Propane and Natural Gas Vehicles Could Get a Nice Boost from New Legislation

9258_vocationalsmith2 Propane and Natural Gas Vehicles Could Get a Nice Boost from New Legislation State representatives Sean J. O'Brien and Dave Hall introduced legislation into the Ohio House of Representatives this week that is aimed at goosing the state's alternative fuel vehicle sector.

Central to the proposed bill is a gaseous fuel vehicle conversion program, covering vehicles that run on compressed natural gas (CNG), liquefied natural gas (LNG) or propane autogas. Through the program, the state would offer grants to public fleets – namely, state and municipal entities, school districts and public transportation agencies – as well as nonprofit corporations.

These grants would cover 100% of the cost of CNG, LNG or propane vehicle conversions, or 100% of the incremental cost of buying an OEM natural gas or propane vehicle.

Should the bill be enacted, the specific eligibility requirements would need to be specified. But the bill does note that the cap on these grants would be $500,000 per ‘eligible entity.’ And O'Brien's office tells NGT News that the grant program overall would be capped at $16 million annually.

For private business fleets and individuals, the bill would enact tax credits for alternative fuel vehicle purchases or conversions. Like the public fleet grant program, these tax incentive would cover CNG, LNG or propane vehicles – both dedicated and bi-fuel models.

The credits for private fleets and consumers would be equal to 50% of the incremental cost of acquiring an alt-fuel vehicle from an OEM, or 50% of the vehicle conversion cost. The legislation does include per-vehicle caps on the tax incentives: For vehicles 8,500 lbs. GVWR or less, $5,000; for medium-duty vehicles 8,500 lbs. to 10,000 lbs. GVWR, $10,000; and for medium- and heavy-duty vehicles that come in at more than 10,000 lbs. GVWR, $25,000.

The bill specifies that the grant and tax-credit programs be phased out after a five-year period. This measure, says Clean Fuels Ohio Executive Director Sam Spofforth, was particularly helpful in attaining the immense co-sponsorship for the O'Brien/Hall bill – some 61 fellow House members, along bipartisan lines, O'Brien's office confirms.

‘That sends a very important message,’ Spofforth tells NGT, noting that the Ohio legislature will likely find a bill that does not carry potentially permanent government subsidies more palatable. But at the same time, the legislation would provide fleets with a near-term lift over a historically steep barrier to entry: the often high up-front cost of alt-fuel vehicle deployments.

To also help spur the natural gas vehicle sector, the bill outlines a phased-in approach to taxing CNG as a motor vehicle fuel. One gasoline-gallon equivalent of CNG would be taxed at pennies per GGE during the law's first year, and that figure would increase gradually over a five-year period to match the taxes on gasoline and diesel.

Spofforth is bullish about the bill's incentive programs, but he notes that additional measures would be welcome. For instance, there are safety-related codes that help govern details such as NGV maintenance facilities and CNG cylinders, but getting areas like these covered statutorily would bring more standardization to the industry. Also, there are matters such as regulations covering the weight of LNG-fueled vehicles, for example, that need attention.

Of course, the bill is in its early stages, and there will be hearings and testimony, and various iterations of the legislation. But overall, it seems that Ohio is taking steps to fortify its position in the alt-fuels sector.

‘There's a lot of growth right now, and the transportation world is changing before our very eyes,’ Spofforth says. ‘We're very encouraged.’

To see a scanned copy of the bill, send an email to bates@ngtnews.com.

Photo: A TruStar Energy/Smith Dairy CNG refueling station near Canton, Ohio

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