The U.S. House of Representatives and Senate passed two bills this month which will be a great help for the alternative fuel and alternative fuel vehicles industries.

Tax Increase Prevention Act

On Tuesday, the U.S. Senate passed the Tax Increase Prevention Act, which includes a provision to extend the federal $.50 per gallon alternative fuel excise tax credits and a return of the 30% alternative refueling infrastructure tax credits. The bill had previously been passed by the House.

These tax credits were made available to individuals, businesses, and other entities that use alternative fuel products.

The excise tax credits cover compressed natural gas (CNG), liquefied natural gas (LNG), propane autogas, and other alternative transportation fuels. The incentive expired at the end of 2013, and it had not been extended this year.
The bill extends the measure retroactively through 2014. All alternative transportation fuel purchases made this calendar year are eligible for the credit.

The 30% alternative refueling infrastructure tax credit is an incentive designed to promote the construction of alternative transportation fueling stations. The credit is capped at $30,000.
The bill also reinstates a $1,000 home refueling tax credit for 2014.

National Defense Authorization Act

Also this month, the U.S. Senate and House passed the National Defense Authorization Act (NDAA) for fiscal year 2015. This bill contains provisions which will incentivize production of natural gas vehicles by removing caps on the number of Corporate Average Fuel Economy (CAFE) compliance credits that manufacturers can earn in producing bi-fuel vehicles.

CAFE compliance credits were born from The 1975 Energy Policy and Conservation Act (EPCA) and 2007 Energy Independence and Security Act (EISA).

A manufacturer’s CAFE is calculated through the fuel economy, expressed in miles per gallon, of all of the passenger and light-duty vehicles in a manufacturer’s given model year. Manufacturers are allowed to earn CAFE credits in any year they exceed CAFE requirements, which they may use to offset deficiencies in other years. They may also earn credits fort eh production and sale of qualifying alternative fuel vehicles.

Existing rules place a cap on the number of CAFE compliance credits manufacturers earn by producing bi-fuel vehicles. To date, most manufacturers have produced vehicles capable of running on E85 in order to earn their credits. Manufacturers also earn CAFE credits with no cap on electric vehicles.

DEC 14 House and Senate

The National Defense Authorization Act (NDAA) is expected to incentivize the production of natural gas vehicles. Credit: NAFTC.

A section of the NDAA amends U.S. code to remove the CAFE compliance credit cap for bi-fuel natural gas vehicles.

While several manufacturers already produce bi-fuel natural gas vehicles, the new CAFE rules are projected to increase the number of natural gas vehicles that are produced in the United States.
“This is the most significant NGV legislation passed by the Congress in some time, and we believe it will help move the ball forward in expanding the use of natural gas as a mainstream transportation fuel,” remarks Matthew Godlewski, president of NGVAmerica.

President Obama is expected to sign both bills into law.

Share this: