Tax Credits, Rebates and Grants for NGVs

In an effort to reduce America’s dependence on foreign oil, reduce urban emissions and reduce greenhouse gases, the federal government and some state governments and natural gas utilities provide a number of incentive programs to encourage the purchase and use of Natural Gas Vehicles (NGVs).   Of particular interest to Austin residents are the federal income tax credit and the Texas Gas Service rebate.

Income Tax Credit for Alternative Fuel Vehicles

The IRS allows an income tax credit for the purchase of a new, dedicated alternative fuel vehicle of 50 percent of the incremental cost of the vehicle, plus an additional 30 percent if the vehicle meets certain tighter emission standards. These credits would range from $2,500 to $32,000 depending on the size of the vehicle. The credit is effective on purchases made after December 31, 2005 and expires on December 31, 2010.  Legislation is currently pending that would significantly expand these incentives.  More details on pending legislation here.

• Light-Duty vehicles up to 8,500 lbs can qualify for up to $4,000;
• Medium-Duty vehicles up to 14,000 lbs qualify up to $8,000;
• Medium-Heavy-Duty vehicles up to 26,000 lbs qualify for up to $20,000;
• Heavy-Duty vehicles over 26,000 lbs qualify for up to $32,000.

Rebate from Texas Gas Service

The Texas Gas Service Conservation Program offers a $3,000 rebate for conversion of a gasoline-powered vehicle to operate on natural gas. These incentives are available to commercial and residential customers in Austin and Sunset Valley with specific gas rate codes.  The program also offers a $1,500 incentive for the installation of a vehicle refueling unit.

Other Grants and Incentives

• Congestion Mitigation and Air Quality Improvement Program (CMAQ)
  The Congestion Mitigation and Air Quality Improvement Program (CMAQ) is one of the largest sources of funding available for alternative fuel projects, funding hundreds of millions of dollars in investments in alternative fuel projects since its inception in 1991. This Department of Transportation program was first authorized in 1991 and has been extended each time the highway bill has been reauthorized. Funding levels for this program annually exceed $1 billion, and competition for funding is fierce.  CMAQ funding is generally limited to projects located in non-attainment areas unless the state does not have any non-attainment areas. Projects generally must be included in the transportation plan and transportation improvement plan for the area that is seeking funding.
  

• Clean Cities Program (SEP)
  The Clean Cities Program is designed to accelerate the use of alternative fueled vehicles throughout the country. The Clean Cities Program expands the use of proven alternative fuel vehicles in a number of key applications, such as school buses, transit buses, airport vehicles, taxis and delivery fleets. The Program expands strategic infrastructure partnerships and promotes advanced technology vehicles to the general public. Support for the various Clean Cities coalitions is provided through the DOE's State Energy Program (SEP) Special Projects. States apply for these grants, which are highly competitive and highly leveraged. States use the grants to support local alternative fuel vehicle and infrastructure initiatives.
  

• Diesel Emissions Reduction Program (DERP)
  This EPA program provides grants to assist government agencies, school districts and other interested parties to replace older diesel engines with new low-emitting ones (including natural gas engines) and to retrofit existing diesel trucks with emission reducing technologies. Repowering, and or rebuilding diesel engines and replacing them with natural gas engines is considered a retrofit under this program. The program is  administered by the US EPA. 
  

• Diesel Truck Retrofit and Fleet Modernization Program.
  This EPA program provides grants to states to fund fleet modernization programs, with preference to be given to ports and other major hauling operations. Natural gas vehicles and retrofits are eligible for the program. Preference will be given to proposals that “will achieve the greatest reductions in emissions” and “involve the use of EPA or CARB verified emission control technologies.” 
  

• Idle Reduction Program
  This EPA program supports the deployment of idle reduction and energy conservation technologies. Idle reduction technologies are defined as: truck stop electrification unit, auxiliary power unit or other technologies that are used to reduce idling, that allow the main engine to be shut down, and that can be employed on HD engines (HD engines are engines that weight 8500 lbs or more). Energy conservation technology is defined as any device, system of devices or equipment that improves fuel economy, including natural gas engines. There is a separate provision for reducing idling emissions from locomotive engines.
  

• Clean School Bus Program.
  This EPA program provides grants to school districts and related organizations for the replacement, repower or retrofit of school buses, the purchase of alternative fuels for school buses and alternative fuel infrastructure. 
  
  

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