U.S. Senators Todd Young, Bill Cassidy, and Michael Bennet have reintroduced the Waterway LNG Parity Act.
This bill requires excise taxes on liquefied natural gas (LNG) for marine transportation on inland waterways be levied at a rate consistent with energy output relative to diesel and gasoline.
“The Waterway LNG Parity Act is a market-based fix for how we tax liquefied natural gas,” said Senator Young.
It takes about 1.7 gallons of LNG to provide the same amount of energy as a gallon of diesel, yet fuel usage is taxed on volume. So LNG usage would be taxed 50 cents for the same amount of energy contained in a gallon of diesel fuel that is only taxed at 29 cents.
Natural gas is cleaner and more efficient than gasoline and diesel respectively, yet under the current federal tax code disincentivizes its use. This legislation would change the inland waterways financing rate to provide equal treatment within the federal tax code, the joint statement reads.
“In addition to reducing carbon emissions, natural gas fuel reduces NOx, SOx and particulates compared to diesel. Natural gas costs less and prices are less volatile than diesel due to abundant domestic gas supply. But this safe and clean fuel is currently taxed at a higher rate per unit of energy, which then masks the economic benefits of switching from other dirtier fuels like diesel,” said Tim Hermann, president of Pivotal LNG.