Larson allies with T. Boone Pickens on natural gas tax incentives

WASHINGTON–Rep. John Larson has revved up his alliance with oil tycoon T. Boone Pickens and House Republicans in a push to make natural gas a more dominate fuel–replacing traditional gasoline–in America’s transportation sector.

This week, Larson will join Pickens–an Oklahoma native who made his fortune in the oil and gas industry–to promote legislation that would provide billions of dollars in tax incentives to spur the development and purchase of natural gas vehicles, particular heavy-duty trucks that now run on diesel.

Larson, D-1st District, said greater use of natural gas will help solve a range of critical problems now facing the country, from the sour economy to our over-reliance on imported oil. “It’s abundant, it’s accessible, it’s American,” Larson said of natural gas, during a call with reporters previewing his proposal last week.

But some skeptics say the push to bolster natural gas ignores the environmental risks that come with drilling for it. And they worry that Larson’s proposal is a piecemeal approach that uses the tax code to choose winners and losers in the energy industry.

“People tend to latch on to the latest silver bullet and throw billions of dollars at it, and when it doesn’t solve our nation’s problems in five years, they move on to the next silver bullet,” said David Friedman, deputy director of the Clean Vehicles Program at the Union of Concerned Scientists. “A few years ago, the silver bullet was ethanol. Now it’s natural gas. And in a couple years, it’s going to be something else.”

Larson is hardly the only one touting natural gas as the silver-bullet solution to America’s energy and climate conundrum. Several House Republicans are also strongly backing the bill, and they hope to fast-track it in the House.

And for Pickens, natural gas has become a crusade. This week, he’s even planning to bring some natural gas vehicles to Washington and park them at the U.S. Capitol for a news conference with Larson touting the bill.

There’s little question that natural gas is preferable to other fossil fuels. when burned, it produces fewer polluting carbon emissions than coal or oil. And as Larson noted, there’s lots of it in the U.S.-enough, experts say, to fuel American cars and generate electricity for 100 years.

Pickens and others have called it a “bridge” fuel–an energy source that can help wean the U.S. off foreign oil during a transition period, until policymakers put in place a more comprehensive energy policy that addresses global warming and taps into wind, solar and other sources to meet America’s insatiable energy needs.

Larson said his bill would give natural gas a boost “that provides a foundation from which to build an energy policy.”

The legislation would offer tax credits for the use of natural gas as a vehicle fuel, the purchase of natural-gas vehicles, and the installation of natural gas refueling stations. For example, consumers and businesses would get a tax break of between $7,500 to $64,000, depending on the weight of the vehicle, for buying a natural gas truck or car. The Congressional Budget Office has not calculated an official cost of the bill yet, but Pickens, during a recent forum at Yale University, said it could cost the Treasury $3 billion to $4 billion.

Larson introduced the bill last week along with another Democrat, Rep. Dan Boren of Oklahoma, and two Republicans, Reps. John Sullivan and Kevin Brady, from Oklahoma and Texas respectively. The bill already has 129 additional co-sponsors, and Sullivan said House Speaker John Boehner backs the proposal.

“The events in the Middle East and the events that have happened tragically in Japan only further underscore the urgency behind this,” Larson said, referring to the political upheaval in Libya, Yemen and other Middle Eastern countries, as well as the still-unfolding nuclear disaster in Japan.

But environmentalists say Congress shouldn’t necessarily rush into a new legislative framework that boosts natural gas.

“Natural gas may have an environmental role to play in heavy duty vehicles, but increased natural gas production also comes with environmental liabilities and those need to be evaluated,” said Brian Siu, a policy analyst with the Natural Resources Defense Council.

“There are air quality concerns, there are water quality concerns,” Siu said. And when it comes to drilling for natural gas, he added, “there are chemical disclosure concerns.”

The method for extracting natural gas is called hydraulic fracturing, or hydrofracking, and the process requires injecting water, sand and chemicals to break up the rock that holds the natural gas. The New York Times and other outlets have recently reported on concerns about water contamination, including high levels of radioactivity, caused by hydrofracking.

There are no natural gas wells currently in Connecticut, although there are about 14 natural gas pumping stations in the state. There are also about 250 or so vehicles in Connecticut that run on natural gas, according to Larson’s office.

There are nearly 500,000 wells in other parts of the country, a significant jump in recent years as companies seek to exploit this newly popular energy source. In Pennsylvania, in particular, the scramble to drill for natural gas has led to serious environmental concerns, including seepage of the gas into underground water supplies.

Environmentalists say these issues need to be addressed with strict new federal regulatory oversight, before lawmakers push to create a broad new market for natural gas vehicles. “There are a lot of harms that are being generated from natural gas production, and they really need to be addressed and mitigated before we can look into creating new markets for this,” said Amy Mall, also a policy analyst at the NRDC.

Friedman, of the Union of Concerned Scientists, said the better route is a “technology-neutral” tax incentive program that doesn’t favor one industry over another.

“Why natural gas?” he asked. It may make sense, he said, but so might other energy sources, like hybrid and electric vehicles. Friedman said that rather than gumming up the tax code with another new tax provision, Congress should embrace a performance-based credit that rewards outcomes rather than specific industries.

That, along with strong global warming controls and strong fuel-efficiency standards, is the best way forward. “That’s what is going to drive the technology. Let’s not necessarily pick natural gas as the winner,” he said.

Larson and other supporters dismissed the environmental concerns, saying there was a lot of “misinformation” about the risks of natural gas. And they noted that President Barack Obama seemed to endorse their bill in his energy speech on March 30th.

“The potential for natural gas is enormous, and this is an area where there’s actually been some broad bipartisan agreement,” Obama said, noting that a version of the tax-incentives legislation garnered 150 sponsors in the House last year, even thought it did not win final passage.

“Getting 150 members of Congress to agree on anything is a big deal,” Obama said. “And they were even joined by T. Boone Pickens, a businessman who made his fortune on oil, but who is out there making the simple point that we can’t simply drill our way out of our energy problems.”

But Obama also made reference to the environmental concerns. “We’ve got to make sure that we’re extracting natural gas safely, without polluting our water supply,” he said, adding that he’d asked his Energy Secretary to work with the natural gas industry and environmental experts to examine the safety of drilling.

Larson said that remark was just to provide public assurance about the safety of natural gas. His bill, he said, is an important–albeit targeted and narrow–policy change. He and others argued that it will create the political wiggle room necessary for lawmakers to come together on a more comprehensive energy policy, he and others argued.

“For 40 years our country has had no energy plan,” Pickens said in the call with Larson and other lawmakers last week. “This is the first step to change.”