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Tuesday, October 5, 2010

Alternative Fuels and Advanced Technology Vehicles: Issues in Congress

Brent D. Yacobucci
Specialist in Energy and Environmental Policy

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.

Alternative fuels and advanced technology vehicles were addressed early in the 111
th Congress, as both the House and Senate versions of the American Recovery and Reinvestment Act of 2009 (H.R. 1) contained provisions supporting their development and deployment. While some of these provisions were removed in conference, the final version (P.L. 111-5) contains provisions for tax incentives, federal grants and loans, and other federal support for alternative fuels and advanced vehicles.

On February 3, 2010, the Environmental Protection Agency (EPA) finalized new rules for the renewable fuel standard (RFS) that was expanded by the Energy Independence and Security Act of 2007 (EISA, P.L. 110-140). In 2010, the RFS will require the use of 12.95 billion gallons of ethanol and other biofuels in transportation fuel. Within that mandate, the RFS will require the use of 0.95 billion gallons of advanced biofuels, including 6.5 million gallons of cellulosic biofuels. EISA also requires that advanced biofuels (as well as conventional biofuels from newly built refineries) meet certain lifecycle greenhouse gas reduction requirements. EPA’s methodology and conclusions on various biofuels’ lifecycle emissions have been controversial.

EPA is also reviewing a waiver petition from Growth Energy to allow blends of up to 15% ethanol in gasoline: currently gasoline is limited to 10% ethanol content under EPA implementation of the Clean Air Act. Allowing higher blends of ethanol under the Clean Air Act would remove one component of the “blend wall,” which limits the total amount of ethanol that can be blended in gasoline nationwide; other blend wall components include vehicle and pump certification and warranties, and state and local fire codes and other laws. EPA has stated that a decision on newer vehicles could come by late September.

The 111
th Congress is likely to further discuss alternative fuels and advanced technology vehicles as it addresses other key topics. These include their role in any federal policy to address climate change, and their role in federal energy policy. The 111th Congress may also play an oversight role in the development of major regulations: the Environmental Protection Agency’s implementation of the RFS; the Department of Transportation’s implementation of new fuel economy standards enacted in 2007; and the Department of Agriculture’s implementation of the 2008 Farm Bill. Further, some key tax incentives for biofuels expired at the end of 2009, and others will expire at the end of 2010. These incentives may be extended in the second session of the 111th Congress.

Date of Report: September 22, 2010
Number of Pages: 23
Order Number: R40168
Price: $29.95

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