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NGT News: UPS Cruising Towards Alternative Fuel Goal

UPS has a goal of driving 1 billion miles in its alternative fuel and advanced technology fleet by the end of 2017, and if the company's annual Sustainability Report and a slew of recent announcements are any indication, UPS has picked up the pace and is well on its way toward meeting that target.

According to its new 2014 Sustainability Report, the company accelerated investment in its clean fleet last year, increasing the number of greener vehicles by 61% over 2013 and adding 1,100 natural gas vehicles. By year’s end, the report says, UPS was operating over 5,000 alt-fuel and advanced technology vehicles on the road worldwide. Such vehicles include all-electric, hybrid electric, hydraulic hybrid, compressed natural gas (CNG), liquefied natural gas (LNG), propane and biomethane models. The company also uses lightweight, fuel-saving composite body vehicles.

10977__mobile0c9a66_assets_img_media_hhv1.jpgUPS notes that it works closely with its customers, government leaders and other stakeholders to develop new delivery methods to reach dense urban areas. For example, the company has 28 electric trucks operating in London and expects to add another 40 within the next few years to reach its goal of having an all-electric fleet in London’s city center. UPS also operates 80 electric vehicles in cities across Europe, including Amsterdam, Rotterdam and Hamburg.

UPS reports that 5.4% - or 25 million gallons - of its total gasoline and diesel purchased in 2014 was displaced with alternative fuels, including electricity. The company says its commitment to a cleaner fleet will allow UPS to reduce its annual use of traditional fuels 12% by the end of 2017.

All told, the report says UPS logged 154 million miles in 2014 toward its goal of driving 1 billion miles globally with its clean fleet by the end of 2017 - an almost threefold increase from 2013. The specialized fleet has now surpassed 500 million miles since 2000.

“It took 13 years to drive the first 350 million miles with our alternative fuel and advanced technology fleet,” explains Rhonda Clark, UPS chief sustainability officer and vice president of environmental affairs, in a press release. “In just one year, we were able to build dramatically on that number, and we are now more than halfway to our 2017 goal. With continued investments in this fleet, we are doing our part to help transform the transportation industry.”

David Abney, CEO of UPS, goes even further and says in the report that he is “confident” the company will reach its goal of 1 billion miles.

Indeed, UPS has maintained its alternative fuel investments beyond 2014. In the U.S. alone this year, UPS announced deals to add 64 LNG tractors to its UPS Freight fleet, deploy 1,400 new CNG vehicles and build 15 more CNG stations.

Notably, UPS has also inked new agreements for up to 46 million gallons of renewable diesel over the next three years. The company says the deals constitute a 15-fold increase over prior contracts and make UPS one of the largest users of renewable diesel in the world.

UPS has been using renewable fuels for more than a year in trucks operating in Texas and Louisiana. The company says the new agreements with suppliers Neste, Renewable Energy Group and Solazyme pave the way for expanded use across the U.S. and, potentially, in parts of Europe.

“Advanced alternative fuels like renewable diesel are an important part of our strategy to reduce the carbon emissions impact of our fleet,” says Mark Wallace, UPS senior vice president of global engineering and sustainability, in a press release.

“We have used more than 3 million gallons of renewable diesel to date with positive results. Renewable diesel has a huge impact, significantly reducing lifecycle greenhouse gas emissions by up to 90 percent less versus conventional petroleum diesel,” continues Wallace. “Renewable diesel also performs well in cold weather, does not have any blending limitations and can be easily ‘dropped in’ to our fuel supply chain without modifications to our existing diesel trucks and equipment.”

Further solidifying its commitment to sustainability, UPS also recently joined White House officials and 12 other big-name companies in launching the American Business Act on Climate Pledge.

As part of its pledge, UPS plans to cut its greenhouse-gas emissions by 20% by 2020 versus a 2007 baseline. Unsurprsingly, the company suggests its ongoing investment in alternative fuel will help UPS reach that goal.
Article via NGT News

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TRS Question of the Month: What factors affect fuel prices?

Question of the Month: What factors affect fuel prices?

Answer: When gasoline and diesel prices spike, we often want to blame someone for our pain at the pump. The reality is that the oil industry is a complex market. Though there are numerous factors that could ultimately influence the price of fuel, such as weather, government policies, and international relations, there are four factors that have the most significant influence. These factors include the cost of crude oil, refining costs and profits, distribution and marketing costs, and fuel taxes. Alternative fuels, such as natural gas, propane, electricity, and biofuels, can mitigate some price fluctuations attributable to short-term events, like natural disasters, because they diversify the fuel supply; however, some alternative fuel prices are also dependent on similar factors.

In May 2015, the average retail price of regular grade gasoline was $2.72, according to the Energy Information Administration (EIA). Below is a summary of the factors that affect gasoline prices, and the relative percentage of each component. We have also described how each of these factors may affect alternative fuel prices.

Crude Oil

As of May, approximately 51% of the cost of gasoline was related to the price of crude oil. The fluctuation in crude oil price is the biggest factor in the volatility of the price of gasoline, as the other costs (described blow) are relatively static.

Crude oil prices are largely a product of supply and demand. Global demand has grown in recent years due to world economic growth and increased access to vehicles, particularly in developing nations. The Organization of Petroleum Exporting Countries (OPEC), which produced about 40% of the world’s crude oil between 2000 and 2014, also has significant influence on oil prices by setting production limits among members. Part of the reason oil prices have declined significantly since July 2014 is that OPEC nations are not limiting production, resulting in a global ‘glut’ of crude oil. Much of this glut stems from a surge in oil production in the United States and Canada over the last few years from unconventional sources, like shale. This price could change dramatically, however, if there is a major global supply disruption. 

With the exception of electricity and natural gas, alternative fuel prices can also be impacted by the price of crude oil and the price and demand for petroleum products. Higher or lower demand for gasoline also influences ethanol demand, for example, and ethanol is closely linked to the price of gasoline, as shown in the Clean Cities Alternative Fuel Price Report. Biodiesel wholesale costs are largely influenced by the price of diesel. Propane costs historically tend to follow crude oil prices, though not to the same extent as other fuels, and change seasonally because of the demand for propane as heating fuel in the winter.

Alternative fuel prices are also affected by the applicable commodity price, though the impact varies by fuel. For example, the price of natural gas only comprises 20% of the compressed natural gas (CNG) price at the pump, according to the American Gas Association (AGA). Because the natural gas is a relatively small percentage of the overall fuel price, a swing in the natural gas commodity prices has less of an effect on the CNG price at the pump. In addition, natural gas costs are typically regulated and less expensive than petroleum (on a gasoline gallon equivalent, or GGE, basis) and the infrastructure is independent of oil infrastructure.

Refining Costs and Profits

Crude oil must be refined into gasoline and diesel so it is compatible with our vehicles. Refining oil takes energy and costs may vary based on the type and origin of the crude oil used in the process. In May, refinery costs and profits represented about 22% of the cost of a gallon of gasoline.

Alternative fuels, such as propane, natural gas, and biofuels, are also “refined” or otherwise altered before they can be used in vehicles. Propane is a by-product of crude oil refining and is also produced as a liquid from natural gas and oil wells. Propane from natural gas liquids does not require refining; however, it must go through a scrubbing process to remove contaminants, as well as a separation process. Natural gas is produced from natural gas and oil wells, and is also subject to a separation and treatment process to remove contaminants. It must also be compressed in order to be transported in major distribution pipelines. Biofuel production facilities are often called ‘biorefineries’ because they produce and refine crude biofuels at the same location.

Distribution and Marketing

Since many of us do not live next to oil refineries, gasoline and diesel must be transported to local fueling stations first through a sophisticated system of pipelines, trucks, or barges to a network of fuel terminals, which can also be referred to as a distribution rack. The distributors, also called jobbers, load and blend the gasoline and diesel with other products (e.g., ethanol, biodiesel) in tanker trucks, which is driven to your local retail outlets and placed in underground storage tanks. In every part of the supply chain there are costs associated with employee salaries and benefits, equipment, taxes, insurance, and other types of overhead. In May, these resulting costs equaled about 10% of the price of a gallon of gasoline.

Taxes

Finally, motor fuel taxes contribute to the construction and maintenance of the roads we use on a regular basis. In the early 1900s, state governments devised ways to collect taxes on each gallon of fuel to help cover these costs and increase revenue. In May, federal, state, and local taxes accounted for 17% of the average retail price of a gallon of gasoline. Federal excise taxes are currently $0.184 per gallon of gasoline or ethanol and $0.244 per gallon of diesel or biodiesel. Propane and CNG are taxed at $0.183 per gallon of propane or GGE of CNG, and liquefied natural gas is taxed at $0.243 per gallon. The September Question of the Month will delve into this topic in more detail.

State and local fuel taxes vary widely by jurisdiction. Though motor fuel taxes are applied to each gallon of gasoline or diesel sold, alternative fuels can also be taxed on an energy equivalent basis with gasoline and/or diesel. Some states use alternatives to traditional state fuel taxes, such as annual fees for alternative fuel vehicles or taxes based on the number of miles traveled. Look for the August Question of the Month for more information on these alternatives.

Though the alternative fuel supply chain differs slightly from conventional fuels, many of the same factors influencing oil prices also impact alternative fuels. Now when you fill up your vehicle, take a moment to think about all the infrastructure and people required to process and deliver fuel from the field to the pump.

For more information on fuel prices, please refer to the following websites:

 

 

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U.S. House Passes Highway Bill with Alt-Fuel Tax Parity Provision

On July 15th, the U.S. House of Representatives passed a bill that levels the taxes of alternative fuels compared to traditional fuels.

H.R.3038, which is legislation to fund and extend the authorization for the country’s highway and transit programs through the end of 2015, passed the House in a 312-119 vote.

Rather than tax on volume, the tax parity provision included in the bill will ensure the federal highway excise taxes on liquefied natural gas (LNG) and propane autogas are levied based on the fuels’ energy output.

U.S. Rep. Todd Young explains, “LNG produces 58? Of the energy output of diesel, but the two fuels are currently taxed at the same 24.3 center per gallon rate.  Similarly, propane produces 72% of the energy output of gasoline, but those two fuels are taxed at the same 18.3 cents per gallon rate.  The tax parity provision recognizes these disparities and sets the energy equivalent rates for LCF (14.1 cents per gallon) and propane (13.2 cents per gallon).

UPS and NGVAmerica have already issued statements of approval for the new bill.  UPS, specifically stated, “LNG and propane are both clean, readily available fuels, produced in the United States.  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 on America’s roadways. 

The authorization for federal transportation funding expires at the end of July, which means a passage of an extension by Congress is needed.  The Senate must also consider H.R.3038 or its own transportation funding legislation. However, the Senate has previously voted to the LNG tax inequality in 2014.  

View the original post by NGT News here.  

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Fox Business Report Features LCF Member CNG4America

In this week’s episode, industry leaders are featured for their innovative technologies, solutions and commitments to today’s energy solutions.  Take a look at clean burning natural gas and how this American resource is leading the way to a cleaner and healthier environment for our nation’s communities.  Also featured in the story are Greater Indiana Clean Cities and Ryder Truck Rental and Leasing.  The Clean Cities Coalition explains their role in expanding alternative fuels use, and Ryder explains how and why they made the switch to CNG.  

Watch here: http://youtu.be/T_cvEXvXO8g 

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Louisiana Clean Fuels Featured in Summer Edition of Fuels Fix

Louisiana Clean Fuels has been featured in the nationally published Ezine, Fuels Fix, for the summer edition.  Fuels Fix is a collaborative effort of all the U.S. DOE Clean Cities Coalitions in the U.S. working together to get the word out about actions being made to reduce petroleum consumption, improve air quality, and getting alternative fuels, vehicles and vehicle technologies in use.

View the Ezine onine  | Download the PDF

Inside This Issue:

  • 2015 LAF Conference & Expo (Page 20)
  • UPS Receives Clean Fuel Leader Award from LCF (Page 10)
  • Drive Shaft: Get to know your LA Alternative Fuel Industry Experts (Page 15)
  • Lightning Hybrids: On a Roll (Page 14)
  • Question of the Month (Page 16)
  • Clean Cities TV (Page 22)

 

 

 

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Louisiana Legislative Update: Excise Taxes and Tax Credits

Louisiana Clean Fuels, the Louisiana Department of Revenue and the Louisiana Department of Natural Resources have jointly created a forum to answer your questions about legislation from the 2015  Regular Legislative Session that affect alternative fuels stakeholders in Louisiana. Act 147 and Act 125 both will have a significant impact on your operations. Each new Act has been assigned a contact person within the Department of Revenue who is a specialist in the corresponding subject matter to answer your questions about how the new rules will be administered.

The Department of Revenue will compile all the questions and answers received on these support lines. The FAQ Document will be made available here on the LCF Website as well as on the LDNR and LDR Websites.

SPECIAL FUELS TAX - ACT 147

Act 147 Beginning Jan. 1, 2016, the tax levied on special fuels shall not be collected pursuant to the annual decal but rather the amount of the tax shall be converted from a tax levied per gallon on such special fuel to a tax levied per gallon but based on the special fuel's energy content as follows:

  1. Diesel gallon equivalent for liquefied natural gas (LNG) is equal to 6.060 lbs. of LNG.
  2. The gasoline gallon equivalent for LPG shall be energy equivalent rate equal to 73% percent of the state tax per gallon on gasoline and diesel fuel.
  3. Gasoline gallon equivalent for compressed natural gas (CNG) is equal to 5.660 lbs. of CNG.
  • Decals will continue to be issued through Dec. 31, 2015, for vehicles that use special fuels in order for the taxes due on the fuel to be paid. The amount of the decal is being calculated at a rate of one-twelfth of the total annual decal amount for each month the decal is valid. Refunds will be issued in Jan. 2016 for renewals & new applications.
  • Dealers must register with LDR and post a $50,000 bond or an amount equal to 3 months’ tax liability, whichever is greater. 
  • R.S. 47:818.112 requires the tax to be collected by any person or entity upon the delivery of the fuel into the fuel supply tank of a motor vehicle. R.S. 818.112(B) imposes the tax on the delivery of fuel into the supply tank of a motor vehicle by a special fuel fleet dealer or other dealer not in connection with a sale. 
  • The return is due by the 20th of the month.
  • Licensed dealers are entitled to a 1/3 of 1% discount for the expense of collecting, accounting for, reporting and timely remitting the taxes collected and for keeping records.
  • For gasoline and diesel--Reduces the administrative discount to supplier for filing returns and remitting payment timely from one and one-half percent to one-half percent and reduces the deduction from 1% to one-third of 1% for licensed distributor or importer. See RIB 15-022.


Questions about Act 147 can be directed to Shanda McClain 225-219-2780 or the Policy Services Excise email address: pracexcsevtaxpolicyinquiries@la.gov

 

CHANGE IN THE TAX CREDIT FOR CONVERSION OF VEHICLES TO ALTERNATIVE FUEL USAGE

Act 125 of the 2015 Regular Legislative Session amends La. R.S. 47:6035(C)(1) to change the tax credit for conversion of vehicles to alternative fuel usage from 50 percent of the cost of the qualified clean-burning motor vehicle fuel property to 36 percent.

In addition, currently, according to La. R.S. 47:6035(D), if a taxpayer is unable to or elects not to determine the exact cost attributable to such qualified clean-burning motor vehicle fuel property, the taxpayer may claim a credit equal to 10 percent of the cost of the motor vehicle or $3,000, whichever is less. Act 125 would change those amounts to 7.2 percent of the cost of the motor vehicle or $1,500, whichever is less. See RIB 15-011.

Questions about Act 125 can be directed to William Little 225-219-2780 or the Policy Services CIFT email address: PracCIFTPolicyInquiries@La.GOV

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