Obama Again Proposes U.S. Tax Credits to Cut Net Cost of Natural-Gas Trucks

This story appears in the March 25 print edition of Transport Topics.

President Obama again proposed federal tax credits for buyers of trucks powered by natural gas, including such a plan in his newest energy initiative on March 15.

Obama is proposing that natural-gas truck buyers earn a tax credit equal to 50% of the price difference between diesel-powered trucks and natural-gas models, which can be upward of $40,000.

The president, who has endorsed a trucking tax credit before, included it in the energy plan he unveiled earlier this month, “Blueprint for a Clean and Secure Energy Future.”

The plan “commits to partnering with the private sector to adopt natural gas and other alternative fuels in the nation’s trucking fleet,” a White House statement said.

The tax credit program for medium- and heavy-duty natural-gas trucks would last five years.

Under the plan, Congress would have to create an “Energy Security Trust” of $2 billion over 10 years, financed with revenue from federal oil and gas royalties. The trust would support research on new fuel technologies and alternatives.

Twice last year, Obama touted his tax credit idea for natural-gas trucks — in January at an LNG fueling depot for UPS trucks in Las Vegas and in March during a visit to Daimler’s Freightliner plant in Mount Holly, N.C.

American Trucking Associations is seeking the 50% tax credit, as well as a “relaxation” of the federal excise tax on trucks powered by natural gas, said Glen Kedzie, assistant general counsel who oversees environmental affairs for ATA.

“We’re not saying a permanent relaxation of the federal excise tax; we’re not saying a permanent tax credit,” Kedzie said. “We just need a jump-start to get this ball rolling a little faster than what it currently is.”

The high cost of the trucks and the subsequently higher excise tax are “barriers” to fleets considering converting to natural gas, Kedzie said.

“We definitely want research money for alternative fuels,” he added.

Trucking would like to see new research money focused on truck fuels but supports research such as that on batteries for cars because the findings eventually might be “scaled up” for trucks, he said.

Anytime the president mentions trucks and natural gas, it tells trucking he’s thinking about its needs, which is “very critical to us,” Kedzie said.

“Now, if we can get the same push from the members in Congress, we’ll be set to go,” he added.

Bills were introduced last year to provide incentives to trucking such as the tax credits, but the House never voted on its bill, and the Senate rejected a bill there.

The president’s latest effort on behalf of natural-gas truck buyers is not receiving a warm welcome in Congress, either.

“The president has offered this proposal in the past, but I’m skeptical about it,” Rep. Tom Petri

(R-Wis.) told Transport Topics. “There are already natural-gas trucks in use without federal involvement and it’s continuing to grow, so I don’t really see the need for a tax credit,” he said.

Many big fleets are converting already to natural gas, and infrastructure is already being built, especially in his home state, Petri added.

Other lawmakers rejected the president’s energy plan outright, saying they did not support it because the plan did not allow for expanded oil and gas drilling offshore or in Arctic wilderness areas.

At least one natural-gas advocate said the 50% tax credit is a necessary incentive to speed the transition away from petroleum.

“The natural-gas vehicle market is already growing, but the vehicle incentives the president calls for would help accelerate that growth and help displace foreign oil use even faster,” said Richard Kolodziej, president of NGVAmerica, an advocacy group for greater natural-gas use in transportation.