LCF testifies before Louisiana Transportation Funding Committee

    Louisiana Clean Fuels testifies before Louisiana Transportation Funding Committee
    Februar 20, 2015 | Louisiana State Capitol

    LCF and NREL present to Louisiana House of Representatives Transportation Funding Task Force on February 20, 2015 about LA Alt Fuels Excise Tax

    Louisiana Clean Fuels (LCF) Executive Director, Ann Shaneyfelt, and National Renewable Energy Laboratory (NREL) Transportation Technology Deployment Manager, Alex Schroeder, spoke to the Louisiana Transportation Funding Task Force on Fri. Feb 20. The two presented facts about the current state of alternative fuels usage in Louisiana, as well as the methods of state transportation taxation.

    Shaneyfelt gave an update on the size and composition of the alternative fuels industry in Louisiana, citing issues of parity and compliance as motivating factors in many states' decisions to change how alternative fuels in transportation are taxed. 

    According to Schroeder, Transportation funding was the most legislated issue nationally in 2014, and alternative fuels introduced a level of complexity that states didn’t need to consider before. As vehicles are manufactured to be more fuel efficient, there is a decrease in revenues to pay for the roads and transportation infrastructure. Shaneyfelt pointed to the various companies that are converting their on- and off-road fleets to natural gas and propane as evidence that alternative fuel vehicles are a steadily growing minority, and that this may be an issue worthy of new legislation.

    Schroeder outlined the “fuel agnostic approaches,” which are broad policy fixes that have been set in place in North America, but noted that there is not yet a consensus on what the best approach is. Differing taxation methods are an attempt to ensure each citizen is paying a fair and equal tax on transportation fuel, but not all fuels are equal.

    Fuel Parity
    Fuel taxes are traditionally based on volume, but one gallon of alternative fuel does not always equal a gallon in terms of the mileage and energy from a fuel.

    For example, liquefied natural gas (LNG) usually displaces diesel. However, 1 ¾ gallons of LNG provides the same gallon of energy as diesel. One gallon of CNG will have a different content of energy based on how pressurized it is. Because there are different ozone compliance requirements across the country, utilities pressurize the gas differently from state to state, meaning that the natural gas in Louisiana is likely not the same content of energy as it is in any other state. So, establishing how fuels compare to one another as well as the fuel’s regional components must be a consideration when trying to set tax rates for these alternative fuels.

    Recent and Pending Legislation

    • U.S. Senators Richard Burr (R-NC) and Michael Bennet (D-CO) introduced bipartisan legislation to equalize the federal excise tax on LNG with that of diesel.
    • Colorado’s HB1110 phased out decals for natural gas and propane vehicles and implemented energy-content based fuel taxation as well as assessing a $50 annual fee on electric vehicles, $25 of which goes to transportation infrastructure, and $25 goes to EV charging infrastructure.
    • Mississippi’s HB1590 defined a diesel gallon equivalent for the purpose of taxation of LNG.
    • New Mexico’s HB30 removed the decal system and established an energy equivalent tax for CNG, LNG and LPG.

    Current alternative fuel tax in La
    Currently, Louisiana is one of 14 states using a decal system for alternative fuel vehicles. All Louisianans who own vehicles that are licensed to drive on the public highways that are fueled by natural gas or propane  are required to submit forms to the Excise Taxes Division of the Louisiana Department of Revenue when the vehicle is purchased, and the citizen is required to renew annually. It’s a one-time fee, which is an incentive to use alternative fuels, because it’s less tax on a per gallon basis, but according to Schroeder, the decal system was a quick fix that presents struggle in parity and compliance.

    The Transportation Funding Task Force must draft and file legislation on this issue by April 3. Watch the video of the presentations by the Department of Revenue, LCF and NREL.

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