US Senators Demand Investigation into LNG Exporter Tax Credits

US Senators are calling for an investigation into tax credits awarded to liquefied natural gas (LNG) exporters under the Alternative Fuel Excise Tax (AFET) credit. The probe would examine the Internal Revenue Service's treatment of the AFET credit, which was authorized in 2006 and expired on December 31, 2024.

Oregon Senator Jeff Merkley, backed by Senate Democratic Leader Chuck Schumer and US Senators Chris Van Hollen, Edward J. Markey, and Sheldon Whitehouse, argued that the provision of the AFET credit to LNG exporters favors fossil fuel companies and provides little environmental benefit.

The Senators pointed out that the tax code does not define 'motorboats', but federal shipping regulations have defined motorboats as ships no more than 65 feet long for over 60 years. However, standard LNG vessels are roughly 1,000 feet long.

The AFET credit was designed to subsidize the use of alternative fuels and reduce domestic oil dependence by providing a credit of 50 cents for every gallon equivalent of a nonliquid alternative fuel sold for use in a motorboat.