presentation by: paul kerkhoven director of government relations ngvamerica

Presentation by:

Paul Kerkhoven

Director of Government RelationsNGVAmerica

The Right Choice. The Right Time:

The Compelling Case for Natural Gas Vehicles in Heavy-Duty Fleet Applications

OverviewOverview

• New federal incentives: The “3-legged stool”

• Available natural gas vehicles and engines

• Applications best suited for NGVs

• Sample economics

Energy and Highway Bills Energy and Highway Bills Approved By CongressApproved 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 IncentiveBus Purchase Tax Incentive(Energy Bill)(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 non-

tax paying entity(continued)

Bus Purchase Tax IncentiveBus Purchase Tax Incentive(Energy Bill)(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 Fuels Use Tax Incentive (Highway Bill)(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)


• 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)


• 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 Fuel Use Tax Incentive (Highway Bill)(Highway Bill)

• Begins on October 1, 2006

• Expires on September 30, 2009

Fuel Station Tax IncentiveFuel Station Tax Incentive(Energy Bill)(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 IncentiveFuel Station Tax Incentive(Energy Bill)(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

• NGVs use an inherent clean fuel– 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)

Benefits of NGVsBenefits of NGVs

Methane Molecule

• 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

Benefits of NGVsBenefits of NGVs

A Wide Variety ofA Wide Variety ofNatural Gas Vehicles Are AvailableNatural Gas Vehicles Are Available

• Sedans, Pick-ups/SUVs, Vans/Wagons

– American Honda; all GMC brandsFord/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 Natural Gas Powered Medium- and Heavy-Duty Engines and VehiclesHeavy-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– 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 NGVs Are a “Good Fit” for Many Different Fleet Applications Different Fleet Applications

• 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 CostsRefuse Collection Truck Life-Cycle Costs(Taking Federal Vehicle Tax Credit Only)(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 -

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 -

Simple Payback 2.6 years -

8 Yr. Life-Cycle Advantage*** $37,022 -

* 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 CostsRefuse Collection Truck Life-Cycle Costs(Taking Vehicle Tax Credit and Partial Fuel Tax Credit)(Taking Vehicle Tax Credit and Partial Fuel Tax Credit)


Cost of refuse collection vehicle $200,000 $150,000

Incremental Cost of CNG vehicle $50,000 -

Vehicle Tax Credit $32,000 -


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 -


8 Yr. Life-Cycle Advantage*** $68,674 -

* 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 CostsMunicipal Dump/Plow Truck Life-Cycle Costs(Taking Vehicle Tax Credit and Partial Fuel Tax Credit)(Taking Vehicle Tax Credit and Partial Fuel Tax Credit)


Quoted cost of dump-plow truck* $168,000 $128,000

Incremental cost of CNG vehicle $40,000 -

Vehicle tax credit (net dealer’s 5% “cut”) $30,400 -


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 -


10 Yr. Life-Cycle Advantage**** $12,688 -

* 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:

NGVAmerica400 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 BILLENERGY BILL VehicleVehicle Tax Incentives 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

presentation by: paul kerkhoven director of government relations ngvamerica

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