Three House lawmakers last week introduced bipartisan legislation (HR 1835) that would expand and extend by 18 years tax incentives promoting the use of natural gas as a transportation fuel.
The legislation would extend for 18 years three existing tax credits for natural gas vehicles (NGVs), including the alternative fuel credit for natural gas used as a vehicle fuel; the purchase of NGVs; and property credit for NGV refueling stations. The tax credits, which have been in place since 2006, are scheduled to expire late this year or at the end of 2010.
The measure, which is sponsored by Reps. Dan Boren (D-OK), John Larson (D-CT) and John Sullivan (R-OK), would make all dedicated NGVs eligible for a credit equal to 80% of the vehicle’s incremental cost; make all bi-fuel NGVs eligible for a credit equal to 50% of the vehicle’s incremental cost; and would increase the refueling property tax credit to $100,000 per station from $50,000. Incremental cost is the cost of a NGV over the cost of a similar petroleum-power vehicle.
It also would increase the allowable incremental cost limits to more accurately reflect the cost of producing or converting NGVs. For light-duty vehicles, for example, the purchase tax credit would be increased to $12,500 from the current $5,000, according to the bill. For all other vehicle weight classes, the purchase tax credit cap would be doubled.
In addition, the bill would make the vehicle and infrastructure tax credits count against alternative minimum tax provisions and would make them transferable. “Many potential purchasers do not have sufficient tax liability to benefit from these tax credits. This is especially true for fleets that wish to purchase a large number of natural gas vehicles at one…Allowing these credit to be transferable creates an incentive for state and local governments to transition their fleets to natural gas-fueled vehicles and trucks,” the lawmakers said.
The measure would create a new tax credit for original equipment manufacturers that produce dedicated and bi-fuel NGVs as well. The tax credit would be equal to the lesser of 10% of the manufacturer’s suggested retail price of the vehicle or $4,000. The aggregate credit per manufacturer is limited to $200 million. All major auto manufacturers make NGVs for overseas markets, the lawmakers noted, adding that they want to “incentivize” them to begin offering these vehicles in the United States.
Moreover, it requires that at least 50% of the new vehicles purchased and placed into service by the federal government be capable of operating on gas by Dec. 31, 2014. And the bill would provide grants for the development of light- and heavy-duty NGVs.
“To meet their full market potential, new, cleaner, more efficient light- and heavy-duty natural gas engine technologies need to be developed…certified by EPA [Environmental Protection Agency] and integrated into truck and bus [chassis]. Despite this need, the Department of Energy has long ceased funding critical natural gas vehicle research, development and demonstration,” the House lawmakers said.
Energy executive T. Boone Pickens applauded the bill. It “will provide the immediate incentives and long-term stability for companies to seriously move from imported diesel and gasoline to domestic natural gas. Last month AT&T announced a program to replace 8,000 vehicles — or one fifth of its fleet — to run on natural gas. I know that this legislation will motivate many others” (see NGI, March 16).
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