May 26, 2011

THE PROPANE GREEN AUTOGAS SOLUTIONS ACT OF 2011

MR. CARDIN.  Mr. President, I rise today introduce the Propane Green Autogas Solutions Act of 2011.  I am pleased to note that the junior Senators from Missouri (Mr. Blunt) and Michigan (Ms. Stabenow) are original co-sponsors of this measure.  Our bill extends for five years Federal Alternative Fuel Tax Credits for Propane Used as a Motor Fuel, Propane Vehicles, and Propane Refueling Infrastructure.

Propane “autogas” is a reliable, domestically produced alternative fuel with lower greenhouse gas (GHG) emissions than gasoline.  Sixty percent of propane, also known as liquefied petroleum gas (LPG), is derived from natural gas processing and 40 percent is a byproduct of crude oil refining.  Since LPG is derived from fossil fuels, burning it releases carbon dioxide (CO2).  The advantage is that LPG releases less CO2 per unit of energy than oil and burns cleanly with regard to particulates.

At present, one propane-powered light-duty vehicle (LDV) and several heavy-duty vehicle (HDV) propane engines and fueling systems are available from U.S. original equipment manufacturers (OEM).  Because other countries offer more OEM options in propane vehicles, thorough testing to compare emissions with reformulated gasoline has been conducted on these vehicles and engines in Europe.  Two of these tests were combined and the results are promising with respect to lower particulate matter (PM), nitrogen oxides (NOx), carbon monoxide (CO), and total hydrocarbon (THC) emissions, as the chart below details:

Emissions of Manufactured Propane Vehicles

Pollutant

Percent Reduction: LDV

Percent Reduction: HDV

Total Hydrocarbons (THC)

>40%

>80%

CO

>20%

>90%

NOx

>30%

~60%

PM

~100%

~100%

Source: The Report of Alternative Fuels Group of the Cleaner Vehicles Task Force

To augment LPG’s generally cleaner combustion properties, propane engines can be calibrated to choose between pollutants, making the engine additionally useful in achieving regional or local pollution-reduction targets.  A rich calibration reduces nitrogen oxides (NOx) at the expense of increasing CO and non-methane hydrocarbons and a lean calibration does just the opposite.

Propane is in surplus worldwide with 93 percent of U.S. propane produced domestically when combined with supply from Canada.  A national infrastructure of pipelines, processing facilities, and storage (i.e., 59 million barrel capacity in Texas alone) already exists for the efficient distribution of propane and there are roughly 3,200 propane dispensing stations across the U.S.  Propane supply is expected to increase over the next several decades, which means more consumer availability and price stability.

 

The Tax Credits

Commercial fleets are the propane autogas vehicle target market.  The Energy Policy Act of 2005 (EPACT 2005) and the 2005 Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) transportation reauthorization established significant tax incentives for propane autogas to stimulate its use in motor vehicles to reduce U.S. dependence on foreign oil and reduce environmental impacts associated with gasoline and diesel fuel use.  The 2005 legislation provided the following alternative fuel tax credits that benefit propane autogas, all of which would be extended under the legislation Senators Blunt and Stabenow and I are introducing today

  • Propane Fuel Credits – SAFETEA-LU included a 50 cent per gallon credit for propane sold for use in motor vehicles.  This credit expires at the end of 2011.
  • Propane Vehicle Credits – EPACT 2005 included a tax credit to consumers who purchase OEM propane vehicles or convert gasoline or diesel engines.  The amount of credit the consumer receives varies depending on vehicle weight and emissions.  This credit is currently expired.
  • Propane Infrastructure Credits – EPACT 2005 provided a tax credit amounting to 30 percent of the cost of a fueling station, not to exceed $30,000 per station.  This credit expires at the end of 2011.

The Propane Act would extend these three tax credits for five years.  For the credits to have a meaningful effect in firmly establishing a robust propane autogas market, they should be in place for a defined period of time, not extended from year-to-year in a haphazard fashion.  Congress should not wait to act until the credits are about to expire because market uncertainty regarding the credits undermines the effectiveness of the incentives and discourages the kind of investment that Congress wants the private sector to make in alternative fuels.  The Propane Green Autogas Solutions Act, if enacted, would offer the long-term policy commitment necessary to continue building essential alternative fuel infrastructure and bolster a burgeoning autogas market.  Private investment is much more likely to occur when the availability of the tax credits is assured in the long-term so the propane industry can create the economies of scale necessary to make propane autogas a viable and competitive alternative fuel.

There is no score for the bill yet.  The National Propane Gas Association (NPGA) has retained an economic research firm to perform a comprehensive economic review that will look at costs and offsetting benefits (job creation, economic growth, etc.); foreign petroleum gallons displaced; and the positive environmental impact of extending the tax credits.  The study will be available shortly and  will share it with my colleagues when it becomes available.

Mr. President, recent rapid price increases for gasoline and diesel fuel have hurt Americans families and businesses.  This weekend is Memorial Day weekend, the unofficial beginning of the summer and the summer driving season.  Our Nation needs to come to grips with a few fundamental facts.  We have 2-3 percent of the world’s oil reserves.  We account for about 5 percent of the world’s population.  We currently produce 11 percent of the world’s oil (up 11 percent over the last two years), in large part because we have more drilling rigs in operation right now than the rest of the world combined – by 50 percent.  And we account for 25 percent of the world’s oil consumption.  “Drill here, drill now, pay less” is a catchy slogan, but it’s not a solution to our energy woes.  As T. Boone Pickens himself has said, we cannot drill our way of this problem.  The best way for the United States to put downward pressure on gasoline and diesel prices is through demand reduction since we are the world’s biggest consumers of petroleum products by far.  The Propane Green Autogas Solutions Act offers one way to reduce our demand – by substituting propane for gasoline or diesel fuel.  Propane is a domestic transportation fuel.  It’s less expensive than gasoline and diesel fuel.  It burns more cleanly.  These are all good things.  I urge my colleagues to support this bill.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record following my remarks.

THE PRESIDING OFFICER.  Without objection, it is so ordered.

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