Presentation by:

1

The Right Choice. The Right Time The Compelling
Case for Natural Gas Vehicles in Heavy-Duty Fleet
Applications

• Presentation by
• Paul Kerkhoven
• Director of Government Relations
• NGVAmerica

2
Overview

• New federal incentives The 3-legged stool
• Available natural gas vehicles and engines
• Applications best suited for NGVs
• Sample economics

3
Energy and Highway Bills Approved By Congress

• HR 6 the Energy Policy Act of 2005
• Includes income tax credit for alt fuel vehicle
  purchases and fueling infrastructure
• HR 3 Safe, Accountable, Flexible, Efficient
  Transportation Equity Act A Legacy for Users
  or SAFETEALU
• Includes excise tax credit for natural gas and
  other alt fuel used

4
Bus Purchase Tax Incentive(Energy Bill)

• A income tax credit to the buyer of a new,
  dedicated alternative fuel vehicle
• 50 percent of the incremental cost of the vehicle
• plus an additional 30 percent if the vehicle
  meets certain tighter emission standards.
• Tax credit goes to the seller if the buyer is a
  non-tax paying entity
• (continued)

5
Bus Purchase Tax Incentive(Energy Bill)

• Credits would range from 2,500 to 32,000
  depending on the size of the vehicle
• 2,500-4,000 Under 8,500 lbs.
• 5,000-8,000 8,500-14,000 lbs.
• 12,500-20,000 14,000-26,000 lbs.
• 20,000-32,000 Over 26,000 lbs.
• The credit is effective for vehicles placed in
  service after December 31, 2005 and expires on
  December 31, 2010

6
Fuels Use Tax Incentive (Highway Bill)

• The Volumetric Excise Tax Credit for Alternative
  Fuels (VEETC)
• JOBS Act of 2004 created VEETC for ethanol and
  biodiesel
• Highway Bill 2005 made CNG, LNG, LPG, and
  hydrogen eligible when those fuels are used in
  on-road vehicles
• (continued)

7
Fuels Use Tax Incentive (Highway Bill)

• A 50 cent motor fuels excise tax credit is paid
  to the seller
• Per GGE of CNG
• Per liquid gallon of LNG
• The credit will be paid to eligible recipients on
  a regular basis without regard to the amount of
  excise tax paid (including tax exempts)
• (continued)

8
Fuels Use Tax Incentive (Highway Bill)

• The value of the excise tax credit is offset by
  an increase in the motor fuels excise tax rate
  for both CNG and LNG
• CNG is increased from 4.3 cents per GGE to
  18.3 cents
• LNG is increased from 11.9 cents per LNG gallon
  to 24.3 cents
• (continued)

9
Fuel Use Tax Incentive (Highway Bill)

• Begins on October 1, 2006
• Expires on September 30, 2009

10
Fuel Station Tax Incentive(Energy Bill)

• A Tax Credit Equal to 30 of the cost of alt fuel
  refueling equipment
• Up to 30,000 in the case of large stations
• Up to 1,000 for home refueling appliances
• The existing 100,000 tax deduction for refueling
  property is repealed
• (continued)

11
Fuel Station Tax Incentive(Energy Bill)

• Credit allowable for CNG, LNG, LPG, Hydrogen, E85
  and Biodiesel (B20)
• Like the vehicle tax credit, provision allows tax
  exempts to pass credit through to seller of
  equipment
• The credit is effective on equipment placed in
  service after December 31, 2005 and expires on
  December 31, 2009

12
Benefits of NGVs

• NGVs use an inherent clean fuel
• Simple CH4 structure
• Minimal combustion byproducts
• 2007 HD NGVs meet 2010 standard
• Less greenhouse gases
• NGVs are proven and reliable
• Nearly 5 million worldwide
• NGV fuel costs are lower
• Varies 1.73/dge versus 2.65-3.00 for diesel!
• Differential increases with new fed credit in
  10/06
• (continued)

13
Benefits of NGVs

• NGV maintenance costs are or lt diesel
• Natural gas engines are far quieter than diesel
• NGVs run on American fuel
• 85 from USA
• Virtually all the rest from Canada
• Huge domestic supply

14
A Wide Variety ofNatural Gas Vehicles Are
Available

• Sedans, Pick-ups/SUVs, Vans/Wagons
• American Honda all GMC brandsFord/Mercury/Lincol
  n via SVMs
• Work/Vocational Trucks
• Peterbilt, Freightliner, Freightliner
  CC,Sterling, Crane Carrier, Autocar, Isuzu, GM,
  Workhorse, Ottawa,Allianz, Schwarze, Tymco
• Bus and shuttle
• NABI, Orion, New Flyer, SpecialtyEl
  Dorado-National, Champion, Supreme,Blue Bird,
  Thomas Built, Optima

15
Natural Gas Powered Medium- and Heavy-Duty
Engines and Vehicles

• BAF Technologies
• 6.8L (Ford)
• Baytech Corporation
• 6.0L HD (GM)
• 8.1L (GM)
• Campbell Technologies
• 5.4L (Ford)
• Cummins Westport
• 5.9L B Gas Plus 195-230hp
• 8.3L C Gas Plus 250-280hp
• 8.9L L Gas Plus 320hp
• 8.9L ISL-G (07) 250-320hp

• Emission Solutions Inc.
• 7.6L NG 175-265hp
• Hybrid Energy Systems/USEIC
• 6.0L HD (GM)
• 11.9L (Mack) dual-fuel
• John Deere
• 8.1L HN04 250-280hp
• 9.0L 300hp
• Westport Innovations Inc
• 15L ISX-Gas 450hp

16
NGVs Are a Good Fit for Many Different Fleet
Applications

• Local/State Government
• Airports
• Refuse
• Transit
• School Districts
• Utilities
• Short-Haul Operations
• Food/Beverage/Snack, Linens, Pkg.
  Delivery/Courier Services, Port/Rail, Newspapers,
  etc.
• Local-Service Businesses
• Plumbers, HVAC, Florist, etc.

17
Refuse Collection Truck Life-Cycle Costs(Taking
Federal Vehicle Tax Credit Only)
Natural Gas Clean Diesel
Cost of refuse collection vehicle 200,000 150,000
Incremental Cost of CNG vehicle 50,000 -
Vehicle Tax Credit 32,000 -
Net Incremental Cost 18,000 -
Fuel Use/yr (dge) _at_ 20K miles 9,984 8,320
Cost/dge 1.73 2.90
Fuel Cost/yr 17,272 24,128
Fuel Savings/yr 6,856 -
Simple Payback 2.6 years -
8 Yr. Life-Cycle Advantage 37,022 -
Assumes 2.5mpg (diesel) and 20 fuel
consumption penalty for S.I.N.G. engine vs
diesel-cycle, a differential that is widely
expected to diminish 3-4 in model year MY07
engines and more in MY10. CGCU natural gas
dge cost shown. Diesel price is rack rate
including fed/state motor fuels excise taxes.
Estimate does not include any of .556/dge CNG
tax credit effective 10-01-06. Assumes equal
maintenance costs. Natural gas vehicles have
documented lower maintenance costs than
comparable diesel units. NGVs maintenance cost
advantage is projected to increase as MY
2007-2010 diesel engines and exhaust
after-treatment technologies are introduced.
18
Refuse Collection Truck Life-Cycle Costs(Taking
Vehicle Tax Credit and Partial Fuel Tax Credit)
Natural Gas Clean Diesel
Cost of refuse collection vehicle 200,000 150,000
Incremental Cost of CNG vehicle 50,000 -
Vehicle Tax Credit 32,000 -
Net Incremental Cost 18,000 -
Fuel Use/yr (dge) _at_ 20K miles 9,984 8,320
Cost/dge 1.33 2.90
Fuel Cost/yr 13,278 24,128
Fuel Savings/yr 10,849 -
Simple Payback 1.66 years -
8 Yr. Life-Cycle Advantage 68,674 -
Assumes 2.5mpg (diesel) and 20 fuel
consumption penalty for S.I.N.G. engine vs
diesel-cycle, a differential that is widely
expected to diminish 3-4 in model year MY07
engines and more in MY10. CGCU natural gas
dge cost shown assumes that 0.40 of .556/dge
CNG tax credit is passed on to customer at pump.
Diesel price is rack rate including fed/state
motor fuels excise taxes. Assumes equal
maintenance costs although NGV costs are
generally lower. Also assumes that federal motor
fuels excise tax credit is extended beyond
9-30-09.
19
Municipal Dump/Plow Truck Life-Cycle
Costs(Taking Vehicle Tax Credit and Partial Fuel
Tax Credit)
Natural Gas Clean Diesel
Quoted cost of dump-plow truck 168,000 128,000
Incremental cost of CNG vehicle 40,000 -
Vehicle tax credit (net dealers 5 cut) 30,400 -
Net Incremental Cost 9,600 -
Fuel Use/yr (dge) _at_ 15K miles 2,062 1,875
Cost/dge 1.33 2.65
Fuel Cost/yr 2743 4969
Fuel Savings/yr 2226 -
Simple Payback 4.3 years -
10 Yr. Life-Cycle Advantage 12,688 -
Based on Freightliner M2 with dump-plow
pkg CNG unit with 3 CNG tank vertical package
Assumes mixed city/suburban duty cycles, 8mpg
(diesel) and 10 fuel consumption penalty for
S.I.N.G. engine vs diesel-cycle. CGCU
natural gas dge cost shown assumes that 0.40 of
.556/dge CNG tax credit is passed on to customer
at CGCU pump. Diesel price is rack rate without
fed/state motor fuels excise taxes. Assumes
equal maintenance costs although NGV costs are
generally lower. Also assumes that federal motor
fuels excise tax credit is extended beyond
9-30-09.
20

• For more information please contact
• NGVAmerica400 N. Capitol St. NW 4th
  floorWashington, DC 20001
• Paul Kerkhoven
• [phone]
• Pkerkhoven_at_ngvamerica.org
• Stephe Yborra Director of Marketing
  Communications
• [phone]
• Syborra_at_ngvamerica.org

21
ENERGY BILL Vehicle Tax Incentives

• Suggested RFP guidelines for tax exempts
• Have supplier quote comparable vehicle cost and
  incremental amount for AFV up front
• State the amount of tax credit they will file
  with IRS
• Show amount of tax credit to be allocated back to
  you, the customer
• Subtract that amount from quote price