Clean Energy Fuels (CLNE) Q4 2025: Upstream EBITDA Turns Positive as RNG Volumes Hit 64M Gallons

2026-02-24 | By EarningsIQ Research

Clean Energy Fuels delivered a milestone quarter as upstream RNG operations turned EBITDA positive and downstream volumes reached a record, with heavy-duty trucking adoption and regulatory tailwinds shaping a cautiously optimistic 2026 outlook. Management is prioritizing operational discipline, cost efficiency, and measured expansion, while capitalizing on policy momentum and customer demand for low-emissions transport solutions. Investors should watch for execution on RNG volume ramp, environmental credit monetization, and evolving competitive dynamics in contract renewals.

Summary

• Upstream Shift: RNG production platform achieved positive adjusted EBITDA, signaling inflection in project profitability.
• Contract Renewal Impact: Downstream fuel distribution margins normalized as major customer renewals reflected increased competition.
• Policy and Adoption Tailwinds: Regulatory clarity and growing fleet demand for RNG position Clean Energy for disciplined growth in 2026.

Performance Analysis

Clean Energy Fuels closed Q4 2025 with notable progress in both upstream RNG production and downstream fuel distribution. The company delivered 64.1 million gallons of RNG in the quarter, a record for the business and a 5 percent sequential increase, reflecting recovery from early-year weather disruptions and expansion of customer partnerships. For the full year, RNG delivered was 237.4 million gallons, about 97 percent of target, with the shortfall tied to Q1 weather, not demand erosion.

Upstream, the South Fork Dairy Project in Texas, now the largest fully consolidated RNG facility in the portfolio, entered service and began contributing to results, while the East Valley project in Idaho, a joint venture with BP, started injecting gas and is on track for full completion by spring 2026. Adjusted EBITDA for 2025 reached $67.6 million, exceeding the high end of guidance and outpacing the prior year on a comparable basis, even with the loss of the alternative fuel tax credit. SG&A expenses spiked in Q4 on one-off items but are guided to fall by over $10 million in 2026, supporting margin stability.

• Upstream Profitability: RNG production moved to positive adjusted EBITDA, with eight operating dairy projects and three more under construction.
• Volume Recovery: Downstream fuel volumes rebounded after weather-impacted Q1, with record Q4 volumes and continued customer wins.
• Debt Reduction: $65 million in debt repaid, lowering future interest expense and preserving balance sheet flexibility.

Management expects further improvement in 2026, driven by volume growth, cost controls, and stable environmental credit pricing, but notes that contract renewals and competitive pricing will temper margin expansion in the fuel distribution segment.

Executive Commentary

Strategic Positioning

1. Integrated RNG Model Expansion

Clean Energy’s business model integrates upstream RNG production with downstream fuel distribution, capturing value across the supply chain. The company controls RNG output from both wholly owned and JV facilities, with all new production flowing through its fueling infrastructure. This vertical integration supports margin capture and supply security, especially as RNG adoption accelerates in transportation.

2. Upstream Project Execution and Capital Discipline

Project delivery has improved, with the South Fork and East Valley projects brought online on time and on budget. Management is taking a measured approach to new investments, focusing on ramping existing projects and completing three Moss Energy Works dairies before considering further expansion, citing market discipline amid still-recovering LCFS (Low Carbon Fuel Standard) credit prices.

3. Downstream Volume Growth and Customer Wins

Fuel distribution volumes set a record, supported by renewals and expansions with major customers like WM and transit agencies nationwide. The company continues to “flip” CNG (compressed natural gas) customers to RNG supply, leveraging long-term station relationships and operational expertise. About 89 percent of Clean Energy’s network now dispenses RNG, with California at nearly 100 percent.

4. Environmental Credit and Policy Leverage

Policy momentum is constructive, with positive signals from California’s LCFS, federal D3 RINs (Renewable Identification Numbers), and anticipated 45Z clean fuel production credits. Management is optimistic about the eventual recognition of deeply negative carbon intensity scores for dairy RNG, which could further enhance project economics. The company is already accruing 45Z credits in its guidance and expects to monetize them with third parties as regulatory clarity improves.

5. Heavy-Duty Trucking Adoption and Market Dynamics

Adoption of the Cummins X-15N engine, a 15-liter natural gas engine, was slower than expected in 2025 due to macro freight headwinds, but early customer feedback is positive and management sees improved order flow as market conditions stabilize. RNG’s cost advantage and emissions profile continue to resonate with fleets and shippers seeking to meet sustainability targets and manage total cost of ownership.

Key Considerations

This quarter’s results highlight Clean Energy’s ability to navigate policy, operational, and commercial complexity while maintaining capital discipline and positioning for growth. The company’s integrated RNG model, strong customer relationships, and balance sheet flexibility provide resilience and upside as market and policy dynamics evolve.

Key Considerations:

• Environmental Credit Monetization: The timing and value of 45Z and LCFS credits will materially impact upstream project returns and capital allocation decisions.
• Competitive Pricing Pressure: Contract renewals in the fuel distribution segment are increasingly competitive, impacting the share of environmental credits retained and overall margin structure.
• Volume Ramp Execution: Upstream project ramp and downstream adoption must continue to deliver to meet 2026 guidance and sustain growth trajectory.
• Heavy-Duty Truck Market Recovery: Broader freight market stabilization is critical for unlocking the next wave of RNG-fueled truck adoption.
• Capital Allocation Discipline: Management is holding off on new project underwriting until credit and commodity markets stabilize, preserving dry powder for high-return opportunities.

Risks

Key risks center on regulatory uncertainty, especially around final 45Z credit rules and LCFS market volatility, which could impact project economics. Competitive intensity in downstream contract renewals may further pressure margins if rivals bid more aggressively for volume. RNG adoption in heavy-duty trucking remains sensitive to macro freight cycles and fuel price spreads, which could elongate payback periods and slow fleet conversion.

Forward Outlook

For Q1 2026, Clean Energy guided to:

• Continued sequential growth in RNG volumes as new projects ramp
• SG&A expense reduction to approximately $25 million per quarter

For full-year 2026, management provided guidance:

• RNG delivered: 250 million gallons
• Total fuel volumes: ~324 million gallons
• Adjusted EBITDA: $70 to $75 million
• Revenue: $420 to $440 million
• GAAP net loss: $66 to $71 million

Management emphasized:

• Moderate RNG volume growth with a focus on ramping existing assets
• Constructive but cautious view on environmental credit prices and natural gas-oil spreads

Takeaways

Clean Energy Fuels is at an operational inflection point, with upstream RNG profitability and downstream volume growth underpinning a more stable financial outlook. Management’s disciplined approach to capital allocation and project ramp is prudent given ongoing policy and market uncertainty.

• Upstream Execution: Positive EBITDA from RNG production validates project investments and supports future cash flow growth as new dairies come online.
• Margin Management: Downstream contract renewals are resetting economics, but recurring revenue and customer stickiness remain strengths.
• Policy and Adoption Watch: Investors should monitor 45Z rule finalization, LCFS price trends, and heavy-duty fleet adoption as key catalysts for valuation and growth.

Conclusion

Clean Energy Fuels delivered a record downstream quarter and achieved a pivotal upstream EBITDA milestone, demonstrating the strength of its integrated RNG platform. Operational discipline, measured growth, and regulatory tailwinds position the company for continued improvement in 2026, while competitive and policy risks remain key variables to watch.

Industry Read-Through

Clean Energy’s results reinforce the growing traction of RNG as a transportation fuel, especially as fleets seek cost-effective decarbonization solutions and regulatory programs increasingly reward negative carbon intensity fuels. The company’s experience with contract renewals and credit monetization foreshadows margin compression and competitive intensity across the RNG and clean fuels sector. Peers with integrated models and capital discipline are likely best positioned, while those dependent on spot credit prices or single-market exposure may face greater volatility. The pace of heavy-duty truck adoption and the evolution of federal and state credit programs will remain central industry watchpoints into 2026.

CLNE Energy Renewable fuels RNG Heavy-duty trucking Environmental credits Upstream Fuel distribution