If there were a national race among clean fuel vehicles Thursday, natural gas vehicles (NGV) would have gotten the checkered flag, shining at the opening of the Los Angeles Auto Show and winning regulatory support in New York state.

Echoing moves in other states and in Congress, The New York Public Service Commission (PSC) approved a utility-sponsored partnership for boosting NGVs in a pilot program geared to demonstrate the economic feasibility and evaluate the impact on utility infrastructure from an uptick in the use of NGVs.

Separately, the Honda Civic Natural Gas, its latest model running on compressed natural gas (CNG), was named the Green Car of the Year at the LA Auto Show. Honda boasts that the NGV Civic is “the cleanest-running internal combustion vehicle” certified by the U.S. Environmental Protection Agency (EPA).

Honda said the 2012 NGV Civic, a fifth generation natural gas-powered car, will be priced at $26,155 and sold at 200 Honda dealerships in 36 states.

And in the halls of Congress, a U.S. Senate version of the House of Representatives’ proposal for creating more use of natural gas in transportation, New Alternative Transportation to Give Americans Solutions Act of 2011 (NAT GAS Act), was unveiled last week as an alternative means of expanding tax credits for gas infrastructure and vehicles.

Senate Majority Leader Harry Reid was joined by Sens. Richard Burr (R-NC), Saxby Chambliss (R-GA) and Robert Menendez (D-NJ) in proposing legislation that they said would boost domestic production of vehicles capable of running on either compressed natural gas (CNG) or liquefied natural gas (LNG). To pay for tax credits for vehicles and fueling infrastructure the senators are proposing a temporary user fee on the use of CNG and LNG in vehicles.

One of the nation’s largest CNG/LNG for transportation providers in terms of fuel and infrastructure, Seal Beach, CA-based Clean Energy Fuels Corp., is supporting the Senate bill, saying it will provide a five-year extension of the tax credit incentives for the purchase of natural gas vehicles.

“Backing by Congress is critical for our nation to succeed in its goal of utilizing domestic natural gas instead of imported petroleum,” said Clean Energy CEO Andrew Littlefair.

While the proposed measure is a variation of a legislative initiative advocated by former oil billionaire-turned-clean fuel advocate T. Boone Pickens, it has stirred conservative opponents in Congress and in think tanks such as the Heritage Foundation. Pickens has been pushing for passage of the NAT GAS Act for years (see NGI, April 4).

The move in the Senate attempts to “leverage the arbitrage between oil and natural gas,” according to an analysis by Baird Equity Research. “The user fee to fund the bill diverts part of the savings realized when natural gas is used as a transportation fuel instead of oil.”

Because gas is “cheap and abundant,” Menendez said the fuel should be used more in the United States to displace oil. He claimed the bill would “create jobs, lower transportation costs, lower pollution in urban areas, and make us more energy secure.” And he said the measure would not add to the nation’s bulging budget deficit.

Analysts, however, are skeptical that Congress can turn its attention to the issue in the midst of fiscal year 2012 budget issues.

An analysis issued by Menendez’s office envisions CNG selling for the gasoline gallon-equivalent of $2.33 compared to average per-gallon gasoline prices around $3.46.

The Senate proposal aims to allow tax credits to be applied against taxpayers’ minimum tax and allows transfers of the tax benefits to sellers, manufacturers or lessees in cases of leased vehicles. It would also modify the credit for the purchase of CNG and LNG vehicles.

In other actions, the governors of Colorado, Oklahoma, Wyoming, Utah and Pennsylvania recently signed a pact designed to increase the use of NGVs in the fleets of each state. Through the initiative, the five states would each decide how many NGVs to commit to buy, and the request would specify that the ultimate cost of the vehicles should be comparable to gasoline-powered vehicles.

And regulators in New York, despite that state’s blockage of natural gas drilling, last Thursday approved a utility-sponsored partnership for a pilot program boosting NGVs. Presumably, they would get their natural gas from Pennsylvania.

The $3.5 million program, which is to run through March 31, 2015, will provide one-time credits for refueling stations and for the purchase of NGVs. The estimated payback time for NGV purchasers is estimated at four to eight years. National Fuel provides the customers with a one-time cost buydown in return for a transportation service contract of up to six years, and the service contract allows the recovery of the cost of the buydown.

National Fuel estimates that there are about 112,000 NGVs, mostly trucks, operating in the United States with about 30 different manufacturers producing 100 models (light, medium and heavy duty). While natural gas for the vehicles costs from a third to a half less than equivalent gallons of gasoline, the added cost of the vehicles is $7,000-22,000 compared to comparable gasoline and diesel-powered vehicles, and refueling stations can cost up to $1.5 million.

For Honda’s NGV Civic, the car-of-year award was achieved over four competitors: Ford Focus Electric, Mitsubishi i, Toyota Prius V, and Volkswagen Passat TDI. Officials with various environmental groups comprised the jury making the selection, according to a green car trade publication, Green Car Journal, whose editor, Ron Cogan, said the Civic Natural Gas was unique among vehicles in operation today.

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