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WASHINGTON, April 7 (Reuters) – A group of Democratic U.S. senators on Tuesday pressed Treasury Secretary Scott Bessent on whether enormous tankers that ship liquefied natural gas qualify for a lucrative tax credit meant for smaller boats that burn the fuel.
Here are details about the issue.
- The Alternative Fuel Excise Tax credit, signed by former President George W. Bush in 2005, was meant to decrease oil dependence by subsidizing a transition among smaller motorboats to alternative fuels, such as natural gas, propane and LNG.
- Burning the fuel in LNG tankers does not help transition off liquid fuels such as bunker fuels, critics say, because many LNG tankers are already designed to burn LNG that boils off during shipping. That boiled-off gas otherwise would be vented to the atmosphere or chilled back into LNG.
- “Providing tankers with AFET credits would unnecessarily waste taxpayer money while doing nothing to protect the environment, reduce costs for everyday Americans, or lessen the United States’ dependence on oil,” the senators said in the letter. Senators Jeff Merkley, Elizabeth Warren and Chuck Schumer and four others signed the letter.
- The AFET credit was meant for motorboats, the senators said, which some federal regulations define as less than 65 feet long (20 metres) – tiny compared to LNG tankers, which can measure about three football fields long.
- Cheniere Energy (LNG.N) disclosed in February that it got a $370 million tax break for burning the fuel in its LNG tankers. Cheniere said it had no comment.
- The Treasury Department did not immediately comment.
- Senate Democrats have limited power now because they are in the minority, but that could change after the November midterm elections.
Reporting by Timothy Gardner Editing by Rod Nickel
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