HB0166 was introduced to increase the electric vehicle fee to $200.00 (up from $50.00), and add a hybrid vehicle fee of $100.00. Yellowstone-Teton Clean Cities agrees all users of the roadways should help finance the infrastructure, however these fees are not reflective of an EV or Hybrid owners use of the roadways. Please read YTCC’s comments to the Senate Transportation committee, as that is where the bill is currently located. If you have agree with YTCC’s comments or have additional comments and ideas about this bill, please reach out to the Senate transportation committee today by emailing STransportation@WYOLEG.GOV.
Question of the Month: What are the current and future medium- and heavy-duty vehicle fuel efficiency and greenhouse gas emissions standards?
According to the U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA), greenhouse gas (GHG) emissions from medium- and heavy-duty vehicles (collectively, HDVs) are expected to surpass light-duty vehicle (LDV) emissions by 2030. The Energy Independence and Security Act of 2007 directed the U.S. Department of Transportation to establish fuel efficiency standards for HDVs. Then, in 2010, President Obama announced a new national program to implement coordinated fuel efficiency and GHG emissions standards for medium- and heavy-duty engines and vehicles. As you may have seen last month, EPA and NHSTA recently finalized the most recent set of requirements under this program.
First promulgated by EPA and NHTSA in 2011, these coordinated standards are being implemented in two separate phases, beginning with Model Year (MY) 2014 to 2018 (Phase 1, which has now been extended through 2020) and followed by MYs 2021 to 2027 (Phase 2), with some exceptions. Under Phase 1, the GHG emissions and fuel efficiency standards generally increase in stringency in MY 2017, then remain steady through MY 2020. GHG emissions and fuel efficiency standards under Phase 2 of the program increase first in MY 2021, and then again in MYs 2024 and 2027. Although the Phase 2 standards do not begin until MY 2021, manufacturers may need to begin compliance measures beforehand in order to be adequately prepared to meet the targets.
Fuel efficiency and GHG emissions standards are determined differently for each of five regulated heavy-duty (HD) engine and vehicle categories: combination tractors; vocational vehicles; HD engines used in combination tractors and vocational vehicles; trailers used with combination tractors; and HD pickup trucks and vans. For more information on these categories, please refer to pages 3 and 4 of the EPA Phase 2 fact sheet (https://www3.epa.gov/otaq/climate/documents/420f16044.pdf).
NHTSA Fuel Efficiency Standards
NHTSA’s fuel efficiency standards are designed to take into account the different functions of each of the regulated vehicle categories. Therefore, the standards are calculated differently for each vehicle category. For HD pickup trucks and vans, there are separate gasoline and diesel target values.
The vehicle-based standards for combination tractors and vocational vehicles are calculated based on weight class, as well as specific characteristics of the vehicle category that affect fuel consumption and emissions, such as roof height for combination tractors and drive cycle for vocational vehicles.
The HD engine standards are determined by the size of the engine, the fuel type (diesel or gasoline), and the characteristics of the respective vehicles into which they are installed. The HD pickup and van standards, engine and chassis included, are fleet-average standards based on fuel-specific (gasoline and diesel) target values that are determined by a “work factor” curve. The “work factor” curve takes into account the payload and towing capacity of the vehicle and whether the vehicle has 4-wheel drive. Like the Corporate Average Fuel Economy (CAFE) program for LDVs, the HD pickup and van targets are production-weighted based on the manufacturer’s total sales volume of all of its different HD pickup and van models.
Manufacturers were required to meet Phase 1 fuel efficiency standards for combination tractors, vocational vehicles, and HD engines beginning either in MY 2016 or 2017. Phase 2 standards apply in MY 2027, with phase-in standards for MYs 2021 and 2024. Trailer fuel efficiency standards are voluntary beginning in MY 2018, and mandatory effective MY 2021. Manufacturers were not required to participate in the Phase 1 HD pickup and van program until MY 2016. At the outset of the program, NHTSA gave manufacturers the option to choose one of the alternative phase-in options for the Phase 1 standards. Phase 2 HD pickup and van standards begin in MY 2021 and increase in stringency by 2.5% each model year through MY 2027.
Fuel Efficiency Standards and Targets
To view the final Phase 1 standards and HD pickup and van targets, please see the Phase 1 Final Rule. For the recently finalized Phase 2 standards and targets, see the Phase 2 Final Rule. You may also reach out to TRS directly (firstname.lastname@example.org) if you would like specific information about where to find the finalized standards.
EPA GHG Emissions Standards
EPA also takes into account the varying functions of each of the regulated vehicle categories in its GHG emissions calculation. It uses the same factors as NHTSA to determine emissions standards for each vehicle category, except measurements are based on grams of carbon dioxide (CO2) emitted.
EPA’s mandatory Phase 1 GHG emissions standards for combination tractors, vocational vehicles, and HD engines began in MY 2014. The timeline for the Phase 2 standards mirrors that of the NHTSA fuel efficiency standards. However, Phase 2 trailer emissions standards differ in that they are mandatory in MY 2018. For Phase 1 of the HD pickup truck and van program, similar to the fuel efficiency targets, manufacturers were given the option to choose from two alternative phase-in options. As with the Phase 2 fuel efficiency targets, the separate GHG emissions targets for diesel and gasoline HD pickups and vans will increase in stringency under Phase 2 by 2.5% per year from MY 2021 to 2027.
Emissions Standards and Targets
GHG emissions standards and targets for Phase 1 and Phase 2 can be found in their respective final rules. Please refer to the Fuel Efficiency Standards and Targets section above for more information.
Manufacturers may employ many different compliance measures to meet the fuel efficiency and GHG emissions standards. These measures vary depending on the vehicle category. Each vehicle category has a different certification testing process to determine its GHG emissions and fuel efficiency values. These values are the baseline to which any additional earned credits can be added. The regulation also offers incentives to encourage advanced vehicle technologies.
The credits and incentives available for both the EPA and NHTSA programs include:
Advanced Technology Credits: Phase 1 of the program incentivizes manufacturers to produce advance technology vehicles and engines by effectively allowing manufacturers to “count” certain vehicle and engine types as more than one in their compliance calculations. This includes vehicles with hybrid powertrains and Rankine-cycle waste heat recovery systems, as well as plug-in electric vehicles (PEVs) and fuel cell electric vehicles (FCEVs). As the new Phase 2 standards are premised on some use of Rankine-cycle engines and hybrid powertrains, these technologies will not qualify as advanced technologies under Phase 2. From MY 2021 through MY 2027, advanced technology credits (with considerably higher multipliers) will only be offered for PEVs and FCEVs.
Innovative Technology and Off-Cycle Credits: Both Phases 1 and 2 of the program allow manufacturers to earn credits for off-cycle technologies that result in benefits that are not captured in certification testing procedures.
Early Credit Multipliers: Phase 1 of the program enabled manufacturers to earn credits for early compliance. Phase 2 will not include early credits.
For more information on the medium- and heavy-duty engine and vehicle GHG emissions and fuel efficiency standards, please refer to the following resources:
EPA Regulations and Standards: Heavy-Duty page: https://www3.epa.gov/otaq/climate/regs-heavy-duty.htm
NHTSA CAFE: Fuel Economy page: http://www.nhtsa.gov/fuel-economy
Clean Cities Technical Response Service Team
Model Year 2017 and Beyond: Light-Duty Fuel Economy and Emissions Standards
What are the current and future light-duty vehicle fuel economy and greenhouse gas (GHG) emissions standards?
According to the U.S. Environmental Protection Agency(EPA), light-duty vehicles (LDVs) emit nearly 60% of transportation-related GHG emissions and use more than half of all petroleum transportation fuel in the United States. In 1975, Congress enacted the Energy Conservation and Policy Act, which directed the U.S. Department of Transportation (DOT) to implement the Corporate Average Fuel Economy (CAFE) program. The goal of the CAFE program is to reduce national energy consumption through fuel economy improvements.
Read more about emissions standards here.
For further information, or for any questions, feel free to contact the Technical Response Service Team:
Recent federal tax incentive extensions and changes impact alternative fuel and infrastructure tax credits.
The Consolidated Appropriations Act of 2016 (H.R. 2029) retroactively extended several tax credits, including theAlternative Fuel Excise Tax Credit and Alternative Fuel Infrastructure Tax Credit. It also included updates to the calculation method for Alternative Fuel Excise Tax Credit amounts, specifically for propane and liquefied natural gas(LNG). Below we discuss three frequently asked questions about these credits.
How have the Alternative Fuel Excise Tax Credit amounts changed for propane and LNG in 2016 and beyond?
The Alternative Fuel Excise Tax Credit applies to alternative fuel sold or used to operate a motor vehicle. Previously, the excise tax credit amount for propane and LNG was based on a volumetric basis ($0.50 per gallon). For fuel sold or used starting January 1, 2016, however, the excise tax credit amount for propane and LNG is based on an energy equivalent basis. This means the credit for propane is now measured per gasoline gallon equivalent (GGE) and LNG is measured per diesel gallon equivalent (DGE). Specifically, the updated Internal Revenue Service (IRS) Form 8849, Schedule 3 defines 2016 tax credit rates for propane and LNG as follows:
- Propane: One GGE is equal to 5.75 pounds (lbs.) or 1.353 gallons of propane.
- LNG: One DGE is equal to 6.06 lbs. or 1.71 gallons of LNG.
What does this mean for propane and natural gas retailers and fleets? In short, the tax credit for the same amount of fuel is now less:
- The propane tax credit was previously $0.50 per gallon and is now $0.50 per GGE (1.353 gallons of propane), which equates to $0.37 per gallon.
- The LNG tax credit was previously $0.50 per gallon and is now $0.50 per DGE (1.71 gallons of LNG), which equates to$0.29 per gallon.
The tax credit amount for compressed natural gas (CNG) is still based on the GGE, where one GGE is equal to 121 cubic feet.
Natural Gas Vehicles for America (NGVAmerica) provides additional information on federal tax incentives for LNG and CNG, and highlights the impacts of the recent tax credit changes in the article, New Year Rings in Changes for CNG and LNG in 2016. The National Propane Gas Association explains the excise tax equalization for propane.
So, you said the Alternative Fuel Excise Tax Credit was retroactively extended. Does that mean I can claim it for fuels sold or used in 2015?
Yes! Both the federal Alternative Fuel Excise Tax Credit and Biodiesel Mixture Excise Tax Credit were extended to cover 2015, meaning that propane, CNG, LNG, hydrogen, and biodiesel sold or used in 2015 are eligible for the federal tax credit. To file for the tax credit, registered claimants must submit a single one-time 2015 claim with IRS Form 8849, as well as the accompanying Schedule 3. The deadline to submit a claim for fuels sold or used in 2015 is August 8, 2016.
Please note that the tax credit amount for propane and LNG sold or used in 2015 is based on the previous, volumetric rate of $0.50 per gallon.
For additional information on claiming the tax credit for fuels sold or used in 2015, please see IRS Notice 2016-05.
Are tax-exempt entities eligible for the Alternative Fuel Infrastructure Tax Credit?
While a tax-exempt entity, such as a school or state government fleet, may not be eligible to claim the Alternative Fuel Infrastructure Tax Credit directly, the entity selling the fueling infrastructure to the tax-exempt entity can claim the credit and pass the “discount” along to the fleet. According to Title 26 of the United States Code, Section 30C(e)(3), the entity selling the fueling equipment to the tax-exempt entity can be treated as the taxpayer and claim the Alternative Fuel Infrastructure Tax Credit, but only if the seller discloses the amount of the credit allowable to the tax-exempt purchaser in writing. In practice, this means the tax-exempt fleet would have the opportunity to use this information to request a discount. However, the infrastructure seller is not required to pass along any savings associated with the tax credit.
For more information on how tax-exempt entities may be eligible for the Alternative Fuel Infrastructure Tax Credit, please see the IRS Instructions for Form 8911.
Please note that the Technical Response Service recommends consulting a qualified tax professional or the IRS before making any tax-related decisions.
On Friday, December 18th, President Obama signed the Consolidated Appropriations Act of 2016 (H.R. 2029). Division Q, the Protecting Americans from Tax Hikes Act (PATH Act), retroactively extends many tax credits.
There are several PATH Act provisions with implications for Clean Cities portfolio items:
- Alternative Fuel Infrastructure Tax Credit. Section 182 extends the tax credit for alternative fuel infrastructure through December 31, 2016. Fueling equipment for natural gas, propane, liquefied hydrogen, electricity, E85, and biodiesel are eligible for a tax credit of 30%, up to $30,000. Residential fueling equipment may receive a tax credit up to $1,000.
- Alternative Fuel Excise Tax Credit. Section 192 extends the $0.50 per gallon tax credit for alternative fuels, including liquefied hydrogen, through December 31, 2016.
- Alternative Fuel Mixture Excise Tax Credit. Section 192 also extends the $0.50 per gallon tax credit for alternative fuel used to produce a mixture containing at least 0.1% gasoline, diesel, or kerosene through December 31, 2016. Alternative fuel blenders must be registered with the Internal Revenue Service (IRS).
- Qualified Two-wheeled Plug-In Electric Drive Motor Vehicle Tax Credit.Section 183 extends the two-wheeled plug-in electric drive motor vehicle tax credit through December 31, 2017. Qualified vehicles are eligible of a tax credit for 10% of the cost of the vehicle, up to $2,500.
- Fuel Cell Motor Vehicle Tax Credit.Section 193 extends the $4,000 tax credit for the purchase of qualified light-duty fuel cell vehicles through December 31, 2016.
- Biodiesel Income Tax Credit. Section 185 extends the biodiesel income tax credit through December 31, 2016. A taxpayer that delivers unblended biodiesel (B100) into the tank of a vehicle may be eligible for a $1.00 per gallon of biodiesel, agri-biodiesel, or renewable diesel tax credit.
- Biodiesel Mixture Excise Tax Credit.Section 185 also extends the $0.50 per gallon tax credit for biodiesel, agri-biodiesel, or renewable diesel used to produce a mixture containing at least 0.1% gasoline, diesel, or kerosene through December 31, 2016. Alternative fuel blenders must be registered with the IRS.
- Second Generation Biofuel Production Property Depreciation Allowance.Section 189 extends the 50% special depreciation allowance for second generation biofuel production plants through January 1, 2017.
- Second Generation Producer Tax Credit.Section 184 extends the tax credit for second generation biofuel producers through December 31, 2016. Second generation biofuel producers registered with the IRS may be eligible for a $1.01 per gallon of biodiesel tax credit.
The changes outlined above are effective immediately. To view the full text of the PATH Act, visit https://www.gpo.gov/fdsys/pkg/BILLS-114hr2029enr/pdf/BILLS-114hr2029enr.pdf. See the Alternative Fuels Data Center Federal Laws and Incentives page for descriptions of each incentive.
Question of the Month: What are the new credit allocations that were established under the U.S. Department of Energy’s (DOE)’s Alternative Fuel Transportation Program (Program) earlier this year? How can I help spread the word on these new Energy Policy Act (EPAct) compliance pathways?
Answer: DOE issued a final rule on March 21, 2014, that establishes credit levels for additional means by which covered state and alternative fuel provider fleets operating under the Program’s Standard Compliance(http://www.eere.energy.gov/
The new credit allocations address the acquisition of various types of electric drive vehicles and allow covered fleets to earn credits under Standard Compliance for some vehicles that do not meet the EPAct 1992 definition of an AFV. Newly eligible vehicles include the following (with their credit allocations):
- Certain hybrid electric vehicles (HEVs) – one-half credit
- Plug-in electric vehicles – one-half credit
- Fuel cell electric vehicles – one-half credit
- Neighborhood electric vehicles – one-fourth credit
Medium- and heavy-duty HEVs are also eligible for one-half credit after a fleet has met its light-duty AFV acquisition requirements.
Acquiring the electric drive vehicles noted above is not the only new way to earn credits under EPAct Standard Compliance. Fleets may now earn credits for investments of their own funds (not grant funds or other monetary awards) in qualified alternative fuel infrastructure. For every $25,000 invested, a covered fleet may earn one credit, with a limit of five credits available per fleet per model year for private infrastructure investment, and ten credits per fleet per model year for public infrastructure investment.
Fleets may also earn credits for investments in alternative fuel non-road equipment and/or emerging technologies associated with the Section 133-identified vehicles. The credits for non-road equipment are similar to infrastructure – one credit for every $25,000 invested and a maximum of five credits may be earned per fleet per model year. Emerging technologies investments will earn a covered fleet two credits for the initial investment of $50,000 and one credit for every $25,000 invested thereafter, with a limit of five credits per fleet per model year.
Fleets may begin taking advantage of these new credit allocations for their efforts undertaken in model year 2014 and future model years.
How Can You Spread the Word?
Are you aware of any covered utility or state fleets that are building new fueling infrastructure?
- Inform them they can earn EPAct credits.
Do you have an EPAct covered fleet stakeholder that needs an extra push to buy or lease HEVs?
- Let them know that certain HEVs are now eligible for EPAct credits.
Do you or your stakeholders have questions regarding EPAct compliance?
Note that covered fleets are currently compiling their Program reports for model year 2014 (September 1, 2013 to August 31, 2014) activities, which are due by December 31, 2014.
For more information, refer to the following resources:
- EPAct Frequently Asked Questions for State and Alternative Fuel Provider Fleets website (http://www1.eere.energy.gov/
- Final rule (http://www.gpo.gov/
- EPAct Transportation Regulatory Activities Statutes and Regulations website (http://www1.eere.energy.gov/
- Webinar: Final Rule on Electric Drive Vehicles and Infrastructure (https://www.youtube.com/
Clean Cities Technical Response Service Team
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