Air Date: Week of February 6, 1998

At the beginning of the year a new law went into effect in New York State that encourages businesses to convert diesel and gasoline powered trucks to cleaner burning natural gas. The new law also offers companies tax credits. Steve Curwood speaks with David Vandor about these new incentives. , a consultant to alternative fuel fleet owners who sits on the Environmental Business Association of New York's Alternative Fuel Vehicle Task Force.

Transcript

CURWOOD: There may not be enough jobs in the South Bronx, but it has plenty of polluted air and some of the highest asthma rates in the nation. Part of the problem comes from some 10,000 delivery trucks that drive through the borough every business day. But now the South Bronx may be moving closer to cleaner air. At the beginning of the year, a new law went into effect that encourages businesses to convert diesel- and gasoline-powered trucks to cleaner-burning natural gas. The new law offers companies a tax credit that pays 60% of the cost of converting their fleets, and another tax credit that refunds half the cost of building natural gas fueling stations. We called David Vandoor, who advises fleet owners on alternative fuels, to talk about these incentives. Thanks for joining us. Thanks for joining us.

VANDOR: Thank you.

CURWOOD: What advantages does natural gas have over diesel fuel and regular gasoline?

VANDOR: It is a domestic fuel, that is, it's not imported. It's much cleaner, substantially cleaner. Much lower nitrous oxide emissions, particulate matter emissions, CO2 emissions. So, in the environmental sense it's virtually clean.

CURWOOD: Now, didn't you help write some legislation in New York that offers businesses these tax credits for switching to natural gas?

VANDOR: Yes. The thinking was that these vehicles are, to begin with, more expensive than their diesel counterparts, and so if the state shares that extra cost with the fleet owner, it would not take so long to recoup that remaining extra cost. If the fuel price was actually lower than diesel. I think the problem we're facing now is that in reality, the actual fuel price does not yet compete with diesel. So for the moment, while the legislation is a terrific first step, it needs to be followed by incentives on the fuel price side of the equation.

CURWOOD: Is there any movement in New York to change the tax law for natural gas to get this program to work?

VANDOR: There is a Federal initiative that is being considered by a number of congressmen that looks at a Federal tax credit for these fuels. That would be very helpful. In New York per se, suggestions have been made that, for example, the sales tax on the natural gas could be eliminated. That would be helpful.

CURWOOD: What else needs to be done?

VANDOR: Other ways of changing the equation would be to offer discounts on tolls for clean vehicles, preferred parking policies for trucks that deliver to midtown manhattan, various other incentives. The most broad-based would be to reduce the tax on the fuel.

CURWOOD: Now, why is it necessary for taxpayers to subsidize natural gas with these tax breaks? Why hasn't it caught on by itself?

VANDOR: The reason it hasn't caught on by itself is twofold. One is that it's new, it doesn't have the historic market share that diesel has. But from my point of view, I think that compressed natural gas and liquid natural gas are over-taxed. They're taxed much too high relative to their heat content, and if that was adjusted then the fuel would catch on.

CURWOOD: How long will it take for natural gas to make its way into the marketplace on its own? I mean, how long are New Yorkers going to have to have these tax expenditures or these tax breaks for natural gas?

VANDOR: Five, 7, 8 years from now, I can see a time when the equipment is adequate, available, and cost-effective, and where the fuel itself is very competitive. And once you establish the societal cost to emissions, and you look at natural gas in that light, then it's a win-win for natural gas.

CURWOOD: David Vandoor is a consultant to fleet owners. He's a member of the Alternative Fuel Vehicle Task Force of the Environmental Business Association of New York. Thanks so much for joining us.

VANDOR: Thank you.