into that vehicle, whether it be electricity, which is for your battery electric vehicles, or whether it be green hydrogen, which is another solution, which is on the horizon, which isn't here today. Once again, a lot of talk about green hydrogen, lot of talk about hydrogen trucks.
Philip Fjeld:We are not anti hydrogen trucks at all, but once again we are we are driven by or we are pulled if you want by what our customers can use. As of today, they can't use battery electric trucks the way they use a CNG or diesel truck, So then they're not demanding it from us and same with green hydrogen. So these will come over time, but the way we look at the world over the next decades is there's not going to be one solution that's going to decarbonize the heavy goods vehicle or the transport sector in this country. It's going to be a multi pronged approach. There are going to be very different energy sources or energy vectors as I call them that are going to contribute towards this.
Philip Fjeld:Yes. There are going to be trucks that can do lower mileage in and out of city centers that will go electric first. But for your big miles, trucks that need to go up and down the motorway, need to go up and down big hills, need to go into Scotland, Wales, Cornwall, etcetera etcetera, those will take decades, potentially many decades before we we can move there. And in that period, there is going to be a room for a lot of different solutions and bio methane is going to be one of the dominant ones.
Kevin Hegarty:Really interesting. And one of the questions that came to mind as I was listening to your answer there was the different people over the ten years that you've been involved with your company, that you must have had to deal with. Do you find on a day to day basis now you're dealing more with the sustainability manager or the finance manager or the logistics fleet manager or is it a combination of them all? I imagine early doors it was very much on the brass tacks of how much it had cost and maybe you're getting more now towards realizing businesses are seeing the sustainabilityenvironmental benefits of the whole thing.
Philip Fjeld:Absolutely. And once again providing a bit more context. You know, the vast majority of companies that we work with and they pretty much all echo the same saying is they say, we can't afford to go green if we're losing money. And I'll give a bit of more context to that, which is typically logistics or running trucks in this country operates on a profit margin of between three to 5%. So really thin profit margins.
Philip Fjeld:Now, if you were to embrace going green, decarbonizing your your fleet and decarbonizing operations, but it's costing you considerably more than running a diesel baseline, eventually you're probably going to run your company into the ground because you've got a three to 5% profit margin to eat into and that's not a lot. So yes, you're right. If we go back ten years ago and I would say up until probably for the first five, six, seven years, the focus was really on cost. But biomethane as a fuel is more cost efficient than diesel. So as such, once we've convinced the industry that biomethane is a a better option from a cost perspective and the trucks are reliable, the drivers love it, you know, all of these non green aspects, if we can call it that, have been sorted.
Philip Fjeld:Then of course, the sustainability officers or the ESG people, all of the ones looking at emissions internally become really excited because then they say, oh, wow, I've got these targets to decarbonize by 30 by 2025 and hundred percent by 2030. Now a lot of us and a lot of listeners probably have twenty fifty in mind with regards to net zero. That's not what our customers are working towards. The vast majority of our customers, the most ambitious want to be net zero by 2028. And probably the least ambitious want to be net zero somewhere between 2035 and 2040.
Philip Fjeld:But the vast majority slot in around about 2030, 2030 to 2032. And that's many years away, all right? So they can't sit there and wait for green hydrogen to maybe become economical ten, fifteen, twenty years from now. Can't wait for battery technology to get better and for the electricity grid to be bettered. So they need solutions here and now.
Philip Fjeld:And that's why, as you as you said, Kevin, what what what what we have moved away from is and when I say moved away from, that doesn't mean it's of lesser importance. It's just that fleets know that cost isn't an option sorry, isn't a isn't a problem for going down the biomethane route. And because of that, it's not really a big discussion point anymore. But what we're now seeing is that the fairly ambitious targets that they've set either by the board have told management to get on with this or shareholders or customers quite importantly are telling their supply chain to get on with it. And that's why the green aspect and the fact that they can achieve net zero so much sooner by going down to biomethane route is important.
Philip Fjeld:So yes, it's been an interesting journey and I would say the last three, four years, it sort of flipped over from being really focused on reliability of trucks, the cost of the fuel, the economics, making sure they're not gonna drive a business out of sorry, drive themselves out of business because now they're convinced about that and now it's only focus or a lot of focus is on how green it is and the immediate impact it can have on their greenhouse gas emissions.
Kevin Hegarty:Well, mean, and that is exactly why we wanted to start this Sustainability Insider podcast, was we wanted to talk to businesses and people who were involved in talking to businesses who were living sustainability here and now rather than it being a 2050 goal. It's achievements and improvements that are being made right now. Philip, thank you for joining us on our podcast. It's been wonderful to talk to you and listen to the journey that's happening within the transport and logistics world.
Philip Fjeld:Thank you very much for having me.
Kevin Hegarty:Thanks for listening. If you enjoyed this episode of Sustainability Insiders, please give the show a follow and a review in your podcast app.
Libby Drabble:If you've got a story to share about how you're making your business or industry more sustainable, we'd love to hear from you. Send us an email using media.relations@cadentgas.com. Speak to you again soon.