New Senate Bill Looks to Offer Massive Tax Breaks for Natural Gas Vehicles
Jason Mick (Blog) - July 13, 2009 4:30 PM



Natural gas could become the new ethanol -- the alternative fuel of choice -- if a new bill passes. Like ethanol engines, gas-natural gas dual mode engines suffer a performance loss of as much as 15 percent. (Source: Treehugger.com)

The U.S. has among the world's most abundant natural gas deposits (regions with highest levels shown in brown). (Source: Wikimedia Commons)A variety of vehicle weight classes are covered by new natural gas bill


A new bill, NAT GAS (New Alternative Transportation to Give Americans Solutions), has been proposed by U.S. Senators Robert Menendez (D-NJ), Senate Majority Leader Harry Reid (D-NV),and Senator Orrin Hatch (R-UT) which looks to push natural gas vehicles into the consumer mainstream. The proposal looks to offer a bevy of natural gas vehicle purchasing, refueling and manufacturing tax credits which would eclipse even current credits for electric vehicles.

People purchasing a light vehicle capable of running on natural gas would get a $12,500 tax credit, significantly more than the $7,500 credit offered for plug-in vehicles. Current tax credits for three other weight classes would double, up to a maximum of $80,000 for the largest vehicle class.

Bi-fuel (gas and natural gas) vehicles would also be eligible for a 50 percent incremental cost tax credit -- this means that 50 percent of the costs that companies assume from increasing production would be offset by tax credits. The bill would also make it 100 percent tax deductible (with some limitations) to build a facility which builds natural gas vehicles. The bill would also offer refueling stations up to $100,000 to provide natural gas vehicle refilling pumps.

The new bill was masterminded and heavily praised by oil and natural gas baron T. Boone Pickens. Mr. Pickens had made headlines last year, announcing a massive wind power project. Just last week, he essentially pulled the plug on the project, and called natural gas the "only option" for the U.S.

With his heavy natural gas holdings Mr. Pickens stands to make a small fortune if the bill should pass. Indeed, the natural gas industry as a whole would see a huge boost from the bill.

Natural gas vehicles run on methane, the primary component of natural gas. Methane engines run approximately as efficiently as gasoline/petrol engines, but are less efficient than diesel engines. Dual-mode engines suffer a 10 to 15 percent efficiency loss over gas-only engines, due to the higher octane number of 120-130.


Buck