Monday, August 17, 2015

What are the alternatives to traditional state fuel taxes?

Question of the Month: What are the alternatives to traditional state fuel taxes?

Answer: Nearly all of us regularly use and access public roads, infrastructure, or transit services. As you may have read in the July Question of the Month, it's common practice for federal, state, and local governments to tax motor fuels on a per gallon basis to fund transportation infrastructure and increase revenue. Returns from gasoline and diesel taxes are on the decline due to a number of factors, including rising construction costs, general inflation, and greater vehicle efficiency, which reduces fuel use per mile. To make up for this deficit, a number of states are evaluating and implementing alternatives to traditional motor fuel tax models through the use of vehicle miles traveled (VMT) fees, annual fees for vehicles that use certain fuels, such as electricity, or adjusting or establishing fuel taxes for certain alternative fuels.

VMT Fees
VMT fees are designed to charge drivers based on the number of miles they drive, rather than the fuel they consume. The concept seeks to base taxes on use rather than fuel consumption, which provides a fuel neutral approach and offsets decreasing revenue from increased vehicle efficiency. Concerns have, however, been raised over program administration and individual privacy. Several states, including Vermont and Oregon, have studied or implemented VMT fee pilot programs. In July of 2015, Oregon began a road usage charge program for 5,000 volunteers and is encouraging participation by plug-in electric vehicle (PEV) drivers ( The Oregon Department of Transportation (ODOT) collects $0.015 per mile and issues gas tax refunds to participants. Vehicle miles will be monitored through a vehicle transponder.

Annual Fees
As alternative fuel use has grown, a number of states have established annual fees or decals to recover revenue that would have normally come from motor fuel taxes. These programs also provide a mechanism to collect revenue from those that charge or fuel at home and, in some cases, are used to incentivize alternative fuel vehicles (AFVs). Fees have traditionally been imposed on fuels such as natural gas and propane, but are now being considered and implemented for PEVs. Establishing the appropriate level for such fees can be tricky as different vehicle classes use very different amounts of fuel. In addition, some AFVs, such as plug-in hybrid electric vehicles and bi-fuel natural gas vehicles, may already pay motor fuel taxes for their gasoline or diesel use. Examples of fees in place include:
  • Colorado requires a $50 annual fee for a PEV decal.
  • Georgia requires a $200 annual fee for non-commercial PEVs and $300 annual fee for commercial PEVs.
  • Louisiana requires an annual fee of $120 or a percentage of the current special fuels tax rate for compressed natural gas (CNG) and propane vehicles.
  • Nebraska requires a $75 annual fee for PEVs and other AFVs not covered under state motor fuel tax regulations.
  • North Carolina requires a $100 annual fee for all-electric vehicles.

Alternative Fuel Taxes
Many states have passed regulations to either tax certain alternative fuels for the first time or to structure motor fuel taxes to account for energy content variations between alternative fuels and gasoline or diesel. For example, Arkansas, Idaho, Kentucky, New Mexico, Oklahoma, Tennessee, and Utah are among the states that have enacted legislation or regulations in 2015 to define the energy content of CNG and liquefied natural gas on a gasoline gallon equivalent or diesel gallon equivalent basis. Wyoming updated regulations related to alternative fuel excise taxes and dealer license fees for natural gas, propane, electricity, and renewable diesel. Kentucky and Utah enacted excise tax requirements for hydrogen and South Dakota increased excise taxes for certain fuels, including ethanol. Look out for the September Question of the Month for further information on efforts to equalize federal fuel taxes across fuels.

Until motor fuel tax revenue shortfalls can be adequately addressed, states risk underfunding our roads and infrastructure. While no single approach has emerged as the preferred choice, creative solutions, such as those discussed above, may help states adequately adjust for continued sales of AFVs and other fuel-efficient vehicles. With the exception of VMT fees, these approaches, however, only address a small portion of the nation's fleet and are not likely to resolve broader funding issues in the near-term.

Refer to the following for more information on alternatives to traditional state motor fuel taxes:

Also watch for an upcoming paper from the National Renewable Energy Laboratory on motor fuel excise taxes

Clean Cities Technical Response Service Team

Friday, August 14, 2015

U.S. Surpasses "Major Milestone" for Alternative Fueling Stations

"With little fanfare, the U.S. reached the 20,000 mark for the number of alternative fueling stations operating throughout the nation back in May."
There are about 21,300 fueling stations in the country offering electricity, propane autogas, compressed natural gas (CNG), liquefied natural gas (LNG), hydrogen, biodiesel (B20 and above) or E85 (up to 85% ethanol). That total includes around 17,500 public stations and almost 3,800 private ones.
The Station Locator indicates there are the following number of public and private stations for each fuel type when most search criteria are applied: Electricity: 12,334; Propane: 3,292; E85: 2,956; CNG: 1,549; Biodiesel: 729; LNG: 115; and Hydrogen: 41.

There are about 153,000 gasoline service stations in the U.S.

These numbers come from the Alternative Fueling Station Locator tool.

Webinar 2: Integrating ZEVs Into Your Fleet - August 27

West Coast Electric Fleets Peer-to-Peer Network
Join us for a webinar on Aug 27, 2015 at 11:00 AM PDT.

Register now!
Have you been looking for ways to reduce your fleet’s impact on the environment and improve air quality where you operate? Are you interested in saving money on fuel? Do you need help determining how you can best integrate clean transportation into your operations?

If you answered yes to any of these questions, you should attend the second West Coast Electric Fleets Peer-to-Peer Webinar. The theme will be Best Practices for Integrating ZEVs Into Your Fleet and will address:
  • How to best match different ZEVs to different duty cycles
  • How to encourage operator acceptance
  • Strategies to incorporate charging into the work schedule
Throughout the webinar series, you will learn more about the initiative and hear case studies from West Coast Electric Fleets partners - your peer fleets that can share their valuable Zero Emission Vehicle (ZEV) adoption experiences.

WHO: Fleet leaders of all sizes and backgrounds in California, Oregon, Washington, and British Columbia can participate and join the West Coast Electric Fleets Initiative. The case studies to be presented are TBD. Stay tuned!

WHAT: Joining West Coast Electric fleets is free and gives you access to many valuable resources. Check out the West Coast Electric Fleets website to view press releases, see our webinar schedule, and make your commitment. It’s fast, easy, and free!

The purpose of these interactive and informative events is peer-to-peer education, so if you’d like to share your own story, please let us know.

If you missed the first webinar, the recording can be found here:

See you at the webinar on August 27!

Learn more online at

After registering, you will receive a confirmation email containing information about joining the webinar.

View System Requirements

Thursday, August 6, 2015

Summary of Alternative Fuel Excise Tax Changes in Public Law 114-41

Dear Coordinators,

As you may have seen in trade press, the U.S. Congress passed, and President Obama signed, legislation that adjusts the federal excise tax on liquefied natural gas (LNG) and propane used in vehicles. These changes are effective January 1, 2016. For the full text of Public Law 114-41, enacted July 31, 2015, see

The following summary highlights the key aspects of the legislation that relate to alternative fuel excise tax changes to help you and your stakeholders understand the implications of this legislation. We have also updated the Alternative Fuels Data Center Laws & Incentives website to reflect the changes. Feel free to share this information as you see fit, and contact the Clean Cities Technical Response Service with any questions.

H.R. 3236, Surface Transportation and Veterans Health Care Choice Improvement Act of 2015
  • Enacted date: July 31, 2015; Public Law 114-41
  • Relevant provision: Section 2008
  • Notable changes:
    • Adjusts the federal excise tax rates for propane and LNG used in vehicles so that, like compressed natural gas (CNG), the fuels are taxed on an energy equivalent basis rather than a volumetric basis.
    • Establishes clear energy equivalencies for each fuel, as follows:
      • One diesel gallon equivalent (DGE) is equal to 6.06 pounds of LNG
      • One gasoline gallon equivalent (GGE) is equal to 5.75 pounds of propane and 5.66 pounds of CNG
  • Effective date: January 1, 2016 (i.e., the amendments apply to any sale or use of these fuel types after December 31, 2015)

Summary of Current and Adjusted Excise Tax Rates
Fuel TypeCurrent Excise Tax Rate (through Dec. 31, 2015)New Tax Rate (effective Jan. 1, 2016)Impact of Amendment
Propane$0.183 per liquid gallon$0.183 per GGEPropane is taxed on an energy content basis that is equal to gasoline, rather than a volumetric gallon
LNG$0.243 per liquid gallon$0.243 per DGELNG is taxed on an energy content basis that is equal to diesel, rather than a volumetric gallon
CNG$0.183 per GGE$0.183 per GGENo change from current tax rates


The Clean Cities Technical Response Service Team