Date: March 14, 2018
To: Members of the Committee of Ways and Means
From: Freedom CNG

A Call For the Renewal of The Alternative Fuels Tax Credit (AFTC)

America is leading the world in natural gas production. The oil and natural gas industry drives $100’s of billions of dollars into the economy. The natural gas industry has been focused on environmental stewardship and methane leakage. Methane emissions per unit of natural gas produced have declined continuously since 1990, down -46%, with production up 52%: in the pipeline distribution segment during the same period down -75%. The EPA Inventory reveals that the natural gas distribution systems have a small emissions footprint shaped by an ongoing declining trend. (American Gas Association Report May 2017)

The Alternative Fuels Tax Credit (AFTC) provides a credit, of $0.50, per gasoline gallon equivalent (GGE) of certain transportation fuels, including natural gas, liquefied petroleum gas, P Series Fuels, liquefied hydrogen and others. Extending the AFTC for five years would allow natural gas technology adopters and fleet customers to plan long-term investment strategies and provide business certainty and would provide a significant contribution to our nation’s economic growth.

Almost 40 percent of Americans live in communities with exceedingly poor air quality according to the U.S. Environmental Protection Agency. Exposure to such conditions increases the risk of asthma, lung cancer, heart disease, and premature death. The risk is increasing every year that we do not promote the change to cleaner burning fuels. It is either do something now in regard to on road transportation or we will pay more for healthcare.

Heavy-duty vehicles are the fastest growing segment of U.S. transportation in terms of energy use and emissions. These trucks are major emitters of nitrogen oxide (NOx), diesel particulate matter, and greenhouse gases – the emissions that greatly contribute to poor air quality. While heavy-duty vehicles total 7 percent of all vehicles on our roads, they account for 33 percent of America’s smog-precursor emissions (NOx) from mobile sources and 20 percent of all transportation-related greenhouse gases. Here in the Greater Houston Metro area there are over 100,000 local delivery, and drayage trucks producing massive amounts of smog annually. With the population growth and increased commerce in the region, the only viable way to clean up the air quality issue is to use cleaner burning fuel.

An obvious solution is the promotion and adoption of alternative fuels, which burn cleaner, and is better for the environment and the health of our neighbors. If we want cleaner air we need cleaner trucks. Heavy-duty vehicles powered by natural gas are the cleanest, most proven commercially available solutions to this growing health concern. Ultra-low NOx engines are powered by natural gas and are 90 percent cleaner than the strictest federal standards. Those powered by renewable natural gas (RNG) are upwards of 115 percent cleaner.

The extension of this important tax credit would further incentivize the transition of aging dirty diesel fleets to cleaner vehicles using natural gas. This could mean the increased deployment of an estimated 58,000 natural gas vehicles (NGVs); equal to eliminating over 1.2 million cars from the area. This would result in the reduction of an estimated 200 million metric tons of greenhouse gas emissions, 82,300 fewer metric tons of NOx emissions, and $1.0 billion in avoided public health costs.

Furthermore, extending the AFTC for a five-year period for natural gas would spur $9.9 billion in economic growth and $5.8 billion in additional private sector investment in infrastructure and equipment and create 62,000 new middle-class jobs over a 10-year period. The AFTC would increase energy independence by decreasing consumption of petroleum-based fuels, and stimulating U.S. manufacturing. The extension of this vital industry credit has support from a broad array of organizations representing users, retailers, customers, fleet managers, utilities, and producers of clean alternative transportation fuels.

Texas by itself is the third largest natural gas producer in the world. The fact that the state has failed to use its own resources to bolster its own industry is a discredit to those who work to make a livelihood in those fields. Natural gas is a clean, abundant, domestic fuel source; and these are real public health outcomes. Utilizing natural gas as a transportation fuel provides numerous economic and national security benefits. Extending the AFTC would promote increased private-sector investment in infrastructure and equipment, which leads to more jobs and economic output.

Congressman Brady, thank you for your consideration of this request. We look forward to sharing more with you regarding this important clean air incentive.