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Federal Legislation Introduced to Significantly Increase Natural Gas Vehicle Use in America
A CryoGas International Special Report

July, 2009

On April 1, 2009, HR 1835, the New Alternative Transportation to Give Americans Solutions (NAT GAS) Act was introduced by Congressmen Dan Boren, John Larsen, and John Sullivan. The bill aims to transform how Americans fuel transportation vehicles and to reduce imported oil.

Specifically, HR 1835 amends the Internal Revenue Code to: (1) allow an excise tax credit through 2027 for alternative fuels and fuel mixtures involving compressed or liquefied natural gas; (2) allow an income tax credit through 2027 for alternative fuel motor vehicles powered by compressed or liquefied natural gas; (3) modify the tax credit percentage for alternative fuel vehicles fueled by natural gas or liquefied natural gas; (4) allow a new tax credit for the production of vehicles fueled by natural gas or liquefied natural gas; and (5) extend through 2027 the tax credit for alternative fuel vehicle refueling property expenditures for refueling property relating to compressed or liquefied natural gas and allow an increased credit for such property.

HR 1835 requires 50 percent of all new vehicles purchased or placed in service by the US government by December 31, 2014, to be capable of operating on compressed or liquefied natural gas. It also authorizes the Secretary of Energy to make grants to manufacturers of light and heavy duty natural gas vehicles for the development of engines that reduce emissions, improve performance and efficiency, and lower cost.

This bill is now in committee, the first step in the US legislative process. Committees deliberate, investigate, and revise bills before they go to general debate.

In the race for best, renewable, and affordable alternative fuel, there are many contenders. A great deal of US R&D has been focused on hydrogen and vehicular fuel cells, as we have reported in this magazine. Last month, however, the US Department of Energy (DOE) terminated all hydrogen R&D and fuel cell vehicle development programs from their FY 2010 budget request (see Editorial, CGI, June 2009, p. 1). In Energy Secretary Steven Chu’s news briefing to cover the highlights of that budget on May 7, 2009, he reported that DOE was “moving away from funding vehicular fuel cells for transportation to technologies with more immediate promise.” With characteristics like pipelines, fueling stations, and cars and trucks that already run on natural gas products — and the availability of natural gas in the US — many see CNG vehicles as a good bet for a near-term alternative fuel choice. (See, “CNG A Bridge to Alternative Fuels,” Energy Initiatives, CGI, December 2008, pp. 50-51).

Clean Energy Fuels Corp. (www.cleanenergyfuels.com) of Seal Beach, CA is a supporter of the New Alternative Transportation to Give Americans Solutions Act. In a May 8th press release, Clean Energy President and CEO Andrew J. Littlefair said, “Worldwide, natural gas vehicle use is expanding dramatically. Natural gas vehicle solutions are no longer in the proof of concept stage, but rather are being rapidly adopted by many countries seeking to reduce petroleum use and improve the environment. The support by the federal government through this legislation can have a meaningful impact on how we as Americans manage our energy resources, swapping more expensive imported oil for less costly domestic natural gas — an abundant, American transportation fuel.”

Seeking to accelerate the production and use of natural gas-fueled vehicles, the bi-partisan- sponsored legislation would greatly enhance alternative fuel tax credits for natural gas used as a vehicle fuel, for the purchase of natural gas-fueled vehicles, and for the installation of natural gas vehicle refueling properties. The bill would also encourage OEMs to produce dedicated natural gas and bi-fuel natural gas vehicles, and require federal government use of natural gas vehicles in a portion of its fleets.

Clean Energy is a leading provider of natural gas (CNG and LNG) for transportation in North America and has a broad customer base in the refuse, transit, ports, shuttle, taxi, trucking, airport, and municipal fleet markets, fueling more than 15,000 vehicles at 176 strategic locations across the US and Canada. Clean Energy owns and operates two LNG production plants, one in Willis, TX and one in Boron, CA, with combined capacity of 260,000 LNG gallons per day and designed to expand to 340,000 LNG gallons per day as demand increases. It also owns and operates a landfill gas processing facility.

This spring, Republic Services, Inc., the City of Boise, Idaho’s waste and recycling collection services contractor, awarded Clean Energy a contract to build and operate a CNG time-fill station and provide fuel for Republic’s planned deployment of a new CNG refuse truck fleet that will be the first in Idaho. Clean Energy also entered into an agreement to acquire the natural gas fueling station business of Exterran Holdings, Inc. The acquisition agreement includes natural gas station operations and maintenance (O&M) contracts covering approximately 25 million GGEs (gasoline gallon equivalents) of natural gas fuel on an annual basis for four transit operators (eight fueling facilities).