You asked (1) how compressed natural gas (CNG) vehicles work, (2) what has the state done to promote these vehicles, and (3) why aren't there more CNG vehicles in use in the state. We answer each question in turn.

HOW CNG VEHICLES WORK

Most CNG vehicles are conversions of gasoline- or diesel-powered vehicles. (There is currently only one passenger vehicle in production that is initially designed to use CNG, the Honda Civic GX.) The conversion can be done by the vehicle manufacturer or as a retrofit. Conversions must meet U.S. Environmental Protection Agency (EPA) standards to ensure that the vehicle's emission control continues to operate properly. According to the U.S. Department of Energy, the horsepower, acceleration, and cruise speed of CNG vehicles are comparable with those of equivalent conventionally fueled vehicles.

For gasoline vehicles, CNG enters the vehicle through the natural gas fill valve and flows into high-pressure cylinders. In a passenger car, these cylinders typically take up much of the trunk. The natural gas in the cylinders is stored at a pressure of up to 3,600 pounds per square inch (psi); in contrast, the air in a car's tires is typically 35 to 45 psi. When the engine requires natural gas, the gas leaves the cylinders and travels through a high-pressure fuel line and enters the engine compartment. Gas enters the regulator, which reduces the gas pressure to that required by vehicle fuel injection system. The solenoid valve allows natural gas to pass from the regulator into the gas mixer or fuel injectors. (The valve shuts off the natural gas when the engine is not running.) Natural gas mixed with air flows down through the carburetor or fuel-injection system and enters the engine combustion chambers where it is burned to produce power, just like gasoline. An illustration of these systems can be found at www.eere.energy.gov/afdc/vehicles/natural_gas_what_is.html. CNG has also been used in a variety of diesel-fueled vehicles, including delivery vans, transit buses, and garbage trucks.

CNG burns more cleanly than gasoline or diesel, leading to lower emissions for carbon monoxide, nitrogen oxides, and particulate matter. The operating costs of CNG vehicles are lower than for gasoline or diesel vehicles. For example, in Connecticut, CNG currently costs less than $3 per the equivalent of a gallon of liquid fuel. CNG vehicles can also have lower maintenance costs than conventional vehicles. On the other hand, as discussed below, the capital costs of CNG vehicles are substantially higher than conventional vehicles and their range is substantially less.

STATE EFFORTS TO PROMOTE CNG VEHICLES

Nationally, there was a great deal of interest nationally in CNG vehicles in the 1990s. In Connecticut, the legislature passed a series of measures, primarily tax incentives, to promote CNG and other alternative fuel vehicles and filling stations. Several of these incentives expired recently and others are scheduled to expire by the end of the year.

The legislature passed PA 91-179, which provided a credit against corporate and other business taxes of 10% of the expenses of equipment associated with natural gas powered vehicles. It also exempted natural gas vehicles, equipment to convert vehicles to natural gas, and natural gas filling station equipment from the sales tax. The act also allows the commissioner of administrative services (DAS) to give a price preference of up to 10% for (1) vehicles powered by natural gas or (2) vehicles powered by other fuels and the equipment to convert them to use natural gas, either exclusively or with another fuel. These provisions applied to vehicles using liquefied natural gas (LNG) as well as CNG.

PA 94-171 authorized a corporation tax credit through the 1998 income year equal to 50% of amounts spent by corporations (1) directly for the construction of new filling stations or improvements to existing ones in order to provide CNG, LNG, or liquefied petroleum gas (propane) as vehicle fuels or (2) for converting motor vehicles so that they can use these fuels or electricity. The act exempted sales of CNG, LNG, and propane from the state excise tax on motor fuels when they were sold to fleets covered under the federal Clean Air Act's clean fuel vehicle requirements. The act also required the emissions reduction credit program adopted by the Department of Environmental Protection to count reductions achieved by conversions that were eligible for the tax credits even if the conversions took place before the program began.

PA 96-183 broadened the exemption from the motor vehicle fuels tax so that it applied to all sales of alternative fuels, rather than just sales to “covered fleet” vehicles. It expanded the corporation business tax credit to apply to the costs of purchasing and installing equipment for a propane vehicle filling station.

PA 99-173 extended the termination date of the credits against various business taxes for investments in alternative fuel vehicles and related fueling equipment to January 1, 2002. PA 02-4, May 9 special Session, further extended this deadline to January 1, 2004. It also extended to July 1, 2004, the expiration dates of (1) the expiration date of the exemption from the motor fuels tax for CNG, LNG, and propane, and (2) the sales tax exemptions for (a) new vehicles that run exclusively on natural gas or electricity; (b) equipment used to convert vehicles to run exclusively on natural gas, electricity, or propane or to run on one of those fuels and any other fuel; and (c) equipment used in, or as part of, a CNG filling or electric recharging station for alternative-fuel vehicles.

PA 04-231 extended the expiration date for the sales tax and motor vehicle fuels tax exemptions to July 1, 2008. It also extended the business tax credits for the purchase of alternative fuel vehicles and investments in alternative fuel facilities and equipment through income years or calendar quarters beginning before January 1, 2008. Thus, the exemptions have expired and the credits are scheduled to expire at the end of this year.

WHY AREN'T THERE MORE CNG VEHICLES?

In spite of these incentives and additional federal incentives, there are very few CNG vehicles in Connecticut. DAS, which is subject to a federal mandate regarding alternative fuel vehicles, has a fleet of approximately 500 vehicles that can use CNG. Several utility and municipal fleets have small CNG vehicle fleets, as does one heating oil company. In contrast, there are more than 3 million vehicles registered in the state.

A major reason for the small number of CNG vehicles is that there are very few CNG filling stations in the state. Currently, there are only three stations open to the public, located in Bridgeport, Hartford, and Norwich. There are an additional six stations that are open only to their owner's fleets, most of which are operated by utility companies or municipalities. Across the country, there are relatively few CNG filling stations open to the public. For example, Massachusetts has only 10 public CNG filling stations, none of which are located west of Worcester. The location of CNG and other alternative fuels stations across the country can be found at a U.S. Department of Energy website, http://www.eere.energy.gov/afdc/fuels/stations_locator.html. The lack of filling stations is particularly salient given the shorter range of CNGs compared to conventionally-fueled vehicles. A typical CNG passenger vehicle has a range of approximately 200 miles on a tank of CNG, compared to 300 miles or more for a typical conventional vehicle.

The paucity of CNG vehicles and filling stations reinforce each other. Potential CNG vehicle purchasers are reluctant to buy a CNG vehicle if they are uncertain that they can fuel it. Similarly, gas stations and other potential vendors of CNG are unwilling to invest in fueling equipment before growth in CNG vehicles creates a market for CNG as a vehicle fuel.

Another reason for the small number of CNG vehicles is that their capital costs are higher than conventional vehicles. The cost of the Honda Civic GX is approximately $7,000 to $8,000 more than a conventional Civic. Conversions of conventional vehicles to enable them to use CNG can cost several thousand dollars. In a study conducted in the late 1990s, United Parcel Service found that CNG-fueled delivery vans operating in Connecticut had a capital cost approximately $15,000 more than comparable diesel-powered vehicles. In addition, the higher capital cost leads to higher property taxes on the vehicle. Finally, the scarcity of filling stations limits the trade-in value of CNG vehicles.

KM:ts