Alternative Fuels and Advanced Technology Vehicles: Issues in Congress Page: 3 of 14

                                
05-08-06

Alternative Fuels and Advanced Technology Vehicles:
Issues in Congress
SUMMARY

Alternative fuels and advanced technol-
ogy vehicles are seen by proponents as inte-
gral 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 develop-
ment and commercialization.
In the 109th Congress, alternative fuels
and advanced technology vehicles have re-
ceived a good deal of attention, especially in
the debate over omnibus energy legislation.
High fuel prices, especially in response to
hurricanes along the gulf coast, have focused
that attention. Major topics of congressional
interest include tax incentives for alternative
fuel production; the future of ethanol and the
fuel additive MTBE, including the establish-
ment of a renewable fuels standard (RFS); and
research and development of hydrogen fuel
and fuel cells. Other topics include govern-
ment vehicle purchase requirements; tax
credits for vehicle purchases; promotion of
biodiesel fuel; and incentives for hybrid elec-
tric vehicles.
The Energy Policy Act of 2005 (P.L.
109-58, H.R. 6) contains many provisions
relevant to alternative fuels and advanced

Congressional Research Service +

technology vehicles. Among its provisions,
the bill expands existing tax incentives for the
purchase of advanced vehicles; authorizes
R&D funding for hydrogen fuel and fuel cells;
and requires that gasoline contain ethanol or
other renewable fuel. H.R. 6 was signed by
President Bush August 8, 2005.
In the fall of 2005, hurricanes along the
Gulf Coast led to disruptions in refining ca-
pacity and oil supply, which then led to higher
gasoline and diesel prices. Since then, Mem-
bers of Congress have been seeking ways to
reduce the vulnerability of the fuel system.
Several bills have been introduced to promote
further development of alternative fuels and
advanced technology vehicles or to mandate
their sale and/or use. High crude oil and
gasoline prices in spring 2006 have further
increased interest in moving away from a
petroleum-based transportation system.
Because of concerns over the energy bill
in the 108th Congress, some alternative fuels
provisions from that energy bill were inserted
into other bills. Some tax provisions, includ-
ing 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 replaced an existing ethanol tax exemp-
tion with a tax credit, and established tax
credits for biodiesel.
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