Equal tax treatment would expand market for natural gas
Washington, DC - U.S. Senators Michael Bennet (D-CO), Bill Cassidy, MD (R-LA), and Todd Young (R-IN) this week introduced the Waterway LNG Parity Act of 2017. This bipartisan legislation would ensure that excise taxes on liquefied natural gas (LNG) for marine transportation on the inland waterways are levied at a rate consistent with their energy output relative to diesel and gasoline, respectively.
LNG is a cheaper, cleaner, domestic energy source and the current financing mechanism for the inland waterways system puts its use at a disadvantage. On an energy equivalent basis, it takes about 1.7 gallons of LNG to provide the same amount of energy as a gallon of diesel. In other words, a user of LNG in marine transportation would have to pay 50 cents in tax for the same amount of energy contained in a gallon of diesel fuel that is only taxed at 29 cents.
First introduced by Bennet and Cassidy in 2015, this legislation would change the inland waterways financing rate to provide equal treatment within the federal tax code.
"Natural gas is a vital part of Colorado's diverse energy industry," Bennet said. "Colorado now ranks sixth in natural gas production in the United States. This legislation acknowledges the shift to cleaner burning fuels. Providing equal treatment to LNG for marine transportation - as we did for cars and trucks in 2015 - expands this market and encourages the use of domestically produced natural gas."
"LNG is taxed at a 72 percent higher rate for the same amount of energy provided as diesel. That needs to change," Cassidy said. "Establishing equal tax treatment for LNG will encourage its use and production-benefiting the economy, environment and workers of Louisiana."
"This is a market-based fix to ensure consumers aren't discouraged from adopting alternative fuel vessels," Young said. "Liquid natural gas is a growing sector of our economy, and this legislation guarantees it competes on a level playing field with other forms of energy."
The following organizations have offered statements in support of this legislation:
"The United States has the most efficient and robust natural gas transportation system in the world," said David Ludlam, Executive Director of West Slope Colorado Oil and Gas Association. "We support this bill to create additional demand for natural gas, which has the potential to benefit producers nation-wide. Natural gas as a marine fuel has a dual benefit of cleaner air in our harbors and more drilling in western Colorado in the decades to come."
"NGVAmerica commends Senators Bill Cassidy, M.D. (R-LA) and Michael Bennet (D-CO) for introducing the Waterway LNG Parity Act of 2017," said Matthew Godlewski, President of NGVAmerica. "This common-sense, bi-partisan legislation would remove another barrier to the greater utilization of clean-burning, low-cost domestic natural gas in the transportation sector by leveling the playing field for the taxation of LNG fuel used in marine vessels operating on inland waterways in the U.S."
"LNG has proven itself as a viable alternative fuel," said Andrew J. Littlefair, President and CEO of Clean Energy Fuels Corp. "It's cleaner, more economically stable, and domestically produced. Now used across the entire transportation industry, it's time it's treated the same as diesel, and I encourage full support of this important, bipartisan legislation."
"We welcome a correction to the tax policy which helps level the playing field for LNG's continued use in marine applications," said Charlie Riedl, Executive Director, Center for Liquefied Natural Gas. "The International Maritime Organizations' 2020 low sulfur rule has already helped make natural gas an increasingly viable option, and taken with this decision, it will make domestically produced LNG more attractive than ever for vessel owners."
Click HERE to read the full text of the bill.