IB10128
Alternative Fuels and Advanced Technology Vehicles: Issues in Congress
February 28, 2005

Download Locations:

	United States Diplomatic Mission to Italy
	National Council for Science and the Environment

Summary:

Alternative fuels and advanced technology vehicles are seen by proponents as integral to improving urban air quality, decreasing dependence on foreign oil, and reducing emissions of greenhouse gases. However, major barriers -- especially economics -- currently prevent the widespread use of these fuels and technologies. Because of these barriers, and the potential benefits, there is continued congressional interest in providing incentives and other support for their development and commercialization. In the 108th Congress, alternative fuels and advanced technology vehicles received a good deal of attention, especially in the debate over omnibus energy legislation (H.R. 6, among others). Major topics included tax incentives for alternative fuel production; the future of ethanol and the fuel additive MTBE, including the establishment of a renewable fuels standard (RFS); and research and development of hydrogen fuel and fuel cells. Other topics included government vehicle purchase requirements; tax credits for vehicle purchases; promotion of biodiesel fuel; and incentives for hybrid electric vehicles. It is likely that many of these topics will be addressed again in the 109th Congress. The omnibus energy bill contained many provisions relevant to alternative fuels and advanced technology vehicles. Among its provisions, the bill would have extended and expanded existing tax incentives for the purchase of alternative fuel and advanced vehicles; authorized R&D funding for hydrogen fuel and fuel cells; required that gasoline contain ethanol or other renewable fuel; banned the use of the fuel additive MTBE; and expanded tax incentives for the production of ethanol and biodiesel. On November 17, 2003, the conference committee on H.R. 6 issued its report (H.Rept. 108-375). The House approved the report, but a cloture motion on the bill failed in the Senate. Substitute bills were offered in the House and Senate, but the 108th Congress was unable to complete an energy bill. Because of concerns over the energy bill, some alternative fuels provisions from the bill -- especially those related to ethanol and MTBE -- were inserted into other bills, including highway and tax legislation. The conference on H.R. 3550 -- the highway reauthorization bill -- convened in June, 2004, but never issued its report. Among other provisions, the bill would have reauthorized existing programs for alternative fuel buses and other transit projects. Also, it would have modified the tax incentives for ethanol-blended fuel. Some tax provisions from the energy bill, including tax credits for ethanol and biodiesel, were inserted into the conference report on the American Jobs Creation Act of 2004 (P.L. 108-357, H.R. 4520). Among other provisions, the new law replaces the existing ethanol tax exemption with a tax credit, and establishes tax credits for biodiesel.