Compressed Natural Gas - Law and Policy

Goals

To identifty the laws and policies that impact the use of compressed natural gas, particularly those that relate to the automotive industry and the environment.

Early Findings

  • On 23 December 2020, the Federal Transit Authority was directed to refocus its efforts and expand the low/no emission grant program to include all qualifying low emission fuel sources, not just those that are electric, as had been the case recently. This expansion will make natural gas conversions eligible for grants.
  • The Appropriations Committee overseeing the FY 2021 Transportation-HUD Appropriations Bill directed the FTA to "implement the low or no emission section 5339(c) competitive grant program in a manner that encourages a variety of different fuel types including electric, natural gas, hydrogen and other alternative fuel types. FTA should give consideration for procurements that reduce an agency’s overall greenhouse gas emissions and takes into consideration the resources available to the agency to do so. The Committee reminds FTA that for some agencies, the transition to zero emission requires the use of low emission buses to bridge funding and technology gaps."
  • The Alternative Fuel Excise Tax Credit was designed to encourage alternative fuels such as natural gas. A tax credit of $0.50 to the gallon was available to any entity paying federal excise tax on the sale or use of the fuel in a motor vehicle. To obtain the credit, there was a requirement that eligible entities registered with the Internal Revenue Service. The credit also applied to tax-exempt entities like federal and state government that dispensed the fuel from an onsite fueling station. Unfortunately, the Alternative Fuel Excise Tax Credit expired on 31 December 2017. This could have contributed to a reluctance by entities to convert vehicle fuel systems to natural gas alternatives. However, Public Law Act 116-94 retrospectively extended the credit through to 31 December 2020. It is unclear whether the credit will be extended again.
  • The Alternative Fuel Infrastructure Tax Credit originally expired on 31 December 2016, which could have contributed to a slowing in those adopting alternative fuels such as natural gas. Like the Alternative Fuel Excise Tax Credit, this credit was retrospectively extended by Public Law Act 116-94 through 31 December 2020. Again, it is unclear if there will be a further extension. The Alternative Fuel Infrastructure Tax Credit provided a tax credit for 30% of the cost (up to $30,000) of fueling equipment for alternative fuels, including natural gas. The tax credit could be carried back one year or forward up to 20 years.
  • The State Energy Program (SEP) provides grants that " assist in designing, developing, and implementing renewable energy and energy efficiency programs." This would include the use of compressed natural gas as an alternative to fossil fuels, for example.
  • As a program which aims to reduce ground level emissions at commercial airports "located in designated ozone and carbon monoxide air quality non attainment and maintenance areas," the Voluntary Airports Low Emissions Program encourages the use of low emission vehicles, such as those fueled by compressed natural gas, and the development of fueling stations of a similar nature.

Summary

  • In our initial hour of research, we have begun to identify laws and policies related to the use of compressed natural gas in the automotive industry. One of the issues is it is difficult to determine the laws and policies that negatively impact the use of compressed natural gas in the automotive and environmental context. This is because it requires an analysis of all laws relating to other fuel types, which is overly time-consuming. We suggest further research focus on the laws and policies that promote the use of compressed natural gas in the automotive and environmental context and the identification of any reasons why those laws and policies have not been the incentive they were intended to be.
  • Our first proposal relates specifically to vehicles and the use of compressed natural gas as fuel (such as the examples in points 1-4 above), while the second proposal considers the broader context and looks at the promotion of the use of compressed natural gas as energy-efficient resource and way to lower the environmental impact of industry (such as the examples in points 5-6 above).
  • We have assumed a US focus for the research, although this could easily be expanded to include Canada if required, as we note the reference given in the chat includes both countries. A global context would potentially create some issues. If a global context is required, we would suggest a comparative regional analysis of policy. This could be divided into Europe, the Americas, the Middle East and Africa, and the Asia Pacific.

Proposed next steps:

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