US Federal Incentives

The following summary of US Federal Incentives is current as a Sept 2006.

New Federal Tax Incentives Favor Market Growth

NGVAmerica’s refers to the new federal tax incentives signed into law last August (2005) as a “three-legged stool” comprising vehicle tax credits, motor fuel excise tax credits and station tax credits. The incentives include:

Federal Alternative Fuel Vehicle Tax Credits
Federal Motor Fuels Excise Tax Credits
Fueling Station Equipment Tax Credit

Federal Alternative Fuel Vehicle Tax Credits

Under a provision of the Energy Policy Act of 2005, buyers of a new dedicated alternative fueled vehicle placed in service after December 31, 2005 are eligible for a tax credit of 50 percent of the incremental cost of the vehicle, with an additional 30 percent “bonus” credit for vehicles meeting the most stringent applicable EPA or California Air Resources Board (CARB) emission standard. If the buyer of the vehicle is a tax-exempt entity, such as a school district, transit agency or municipality, the tax credit may transfer to the seller of the vehicle. The amount of pass-through tax credit is a negotiating point between the buyer and seller to be reflected in a lower purchase price.

The amount of the available tax credit is based on four gross vehicle weight rating (GVWR) groupings that have total incremental cost caps ranging from a $5000 for light duty vehicles (up to 8,500 lbs.) to $40,000 for heavy duty vehicles (more than 26,000 lbs.). For example, a dedicated natural gas-powered light-duty pick-up that meets a lesser EPA emission standard could qualify for up to $2,500, while a Honda Civic GX, which meets CARB’s more stringent SULEV standard, could qualify for up to $4,000 in federal tax credits. Heavy-duty natural gas powered vehicles with GVWR over 26,000 pounds, such as a transit bus or utility crew truck, could qualify for up to $32,000 if the engine meets the strictest emission standard in place for heavy-duty engines.

Federal Motor Fuels Excise Tax Credits

Natural gas’ historical cost advantage over gasoline and diesel fuel will improve substantially due to the new federal motor fuels excise tax credit contained in the Energy Policy Act of 2005. Beginning October 1, 2006, the federal government will pay the seller of vehicular alternative fuel 50 cents per gallon of LNG or gasoline-gallon-equivalent (gge) of CNG. For CNG, the motor fuels excise tax credit is not generated until the gas is compressed for vehicular use.

While one highway bill provision provides this new tax credit, another provision raises the CNG federal tax from its current 6 cents per gge to 18.3 cents per gge, making it equivalent to the federal tax paid per gallon of gasoline, and it also raises the LNG tax from 11.9 to 24.3 cents per gallon, making it equivalent to the federal tax paid per gallon of diesel fuel. For private companies like investor-owned utilities, the net difference after the “rebate” is about 38 cents per gge of CNG and nearly 64 cents per dge of LNG.

NGVAmerica is still awaiting IRS guidance on the fuel credit including how it defines the word “seller.” The highway bill’s language is clear that a fleet operator who buys natural gas and compresses it for use in his/her own fleet is considered the “seller” of the fuel, even though no monetary transaction has taken place. Less clear, however, are cases where the purchase of natural gas and the ownership, operation and maintenance of fueling equipment is shared between the end-use fleet operator and a fuel service provider, such as a utility or independent fuel supplier.

Fueling Station Equipment Tax Credit

The third leg of the stool, is the energy bill provision that allows for an income tax credit equal to 30 percent of the cost of any qualified alternative fuel vehicle refueling property used in a trade or business and placed into service after December 31, 2005. The credit is capped at a maximum of $30,000 “per property” per year. As with the vehicle purchase tax credit, the fueling infrastructure tax credit can be taken by the equipment seller if the purchaser is a tax-exempt entity. The same provision repeals an existing $100,000 tax deduction for fueling stations. The new measure remains in effect until December 31, 2009.

The legislation also permits carrying forward of tax credits if the total allowable credit exceeds the taxable entity’s tax liability for that year. As of late-June when this article was written, final IRS guidance was still being developed. Of particular interest is whether the IRS will define individual pieces of equipment as “property” as it does in regulations pertaining to depreciable assets, thus allowing multiple pieces of “property” per fueling station, or if it will take a more restrictive interpretation and define “property” as the entire refueling facility.

The provision also includes a 30 percent credit for home refueling appliances with a maximum credit of $1,000.

Iran – Natural Gas Vehicle Country Report Update Sept 06

Based on the 121st article of the third national program of economical, social and cultural development of the country, the Iranian Fuel Conservation Organization (IFCO), a subsidiary of National Iranian Oil Company (NIOC), was established in 2000, aiming to manage the fuel consumption in different sectors through the review and survey of consumption trends and executing conservation projects nationwide.

Establishing compressed natural gas (CNG) infrastructure and the promotion of natural gas vehicles (NGV’s) are among the main missions of IFCO.

NGV programs:

CNG projects were started in 1975 with the conversion of 1200 taxis and private passenger cars in Shiraz city as a pilot project.

These are the main strategies of IFCO for bi-fuel vehicles:
– Retrofit conversion as a short term method for existing cars.
– OEM production of bi- fuel vehicles as a medium term measure.
– Design and production of CNG base OEM vehicles as a long term method

A comprehensive project for creating infrastructure and developing CNG in Iran was started by IFCO in 2001 with some separate activities in parallel, as described below:
– Conversion retrofit vehicles to CNG
– OEM CNG vehicles manufacturing
– Legislation of national directives and regulations
– Construction of CNG fueling stations.


The following outlines some of the main measures taken relating to infrastructure development.

Iranian CNG Station

CNG stations: Existing large natural gas resources and pipeline networks that cover more than 560 cities and 3226 villages form the basis for the location of CNG stations in the country.

Up to Sep 2006, 326 CNG stations have been constructed and are in service while more than 432 stations are under construction by the government and private sectors. The total capacity of the service stations is more than 10,000,000 m3/day (6.000.000 m3/day is in service and more than 4.000.000 m3/day is ready for operation)

Public relations: Safety aspects and the promotion of natural gas vehicles have been addressed through many educational films produced and broadcast on TV and radio channels. Brochures including safety requirements for use natural gas as vehicles fuel, specification of natural gas, etc, have also been issued. In several national and international fairs, IFCO has also raised awareness about natural gas vehicles.

Regulations and standards: International standards (ISO Standards), European Regulations and standards of countries with historical background on CNG such as Italy, Argentina and New Zealand have been used for different activities related to CNG in both vehicles (light and heavy duty) and refueling stations since the beginning of the project in Iran. Also some important regulations regarding NGV’s and CNG refueling stations have been issued by IFCO.

After a short interval the national standards based on ISO standards were issued for CNG vehicles and their components (ISIRI 5636 and ISIRI 5764), and at present the country is switching CNG vehicle components standards from ISO standards to European regulation R110 and first edition of national NGV’s standards (ISIRI 7598) has been recently published based on R110 regulation.

A national standard of CNG stations was published in 2005 with code no. ISIRI 7829 based on the Argentina (GE-N1-118), United States (NFPA 52), and New Zealand (NZS 5425 Part 2) standards and considering Iran’s climate and geographical circumstances.

Supporting related research: IFCO supports a number of research projects related to CNG engine performance (dedicated, Bi-fuel, Dual-fuel engines), fuel conservation projects, natural gas vehicle durability, emissions and other associated topics such as the identification of natural gas treatment as a vehicle fuel, gas composition effects on engine performance, etc. CNG based engines and native NGVs have been developed by country research centers and car manufacturers.

Localization of CNG components and equipment production: Transferring technology from abroad and the localization of CNG kit components, cylinders and CNG stations equipments are some of the strategies of IFCO. Construction of a CNG cylinder production factory with a nominal capacity of 120 thousands cylinders per year in different dimensions has been completed and now supplies a portion of the country’s requirements according to present international standards. Another CNG cylinder production factory is under construction in Esfahan with more than 200 thousands cylinders per year. Other CNG cylinder production factories are also being planned. Local compressor manufacturing companies are producing major parts of CNG station equipments with the co-operation of foreign companies.

CNG Companies (Conversion & Refueling station equipments)

CNG kit manufacturer and conversion

-Electro fan (tel:+98-21-228418844/22865892,3), Contact Sepideh Mirshahreza, Email –
-Shahab Gaz sooz (tel:0098-251-2936466)
-Sasad (tel:0098-21-22953799)
-Pad Alayandeh (tel:0098-21-88745519)

Refueling station equipments:

-Parts compressor (partner with Intermech Ltd) \n
-Chagalesh (partner with Nuovo Pignone) \n
-Tamkar gas (partner with GreenField)

Cylinder manufacturer

-Satak Co. (tel:0098-21 88726501)
-Pars MCS (tel:0098-21 22031854-58)

Conversion workshops: More than 107 conversion centers have been equipped and certified in 37 cities countrywide. Local car manufacturers that produce CNG vehicles have equipped their existing after sale services network to service NGV products and related regular inspection. Identity information and specifications of NGV’s are being entered in audit software for tracking periodic audit and inspections.

Training: Personnel of conversion workshops, inspection centers, after sale services and CNG stations, inspectors, operators and all technical staffs who work directly with CNG, have passed related training courses and have been certified for particular activities. The general public have also been informed on safety issues through many reports, presentations and demonstrations about CNG and NGVs.

Long Term Program:
In approving the nation’s budget for the current year, Parliament gave special attention to the CNG industry and approved considerable subsidies for production of 280,000 OEM NGV’s by Iranian major car manufacturers and the conversion of 120,000 cars to CNG by available conversion workshops.
1. 20% of OEM CNG fueled vehicles are produced annually by Iran’s two biggest car manufacturers (Iran Khodro & SAIPA).
2. Conversion of 600,000 public and governmental cars to NGV.
3. 667,000 OEM CNG based vehicles and contributing a new production line of 410,000 OEM annual capacity at Iran Khodro.
4. Contributing to produce 6,000 OEM CNG based buses in 5 years.