US senators introduce bill to promote NGVs

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, July 10 -- US Senate Majority Leader Harry M. Reid (D-Nev.) joined Sens. Orrin G. Hatch (R-Utah) and Robert B. Menendez (D-NJ) in introducing legislation on July 8 to increase use of natural gas in US motor vehicles.

“Each day, our nation consumes about 21 million bbl of oil, more than 25% of the world’s supply. Nearly 70% is imported from outside our borders. With only 3% of the world’s oil reserves, we cannot produce our way to a safe and secure energy future,” said Reid. “We must get serious about using cleaner-burning natural gas and renewable energy, and this legislation is a strong step in the right direction.”

The three senators said their bill, S. 1408, would expand the alternative fuel vehicle and refueling property tax credits in several ways. It would make all dedicated NGVs eligible for a federal tax credit equal to 80% of the vehicle’s incremental cost, instead of only some NGVs as is the case now. It would make all bifuel NGVs eligible for a 50% federal tax credit for the first time.

The bill would increase allowable incremental cost limits to more accurately reflect costs of producing or converting NGVs. For a light-duty vehicle, the purchase tax credit cap would climb to $12,500 from $5,000. For all other vehicles, the cap would be doubled.

The bill also would extend for 10 years alternative fuel credits for natural gas used as vehicle fuel, for the purchase of an NGV, and for installing NGV refueling equipment. It would let state and local governments issue tax-exempt bonds to finance NGV projects. It would authorize grants for light-duty and heavy-duty NGV engine development.

Other provisions
It would allow 100% of the cost of an NGV manufacturing plant that is placed in service before Jan. 1, 2015, to be expensed and to be treated as a deduction in the taxable year in which the facility was placed in service. This would decrease to 50% after Dec. 31, 2014, and would be phased out by Jan. 1, 2020.

S. 1408 also would require federal agencies, when complying with mandatory federal fleet alternative fuel vehicle purchase requirements, to buy dedicated alternative fuel vehicles unless the agency can show that alternative fuel is unavailable or that purchasing such vehicles would be impractical.

“We saw last summer how the wild fluctuations in oil prices helped to wreck our economy and we’ve seen how pollutants from dirty fuels are wrecking our planet,” said Menendez. “Our economic crisis has shined a spotlight on the urgent need for alternative, cleaner, and cheaper sources of energy that we don’t have to import. By making it easier and cheaper to own a vehicle that runs on natural gas, we can help families save money on energy, create new manufacturing jobs, and clean our air.”

Hatch said gas is an important vehicle fuel alternative not only because of its potential to increase US energy security, but also because it is significantly less expensive. He noted that he lobbied to include provisions encouraging more hybrid and alternative fuel vehicle development and use in the 2005 Energy Policy Act, but added that NGVs have not grown as quickly as gasoline-electric hybrids in the time since.

‘An extra push’
“I believe strongly that an extra push is needed to spur the greater use of natural gas and to get more gas-fueled vehicles on the road,” he maintained. He said Utah is in a position to lead the US in NGV use and refueling station placement, and that the state’s governor, Jon M. Huntsman Jr., has helped promote making the state’s major north-south highway, Interstate 15, an NGV corridor.

T. Boone Pickens, who joined the three senators at their press conference, said that the bipartisan bill would do more to reduce US dependence on foreign crude oil than any other piece of legislation in the past 40 years. “It will accelerate the use of natural gas in vehicles and is the only way I know to quickly and effectively reduce our dependence on foreign oil,” he said.

The three senators introduced their bill a day after Colorado Gov. Bill Ritter announced that his energy office applied to the US Department of Energy for a $10 million grant to dramatically expand compressed natural gas’s use as a transportation fuel in the state.

Contact Nick Snow at nicks@pennwell.com.

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