Clean Energy Fuels (CLNE): Capitalizing on RNG Growth and Policy Tailwinds in 2025

The renewable natural gas (RNG) sector is heating up in 2025, and Clean Energy Fuels (CLNE) is positioning itself as a key player in this green revolution. With a mix of strategic partnerships, regulatory tailwinds, and financial discipline, CLNE is navigating a complex market landscape while laying the groundwork for long-term growth. Let's break down how the company is leveraging RNG's potential and what investors should watch for.

Strategic Partnerships and Market Expansion

Clean Energy Fuels has been aggressive in securing RNG supply agreements with municipalities and transit agencies, a move that underscores its focus on high-volume, stable customers. Recent contracts with the Los Angeles Metro, Trinity Metro in Texas, and the City of El Paso are expected to deliver over 20 million gallons of RNG annually. These partnerships not only diversify CLNE's customer base but also align with the growing demand for decarbonization in public transportation.

The company's ability to scale RNG production is further bolstered by its joint venture with BP, CE bp Renew Co, LLC. By monetizing $29.5 million in investment tax credits (ITCs), CLNE has injected capital into its dairy RNG projects, which are critical for expanding sustainable RNG generation. This financial maneuver highlights CLNE's knack for turning regulatory incentives into tangible growth opportunities.

Financial Strength and Shareholder Value

Despite a 12.8% year-over-year decline in RNG gallons sold in Q1 2025—attributed to cold weather disrupting supply—CLNE has maintained financial discipline. The company resumed share repurchases, buying back nearly 4.9 million shares for $7.9 million in the first half of 2025. This signals confidence in its long-term value and reinforces the idea that CLNE is prioritizing shareholder returns even amid short-term volatility.

Looking ahead, CLNE's 2025 Adjusted EBITDA guidance of $60–65 million reflects a focus on core operational performance. While non-GAAP metrics like EBITDA are key here, the company's cash reserves and recurring revenue streams from transit agencies provide a buffer against market fluctuations.

Regulatory Tailwinds and Technological Momentum

The RNG sector is riding a wave of policy support, and CLNE is strategically aligned with these trends. The Inflation Reduction Act (IRA) has been a game-changer, with Section 45Q tax credits for carbon capture and sequestration providing a revenue boost for RNG projects. CLNE's dairy RNG initiatives, which convert agricultural waste into RNG, are particularly well-suited to leverage these incentives.

Legislative developments like the One Big Beautiful Bill Act also bode well for CLNE. The bill's emphasis on RNG as a cost-effective decarbonization tool aligns with the company's mission to make natural gas a bridge to a low-carbon future. Meanwhile, the adoption of RNG-compatible engines like Cummins' X15N in the trucking sector is creating new demand, a trend CLNE is actively capitalizing on.

Volume Recovery and Long-Term Outlook

While Q1 2025 saw a temporary dip in RNG sales, CLNE is optimistic about a rebound. The company attributes the decline to weather-related supply constraints and has already secured new contracts to offset this. With RNG gallons sold at 61.4 million in Q2 2025—a 7.5% increase year-over-year—CLNE is demonstrating its ability to scale production and meet demand.

The CEO, Andrew Littlefair, has emphasized that RNG is a “commonsense solution” for heavy-duty trucking, a market segment with massive growth potential. CLNE's network of natural gas stations across the U.S. and Canada further cements its role as a critical infrastructure provider for clean transportation.

Risks and Challenges

No investment is without risks. The EPA's proposed reduction in D3 RIN volume requirements has created uncertainty for RNG producers, with D3 RIN prices dropping 24.3% in Q1 2025. While CLNE's diversified revenue streams and IRA incentives mitigate some of this risk, regulatory shifts under a new presidential administration could introduce volatility. Investors should also monitor the company's goodwill impairment charges and depreciation expenses, which impacted Q1 results.

Investment Thesis

Clean Energy Fuels is a compelling play on the RNG sector's long-term potential. Its strategic partnerships, ITC monetization, and alignment with policy tailwinds position it to outperform in a market poised for growth. While short-term headwinds like RIN volatility exist, CLNE's focus on recurring revenue, infrastructure expansion, and shareholder returns makes it a resilient bet.

For investors, the key is to balance optimism with caution. CLNE's stock has shown resilience despite a 60% decline in the past year for some peers, but its success hinges on regulatory stability and continued RNG adoption. If the company can maintain its production growth and leverage IRA incentives, it could deliver strong returns as the RNG market matures.

In conclusion, CLNE is not just surviving in the RNG space—it's thriving. With the right mix of strategy, policy support, and execution, this stock could be a cornerstone of a green energy portfolio in 2025 and beyond.