Federal Alternative Fuel Tax Credits Back in Discussion

The U.S. House of Representatives on Wednesday voted to approve H.R.5771, the Tax Increase Prevention Act of 2014, which contains a provision that would retroactively extend the federal $0.50/gallon alternative fuels excise tax credits through the end of this year.

These credits, which cover compressed natural gas (CNG), liquefied natural gas (LNG), propane autogas and other products used as transportation fuels, expired at the end of 2013. Over the years, the 50-cent incentive has helped alternative fuels gain a foothold by offering retail, commercial and private refueling owners a means to shore up the bottom line or pass fuel-cost savings on to customers.

In the case of alternative fuels, fleets have represented the lion's share of that customer base, with operators routinely finding prices under $2.00/GGE – and even under a dollar, for both CNG and propane.

Notably, H.R.5771 would also bring back the 30% alternative refueling infrastructure tax credits (capped at $30,000) and the $1,000 home refueling tax credits.

‘We appreciate the broad political support for policies that continue to drive down our nation's dependence on imported petroleum,’ says Matthew Godlewski, president of NGVAmerica. ‘Congress recognizes the importance of fuel diversity, and this is one of several steps they can take to foster greater adoption of natural gas in transportation.’

Reinstating the excise tax credits has been a stated goal of key industry groups, including NGVAmerica. And although the House's vote this week could be a positive development, a one-year retroactive extension is not what the alt-fuels sector has been seeking. The planning horizon for building CNG and other refueling infrastructure certainly extends far beyond a year, and a lack of long-term policy certainty is generally a hindrance to market growth.

Indeed, this is not the first time that the credits have expired. Congress and the White House last addressed the measure collectively during the ‘fiscal cliff’ debacle in late 2012, at which time the credits had already lapsed for a full year.

When legislators did take action during the first week of January 2013, the credits were brought back to the fold both retroactively (to cover all of 2012) and for the coming year, 2013.

This time, though, there is no such provision for 2015. Not yet, at least.

The alternative fuels excise tax credits represent just a small piece of H.R.5771, which covers a wide range of individual, business and energy tax incentives. Many of those credits, too, were extended only through 2014 – and the hope is that the new Congress will take up more thorough, long-term tax extenders legislation early next year.

For now, however, the Senate next takes a look at the current legislation. Stay tuned.

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