Fletcher files bill to boost fleets powered by natural gas
WASHINGTON — U.S Rep. Lizzie Fletcher, D-Houston, on Thursday filed a bill that aims to the boost adoption of vehicles that run on natural gas at a time when supplies of natural gas are so cheap and plentiful that drillers burn it off rather than pay the costs of transporting.
The bill, which Fletcher co-sponsored with Rep. Markwayne Mulllin, R-Okla., would revive a lapsed federal tax credit for the purchase of alternative fuels such as compressed natural gas, liquefied natural gas and natural gas harvested from landfills and other sources.
The tax credit lapsed at the beginning of 2018. Fletcher’s legislation would would give a 50 cent tax credit to buyers of the fuel for each gallon of CNG, LNG and renewable natural gas purchased through 2025. After that, the tax credit would be reduced to 25 cents per gallon through 2027.
The goal of the bill is to boost adoption of CNG and LNG vehicles among heavy-duty fleets by lowering the cost of fuel.
Fleet operators such as the package delivery service UPS, the Houston trash hauler Waste Management and the Metropolitan Transit Authority of Harris County have adopted natural gas-powered vehicles to reduce their carbon footprint. Natural gas-powered vehicles are usually thousands of dollars more expensive to buy than their gasoline or diesel-fired counterparts, but advocates say they produce much fewer emissions and save money on fuel.
“This tax credit encourages investments in cleaner fuel options for vehicle use,” Fletcher said in statement. “The alternative fuels tax credit incentivizes innovation of alternative fuels, like natural gas, which leads to lower costs and reduced greenhouse gas emissions through these cleanerburning fuels.”
Mixed feelings
Environmentalists say they have mixed feelings about natural gas vehicles. Some embrace their value in reducing air pollution while others oppose the horizontal drilling and hydraulic fracturing that comes with natural gas production,which typically releases methane, the main component of natural gas and a potent greenhouse gas contributing to global warming.
Daniel Gage, president of the natural gas vehicle advocacy group NGVAmerica, said he expects the bill to enjoy bipartisan support in the House and Senate. He believes that the bill would provide further incentive to reduce the practice among drillers known as flaring, in which producers in the Permian Basin of West Texas and other shale plays burn off natural gas on site instead of transporting it via pipeline to markets.
“Not only are dollars burning up into the atmosphere, methane is being released,” Gage said. “If we can capture that gas and use it on the roads, that would be taking care of two problems. It’s a win-win.”
The tax credits would benefit oil and natural gas companies in Houston by expanding the market for CNG and LNG as transportation fuels. NGV America estimates that the tax credits would cost an estimated $691 million in 2020, but result in $5.8 billion of private investment and $9.9 billion of economic growth.
State taxes for CNG and LNG vary but the federal government levies a 20.4 cent per diesel gallon equivalent tax on CNG and a 24.3 cent per gallon tax for LNG. Texas adds a 15 cent per gallon tax for both fuels. Buyers would still pay those taxes at the pump — the money goes to federal and state highway projects — and then claim the credit on their income taxes.
The bill would allow buyers to retroactively claim CNG and LNG fuel purchases from 2018 and 2019.