An alternative fuel transportation tax credit proposed by House members from Texas and Oklahoma could accelerate growth in the natural gas vehicle (NGV) sector, according to an industry trade group.

Legislation sponsored by Reps. Lizzie Fletcher (D-TX) and Markwayne Mullin (R-OK) proposes to reinstate the lapsed 50-cent/gal alternative fuels tax credit (AFTC) retroactively for 2018 and 2019. The bill also would establish a five-year extension (2020-2024) followed by a two-year "phase-down" at 25 cents/gal in 2025 and 2026.

The proposal, which could be included in some of the budget legislation lingering in Congress, carries major potential for the public transit sector and large regional and national fleet operators. NGVAmerica President Dan Gage said the tax credits are a "needed incentive" for private and public sector fleet operators.

"With the credit, America's transit agencies can continue to invest in cleaner, commercially available and proven natural gas-powered buses without reducing service or increasing fares," Gage said.

The Renewable Natural Gas (RNG) Coalition also supports the AFTC extension, according to spokesperson Marcus Gillette. He called it a "critical mechanism" for increasing deployment and adoption of more environmentally friendly alternative fuel vehicles. The use of more RNG in transportation also can be helped by the tax credits, he noted.

The latest legislative package includes some provisions that NGVAmerica opposes since they only benefit zero emission, mostly electric vehicle (EV) alternatives. One provision is a credit for manufacturers of heavy duty zero emission EV applications. Gage wants near-zero emission NGV engines to also be included, since they are the only commercially available heavy duty fuel alternative on the market now.

"We can't have cleaner air without cleaner trucks," Gage said. The proposed credit “overlooks technology that is market ready, proven and affordable today."

Gage said a longer-term extension of AFTC would provide "investment certainty for fleets of all shapes and sizes" to address clean air and climate change mitigation goals. AFTC was last extended to the end of 2017.

In March, a bipartisan group in the Senate introduced a bill to extend the 50-cent/gal AFTC for 2018 and 2019, drawing praise from the NGV sector, which pushed for the extension. So far the bill has not gone anywhere. A separate Senate Energy Task Force this past summer examined 12 different expired or expiring temporary tax provisions for energy use, but nothing on AFTC.