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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 109th Congress, alternative fuels and advanced technology vehicles are expected to receive a good deal of attention, especially in the debate over omnibus energy legislation. Major topics include 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 include government vehicle purchase requirements; tax credits for vehicle purchases; promotion of biodiesel fuel; and incentives for hybrid electric vehicles. The House version of omnibus energy legislation (H.R. 6) contains many provisions relevant to alternative fuels and advanced technology vehicles. Among its provisions, the bill would expand existing tax incentives for the purchase of advanced vehicles; authorize R&D funding for hydrogen fuel and fuel cells; require that gasoline contain ethanol or other renewable fuel; and ban the use of the fuel additive MTBE. Various House committees completed markup of the bill the week of April 11, 2005. Floor action is expected the week of April 18. This bill is similar to legislation that stalled in the 108th Congress. On March 16, 2005, the Senate Committee on Environment and Public Works ordered S. 606 (the Reliable Fuels Act) reported favorably with amendments. This bill would establish a renewable fuels standard requiring the use of 6 billion gallons of renewable fuel in gasoline by 2012. Because of concerns over the energy bill in the 108th Congress, some alternative fuels provisions from the bill -- especially those related to ethanol and MTBE -- were inserted into other bills, including tax legislation. 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). Among other provisions, the new law replaces the existing ethanol tax exemption with a tax credit, and establishes tax credits for biodiesel.
