US #1 LNG Exporter Claiming $140 Million Tax Credit For Using LNG As Tanker Fuel - Which Is What They Already Do
Liquefied natural gas vessels are fueled by their cargo—they’re built specifically to make use of the gas boiling off from their tanks. But Cheniere Energy, the largest U.S. exporter of LNG, is seeking “alternative fuel” tax credits for that. The claim has baffled shipping experts, because what Cheniere Energy is doing isn’t, in any real sense, an alternative. It would also provide little climate benefit over fueling the vessels with diesel and seeks to use the credit in a way that tax specialists say was never intended.
Yet if approved by the Internal Revenue Service, the claimed tax credits could yield a payout for the company exceeding $140 million, an Inside Climate News analysis found. In its annual report filed with the U.S. Securities and Exchange Commission in February, Cheniere disclosed that it is “actively pursuing” alternative fuel tax credits for its use of LNG in its shipping vessels from 2018 to 2024, the year the tax credit expired. The IRS is reviewing those claims, the filing said.
The alternative fuel excise tax credit was signed into law by President George W. Bush in 2005. It was intended to incentivize the use of fuels other than gasoline and diesel—including biofuels, LNG and liquid fuels derived from coal—for use in motor vehicles, and it set no requirements for the relative cleanliness of these fuels.
Cheniere noted in its financial report that LNG is a cleaner-burning fuel than diesel or heavy-fuel oils and that the use of LNG was part of an ongoing effort to mitigate emissions from the company’s shipping operations. However, critics point out that fueling LNG tankers with diesel would be absurd, given that the gas continually boiling off from the refrigerated liquid cargo would have to be burned off anyway, or re-liquefied, if it wasn’t used for propulsion. “It makes no sense not to use the fuel that you already have because of boil-off,” said Kirsten Sinclair Rosselot, an environmental performance analyst who runs the consultancy Process Profiles and was the lead author of a 2023 study that assessed fuel use and emissions from LNG vessels. “It’s not an alternative fuel.”
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https://insideclimatenews.org/news/31072025/cheniere-energy-lng-claims-massive-alternative-fuel-tax-credit/