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NAT GAS Proposal Could Split Clean Fuel Lobby

Despite the pomp surrounding Wednesday's introduction of the New Alternative Transportation to Give Americans Solutions Act (NAT GAS Act) to Congress, an investment bank warns the bill faces "significant" hurdles to passage.

Meanwhile, supporters of competing alternative energy industries complain that the legislation gives natural gas an unfair advantage, and one rival plans to have similar legislation introduced within 30 days.

Investment bank FBR Capital Markets (FBR) said Thursday that while rising gasoline prices, turmoil in the Middle East and support from President Obama all help improve the NAT GAS Act's chances for passage this time around, several roadblocks remain.

"There are significant headwinds, including the brutal ongoing budget battle that makes spending for a specific industry less likely," FBR said in an energy policy update. "The new Republican majority in the House is fueled by the Tea Party's focus on the budget and spending, which significantly complicates increased subsidies."

The bill, also known as HR 1380, calls for creating or extending tax credits for the purchase of natural gas vehicles, fuel and infrastructure over the next five years (see Daily GPI, April 7).

FBR said the 2011 version of the bill would be more likely to pass because of its smaller five-year scope. By comparison, its doomed predecessor covered 17 years and was estimated to cost between $4 billion and $7 billion, one possible reason for its failure to muster enough support for a House vote in 2010 (see Daily GPI, April 15, 2010; March 25, 2010).

"The Congressional Budget Office score of this legislation will be a key factor," FBR said.

But the bank cautioned that the bill's backers may have to seek support from other interest groups, which would saddle the NAT GAS Act with amendments that may prove too controversial or expensive in a House controlled by Republicans with an eye for cutting spending.

"Moreover, Republicans have used a philosophical opposition to 'picking winners and losers' in energy to oppose environmental subsidies," FBR added.

One of the perceived "losers" would be autogas -- also known as liquefied petroleum gas (LPG) when used as a fuel -- which, like natural gas, has qualified for fuel, vehicle and infrastructure tax credits. Those credits are due to expire at the end of the year.

"We're a bit troubled by the exclusion or the attempt to pick winners in Washington," Autogas for America founder Stuart Weidie told NGI on Thursday. "We feel the marketplace should be determining from multiple viable options what should be deployed in fleets and private vehicles."

Weidie said that despite years of cooperation on other bills, the natural gas industry had rebuffed attempts to collaborate this time to include LPG as a fuel that would qualify for continued tax credits. He said as a consequence, his organization is planning to have separate legislation supporting LPG introduced within 30 days.

"We're in the final stages of getting the sponsors lined up," Weidie said. "We have a significant number of legislators who are interested in co-sponsoring it, and many of them also support natural gas."

Officials at Michigan-based ROUSH Clean Tech and the California-based website AutoChannel.com also derided the NAT GAS Act for promoting only one alternative transportation fuel. They are supportive of the broad energy policy articulated in March by the Obama administration, which they think would better increase the adoption of fleet vehicles that run on a variety of alternative fuels.

"While we are supportive of all alternative fuels, we won't be as successful in achieving [the Obama administration's] vision if each industry introduces legislation that plays to their own agenda, like we saw with the introduction of the NAT GAS Act," said ROUSH President Jose Thompson.

Despite the flap, Clean Energy Fuels Corp. stressed the bipartisan support for the NAT GAS Act and lauded the bill's tax credits for the purchase of natural gas vehicles (NGV) and the use of natural gas for transportation.

"This backing by Congress is critical for our nation to succeed in its goal of creating a new alternate energy economy that's not dependent on imported petroleum, and we applaud efforts to achieve this most important objective," said Clean Energy CEO Andrew Littlefair.

Stressing that President Obama encouraged the proposed legislation in his March 30 energy policy speech, Littlefair said the proposal would "restore and expand" the NGV tax credit, making the technology eligible for a credit equal to 80% of the vehicle's incremental costs, subject to caps depending upon vehicle size. It would also extend for five years the 50 cents/gal alternative fuel credit for the purchase of natural gas fuel and would expand tax credit incentives for developing natural gas fueling infrastructure.

It is Littlefair's contention that natural gas vehicle use is expanding dramatically on a global basis. Propane-based ROUSH CleanTech stressed the National Clean Fleets Partnership backed by President Obama and his Department of Energy as the way to go, allowing for various alternative fuels, which it said the partnerships' five charter members -- AT&T, FedEx, PepsiCo, Verizon and UPS -- are doing with their own fleets.

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