What the Tax Credit Extension Means for the Waste Industry’s Conversion to CNG

The waste and recycling industry may move more aggressively into compressed natural gas (CNG) trucks, now that federal tax credits for initiatives including alternative fuels have been officially extended by Congress and President Obama.

Obama signed the Protecting Americans from Tax Hikes Act (PATH) Dec. 18. The PATH Act includes a broad range of tax extenders, including those for alternative fuels, which were strongly supported by two of the industry’s primary associations, the Washington-based National Waste & Recycling Association (NWRA) and the Silver Spring, Md.-based Solid Waste Association of North America (SWANA).

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The NWRA worked on three provisions affecting alternative fuels, says Kevin Kraushaar, vice president, government affairs & general counsel for the association. PATH will extend the federal tax credit of 50 cents a gallon for CNG, as well as liquefied natural gas, propane autogas and other alternative transportation fuels.

The second credit covers up to 30 percent of infrastructure installation.

The third involved facilities that produce energy from certain renewable resources, such as landfills and methane gas.

“I think it provides further incentives and support for the industry’s move toward cleaner-fuel burning vehicles,” Kraushaar says. “A lot of the companies were moving in that direction anyway, and obviously, for a lot of reasons: cost effectiveness, efficiency, and just to create a cleaner footprint in the environment.”

SWANA backed the tax credit extension as well, providing a letter in support of the move.

“I think this this is going to continue to encourage local government and haulers to more closely consider natural gas trucks and infrastructure in the coming year,” says David Biderman, SWANA executive director and CEO. “There had been uncertainty about whether the tax credit would be in existence this year, and between that and the low price of diesel, those had been challenges for some to overcome. But I think the renewal of the tax credit is going to continue to encourage those that have not yet transitioned to do so.”

One of leading CNG conversion firms, Newport Beach, Calif.-based Clean Energy Fuels Corp., has lauded the passage of the extension. However, it could not quantify how much it might save the industry, according to Jason Johnston, public relations manager for the company.

Will the extension speed up the industry’s conversion to CNG? “This is an industry that’s culturally conservative, and sometimes people in the industry need to see it working for others before they are willing to adopt it,” Biderman says. “And that was probably true for things like automated trucks, changing over from manual to rear load. And when you change over from diesel fuel to gas fuel truck, you’re introducing a whole set of new maintenance and operational changes associated with these types of trucks.

“I think some of the skeptics are now looking at these trucks differently given the fact that so many of their competitors are using them, and there are true cost savings associated with using these vehicles and looking at it over a 10-year cycle.”

Kraushaar sees it as continuing the industry’s shift toward alternative fuel. Even with gas prices down significantly, the trend has continued. “I think the companies want to prepare for the long haul, and they’ll continue these investments despite the temporary downward trends of gasoline prices.

“This (the tax credit extension) again is a tremendous assistance to them in making the conversion to cleaner energy. It promises to be a more stable source of energy over the years to come.”

With the tax credit bill the NWRA also monitored three other provisions of interest to the industry. One involved food waste and charitable deductions; a provision on active-duty military personnel; and one for bonus depreciation. The first two became permanent; the third was extended through 2019.

Kraushaar says the association did three things in support of the extension. It prompted members and other supporters to make individual calls to Congress. The association itself reached out to members of both the House Ways and Means Committee and the Senate Finance Committee in support of the provisions.

And the NWRA worked a number of associations such as the National Association of Manufacturers and the Natural Gas Vehicles of America that also were supporting the bill.

“This is probably one of the most heavily lobbied bills in Washington I’ve seen in a long time,” he says.

The credits are extended only through 2016, Kraushaar says.

“Congress will have to take another look at this next year to determine whether or not this is the appropriate public policy moving forward; obviously we hope they will, that it is the right policy.”

Published by: WIH Resource Group

Source: Waste360

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Bob Wallace, MBA is the Founder and a Principal of WIH Resource Group, Inc. and has over 27 years of experience in waste and recycling collections programs management, transportation / logistics operations, alternative fuels (CNG, LPG, RNG, LNG & biodiesel), Fleet Management, Operational Performance Assessments (OPAs), Waste-by-Rail programs, recycling / solid waste operations, transfer stations, landfills, planning and development. Mr. Wallace has extensive experience in working with clients in both the private and public sectors. Prior to WIH Resource Group, Mr. Wallace served as the Director of Transportation & Logistics for Waste Management, the largest provider of waste management and recycling services in North America. He can be reached at bwallace@wihresourcegroup.com or 480.241.9994. For more information visit http://www.wihrg.com

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