The use of natural gas and propane vehicles is an important way to diversify U.S. transportation fuel supply and reduce U.S. reliance on foreign oil. Both natural gas and propane are primarily produced in the U.S., which increases U.S. energy security and creates job opportunities. Most natural gas and propane vehicles in Indiana are used by government or commercial fleets, and natural gas and propane filling stations are spreading quickly across Indiana.
Natural gas can power vehicles in the form of compressed natural gas (CNG) or liquefied natural gas (LNG). Natural gas is mainly found in underground rock formations, but it can also be derived from renewable biomass resources, such as the break down of plant or animal waste in landfills or anaerobic digestors. Learn more about natural gas here.
Compressed Natural Gas (CNG) stays in a gaseous form and is stored on a vehicle in high pressure tanks—up to 3,600 pounds per square inch. A CNG-powered vehicle gets about the same fuel economy as a conventional gasoline vehicle on a gasoline gallon equivalent (GGE) basis (a GGE equals about 5.7 lb of CNG).Light duty trucks tend to use CNG instead of LNG.
Liquefied Natural Gas (LNG) allows more energy to be stored on board in a small volume, so it is suited for long distance or heavy duty trucks. LNG is produced when natural gas is purified and condensed into liquid at 260°F. At atmospheric pressure, LNG occupies only 1/600 the volume of natural gas in vapor form. A gasoline gallon equivalent (GGE) equals about 1.5 gallons of LNG.
Propane becomes liquid when pressurized and is then known as liquefied petroleum gas (LPG)is stored on a vehicle in a tank pressurized to around 150 pounds per square inch. LPG has high energy density and low maintenance costs. Its high octane rating (104 to 112 compared with 87 to 92 for gasoline) has resulted in documented engine life of up to two times that of gasoline engines. However, a gallon of LPG has about 25% less energy than a gallon of gasoline. Learn more about propane here.
State Natural Gas Vehicle (NGV) Tax Credit: Effective January 1, 2014, individual and entities that place into service an NGV with a gross vehicle weight rating of more than 33,000 pounds may be eligible for a tax credit for 50% of the incremental cost of the NGV, up to $15,000. One individual or entity may claim up to $150,000 in such credits per year. Other restrictions apply. The credit expires December 31, 2016. Unused credits may be carried forward for up to six consecutive taxable years. (Reference House Bill 1324, 2013, and Indiana Code 6-3.1-34.6)
State Natural Gas Tax Credit: Effective January 1, 2014, a carrier operating a commercial natural gas vehicle (NGV) in Indiana may claim a credit equal to 12% of the road taxes imposed on its consumption of compressed natural gas in the previous year. The credit is refundable. (Reference House Bill 1324, 2013, and Indiana Code 6-6-4.1-1 and 6-6-12)
Federal Tax Credits for Fueling Equipment: The Alternative Fuel Vehicle Refueling Property credit applies to CNG, LNG, and propane fueling equipment. Consumers who purchase qualified residential fueling equipment prior to December 31, 2016 may receive a federal tax credit of up to $1,000. Businesses and investors who purchased fueling equipment may receive a federal tax credit of 30% of the equipment and installation cost, up to $30,000. Learn more about the Alternative Fuel Vehicle Refueling Property credit here.
Federal Volumetric Excise Tax Credit (VEETC) for CNG and LNG: Private and public entities and individuals can claim a federal excise tax credit of 50 cents per gallon of natural gas transportation fuel for their 2014. This tax credit expired after December 31, 2014.
Federal Alternative Fuel Excise Tax Credit: A tax incentive is available for alternative fuel that is sold for use or used as a fuel to operate a motor vehicle. A tax credit in the amount of $0.50 per gallon is available for the following alternative fuels: compressed natural gas, liquefied natural gas, liquefied hydrogen, biodiesel, and propane. The credit expires December 31, 2016. Learn more about this tax credit here.
This tool shows what the payback period could be for using CNG versus diesel.