Published Monday May 11, 2009
Jump-start is sought for natural gas vehicles
BY PAUL HAMMEL
WORLD-HERALD BUREAU



LINCOLN — At Happy Cab headquarters in Omaha sits a rare "green" bird — a 2008 Chevrolet Impala converted to run on compressed natural gas.

It's the first of 50 cabs the company plans to convert over the next two years to run on the domestically produced, environmentally friendly fuel.

Prominently displayed on the parked cab is a price comparison: $1.96 a gallon for unleaded gasoline vs. 49 cents for compressed natural gas (the price with a 50-cent federal rebate).

One problem: No public gas stations in Nebraska or Iowa pump natural gas.

So backers of "CNG" (compressed natural gas) vehicles are pushing for federal and state government help to get these alternative-fuel vehicles out of the garage.

A group of entities in Nebraska and Missouri, including the Metropolitan Utilities District in Omaha, is preparing a nearly $10 million grant request for federal stimulus funds.

About $4.1 million of that would be used to open a public CNG station in Omaha and help retrofit the 50 Happy Cabs, 29 new MUD service vans and seven vehicles for the Lincoln Airport Authority.

CNG supporters also hold out hope that the Nebraska Legislature might pass a bill yet this spring to exempt natural gas used in vehicles from the state's 26 cents-per-gallon fuel tax.

That would further lower the fuel cost, cutting in half the five-year payback time on the higher cost of cars designed or converted to run on CNG.

"There's a lot of heavy lifting in getting a CNG industry started," said Doug Clark, vice president of government affairs and marketing for MUD.

It is a classic chicken-and-egg scenario: Consumers won't switch to CNG without refueling options, but gas stations won't buy the $500,000 to 800,000 worth of equipment to efficiently pump natural gas unless there are customers.

MUD has a private pump, which it uses to fuel 62 CNG-powered service vans it put on the road in the 1990s and two Honda Civics purchased recently.

But the closest public pump for CNG is in the Kansas City area.

State Sen. Jeremy Nordquist of Omaha said now is the perfect time to provide incentives for CNG vehicles.

Because so few are on the road in Nebraska the cost of the fuel tax exemption to the state would be low — $14,300 a year.

That compares with about a $200,000-a-year sales tax break headed for approval this year on wood and corn purchased as fuel by farmers and industry, and for mineral oil purchased as a dust suppressant for grain elevators.

Nordquist's measure, Legislative Bill 421, would provide the CNG tax break for five years, to help jump-start the industry.

Thirty-five states provide some sort of incentive for CNG vehicles, according to Natural Gas Vehicles for America, based in Washington, D.C. The organization estimates that 120,000 CNG vehicles are on the road in the United States.

Richard Kolodziej, who heads the group, said CNG makes the most sense now for large fleets of urban vehicles that make short runs, such as taxis, garbage trucks and vans for service calls and deliveries. The bulky reinforced fuel tanks have a capacity that allows only a 230-mile range for most cars.

But the low fuel cost and federal incentives to buy such vehicles are inviting, he said. Over 20 percent of new city transit buses being purchased are CNG-equipped, he said.

The more miles driven, the greater the savings in fuel costs, Clark said. That helps repay the initial expenses of CNG vehicles, which include retrofitting engines and building fueling stations.

It cost about $15,000 to retrofit the cab and will cost about $19,000 for each new MUD service van. Truck engine conversions can cost up to $50,000.

State Sens. Mike Friend of Omaha and Dennis Utter of Hastings question whether natural gas vehicles would be the answer and whether state incentives are really needed.

John Davis, director of operations for Happy Cab, said Nebraska will be "asleep at the switch" if it doesn't help the industry get off the ground. But passing the bill this year is a long shot, with 15 days remaining in the 2009 legislative session.

Buck