Washington, DC - Today, the U.S. Senate passed a provision to modify the federal excise tax on Liquefied Natural Gas and Propane as part of the three month highway funding extension. The provision, introduced by Senator Michael Bennet (D-CO) and Senator Richard Burr (R-NC), will make modifications to the Excise Tax for Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG), allowing natural gas to compete fairly with diesel by taxing the fuel on an energy output basis rather than per gallon. Under the current system, Americans are unfairly paying about 70% more in taxes to fill up their cars and trucks with comparatively cleaner Natural Gas than diesel.
"Natural gas is a growing part of Colorado's diverse energy industry, and this bill recognizes the ongoing shift to alternative transportation technologies and fuels," Bennet said. "Providing parity to LNG creates an opportunity to help grow this market and encourages the use of natural gas as a transportation fuel."
"As we continue to develop alternative fuels, it's critical that the federal government stays away from picking winners and losers and encourages consumers to use the products that best suit their needs," said Senator Burr. "America is fortunate that our energy markets have diversified in the last few years, and in order to foster more innovation, this legislation is sorely needed so that we're not unfairly punishing consumers with higher taxes for choosing cleaner fuels."
"The use of LNG as a transportation fuel continues to grow in heavy-duty trucks, locomotives and large ships because it burns cleaner and the price is reliably lower due to the fact that it originates from North America," said Andrew J. Littlefair, president and CEO of Clean Energy Fuels Corp. "Anyone who cares about a cleaner environment and energy independence should be very grateful for what the U.S. Congress did this week by making LNG that much more competitive as a transportation fuel of choice."
"LNG and propane are both clean, readily available fuels, produced in the United States," said Laura Lane, President of UPS Global Public Affairs. "Removing this economic disincentive in the tax code will speed the penetration of LNG and propane vehicles into the marketplace, and expand the use of LNG and propane vehicles on America's roadways."
"Passage of this legislation is great news for trucking fleets who are looking to clean-burning LNG to power their transportation needs," said Matthew Godlewski, NGVAmerica President. "This common-sense change will mean even greater savings on their fuel costs, and it provides a powerful new economic incentive for those fleets considering the switch to this already low-priced, domestic fuel."
Description of Provision:
- Modifies the current excise tax on LNG to be calculated on an energy-equivalent basis relative to diesel, to take in account the fact LNG produces approximately 58 percent of the energy of the same amount of diesel. Similarly, this provision modifies the current excise tax on propane (LPG) to be calculated on a per gallon energy equivalent basis with a gallon of gasoline; LPG produces approximately 72 percent of the energy of the same amount of gasoline. With the passage of this provision, LNG and LPG would be taxed at 14.1 and 13.2 cents per gallon, respectively.
- The provision would also create uniform rules on measuring equivalency of LNG, LPG, and Compressed Natural Gas (CNG), which will assist retailors of these alternative fuels pay the correct amount of federal excise tax.
- Based on legislation introduced by Senators Bennet and Burr. The provision was recently approved by the Senate Finance Committee.
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