By Michele Fuetsch, Staff Reporter This story appears in the Dec. 1 print edition of Transport Topics.
Advocates of natural gas are pressing Congress to pass legislation in the lame-duck session that would end the disparity between the federal fuel tax on liquefied natural gas and diesel fuel.
Bills introduced last year would put the fuels on equal footing by basing the LNG tax on energy generated, rather than gallons pumped. The bills, however, are stalled in the House and Senate, which will open a new session in January.
The strategy for the lame-duck session is to get the measures attached to bills that may move through both bodies before the end of the year, said Matthew Godlewski, president of Natural Gas Vehicles for America.
“We’re talking with leaders and key committee members right now to try and move the extenders package, and as part of that, what we’re saying is: ‘Let’s go ahead and do all this at once; let’s move the alternative fuel tax credits and then take care of this LNG-diesel tax fix,’ ” Godlewski said.
The extender bill would give tax credits to more than 40 groups, including the trucking industry for buying new equipment, as well as those who pump natural gas into vehicles.
Clean Energy Fuels Corp., one of the nation’s largest producers of LNG, also said it believes Congress should address the tax-equity issue.
“Obviously, we would like for it to happen in the lame-duck session, but if not, hopefully, they will take it up in the new Congress as soon as possible,” Clean Energy spokesman Patric Rayburn said.
Under the existing federal fuel-tax system, LNG is taxed at almost the same rate as diesel — 24.4 cents a gallon. However, LNG has less energy per gallon than diesel fuel, so, on an energy-equivalent basis, LNG effectively pays 170% of the diesel tax rate, NGVAmerica said.
In a recent letter to congressional leaders, NGVAmerica said the “current highway excise tax treatment of LNG is a disincentive to investment in new LNG trucks and fueling stations, and should be corrected to encourage capital investments.”
Compressed natural gas already has tax equity with diesel fuel.
American Trucking Associations supports tax equity for LNG, and ATA’s counsel for environmental affairs, Glen Kedzie, pointed out that taxes on fuel were levied to pay for highways.
The disparity between the way LNG and diesel are taxed “runs afoul of the original intent of the federal fuel tax,” Kedzie said.
LNG is being disproportionately taxed to support the roads, he said.
“The pavement doesn’t know the difference between what fuel is powering the vehicle.”
Godlewski said there is broad bipartisan support for LNG tax equity, as demonstrated this summer when the Senate attached a measure to the extension of MAP-21, the highway reauthorization bill.
However, the House stripped the LNG and other amendments from the extension before it was approved, he said.
If tax equity is not achieved in the lame-duck session, natural-gas advocates will try to get the LNG provision in the reauthorization bill that is to be written by May, when MAP-21 expires, Godlewski said.
