'Clean fuel' tax credits becoming popular with Utahns

Record-high gas prices and increased environmental awareness are being credited with a jump in state tax credit applications for "clean fuel" vehicles.

The number of applications more than tripled in a year, going from 176 in 2006 to 645 for tax year 2007. And applications are still trickling in for last year, meaning those numbers will grow.

The tax credit program, as well as a grant/loan program for government agencies and businesses, are both being tweaked to make the application process easier for both sides.

"It's really taken off in the last year," Utah Division of Air Quality's energy program coordinator Glade Sowards said Friday about the tax credit program. "I think definitely fuel prices have gotten people's attention. Several people we've talked with have also mentioned air quality as well."

Most of the '07 applications were for vehicles using compressed natural gas, which currently costs the equivalent of about 70 cents per gallon of gasoline. In '05 there were 278 applications for the one-time tax credit, with 155 in '04 and 119 in '03.

Division of Air Quality environmental planning consultant Matt Carlile is averaging per day about 20 calls and 15 e-mails with inquiries about the tax incentive program. Both he and Sowards said that easier ways for getting information about the tax credit program, especially through various Web sites, are drawing more people into the world of clean-fuel vehicles.

"Going about applying for any kind of a tax credit can be confusing," Sowards said.

For example, electric hybrids that used to qualify for a credit currently do not qualify, although that may change in the future, Sowards said. He said the goal is to not pick a fuel or technology winner but to instead offer a flat $750 one-time credit per vehicles that meet certain air quality and fuel economy standards. The program bases its standards on the Environmental Protection Agency's "Smart Way Elite" program.

Even if a vehicle running on diesel can only clear the two hurdles, Sowards said they'll also qualify for a credit. For now, however, the state still uses a time-consuming "incremental cost" system of figuring how much of a credit to award an applicant.

Due to the popularity of vehicles running on compressed natural gas in Utah, with its growing network of refueling stations, so-called CNG vehicles will be handled differently in 2009. Each vehicle can qualify for a one-time $2,500 credit (or 35 percent of the vehicle's purchase price, whichever is less). If it's a used CNG vehicle but has not yet been registered as having received a credit, the purchaser may apply for one.

There are actually two state programs benefiting individuals and groups interested in using alternative fuel vehicles, and both programs, dating back to the 1990s, are getting some fine-tuning.

One known as the "Clean Fuel Vehicle Grant and Loan Program" is on hold until its administrative rules can be finalized. It's expected that by fall of this year applications and grant proposals from government agencies and businesses will start being processed.

"I would say there's a lot of interest," Carlile said about the grant and loan program, which is not available to individuals.

There is currently about $2.4 million in that fund. A public hearing to talk about changes to the program is set for June 20, 2 p.m., in Room 201 at the Department of Environmental Quality, 168 N. 1950 West, Salt Lake City.

The other program is formally known as the "Clean Fuel Vehicle Tax Credit," which offers taxpayers a credit on their return if they purchase or convert a vehicle to run on "cleaner burning fuels." Right now, those fuels only include propane, natural gas and electricity.

"There's a lot of people very interested in that program," said Utah Division of Air Quality director Cheryl Heying. "It's kind of cumbersome, so we're trying to shore that up a bit."

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More information:

Smart Way Elite program: epa.gov/smartway/consumer/vehicles.htm

CNG refueling station locater: afdcmap2.nrel.gov/locator

Tax credit FAQ: cngchat.com

Matt Carlile, DAQ: 801-536-4136; mcarlile@utah.gov.

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E-mail: sspeckman@desnews.com