Transcript Government Affairs Committee Legislative Update

The Right Choice. The Right Time:
The Compelling Case for Natural Gas Vehicles in
Heavy-Duty Fleet Applications
Presentation by:
Paul Kerkhoven
Director of Government Relations
NGVAmerica
Overview
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New federal incentives: The “3-legged stool”
Available natural gas vehicles and engines
Applications best suited for NGVs
Sample economics
Energy and Highway Bills
Approved By Congress
• HR 6: the Energy Policy Act of 2005
– Includes income tax credit for alt fuel vehicle
purchases and fueling infrastructure
• HR 3: ‘‘Safe, Accountable, Flexible, Efficient
Transportation Equity Act: A Legacy for
Users’’ or ‘‘SAFETEA–LU’’
– Includes excise tax credit for natural gas and other
alt fuel used
Bus Purchase Tax Incentive
(Energy Bill)
• A income tax credit to the buyer of a new, dedicated
alternative fuel vehicle:
– 50 percent of the incremental cost of the vehicle
– plus an additional 30 percent if the vehicle meets
certain tighter emission standards.
– Tax credit goes to the seller if the buyer is a nontax paying entity
(continued)
Bus Purchase Tax Incentive
(Energy Bill)
– Credits would range from $2,500 to $32,000
depending on the size of the vehicle
• $2,500-$4,000: Under 8,500 lbs.
• $5,000-$8,000: 8,500-14,000 lbs.
• $12,500-$20,000: 14,000-26,000 lbs.
• $20,000-$32,000: Over 26,000 lbs.
– The credit is effective for vehicles placed in
service after December 31, 2005 and expires on
December 31, 2010
Fuels Use Tax Incentive
(Highway Bill)
• The Volumetric Excise Tax Credit for
Alternative Fuels (VEETC)
– JOBS Act of 2004 created VEETC for ethanol
and biodiesel
– Highway Bill 2005 made CNG, LNG, LPG, and
hydrogen eligible when those fuels are used in
on-road vehicles
(continued)
Fuels Use Tax Incentive
(Highway Bill)
• A 50 cent motor fuels excise tax credit is paid
to the seller:
– Per GGE of CNG
– Per liquid gallon of LNG
• The credit will be paid to eligible recipients
on a regular basis without regard to the
amount of excise tax paid (including tax
exempts)
(continued)
Fuels Use Tax Incentive
(Highway Bill)
• The value of the excise tax credit is offset by
an increase in the motor fuels excise tax rate
for both CNG and LNG:
– CNG is increased from 4.3 cents per GGE to
18.3 cents
– LNG is increased from 11.9 cents per LNG
gallon to 24.3 cents
(continued)
Fuel Use Tax Incentive
(Highway Bill)
• Begins on October 1, 2006
• Expires on September 30, 2009
Fuel Station Tax Incentive
(Energy Bill)
• A Tax Credit Equal to 30% of the cost of alt
fuel refueling equipment:
– Up to $30,000 in the case of large stations
– Up to $1,000 for home refueling appliances
– The existing $100,000 tax deduction for refueling
property is repealed
(continued)
Fuel Station Tax Incentive
(Energy Bill)
– Credit allowable for CNG, LNG, LPG,
Hydrogen, E85 and Biodiesel (B20+)
– Like the vehicle tax credit, provision allows tax
exempts to pass credit through to seller of
equipment
– The credit is effective on equipment placed in
service after December 31, 2005 and expires on
December 31, 2009
Benefits of NGVs
• NGVs use an inherent clean fuel
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Simple CH4 structure
Minimal combustion byproducts
2007 HD NGVs meet 2010 standard
Less greenhouse gases
• NGVs are proven and reliable
– Nearly 5 million worldwide
• NGV fuel costs are lower
– Varies: $1.73/dge versus $2.65-3.00 for diesel!
– Differential increases with new fed credit in 10/06
(continued)
Methane
Molecule
Benefits of NGVs
• NGV maintenance costs are = or < diesel
• Natural gas engines are far quieter than
diesel
• NGVs run on American fuel
– 85% from USA
– Virtually all the rest from Canada
– Huge domestic supply
A Wide Variety of
Natural Gas Vehicles Are Available
• Sedans, Pick-ups/SUVs, Vans/Wagons
– American Honda; all GMC brands
Ford/Mercury/Lincoln via SVMs
• Work/Vocational Trucks
– Peterbilt, Freightliner, Freightliner CC,
Sterling, Crane Carrier, Autocar,
Isuzu, GM, Workhorse, Ottawa,
Allianz, Schwarze, Tymco…
• Bus and shuttle
– NABI, Orion, New Flyer, Specialty
El Dorado-National, Champion, Supreme,
Blue Bird, Thomas Built, Optima…
Natural Gas Powered Medium- and
Heavy-Duty Engines and Vehicles
• BAF Technologies
– 6.8L (Ford)
• Baytech Corporation
– 6.0L HD (GM)
– 8.1L (GM)
• Campbell Technologies
– 5.4L (Ford)
• Cummins Westport
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5.9L “B Gas Plus” – 195-230hp
8.3L “C Gas Plus” – 250-280hp
8.9L “L Gas Plus” – 320hp
8.9L “ISL-G” (’07) – 250-320hp
• Emission Solutions Inc.
– 7.6L NG – 175-265hp
• Hybrid Energy Systems/USEIC
– 6.0L HD (GM)
– 11.9L (Mack) “dual-fuel”
• John Deere
– 8.1L HN04 – 250-280hp
– 9.0L – 300+hp
• Westport Innovations Inc
– 15L “ISX-Gas” – 450hp
NGVs Are a “Good Fit” for Many
Different Fleet Applications
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Local/State Government
Airports
Refuse
Transit
School Districts
Utilities
“Short-Haul” Operations
– Food/Beverage/Snack, Linens, Pkg.
Delivery/Courier Services, Port/Rail,
Newspapers, etc.
• Local-Service Businesses
– Plumbers, HVAC, Florist, etc.
Refuse Collection Truck Life-Cycle Costs
(Taking Federal Vehicle Tax Credit Only)
Natural Gas
“Clean” Diesel
Cost of refuse collection vehicle
$200,000
$150,000
Incremental Cost of CNG vehicle
$50,000
-
Vehicle Tax Credit
$32,000
-
Net Incremental Cost
$18,000
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Fuel Use/yr (dge)* @ 20K miles
9,984
8,320
Cost/dge**
$1.73
$2.90
Fuel Cost/yr
$17,272
$24,128
Fuel Savings/yr
$6,856
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Simple Payback
2.6 years
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8 Yr. Life-Cycle Advantage***
$37,022
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* Assumes 2.5mpg (diesel) and 20% fuel consumption “penalty” for S.I.N.G. engine vs diesel-cycle, a differential that is widely expected to
diminish 3-4% in model year MY’07 engines and more in MY’10.
** CGCU natural gas dge cost shown. Diesel price is rack rate including fed/state motor fuels excise taxes. Estimate does not include any of
$.556/dge CNG tax credit effective 10-01-06.
*** Assumes equal maintenance costs. Natural gas vehicles have documented lower maintenance costs than comparable diesel units. NGV’s
maintenance cost advantage is projected to increase as MY 2007-2010 diesel engines and exhaust after-treatment technologies are introduced.
Refuse Collection Truck Life-Cycle Costs
(Taking Vehicle Tax Credit and Partial Fuel Tax Credit)
Natural Gas
“Clean” Diesel
Cost of refuse collection vehicle
$200,000
$150,000
Incremental Cost of CNG vehicle
$50,000
-
Vehicle Tax Credit
$32,000
-
Net Incremental Cost
$18,000
-
Fuel Use/yr (dge)* @ 20K miles
9,984
8,320
Cost/dge**
$1.33
$2.90
Fuel Cost/yr
$13,278
$24,128
Fuel Savings/yr
$10,849
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Simple Payback
1.66 years
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$68,674
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8 Yr. Life-Cycle Advantage***
* Assumes 2.5mpg (diesel) and 20% fuel consumption “penalty” for S.I.N.G. engine vs diesel-cycle, a differential that is widely expected to
diminish 3-4% in model year MY’07 engines and more in MY’10.
** CGCU natural gas dge cost shown assumes that $0.40 of $.556/dge CNG tax credit is passed on to customer at pump. Diesel price is rack rate
including fed/state motor fuels excise taxes.
*** Assumes equal maintenance costs although NGV costs are generally lower. Also assumes that federal motor fuels excise tax credit is extended
beyond 9-30-09.
Municipal Dump/Plow Truck Life-Cycle Costs
(Taking Vehicle Tax Credit and Partial Fuel Tax Credit)
Natural Gas
“Clean” Diesel
Quoted cost of dump-plow truck*
$168,000
$128,000
Incremental cost of CNG vehicle
$40,000
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Vehicle tax credit (net dealer’s 5% “cut”)
$30,400
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Net Incremental Cost
$9,600
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Fuel Use/yr (dge)** @ 15K miles
2,062
1,875
Cost/dge***
$1.33
$2.65
Fuel Cost/yr
$2743
$4969
Fuel Savings/yr
$2226
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Simple Payback
4.3 years
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10 Yr. Life-Cycle Advantage****
$12,688
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*
Based on Freightliner M2 with dump-plow pkg; CNG unit with 3 CNG tank vertical package
** Assumes mixed city/suburban duty cycles, 8mpg (diesel) and 10% fuel consumption “penalty” for S.I.N.G. engine vs diesel-cycle.
*** CGCU natural gas dge cost shown assumes that $0.40 of $.556/dge CNG tax credit is passed on to customer at CGCU pump. Diesel price is
rack rate without fed/state motor fuels excise taxes.
**** Assumes equal maintenance costs although NGV costs are generally lower. Also assumes that federal motor fuels excise tax credit is extended
beyond 9-30-09.
For more information please contact:
NGVAmerica
400 N. Capitol St. NW; 4th floor
Washington, DC 20001
Paul Kerkhoven
(202) 824-7363
[email protected]
Stephe Yborra – Director of Marketing & Communications
(301) 829-2520
[email protected]
ENERGY BILL
Vehicle Tax Incentives
• Suggested RFP guidelines for tax exempts:
– Have supplier quote “comparable” vehicle cost and
incremental amount for AFV up front
– State the amount of tax credit they will file with IRS
– Show amount of tax credit to be allocated back to you, the
customer
– Subtract that amount from quote price