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AAG Partner Newsletter>Extension of Alternative Fuel Tax Credits

Extension of Alternative Fuel Tax Credits

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Information provided by the National Propane Gas Association.

Congress passed H.R. 133 on December 21, 2020, an omnibus package, which includes COVID-19 relief and FY2020 appropriations legislation. This bill contains several significant wins for the propane industry, including appropriations funding for research and development projects through the Department of Energy, an extension of the alternative fuel tax credits, COVID-19 relief for small businesses, and other broad energy provisions.

National Propane Gas Association (NPGA) President and CEO Stephen Kaminski applauded the work of Congress on passing critical year-end legislation that supports small businesses and energy consumers across the country.

“The propane industry is a clear winner in Congress’ year-end legislation,” Kaminski said. “NPGA worked tirelessly with its member companies and allies in Washington, DC to secure the inclusion of several policy priorities in the final legislative package of the 116th Congress.”


Propane Highlights:

Appropriations funding opportunities through the Department of Energy

  • $5 million for vehicle engine technology including dimethyl ether (DME)
  •  Within available funds (WAF) for micro combined heat and power (CHP) combined with other renewables
  • WAF for CHP micro-grids

One-year extension of the alternative fuel credits

  • Alternative Fuel Tax Credit
  • Alternative Fuel Refueling Infrastructure Credit

COVID-19 Relief

  • Tax fix allowing the deductibility of business expenses related to PPP loans
  • Emergency Rental Assistance Program including funds to be used to cover utilities and home energy costs and arrearages

Energy Provisions

  • Commitment to phase out the use of Hydrofluorocarbons
  • Successfully lobbied against misguided building codes language that would have impacted housing affordability and favor electrification 

NPGA & Congress

NPGA engaged Congress throughout the year to build on the success of last year’s appropriations efforts. In February, NPGA conducted its first-ever appropriations-based fly-in to garner support for funding opportunities through the Department of Energy for vehicle engine technology including DME, micro-CHP combined with renewables, and CHP microgrids. House and Senate Energy and Water Appropriations Subcommittees included these provisions in their annual report, and ultimately in the year-end spending bill. 

Alternative Fuel Credits

The year-end legislation also includes a one-year extension (through December 31, 2021) of the Alternative Fuel Tax Credit and the Alternative Fuel Refueling Infrastructure Credit. These provisions are worth more than $165 million annually to the propane industry and were set to expire at the end of 2020. In recent months, NPGA worked with a small business coalition to meet with tax-writing committee legislators and send a letter to Congress with signatures from over 400 organizations. These efforts helped secure an extension of the tax credits, which will provide tax certainty to the propane industry and its customers and help transition more Americans to autogas vehicles.

Propane for the Future

“NPGA applauds the work of our Congressional champions for passing a year-end package that prioritizes small business and clean energy sources, like propane,” Kaminski said. “As a near-zero, low-cost, domestic fuel, propane is a fair and fast solution to the nation’s emissions reduction goals. The provisions included in this legislation demonstrate to the new Congress and incoming Administration Americans’ collective recognition that propane provides practical and proven planet protection for today and tomorrow.”