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US Senators Introduce Bill to Expand Incentives for Natural Gas Vehicles

12 July 2009

US Senator Robert Menendez (D-NJ) last week introduced new legislation, co-sponsored by Senate Majority Leader Harry Reid (D-NV) and Senator Orrin Hatch (R-UT) that extends and increases tax credits for natural gas vehicle purchasing, refueling and manufacturing.

Under the NAT GAS (New Alternative Transportation to Give Americans Solutions) bill (S. 1408), the purchase tax credit cap for a light-duty natural gas vehicle would be increased to $12,500, up from the current $5,000. For the three other covered vehicle weight classes, the purchase tax credit cap would double; the maximum credit would be $80,000 (up from $40,000).

Other provisions of the bill include:

  • A 10-year extension for alternative fuel credits for natural gas used as a vehicle fuel, the purchase of natural gas-fueled vehicle, and the installation of natural gas vehicle refueling property credit.

  • All dedicated natural gas-fueled vehicles would be eligible for a credit equal to 80% of the vehicle’s incremental cost. Only some dedicated natural gas vehicles currently can qualify for an 80% federal tax credit.

  • Makes all bi-fuel natural gas-fueled vehicles eligible for a credit equal to 50% of the vehicle’s incremental cost. This is the first time bi-fuel vehicles would be eligible for a federal tax credit.

  • Includes conversions and repowers. The bill includes a “Sense of the Senate” provision that the Environmental Protection Agency should streamline the process for certification of natural gas vehicle retrofit kits.

  • Increases the refueling property tax credit from $50,000 to $100,000 per station.

  • Allows the natural gas vehicle and natural gas fueling infrastructure credits to be transferred by the taxpayer back to the seller or to the lessor.

  • Allows state and local governmental entities to issue tax exempt bonds in order to finance natural gas vehicle projects.

  • Allows 100% of the cost of a natural gas vehicle manufacturing facility that is placed in service before January 1, 2015 to be expensed and to be treated as a deduction in the taxable year in which the facility was placed in service. This decreases to 50% after December 31, 2014 and is phased out by January 1, 2020

  • Requires that when complying with mandatory federal fleet alternative fuel vehicle purchase requirements, federal agencies shall purchase dedicated alternative fuel vehicles unless the agency can show that alternative fuel is unavailable or that purchasing such vehicles would be impractical.

  • Provides for grants for light- and heavy-duty natural gas engine development, with an annual cap of $30 million.

S.1408 amends the Internal Revenue Code, and was referred to the Senate Committee on Finance. T. Boone Pickens joined the three Senators to announced the introduction of the bill.

July 12, 2009 in Natural Gas, Policy | Permalink | Comments (28) | TrackBack (0)

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Seems to me that instead of building new dirty coal plants(BTW, a clean coal plant is PR gimmicky and none exist or will ever be built...all PR vapor), the natural gas should be used as a ladder to renewable energy and solar power plants. Natural gas plants create half the air pollution of a coal plant and no toxic ash residue mountains. Concentrate on electric cars and use the natgas interimly until clean renewable and solar power can take over.

This strikes me as a fairly useless development...

For every natural gas vehicle, there is one less using gasoline or diesel. They use NO gasoline nor oil, not just 40% less of it. So look at natural gas conversions as doing the work of 2 hybrids in reducing oil imports.

Jack: Useless? Don't be so sure... brand new article in WSJ "Exxon Shale-Gas Find Looks Big" http://online.wsj.com/article/SB124716768350519225.html basically, ExxonMobil just found what could be the mother-of-all natural gas finds in northern British Columbia. They are also sitting on tens of billions of dollars in profits, especially from the last couple of years of spectacular sales in oil & gas (so they are in a great position to lobby political figures to their benefit). There is a glut of oil on the market now, with no end in sight as Iraq is getting to open their oil fields, Brazil keeps finding massive offshore reserves, and OPEC is in a period of reduced production. These natural gas shale deposits are mainly North American - though ExxonMobil is exploring in Europe as well (see the article). I would not be surprised if there was a major government push for nat gas in the near future - it's American, creates jobs, has big profit potential for ExxonMobil, Transcanada etc (producers & pipeline operators), is better for the environment, and generates mass amounts of revenues for governments through taxes upstream & downstream (wells, sales taxes, etc).

Lad suggested:
Concentrate on EV and use NG for electrical generation[?]
The problem with this is the cost of the battery. On the other hand, every gasoline car can be converted to dual-fuel NG-gasoline car with much much less cost than a BEV conversion. The same tank can be used to hold either gasoline or CNG. A smaller tank can be used to hold 1 or 2 gallons of gasoline while the main tank hold NG. Once all the NG is used up, the main tank can then hold gasoline again.

You would fill up NG to your dual-fueled car at home for in-town driving and saving a lot of money in fuel cost, and for long trips, you just fill up the main tank with gasoline for much longer driving range.

That's an interesting idea Roger but I want more info, can you show me where they have actually used it?

I'm thinking you'd have to make sure the tank was TRUELY empty of NG before you opened it up to pour gasoline into it.

The idea came from BMW series 7 gasoline/H2 dual-fuel vehicle, using a single tank for both H2 and gasoline. Instead of using H2, CNG can also be used.

To be sure the main tank is truely empty of CNG, an auxillary gasoline tank of 1-2 gallons will supply fuel to the car so that you can completely empty the NG off the main tank. When CNG pressure in the maintank is too low to use NG as a sole source of fuel, gasoline will be used to supplement the weaker flow of NG until the tank reaches atmospheric pressure.

Roger - No way that will ever be permitted where there are safety rules - maybe in the 3rd world some place.

The tank should never be allowed to reach atmospheric pressure - that is when you can have an explosive mix. This would not be done once under controlled circumstances. It would be done under all conditions by every Tom, Dick and Harrieta. There would be incidents.

The BMW site says there are two tanks.

Dual fuel usually has the gasoline tank and a CNG tank. When the CNG runs low, the fuel is switched to gasoline. That eliminates the worry of running out of fuel on the highway . If you are running an FFV hybrid, then the mileage is so good that a smaller CNG tank will do.

Just as electric cars would be suitable for the use that the average car gets, Natural gas powered vehicles would be suited to the same range or more. The home compressor, PHILL, allows the vehicle to leave its home station fully charged. Every service station near a natural gas line could easily and cheaply be retrofitted with a PHILL varient that would refill the vehicle tanks in a few seconds.

Service stations not located near natural gas lines could have underground liquid ethane tanks at high pressures. CO2 liquid is now delivered to many stations for soft drink dispensers, and ethane liquid has similar storage requirements.

Many people complain about the loss of luggage room because of the tanks, but there are many places where small tanks can be built into an automobile. Many small tanks theoretically require no more weight than a large one. Thirty years ago, the taxi I saw operated from an airport on natural gas had plenty of room for the lugggage.

Besides not using them, making cars and car engines smaller with more gears is the fastest way to more efficient cars and lower fuel use.

At the cost of a few hundred dollars or less, new cars can be made to operate on methanol, ethanol, gasoline or butanol which are all conveniently stored liquids. Methanol can be made from natural gas or even coal, and can be converted easily into gasoline, but is more efficient if burned directly. The US should require that all new cars can burn pure methanol or ethanol unless they are diesel engined cars.

Because of the low efficiencies and large areas and high costs required for the collection of renewable energy, the wide use of renewable energy will remain mostly a myth for the US.

There is a facility in North Dakota that makes natural gas from coal. It collects most of the sulfur from the coal and turns it into fertilizer. It ships much of the CO2 produced to Canada in a pipline where it is put into the ground, and if there was enough money to build more pipelines, it might be able to sell all the byproduct CO2 it makes.

In a few weeks or even days with sufficient financial incentive, this facility could demonstrate in a large way electricity generation from coal without any CO2 release which is what dirty coal now means now that no smoke or dust is seen comming from the stacks and any CO2 release is considered a deadly sin except that coming from the lungs, cars and houses of the persons considering.

Any power company has the option of selling power generated from natural gas or from coal. The only difference is the price. Those that want electricity generated from natural gas should be given the option of buying it at the usually higher price. It is a natural referendum, for when people actually buy power from natural gas at the usually much higher prices, the coal burning plants will burn less coal until they shut down from disuse. All people will then pay higher prices for natural gas for heating because of its scarcity, so the people who demand natural gas power should also begin to pay a much higher price for their natural gas as well.

At one time there was a law against new natural gas burning power plants because it was a convenient and clean fuel for home burning and power plants could burn coal very much cleaner than people could in individual furnaces and stoves.

Cheap energy is the major basis of a country's economy which is why many things are now made in China because US regulations make energy, including human energy, very expensive. Those that insist on lower CO2 and no coal fired power plants should buy nothing from China but only from the US or Europe. Australia exports a lot of coal, but does not consider that it is putting the CO2 in the air even if that is where the coal eventually goes.

Promoters of Wind energy neither state the actual energy expected to be delivered by the machine in its life time nor the costs associated with providing substitute power when the machine is not delivering full power. There are almost always CO2 releases when the machine is not delivering full power, and these releases must be considered in computing the lifetime releases of CO2 for such a machine compared to Nuclear Reactors.

Not only does the siting of wind turbines and solar collectors require much ground, wind turbines can take wind power from neighboring ground. How many wind turbines are operating in Manhatten if it is such a good idea?

The major source of so called "renewable energy" in the US is hydroelectric energy and this source of energy is almost completly developed and people are calling for the removal of all of the dams anyway. The collection area of the dams is more than can be imagined and the efficiency is so low from the sun's input that it cannot hardly be measured with any accuracy. Much of the water comes from solar evaporation from the wide oceans. Wind and direct solar electricity in the US amount to about one percent. All of such existing facilities would have to be multiplied by a hundred times. All hydroelectric facilities would have to be multiplied by ten times. Where are you going to get ten Columbia rivers and Ten more Colorado rivers and ten more Missisippi rivers.

No lawmaker should be allowed to vote in anyway for renewable energy unless his or her home uses solar water heating and co-generation for any heating or air conditioning. Other people promoting renewable energy should be allowed to be questioned under oath with a penalty of perjury possible for false statements.

Much natural gas was wasted in the production of oil much still is. Natural gas is only valuable where it can be piped to the user at low cost or there is enough of it and the price of oil is high enough that the methane can be liquified and shipped to the users. If you are shipping fuel it is best to ship the more profitable fuel.

In contrast, only four times the number of nuclear power plants would have to be built to replace all coal fired ones. Each such unit could take twenty acres or less with multiple units built on the same site. The efficiency would be lower, but no water reactor cooling is actually needed. It might be cheaper to buy water for the evaporative cooling towers but it is not necessary.

Sea side nuclear reactors could use the waste heat for low cost desalinization using multi-effect distillation, but the cost of nuclear heat is low enough for simple distillation. The high pressure steam boiler and turbine are the principle reasons for the cost of nuclear electricity. The fuel cost percentage of nuclear electricity is very low and can be made lower. Free coal at modern coal power plants would not reduce the cost of electricity to the consumer by 25 percent.

A pound of uranium or plutonium from a dismantled nuclear weapon can yield about 2 million pounds of coal worth of heat in present operating reactors and the same is true of the thousands of pounds of plutonium stored in used fuel rods. The present operating reactors can use this fuel without change to the reactor. New reactor designs could use it more efficiently.

Coal not used for making electricity can then be used for making automotive and jet fuels at much lower cost than oil at $70. A tax on imported oil of $35 a barrel would make it always cost effective to make motor fuel out of coal.

Any time there is excess power, the energy can be used to produce hydrogen and combine it with CO2 to make gasoline. Gasoline can be made cheaper this way than from oil at $120. Natural gas can also be made this way.

Making a cheap kit that can convert many cars to the use of methane (natural gas) is a very fast way of reducing oil use. PHILL should be made cheaper as well and liquid ionic salts might assist in such processes.

I don't know Roger, it seems to me that even if the NG tank gets to atmospheric pressure it's volume will still be full of a combustible, greenhouse gas. Pouring in a liquid [like gasoline] would displace the gas during refueling. Even if it weren't an explosion hazard a million of these cars refueling each week is going to add to GW.

Henry;
Yes, solar and wind energy requires a lot of land but in no way goes it require too much land. "The solar energy resource in a 100-mile-square area of Nevada could supply the United States with all its electricity (about 800 gigawatts) using modestly efficient (10%) commercial PV modules.

A more realistic scenario involves distributing these same PV systems throughout the 50 states. Currently available sites—such as vacant land, parking lots, and rooftops—could be used. The land requirement to produce 800 gigawatts would average out to be about 17 x 17 miles per state. Alternatively, PV systems built in the "brownfields"—the estimated 5 million acres of abandoned industrial sites in [y]our nation's cities—could supply 90% of America's current electricity.

These hypothetical cases emphasize that PV is not "area-impaired" in delivering electricity."

Neither is wind. There's enough wind resource in the midwest that using just 2% of the land in 4 states could supply all your electricity. Of course a more realistic scenario involves distributing the turbines throughout the country.

http://www.nrel.gov/docs/fy05osti/37657.pdf

Best use for NG and waste > methane is CCHP aka Residential Power Units. If in North America we could convert even half of the 70M NG equipped homes - it would lower central power demand as much as 1/3. That's 33% less demand on the current grid which lowers new plant construction and grid expansion costs.

There are major manufacturers capable of building these RPUs at reasonable costs. Probably the simplest design is the stirling 3kW type that Infinia is building (http://www.infiniacorp.com) Both Toyota and Honda make ICE-based CHP units - but I suspect the low power capacity will not meet expectations except for supplemental to grid energy.

But there is a lot of new activity in the SOFC area that can provide a strong source of competition to the stirling designs. A 2kW SOFC unit from an Aussy outfit looks promising (http://tinyurl.com/lep37b)based on the
Gennex SOFC.

Finally there is an interesting SOFC/Stirling hybrid design I just looked at. The high internal SOFC temp excess is the source for the Stirling that generates about 25% of the 5kW power output. Bound to be more expensive but claims 51% overall efficiency.

I would like to see a small pilot program with 100-200 of each type RPU running in typical residential homes. Only by getting started will this viable (sustainable via biogas) clean energy resource be brought to market.

@russ and ai vin,

Explosion risk when NG in the tank is reduced to atmospheric pressure?
Only if air is allowed to enter the tank. A special filler with valve is used for gasoline filling which will prevent air from entering the tank. The NG in the tank will be moved to a charcoal canister where the NG will be adsorbed. While the gasoline is consumed, the adsorbed NG will re-enter the tank to make up for displaced volume.

If the tank is built strong enough, for example, to withstand 1000 psi pressure, you can mix NG and air under stoichiometric ratio under one atmosphere, and ignite this combustible mix, and the tank will still be all right. Doubt about this? This is just what happens the engine's head thousands of times a minute...even ignited at 10 times atmospheric pressure, and peak combustion pressure would not even exceed 1000 psi!

Thanks Ai:

The cost of the solar cells with ignoring the cost of the land would be beyond any federal budget. The process of growing plants is what I was talking about. Converting solar electricity to fuel with the production of hydrogen for combustion loses about 80 percent of the energy, which would be saved if the electricity were used in electric cars. Compared to nuclear power, solar cell electricity is five to ten times more expensive not considering the land. All of the radioactive fission products now being stored in diluted form would take up the space of a small house.

I will leave it as an arithmetic exercise to calculate how much space it would take to store the uranium needed to produce all of the energy used by the US in a year, if a pound of uranium produces about the same energy as three million pounds of coal. Plutonium is similar and a pound will produce 10 million kilowatt-hours of thermal energy. Even Queen Elizabeth held a pound or more of plutonium in her hand once. It is far more dangerous to try to cross simple busy roads.

I forgot to remind people that they and all other live creatures have always had radioactive potassium in themselves which results in about 25 internal nuclear explosions per second per pound.

The sun also exposes people to nuclear radiation because of its operation as does the earth itself. Burning natural gas has released more radiation to the air than all of the nuclear reactors put together.

..HG..

The cost of solar; "The cost of producing PV modules, in constant dollars, has fallen from as much as $50 per peak watt in 1980 to as little as $3 per peak watt today. This causes PV electricity costs to drop 15¢-25¢ per kilowatt hour (kWh), which is competitive in many applications.

In the California market, where state incentives and net metering are in place, PV electricity prices are dipping below 11¢/kWh, on par with some utility-delivered power. Moreover, according to the U.S. PV Industry Roadmap, solar electricity will continue this trend and become competitive by 2010 for most domestic markets.

The energy payback period is also dropping rapidly. For example, it takes today's typical crystalline silicon module about 4 years to generate more energy than went into making the module in the first place. The next generation of silicon modules, which will employ a different grade of silicon and use thinner layers of semiconductor material, will have an energy payback of about 2 years. And thin-film modules will soon bring the payback down to one year or less. This means that these modules will produce "free" and clean energy for the remaining 29 years of their expected life."
http://www1.eere.energy.gov/solar/myths.html

@Henry Gibson,
The threat of nuclear proliferation is looming larger than ever. North Korea and Iran are rogue states with more threaten to follow suit. The more wide-spread nuclear technology will become, the more nuclear-technology-trained personnel will be required and if some of them are corrupted, will transfer this technology along with nuclear raw materials for the terrorists or future rogue states.

The best way is to put all human knowledge of nuclear technology in one locked box and throw the key away. Since that is not possible, the only alternative is to limit the use of nuclear energy and nuclear weapon.

There are significant problems with nuclear. Firstly, there is widespread public opposition to it and that will never go away. This will make it more difficult to get them approved, perhaps prohibitively, and you're now looking at probably 20 years between seriously proposing one to actually building it and getting power. Then you have all the waste to deal with, which in theory sounds like it could be easy to store, but as we all know, these things never turn out that way, and the consequences of mistakes are very serious.

Covering photovoltaics all over unused surfaces in cities and on electric cars would make a noticable dent in energy production and reduce demand as transportation moves over to electric.

And then you have all the deserts of the southwest. Solar thermal plants are way more efficient than photovolataics so probably more suited for large scale grid supply, I don't know, what are they, like 50% efficient? Cover a 100 mile square with those and that's like half the energy of the US right there.

These steps, along with wind turbines, could supply most of the power for North America. The remaining 25% could be supplied by hydro and relic coal plants with CCS, along with the remaining nuclear plants, to even out grid fluctuations because they can ramp up and down qiuckly.

The remaining demand for liquid fuels like from aviation and trucking are minor energy draws anyways and by the time we take care of the above low hanging fruit we will probably have developed some solutions for these specialized and difficult applications.

I don't see much need for natural gas to fit into this picture. It could displace some gasoline over the next 10 years until the majority of cars have become electric which is good. But beyond this I think all it will do is delay the inevitable beneficial transition away from fossil fuels.

Mark BC stated: "I don't see much need for NG to fit into this picture."

Well, the picture you've painted is a very practical one...except for the little itty bitty problem of electrical energy storage on board the vehicle, which can make the vehicle expensive and may take years before we can build BEV in sufficient number to solve the petroleum dependency.

Ergo, the Pickens Plan: use wind (or solar electricity) to displace the NG used in power generation, and use NG for motor vehicle instead.

Like I've just mentioned, it is very easy and inexpensive to modify an existing gasoline or diesel vehicle to become a dual-fuel gasoline/NG vehicle. You'll be able to pay off the cost of conversion in a few short years from the lower cost of NG. This is the most realistic option in the short term.

WE (the USA) has a severe trade deficit that is worsening...making the US dollars weaker and weaker, forcing other countries to use the Euro as cash reserve instead...a vicious cycle that will further weaken the USD. We must quickly reduce petroleum importation and expand our domestic automobile production instead of importation if the American dream can be reserved for future generations.

While I am in favor of laws like this, this one has some huge loopholes that you could literally drive a truck through. The dual fuel option for 50% credit could allow for 'mild' gas systems that fulfill the obligations under the law but have little impact. If the law is not worded correctly you could see thousands of useless systems being installed for get up to $40000 credit per truck. Hopefully they will get it right.

Go read
http://www.greencarcongress.com/2009/07/coral-320-20090714.html
We have run out of time.

It is a waste of resources, time and money to use natural gas as fuel for vehicles. In the long view of climate change the question of whether one country or another reduces its oil imports is almost meaningless. What's needed is a significant reduction of fossil CO2 emissions; anything else is re-arranging deck chairs on the Titanic. To that end the best possible near-term use of abundant natural gas is to replace coal-fired power plants.

"To that end the best possible near-term use of abundant natural gas is to replace coal-fired power plants."

How near-term? It takes years to get a power plant built, a NG conversion for your car takes an afternoon. Let's use the years to replace coal with renewables.

Roger Pham stated:
"the little itty bitty problem of electrical energy storage on board the vehicle, which can make the vehicle expensive and may take years before we can build BEV in sufficient number to solve the petroleum dependency."

We could make series hybrids that run on natural gas instead of gasoline. An NiMH battery pack to take the car 150 km costs $12,000 (at $500 / kW-hr), so in total these cars would cost about $25,000. That is possible right now. It will happen in 2014.

And next year, 2010, you can buy (get wait listed to buy) the first mass-produced Li-ion EV. It'll cost around $30k cash and will be able to burn E85 which is renewable and sustainable when made from cellulose.

So what's the better play? Converting existing vehicles to NG at an average cost of $12k - or promoting the sale of EVs and hybrids? And converting coal plants to NG. And investing in a continent-wide conversion to CHP-based Residential Power Units.

NG conversion should cost around $2000 for high volume, or $3000-4000 for limited volume. All that'll be needed is to exchange the current fuel tank for a high pressure CNG tank. The tank will need to hold but 1000-1500 psi for a CNG range of 100 miles, as would a BEV's range, since the CNG can be filled up at home. Lowering the pressures involved will significantly reduce the cost. A throttle body NG valve is needed to feed the engine, and perhaps change the CPU chip of the vehicle to allow dual fuel operation. A few more valves here and there, but all relatively simple.
The NG conversion will last for over the life of the vehicle, unlike BEV, in which the durability of the battery is in question. Battery cannot be completely discharged, only to 40% of SOC, to prolong battery life. The NG can be used up completely in the tank without harm to the tank, which should last for decades.

Forget about Global Warming for now! The US economy is like the Titanic hitting iceberg. More trade deficits and budget deficits years after years is like taking on more and more seawater. We need NG vehicles NOW!!! While building more and more wind turbines and solar collectors.

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