Waterway LNG Parity Act Brought Before US Congress

| USA: Washington DC | Source: U.S. Senate
Q-LNG Barge

Articulated Tug Barge (ATB) for LNG bunkering (© Q-LNG Transport)

U.S. Senators Todd Young (R-Ind.), Bill Cassidy, M.D. (R-La.), and Michael Bennet (D-Colo.) have for the third time brought the Waterway LNG Parity Act before Congress. This bill requires excise taxes on liquefied natural gas (LNG) for marine transportation on inland waterways be levied at a rate consistent with energy output relative to diesel and gasoline.

This bill was previously introduced in 2015 (114th Congress – SB2378) and again in 2017 (115th Congress – S.505) but was not enacted.

“Diesel fuels should not be provided better tax treatment than natural gas,” said Senator Bennet. “Our legislation acknowledges the shift to cleaner burning fuels, which is an important step in moving us to a cleaner energy economy.”

“The Waterway LNG Parity Act is a market-based fix for how we tax liquefied natural gas,” said Senator Young. “The bill levels the playing field for this important alternative fuel source which represents a growing sector of our economy.”

In the publication LNG as a Maritime Fuel: Prospects and Policy (February 5, 2019), prepared by the Congressional Research Service for Members and Committees of Congress, it was stated: “Congress could encourage the growth of LNG bunkering by various means, such as providing tax incentives to support the construction of LNG bunkering facilities and vessels, addressing any statutory or regulatory barriers to bunkering facility siting or operations, and providing funding for technical support to domestic carriers seeking to adopt LNG technology.” (Link to publication – https://fas.org/sgp/crs/misc/R45488.pdf).

It takes about 1.7 gallons of LNG to provide the same amount of energy as a gallon of diesel, yet fuel usage is taxed on volume. So LNG usage would be taxed 50 cents for the same amount of energy contained in a gallon of diesel fuel that is only taxed at 29 cents. Natural gas is cleaner and more efficient than gasoline and diesel respectively, yet under the current federal tax code disincentivizes its use. This legislation would change the inland waterways financing rate to provide equal treatment within the federal tax code.

“Natural gas is a clean, domestic energy source that should be treated equally to gasoline and diesel,” said Dr. Cassidy. “We should be encouraging the use and production of LNG—benefiting the economy and workers in Louisiana.”

“We applaud this extremely important legislation as we continue to promote clean fuel alternatives in our country. LNG is domestic, clean, and abundant, ensuring that marine operators have decades of affordable fuel that produces near zero sulfur oxide emissions and significantly reduce particulate matter and nitrogen oxides,” Dan Gage, president of NGVAmerica. “We hope this legislation passes through the Senate and House so we can work toward the climate goals that remain a priority in Congress and around the country.”

“When liquefied natural gas is used as a fuel for marine, rail and over-the-road transportation assets, our environment wins. In addition to reducing carbon emissions, natural gas fuel reduces NOx, SOx and particulates compared to diesel. Natural gas costs less and prices are less volatile than diesel due to abundant domestic gas supply. But this safe and clean fuel is currently taxed at a higher rate per unit of energy, which then masks the economic benefits of switching from other dirtier fuels like diesel. Pivotal LNG and Southern Company Gas applaud this legislation because it eliminates the significant tax advantage that diesel currently enjoys versus liquefied natural gas,” said Tim Hermann, president of Pivotal LNG.

Related article: Gas Parity Bill Introduced in USA

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