Order Code RL30758
CRS Report for Congress
Received through the CRS Web
Alternative Transportation Fuels and Vehicles:
Energy, Environment, and Development Issues
Updated March 7, 2002
Brent D. Yacobucci
Environmental Policy Analyst
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

Alternative Transportation Fuels and Vehicles:
Energy, Environment, and Development Issues
Summary
The sharp increase in petroleum prices beginning in mid-1999, and experiences
with tighter supply, have renewed concern about our dependence on petroleum
imports. One of the strategies for reducing this dependence is to produce vehicles
that run on alternatives to gasoline and diesel fuel. These alternatives include
alcohols, gaseous fuels, renewable fuels, electricity, and fuels derived from coal. The
push to develop alternative fuels, although driven by energy security concerns, has
been aided by concerns over the environment, because many alternative fuels lead to
reductions in emissions of toxic chemicals, ozone-forming compounds, and other
pollutants, as well as greenhouse gases.
Each fuel (and associated vehicle) has various advantages and drawbacks. The
key drawback of all alternative fuels is that because of higher fuel and/or vehicle
prices, the cost to own alternative fuel vehicles (AFVs) is generally higher than for
conventional vehicles. And while most AFVs have superior environmental
performance compared to conventional vehicles, their performance in terms of range,
cargo capacity, and ease of fueling does not compare favorably with conventional
vehicles. Furthermore, because there is little fueling infrastructure (as compared to
gasoline and diesel fuel), fueling an AFV can be inconvenient.
Any policy to support AFVs must address the performance and cost concerns,
as well as the issue of fueling infrastructure. Within this context, a “chicken and egg”
dilemma stands out: The vehicles will not become popular without the fueling
infrastructure, and the fueling infrastructure will not expand if there are no customers
to serve.
Three key laws, the Alternative Motor Fuels Act of 1988 (P.L. 100-494), the
Clean Air Act Amendments of 1990 (P.L. 101-549), and the Energy Policy Act of
1992 (P.L. 102-486), as well as three Executive Orders, support the development and
commercialization of alternative fuels and alternative fuel vehicles. These legislative
acts and administrative actions provide tax incentives to purchase AFVs, promote the
expansion of alternative fueling infrastructure, and require the use of AFVs by various
public and private entities.
Several bills in the 107th Congress propose to expand these programs or create
further incentives for alternative fuel and vehicle use. Opponents argue that there are
other, more cost-effective ways of promoting clean air and energy conservation. This
report reviews these issues. It will be updated as events warrant.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Legislative Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Alternative Motor Fuels Act of 1988 . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Clean Air Act Amendments of 1990 . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Energy Policy Act of 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Fleet Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Tax Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Executive Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Alternative Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Propane (LPG) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Other Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Natural Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Other Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Biodiesel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Other Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Ethanol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Other Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Methanol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Fuel Cells . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Electricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Fuel Cell and Hybrid Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Hydrogen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Coal-Derived Liquid Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
List of Tables
Table 1. History of U.S. Alternative Fuel Vehicle Policies . . . . . . . . . . . . . . . . . 2
Table 2. Light-Duty Alternative Fuel Vehicle Purchase Requirements
under the Energy Policy Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Table 3. Summary of Alternative Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Appendix 1. Alternative Fuel Vehicle Bills in the 107th Congress . . . . . . . . . . . 24

Alternative Transportation Fuels and
Vehicles: Energy, Environment, and
Development Issues
Introduction
Is there any practical replacement for gasoline and diesel fuel in automobiles?
Since the oil crises of the 1970s and the rise in the awareness of environmental and
security issues, policy makers have often considered this question. For many reasons,
the United States has searched for alternatives to petroleum fuels. These reasons
include limiting dependence on imported petroleum, controlling the emissions of
pollutants into the air, and limiting the emissions of greenhouse gases.
Several fuels are considered alternative transportation fuels by the federal
government. These fuels include electricity, natural gas, propane (liquefied petroleum
gas, or LPG), ethanol, methanol, biodiesel, and hydrogen. Some of these fuels are
similar to conventional fuels, and can be used in conventional vehicles with little or
no modification to the engine and fuel system. However, some of these fuels are
significantly different, and require the use of completely different engine, fuel, and
drive systems. Consequently, cost as well as performance of the associated alternative
fuel vehicles (AFVs) must be part of the discussion. Key factors in the ultimate
success or failure of any alternative fuel include the relative cost of the fuel, the ability
to develop and expand fueling stations, and the performance and safety of the fuel.
For various reasons–notably cost, performance, and availability–alternative fuels
have yet to play a major transportation role in the United States. Many argue that the
government must step in. Congress, recent Administrations, and state governments
have instituted some key programs to promote the use of alternative fuels. These
programs include tax incentives for the purchase of alternative fuels and alternative
fuel vehicles (AFVs), purchase requirements for government and private fleets, and
research grants for the study of alternative fuels. Despite these efforts, only 0.2% of
motor fuel demand (125 billion gallons of gasoline and 38 billion gallons of diesel) is
met by alternative fuels today.1
Legislative Background
The three most important statutes concerning alternative fuels are the Alternative
Motor Fuels Act of 1988 (AMFA, P.L. 100-494), the Clean Air Act Amendments of
1U.S. Department of Energy, Energy Information Administration (EIA), Alternatives to
Traditional Transportation Fuels 1998.
January 2000.

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1990 (CAAA, P.L. 101-549), and the Energy Policy Act of 1992 (EPAct, P.L. 102-
486). AMFA promoted federal government use of alcohol- and natural gas-fueled
vehicles. EPAct requires that federal and state agencies, as well as private firms that
distribute alternative fuels, must purchase for their fleets a certain proportion of
vehicles that are capable of being fueled by specific non-petroleum fuels.
Furthermore, EPAct grants the Department of Energy (DOE) the authority to make
similar requirements of local governments and private fleets. In addition, EPAct
provides tax incentives for private purchases (both individual and commercial) of
AFVs that are not required under the act. CAAA requires government and private
fleets in cities with significant air quality problems to use low-emission, “clean-fuel”
vehicles.

In addition to these laws, recent executive orders have also shaped alternative
fuels policy in the United States. These include: E.O. 12844, which urged federal
agencies to exceed EPAct purchase requirements; E.O. 13031, which required that
federal agencies meet EPAct requirements regardless of budget; and E.O. 13149,
which aims to drastically reduce federal government petroleum consumption through
the use of AFVs and hybrid vehicles.
The major alternative fuels legislation and relevant Executive Orders are
summarized in Table 1 and discussed further below.
Table 1. History of U.S. Alternative Fuel Vehicle Policies
Policy
Year
Key Provisions
Alternative Motor
1988

Promoted Federal Government acquisition of
Fuels Act
AFVs
(42 U.S.C. 6374)

Established commercial demonstration programs
for alternative fuel heavy-duty trucks
Clean Air Act
1990

Established Clean Fuel Fleet Program
Amendments
(42 U.S.C. 7581)
Energy Policy Act
1992

Established AFV purchase requirements for
(42 U.S.C. 6374)
Federal, state, and fuel provider fleets

Established tax incentives for the private purchase
of AFVs
Executive Order
1993

Urged agencies to exceed requirements set in
12844
EPAct
Executive Order
1996

Required federal agencies to meet EPAct
13031
requirements regardless of budget

Required yearly progress reports on EPAct
purchases
Executive Order
2000

Set goal of reducing federal government petroleum
13149
consumption

Identified several strategies including the use of
AFVs and hybrid vehicles

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The Alternative Motor Fuels Act of 1988
Beginning in FY1990, the Alternative Motor Fuels Act called for the federal
government to acquire the “maximum practicable” number of light-duty alcohol and
natural gas vehicles. In addition, AMFA established an Interagency Commission on
Alternative Motor Fuels to develop a national alternative fuels policy. Furthermore,
the act established a commercial demonstration program to study the use of alcohol
and natural gas in heavy duty trucks. Since 1991, DOE has supported projects in
these areas, making the data publicly available through its Alternative Fuels Data
Center (AFDC).2
The Clean Air Act Amendments of 1990
The Clean Air Act Amendments of 1990 established the Clean Fuel Fleet
Program (CFFP).3 This program requires cities with significant air quality problems
to promote vehicles that meet clean fuel emissions standards. In metropolitan areas
in extreme, severe, or serious non-attainment for ozone4 or carbon monoxide, fleets
of 10 light-duty vehicles or more face purchase requirements similar to those for
EPAct (discussed below). However, under CFFP, conventional vehicles are
admissible if they meet National Low Emission Vehicle (LEV) standards. Another
key difference between the CFFP requirements and the EPAct requirements is that
under CFFP, a vehicle must always be operated on the fuel for which it was certified.
For example, if a dual-fuel ethanol vehicle is certified LEV using ethanol, but not
using gasoline, the vehicle must be operated solely on ethanol. This provision avoids
a perceived “loophole” in EPAct.
The Energy Policy Act of 1992
The Energy Policy Act of 1992 was enacted to promote energy efficiency and
energy independence in the United States. It includes programs that require or
promote alternative fuel vehicles, as well as commercial and domestic energy
efficiency, natural gas imports, and nuclear power. Two key programs concerning
alternative fuels are the AFV purchase requirements for federal, state, and alternative
fuel provider5 fleets, and the AFV tax incentives.
Fleet Requirements. EPAct6 requires that a certain percentage of new light-
duty vehicles (passenger cars and light trucks) purchased for certain fleets must be
2[http://www.afdc.doe.gov/.]
3P.L. 101-549, section 246.
4Ozone standards are maintained by limiting emissions of the three key components of ozone:
nitrogen oxides (NOx), volatile organic compounds (VOCs), carbon monoxide.
5An alternative fuel provider fleet is a fleet of vehicles owned and operated by a private
company that sells or distributes alternative fuels.
6P.L. 102-486, sections 303, 501, and 507.

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fueled by an alternative fuel.7 Covered fleets are those that operate 50 or more light-
duty vehicles, of which at least 20 operate primarily in a metropolitan area.
Furthermore, the fleets must be capable of being fueled at a central location, such as
the fleet motor pool. Law enforcement vehicles, emergency vehicles, non-road
vehicles, and vehicles used for testing are exempted from the requirement. Federal,
state, and alternative fuel provider fleets are currently mandated to purchase AFVs,
and DOE is currently considering whether to include municipal and private fleets in
the program.8 The purchase requirements are phased in between 1997 and 2001.
(See Table 2.)
Table 2. Light-Duty Alternative Fuel Vehicle Purchase
Requirements under the Energy Policy Act
Percentage of all Acquisitions for Covered Fleets
Year
Federal
State
Alternative Fuel
Provider
1997
33%
10%
30%
1998
50%
15%
50%
1999
75%
25%
70%
2000
75%
50%
90%
2001 and beyond
75%
75%
90%
Source: National Alternative Fuels Hotline, Department of Energy, September 1998.
DOE currently recognizes the following as alternative fuels: methanol and
denatured ethanol as alcohol fuels (mixtures that contain at least 70% alcohol),
natural gas (compressed or liquefied), liquefied petroleum gas (LPG), hydrogen, coal-
derived liquid fuels, fuels derived from biological materials, and electricity.9 Covered
vehicles may be dedicated10 or dual fuel.11
There have been mixed results from the program. According to DOE, some
federal and state agencies are exceeding their mandates, while others are far below
their quota. As a whole, the federal government is was compliance in 1998, mainly
7EPAct defines an alternative fuel as “any fuel the Secretary [of Energy] determines, by rule,
is substantially not petroleum and would yield substantial energy security benefits and
substantial environmental benefits.”
863 Federal Register 19372. April 17, 1998.
9Some fuels may actually be covered by more than one category. For example, most ethanol
(an alcohol fuel) is derived from corn or other agricultural products (biological materials).
10Dedicated: operated solely on an alternative fuel.
11 Dual-fuel: capable of being operated on both conventional and alternative fuel. There are
two types of dual-fuel vehicles, bi-fuel and flexible fuel. Bi-fuel vehicles can only be operated
on one fuel at a time, while flexible fuel vehicles can operate on any mixture of the two fuels.

CRS-5
due to large purchases such as 10,000 ethanol vehicles purchased by the U.S. Postal
Service in that year.12 However, according to a coalition of environmental groups,
the government as a whole has failed to comply with EPAct since then. In a suit filed
by Earthjustice13 in San Francisco federal court, 18 federal agencies are accused of
failing to comply with the purchase requirements.14 In addition, questions have been
raised about the success of the program since many covered fleets, especially fuel
provider fleets, have not reported their purchases to DOE.15
A key concern over the fleet requirements is whether they actually support the
goals of EPAct. This is because EPAct does not require the use of alternative fuels,
only the purchase of AFVs. Fleets can purchase dual-fuel vehicles, operate them
solely on gasoline or diesel fuel, and still meet the EPAct requirements. The fleet
program has been criticized because this use of dual-fuel vehicles is seen by some as
a “loophole.” This criticism is another element of the lawsuit filed by Earthjustice.
Tax Incentives. Another key provision of EPAct is a set of tax incentives for
the purchase of new AFVs.16 The act provides an electric vehicle (EV) tax credit of
10% of the purchase price, up to a maximum of $4,000. In addition, it provides a
Clean Fuel Vehicle (any alternative fuel) tax deduction of $2,000 for light-duty
vehicles, $5,000 for heavy-duty vehicles up to 26,000 pounds, and $50,000 for
heavier trucks and buses. Vehicles are not eligible for both incentives, and vehicles
purchased to meet mandated fleet requirements are ineligible for either incentive. The
EV tax credit is scheduled to be phased down starting in 2001, reaching zero in 2004;
the Clean Fuel Vehicle tax deduction will be phased down starting in 2002, reaching
zero in 2005.
Executive Orders
Three Executive Orders have also played a key role in developing alternative
fuels policies. Executive Order 12844, issued on April 21, 1993, urged federal
agencies to make every effort to exceed the mandatory purchase requirements set in
EPAct. The order argued that the federal government could provide impetus for the
development and manufacture of alternative fuel vehicles, and the expansion of fueling
stations and other infrastructure to support privately-owned AFVs.
Executive Order 13031, issued December 13, 1996, expanded the
Administration’s policy on EPAct fleets. The order required that federal agencies
12In 1998, the U.S. Postal Service placed an order with Ford for 10,000 specially-designed
Ford Explorers. The redesigned sport-utility vehicles use flexible fuel ethanol/gasoline
engines.
13Earthjustice is representing the Sierra Club, the Center for Biological Diversity, and the
Bluewater Network.
14“U.S. Agencies Sued on Alternative Fuel Rule,” San Francisco Chronicle. January 3,
2002. p. A3.
15U.S. General Accounting Office (GAO), Limited Progress in Acquiring Alternative Fuel
Vehicles and Reaching Fuel Goals.
February 2000. p. 9.
16P.L. 102-486, section 1913.

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must comply with EPAct regardless of their budgets. The order also required that
agencies must submit a yearly progress report to the Office of Management and
Budget (OMB) along with their yearly budgets. Further, it established penalties for
failing to meet the EPAct requirements. If an agency reported to OMB that it did not
meet its EPAct requirements, that agency must submit a detailed plan for meeting the
requirements the next year. The Order also established credits for the use of medium-
and heavy-duty vehicles and EVs to meet the requirements.
Most recently, the Administration issued Executive Order 13149 on April 21,
2000. This order presents the goal of reducing the federal fleet’s annual petroleum
consumption by 20% below the FY1999 level by the end of FY2005. The order
suggests several strategies for attaining this goal, including using alternative fuel
vehicles and high-efficiency hybrids. The order also requires that a majority of
EPACT vehicles must be fueled with alternative fuels by FY2005. This helps fix the
“loophole” that allows dual-fuel EPACT vehicles to operate solely on conventional
fuel.
Alternative Fuels
As noted above, several fuels are considered alternative fuels. This report will
address alternative fuels recognized by EPAct. Many technical and market factors
affect the usability and ultimate success of these fuels as alternatives to petroleum-
based fuels. Since many of these fuels require entirely new powertrains, or extensive
modifications to conventional vehicles, the characteristics of both alternative fuels and
alternative fuel vehicles must be discussed together. Fuel cost and fueling
infrastructure, vehicle cost, fuel and vehicle performance, and other factors for each
fuel will be addressed in turn in the discussion below. Table 3 presents a summary of
the various alternative fuels.
Table 3. Summary of Alternative Fuels
Fuel
Fuel
Vehicles in
Fueling
Incremental
Consumption
Use
Sitesb
Vehicle Costc
(million GEG)a
LPG
242.7
268,000
3,417
$1,000-$2,000
Natural Gas
104.4
103,000
1,278
$4,000-$6,000
Biodieseld
33.5
N/Ae
12
----
Ethanol
3.3f
35,000g
147
$0
Methanol
1.4
18,000
0
$500-$2,000
Electricity
1.8
8,700
685
up to $20,000
Hydrogen
----
----
----
----
Coal-Derived Fuels
----
----
----
----
Note: all data are for 2000, except fueling sites.
Source: Department of Energy and California Energy Commission.

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a GEG: Gasoline Equivalent Gallon. To compare various fuels, an equivalency factor is used.
In this case, it is the amount of energy in one gallon of gasoline.
b As of February 2, 2002.
c This does not include additional infrastructure/fueling equipment costs or additional life-
cycle vehicle costs (e.g. maintenance, resale).
d Since biodiesel can be blended with conventional diesel, separate refueling sites are not
neccessary.
e Biodiesel is used in conventional diesel engines.
f 1,012 million GEG including ethanol in blended gasoline
g This does not include flexible fuel ethanol/gasoline vehicles that operate primarily or
exclusively on gasoline. There are approximately 725,000 of the vehicles in the United States
(Energy Information Administration estimate).
Propane (LPG)
Liquefied petroleum gas (LPG) is produced as a by-product of natural gas
processing and petroleum refining.17 Because the components of LPG are gases at
normal temperatures and pressures, the mixture must be liquefied for use in vehicles.
In addition to vehicles, propane is also used in home heating as well as recreational
activities.18
Consumption. LPG is the most commonly used alternative fuel. Domestic
consumption was approximately 243 million gasoline equivalent gallons (GEG)19 in
2000, or about 0.2% of gasoline demand.20 This is greater than all other alternative
fuels combined.21 Propane is used in both light- and medium-duty vehicles, and there
were approximately 270,000 LPG vehicles on the road in 2000,22 or about 0.1% of
the approximately 210 million gasoline and diesel-fueled vehicles.23
In 1999, the
federal government operated only 208 LPG vehicles.24 LPG vehicles tend to be
custom vehicles; in fact, the only light-duty production vehicles with an LPG option
17LPG is a mixture of hydrocarbons, mainly propane (C H ), but also propylene (C H ),
3
8
3
6
butane (C H ), and butylene (C H ).
4
10
4
8
18Alternative Fuels Data Center (AFDC), Propane (LPG) General Information.
[http://www.afdc.doe.gov/altfuel/lpg_general.html.] Updated My 31, 2000.
19Since all fuels have different energy contents, to compare performance factors (e.g. fuel
economy and fuel cost) an equivalency factor is used. The most common factor is to
determine the amount of alternative fuel needed to generate the energy in one gallon of
gasoline. This amount is called a gasoline equivalent gallon (GEG). While some publications
refer to this as a gasoline gallon equivalent (GGE), this report uses GEG throughout for
clarity.
20EIA, Alternatives to Traditional Transportation Fuels. Table 10.
21Excluding ethanol in gasoline. When used as a blending agent, ethanol does not qualify as
an alternative fuel.
22EIA, Alternatives to Traditional Transportation Fuels. Table 1.
23U.S. Department of Transportation, Bureau of Transportation Statistics, Pocket Guide to
Transportation – 1998.
December 1998.
24EIA, Alternatives to Traditional Transportation Fuels. Table 20.

CRS-8
are the Ford F150 pickup and the GM Express and Savanna vans (the latter two
supplied by Quantum).25
Cost. On a GEG basis, fuel costs for LPG are approximately equal to those of
gasoline, and tend to fluctuate with gasoline prices. Between January 2000 and
October 2001, the price for LPG averaged approximately $1.3826 to $1.7627 per GEG.
While fuel costs are only slightly higher for LPG as compared to gasoline, there is an
incremental purchase cost for an LPG vehicle, which ranges between $1,000 and
$2,000.28 This additional cost covers modifications to the fuel system and the addition
of a high-pressure fuel tank. Some of this incremental cost currently may be defrayed
by federal, state, local, or manufacturer incentives that promote the purchase of
alternative fuel vehicles.
Infrastructure. Because of its many uses,29 the refueling system for LPG is
extensive. There are approximately 3,400 refueling sites in all 50 states,30 which
corresponds to 2.7% of the approximately 124,000 gasoline stations in the United
States.31 Because of its wide use, if the demand for LPG as an alternative fuel were
to expand, it is likely that the supply infrastructure could expand proportionally.
LPG is delivered to retailers through a pipeline and tanker truck system much
like the gasoline delivery system. Therefore, an expansion of the LPG supply
infrastructure would face few technical barriers. However, because the fuel must be
kept under pressure, special equipment is required to transfer LPG to a vehicle.
Addition of new refueling equipment would lead to additional capital costs for
retailers.
Performance. In terms of environmental performance, LPG vehicles tend to
produce significantly lower ozone-forming emissions, although it can be difficult to
quantify the differences. According to the California Energy Commission, LPG
vehicles emit up to 33% fewer VOCs, 20% less NO , and 60% less carbon
x
monoxide.32
25National Alternative Fuels Hotline, Model Year 2002: Alternative Fuel Vehicles. November
2001.
26GAO, Limited Progress. Appendix 1. (Data from U.S. Department of Energy.)
27U.S. Department of Energy, Clean Cities Program, The Alternative Fuel Price Report. May
5, 2000, November 1, 2000, July 3, 2001, and December 17, 2001.
28California Energy Commission, Liquefied Petroleum Gas / Propane-Powered Vehicles
[http://www.energy.ca.gov/afvs/lpg/propane.html.] Updated March 10, 1999.
29Including home heating and outdoor grills.
30Department of Energy, Alternative Fuels Data Center (AFDC), Refueling Sites.
[http://www.afdc.doe.gov/refuel/state_tot.shtml.] Updated July 30, 2001.
31Department of Commerce, Bureau of the Census, County Business Patterns for the United
States.
[http://www.census.gov/epcd/cbp/view/cbpview.html]
32California Energy Commission, Liquified Petroleum Gas.

CRS-9
A key performance drawback to LPG is the somewhat decreased range as
compared to gasoline. However, because LPG has the highest energy content (by
volume) of the alternative fuels, this range reduction is only about 26%. Further,
larger LPG vehicles can carry a larger tank, and tend to maintain a range of between
300 and 400 miles. However, to allow longer range, payload is diminished due to the
size and weight of the LPG tank.33
Safety. LPG has a higher ignition temperature than gasoline, making it safer
in that respect.34 Furthermore, LPG must be present in greater concentrations than
gasoline to ignite.35 Because LPG is stored under pressure, it must be stored in heavy
duty tanks. In order to prevent failure of the fuel tank, LPG tanks must undergo
rigorous testing. Further, LPG is odorless, so an odorant is added to make it
detectable in air.36
Other Issues. There are few major issues involving LPG fuels and vehicles
other than those issues relevant to all alternative fuel vehicles, such as the need to
expand fueling infrastructure. However, because LPG is often derived from
petroleum refining, it may do little to diminish petroleum dependence.
Natural Gas
Natural gas is a fossil fuel produced from gas wells or as a by-product of
petroleum production. Natural gas is composed of hydrocarbons, mainly methane.37
It is used extensively in residences and by industry, and is therefore widely available.
Because of its gaseous nature, natural gas must be stored onboard a vehicle either as
compressed natural gas (CNG) or as liquefied natural gas (LNG). CNG is generally
preferred for light-duty applications such as passenger cars, while LNG is generally
used in heavier applications, such as buses.
Consumption. Vehicles consumed 104 million GEG of natural gas in the
United States in 2000 (mostly as CNG).38 This was less than 0.1% of gasoline
demand, although consumption has been rising steadily over the past ten years. After
propane, CNG is the second most widely used pure alternative fuel.39
33In the case of a passenger car, the tank usually reduces available trunk space.
34This is the range of concentrations in air that a fuel can ignite. Below the lower limit, the
mixture is too “lean” to ignite; above the upper limit, the mixture is too “rich.”
35In fact, propane can ignite through a slightly wider range of concentrations (in air) than
gasoline. However, the lower flammability limit for LPG is higher than gasoline, making it
generally more difficult to ignite. Below this concentration, the mixture is too “lean” to ignite.
Source: Alternative Fuels Data Center, Properties of Fuels. August 28, 2000.
36National Propane Gas Association, Consumer Info. [http://www.npga.org/.]
37The chemical formula for methane is CH . Natural gas also contains minor amounts of
4
ethane (C H ), propane (C H ), butane (C H ) and pentane (C H ).
2
6
3
8
4
10
5
12
38EIA, Alternatives to Traditional Transportation Fuels. Table 10.
39More ethanol is consumed, but most of this is blended with conventional gasoline.

CRS-10
Approximately 103,000 natural gas vehicles were in operation in the United
States in 2000, and the number has been growing by approximately 20% per year.40
These include CNG passenger cars such as the Honda Civic, Toyota Camry, and
Chevrolet Cavalier, as well CNG light trucks natural gas transit buses.41 In 1999, the
federal government operated approximately 15,000 CNG vehicles, and 7 LNG
vehicles.42 In fact, the federal government operates more vehicles on than all other
alternative fuels combined. Approximately half of the federal CNG vehicles are light
duty vehicles, the rest being heavy trucks and buses.
Cost. Using natural gas can cut fuel costs significantly, since natural gas tends
to be a relatively inexpensive fuel43. The average price for one GEG of CNG ranged
from $0.5844 to $1.02,45 between January and October 2000, and the price for LNG
was comparable. In addition to the low cost of the fuel, natural gas is also subject to
a much lower federal excise tax rate (5.4 cents per GEG46) than the gasoline excise
tax rate (18.3 cents per gallon). With recent fuel prices, natural gas vehicles can
reduce annual fuel costs by $200 for smaller cars and up to $300 for larger vehicles.47
While fuel costs tend to be lower for natural gas than for gasoline, equipment
costs tend to be higher. Equipping a light-duty vehicle to operate on CNG typically
costs between $4,000 and $6,000, though some of this incremental cost may be
defrayed through federal and state incentives. In addition, although there are some
public fueling stations, if in-home fueling is desired, a small slow-fill unit can be
installed for approximately $3,500.48
Infrastructure. Refueling infrastructure for CNG is more broadly available
than for most alternative fuels. There are approximately 1,200 public CNG refueling
sites and 44 LNG refueling sites in 46 states.49 Again, this number is small compared
to the number of gasoline refueling stations. However, with the extensive natural gas
system in the United States, the CNG refueling network could be greatly expanded.
Furthermore, since slow-fill refueling systems are available for home installation,
40EIA, Alternatives to Traditional Transportation Fuels. Table 1.
41National Alternative Fuels Hotline, Model Year 2000.
42EIA, Alternatives to Traditional Transportation Fuels. Table 20.
43Current high natural gas prices have made CNG less attractive as a fuel.
44GAO, Limited Progress. Appendix 1.
45Clean Cities Program, Alternative Fuel Price Report.
46Based on a tax rate of 48.44 cents per 1000 cubic feet of natural gas and approximately 112
cubic feet per GEG. Source: ATA Foundation, Alternative Fuels Task Force, 1998-1999 Tax
Guide for Alternative Fuels.
[http://www.afdc.doe.gov/documents/taxindex.html.]
47This is based on a natural gas price of $0.77 per GEG, and a gasoline price of $1.20 per
gallon. Source: John DeCicco, Jim Kleisch and Martin Thomas, ACEEE’s Green Book: The
Environmental Guide to Cars and Trucks,
2000.
48California Energy Commission, Frequently Asked Questions About Natural Gas Vehicles.
[http://www.energy.ca.gov/afvs/ngv/ngvFAQs.html.] Updated March 10, 1999.
49AFDC, Refueling Sites.

CRS-11
consumers could fuel their vehicles overnight, and would only need to access public
stations on longer trips. However, because the technology differs significantly from
a gasoline pump, vehicle users or station operators would need to be trained in the use
of natural gas pumps.
Performance. Compared to gasoline vehicles, the environmental performance
of natural gas vehicles is exceptional. Particulate emissions are virtually eliminated,
carbon monoxide emissions are reduced by as much as 65% to 95%, hydrocarbon
emissions are reduced by up to 80%, and nitrogen oxide (NOx) emissions by as much
as 30%.50 Furthermore, greenhouse gas emissions are also reduced compared with
gasoline vehicles.51
The key performance drawback to natural gas vehicles is their significantly
shorter range. Most natural gas passenger cars can only travel 100 to 200 miles on
a full tank of fuel.52 This is significantly less than the range of 300 to 400 miles for
most gasoline-powered passenger cars.53 For this reason, natural gas vehicles have
been popular for use as delivery trucks or other fleets that operate in cities or other
localized areas.
Safety. Natural gas tends to be safer than gasoline for many reasons. First, the
fuel is non-toxic, although in high gaseous concentrations it could lead to
asphyxiation. Second, natural gas is more difficult to ignite than gasoline, and tends
to dissipate more quickly due to its lower density. However, since natural gas is
colorless and odorless, like LPG, an odorant is added to the fuel to make the fuel
detectable in air.54
A key safety concern with natural gas has to do with on-board storage. Because
CNG is compressed under such high pressures, the rupture of a fuel tank would be
extremely dangerous. For this reason, CNG tanks must undergo “severe abuse” tests
such as collisions, fires, and even gunfire.55
Other Issues. Besides the environmental benefits of natural gas, another
benefit is the fact that over 80% of natural gas used in the United States comes from
50Hydrocarbon and nitrogen oxide emissions contribute to the formation of ground-level ozone,
the main component of urban “smog.”
51California Energy Commission, Natural Gas Vehicles: Fuel and Vehicle History and
Characteristics
. [http://www.energy.ca.gov/afvs/ngv/ngvhistory.html], updated March 10,
1999; James S. Cannon, Paving the Way to Natural Gas Vehicles, 1993.
52Larger vehicles such as pickup trucks and vans can utilize larger fuel tanks by occupying
some of the storage area of the vehicle.
53National Alternative Fuels Hotline, Model Year 2000.
54California Energy Commission, Frequently Asked Questions About Natural Gas Vehicles.
[http://www.energy.ca.gov/afvs/ngv/ngvFAQs.htm.] Updated March 10, 1999.
55The Natural Gas Vehicle Coalition, Questions and Answers about Natural Gas Vehicles
[http://www.ngvc.org/qa.html.] Updated March 16, 2000.

CRS-12
domestic sources.56 Therefore, it has been argued that natural gas vehicles can help
promote energy security in this country by lowering our reliance on imported fuel.
However, because natural gas is used extensively in electricity production, significant
increases in its use for transportation could result in increased demand for other fuels
for electricity.
Biodiesel
Biodiesel is a synthetic diesel fuel that is produced from fatty feedstocks such as
soybean oil and recycled cooking oil.57 Although more expensive than conventional
diesel, it has some important advantages. The most notable advantage is that because
biodiesel is very similar to conventional diesel, the fuel can be used in existing diesel
engines.58
Consumption. Currently, domestic production is between 30 and 60 million
gallons per year,59 as compared to approximately 31 billion gallons per year of
conventional diesel.60 Because biodiesel can be used in existing diesel engines, there
are no vehicles designed specifically for its use.
Cost. The most significant drawback to biodiesel is its increased cost as
compared to conventional diesel. Wholesale diesel prices have averaged between
$0.55 and $0.67 per gallon over the past five years, although they are currently
relatively high (generally between $1.05 and $1.10 per gallon61). Currently, wholesale
prices for biodiesel range between $1.33 and $1.73 per gallon for biodiesel made from
recycled oil, and between $1.94 and $2.26 for biodiesel made from virgin soy.62
Therefore, even current diesel prices are not yet high enough to make biodiesel
competitive. However, wholesale biodiesel prices have been dropping due to process
improvements and increases in production scale.
However, there is one key cost advantage of biodiesel relative to other
alternative fuels. It can be used in existing diesel vehicles with little or no
modification. Therefore, covered EPAct fleets–and others interested in reducing their
petroleum consumption and improving their environmental performance–may use
biodiesel without the capital investments necessary for other alternative fuels.
56Energy Information Administration, Natural Gas Monthly. October 2000.
57Biodiesel is mixture of various compounds called mono alkyl esters.
58National Biodiesel Board, General Interest. [http://www.biodiesel.org.] Updated November
10, 2000.
59Personal conversation with Roy Truesdale, Director of Operations, National Biodiesel
Board. September 25, 2000.
60EIA, Alternatives to Traditional Transportation Fuels. Table 10.
61Platt’s Oligram Price Report, September 21, 2000.
62Roy Truesdale, personal conversation.

CRS-13
Infrastructure. Because biodiesel is chemically very similar to conventional
diesel, it could be placed in the existing diesel distribution system with only a few
modifications. Most importantly, since biodiesel is a more effective solvent than
conventional diesel, it can cause deterioration of rubber and polyurethane materials
(e.g. seals). Currently, most biodiesel supply involves purchase contracts by fleet
owners, and delivery of biodiesel to fleet-owned dispensing sites. However, 12
biodiesel refueling stations have opened in 10 states in the past two years.63
Performance. Biodiesel is generally mixed with conventional diesel at the
20% level. The resulting fuel, B20, can be used in existing diesel engines with few or
no engine modifications. Higher concentrations can be used, however, especially with
newer equipment. The use of biodiesel (B20 or higher concentrations) leads to
substantial reductions in emissions of unburned hydrocarbons, carbon monoxide, and
particulate matter.64 Therefore, there are fewer public health concerns with biodiesel
than with conventional diesel.
Other than the improvements in emissions, there seems to be little, if any,
difference in performance between biodiesel and conventional diesel. Payload and
range remain the same, and maintenance costs may actually be decreased due to the
lower sulfur content of the fuel. Some minor modifications may be necessary with
concentrations above 20%, due to fact that biodiesel is a very effective solvent and
can corrode engine seals.65
Safety. There seem to be few additional safety concerns for biodiesel. Its
safety properties are consistent with conventional diesel. However, it does have one
advantage over conventional diesel. Because biodiesel has a higher flash point66 than
conventional diesel, it is more difficult to ignite.67
Other Issues. Biodiesel currently faces two key issues. The first has to do
with the tax structure for biodiesel. Because biodiesel is a renewable fuel, there is
interest in creating a tax incentive similar to the ethanol tax incentive. This incentive,
supporters argue, would allow biodiesel to compete and play a larger role in our fuel
supply. However, because of the cost disparity between biodiesel and conventional
diesel, any incentive would have to be very large to be effective.
The second issue involves a 1998 amendment to EPAct. This amendment68
grants credits to owners of covered fleets who purchase biodiesel. These credits
count toward the purchase requirements for alternative fuel vehicles. Every 450
63AFDC, Refueling Sites.
6 4 A F D C , B i o d i e s e l G e n e r a l I n f o r m a t i o n .
[http://www.afdc.doe.gov/altfuel/bio_general.html.] Updated August 31, 1999.
65Roy Truesdale, personal conversation.
66The flash point is the minimum temperature at which chemical can ignite under normal
conditions.
67National Biodiesel Board, General Interest.
68P.L. 105-388, section 312.

CRS-14
gallons of biodiesel purchased earns one credit. This allows fleet owners to meet their
EPAct requirements without purchasing new vehicles and without modifying their
existing fueling infrastructure. Environmentalists have charged that because the fuel
is then blended at the 20% level, there is little impact on oil consumption or vehicle
emissions.69
Ethanol70
Ethanol, or ethyl alcohol, is an alcohol made by fermenting and distilling simple
sugars.71 Ethyl alcohol is in alcoholic beverages, and it is denatured (made unfit for
human consumption) when used for fuel or industrial purposes. Although the
broadest current use of fuel ethanol in the United States is as an additive in gasoline,
in purer forms it can also be used as an alternative to gasoline. It is produced and
consumed mostly in the Midwest, where corn–the main feedstock for ethanol
production–is produced. When used as an alternative fuel, ethanol is usually blended
with gasoline at a ratio of 85% ethanol to make E85. As with other alternative fuels,
there are many benefits but also drawbacks associated with its use.
Consumption. Ethanol is the most commonly used alternative fuel, although
most of this is blended at the 10% level with 90% gasoline to make E10, or
“gasohol.” Including its use in gasohol, 2000 ethanol consumption was approximately
1.6 billion gallons, or 1.0 billion GEG. This corresponds to approximately 1% of
annual gasoline consumption. However, E10 is not recognized by EPAct as an
alternative fuel because its widespread use does not significantly diminish gasoline
consumption. Consumption of E85–which is recognized by EPAct–is relatively low.
Only about 3.3 million GEG of E85 were consumed in 2000, although consumption
has steadily increased since 1992.72
As of 2000, there were approximately 35,000 E85 vehicles being fueled primarily
by ethanol in use in the United States.73 This number has been growing, but is still
negligible against the total number of conventional vehicles on the road. However,
many E85 vehicles can be fueled with E85, gasoline, or any mixture of the two.
There are many more of these flexible fuel vehicles (FFV) than dedicated ethanol
vehicles. Models of some popular production vehicles, including the Ford Ranger and
Ford Taurus now have E85/gasoline flexible fuel capability standard. Other vehicles
with the option of FFV capability include the Dodge Caravan, Chevrolet S-10 pickup,
and Mazda B3000 pickup.74 The Energy Information Administration estimates that
approximately 725,000 ethanol FFVs were on the road in 1999. In 1998, the federal
government operated approximately 4,300 ethanol FFVs. It is expected that the vast
69“Committee Backs Biodiesel,” The Oil Daily. August 6, 1998.
70For more information on ethanol fuel, see CRS Report RL30369, Fuel Ethanol:
Background and Public Policy Issues.

71Its chemical formula is C H OH.
2
5
72EIA, Alternatives to Traditional Transportation Fuels. Table 10.
73EIA, Alternatives to Traditional Transportation Fuels. Table 1.
74National Alternative Fuels Hotline, Model Year 2000.

CRS-15
majority of these vehicles will be fueled with gasoline. However, it is possible that the
greater availability of FFVs will spur the market for ethanol fuel.
Cost. One of the key drawbacks to the use of ethanol is its cost. Per gallon,
E85 prices ranged from approximately $0.9075 to $1.8076 between January 2000 and
October 2001. In terms of GEG, ethanol costs ranged between $1.30 and $2.70.77
When blended with gasoline, ethanol benefits from an exemption to the motor fuels
excise tax.78 This benefit makes ethanol competitive with gasoline as a blending
agent. In fact, when used to make E10, the exemption is a nominal 53 cents per
gallon of pure ethanol. However, for neat fuels, the exemption is much less–only a
nominal 6.4 cents per gallon of pure ethanol for E85.
While fuel costs are higher for E85, there is little, if any, incremental vehicle
cost.79 Further, ownership and maintenance costs tend to be equal for ethanol and
gasoline vehicles.
Infrastructure. Most of the current infrastructure for the delivery of ethanol
is in the form of tanker trucks used to deliver ethanol to terminals for blending with
gasoline. However, there were 147 E85 refueling sites nationally as of February 21,
2002, mostly in the Midwest, where ethanol is produced.80 Since there is experience
in storing and delivering ethanol, and since the fueling systems are similar to gasoline,
the refueling infrastructure could expand to meet increased demand if the delivery
costs were reduced.
Performance. Because of its lower energy content, the key performance
drawback of ethanol is lower fuel economy. Fuel economy is reduced by
approximately 29%, resulting in reduced range. However, this reduction in range can
be mitigated somewhat by increasing fuel tank size (with the associated drawbacks of
a larger tank). Another problem with ethanol is that in cold weather, an ethanol-
powered vehicle may be difficult to start. For this reason, most ethanol that is used
in purer forms is E85. The 15% gasoline allows for easier ignition under cold-start
conditions. There are few other technical concerns over the performance of ethanol
because of the relatively few modifications necessary to operate a vehicle on ethanol.
There are key environmental advantages to ethanol, as well as some drawbacks.
Ethanol-powered vehicles tend to emit 30 to 50 percent less ozone-forming
compounds than similar gasoline-powered vehicles, including significant reductions
75GAO, Limited Progress. Appendix 1.
76Clean Cities Program, Alternative Fuel Price Report.
77Based on 1.41 gallons of ethanol per GEG.
7826 U.S.C. 40.
79Because ethanol is more corrosive than gasoline, some components (e.g. seals) must be
replaced.
80AFDC, Refueling Sites.

CRS-16
in carbon monoxide emissions.81 In addition, ethanol tends to have a much lower
content of toxic compounds such as benzene and toluene, leading to lower emissions
of most toxic compounds. However, ethanol-powered vehicles tend to emit more
formaldehyde and acetaldehyde,82 although these emissions can be largely controlled
through the use of catalytic converters.83
Another key environmental advantage with ethanol is its relatively low life-cycle
greenhouse gas emissions.84 Ethanol-powered vehicles tend to emit lower levels of
greenhouse gases than gasoline vehicles. Also, the growth process of the ethanol
feedstock results in uptake of carbon dioxide, further reducing net greenhouse gas
emissions. Conversely, when the raw materials and practices used to produce the
feedstock and the fuel are taken into account, emissions for both fuels are increased.
According to a study by Argonne National Laboratory, the use of E85 results in a
14% to 19% reduction in life-cycle greenhouse gas emissions, and with advances in
technology, this reduction could be as high as 70% to 90% by 2010.85 However,
other studies cite lower efficiency in the ethanol production process, leading to
smaller reductions in greenhouse gas emissions.86
Safety. Fuel ethanol tends to be safer than gasoline. At normal temperatures,
E85 is less flammable than gasoline, and tends to dissipate more quickly. While an
ethanol flame is less visible than a gasoline flame, it is still easily visible in daylight.87
Other Issues. The most significant issue surrounding ethanol is the exemption
from the motor fuels excise tax. Because a few producers control a majority of
ethanol production capacity in the United States, the exemption has been called
“corporate welfare” by its opponents. Proponents of the exemption argue that it helps
support farmers (through increased demand for their product), and helps compensate
for added economic value from benefits to the environment, and to energy security
because ethanol is produced from domestic crops.88 Outside of the tax debate,
concerns have been raised over using crops for fuel because the effects on soil, water,
and the food supply have not been fully assessed.
81California Energy Commission, Ethanol Powered Vehicles.
[http://www.energy.ca.gov/afvs/ethanol/ethanolhistory.html.] Updated November 3, 1998.
82Formaldehyde and acetaldehyde are toxic compounds that, in air, can irritate tissues and
mucous membranes in humans, and are characterized by EPA as possible carcinogens.
83California Energy Commission, Ethanol Powered.
84Although most greenhouse gases are not regulated pollutants, environmentalists are
concerned that the accumulation of these gases (such as carbon dioxide) in the atmosphere will
lead to global warming.
85M. Wang, C. Saricks, and D. Santini, Effects of Fuel Ethanol on Fuel-Cycle Energy and
Greenhouse Gas Emissions,
January 1999. Argonne National Laboratory.
86Alan Kovski, “Study Defends Fuel Efficiency of Ethanol, While Another Notes Emissions
of Pollutants,” The Oil Daily, March 9, 1998. p. 6.
87Center for Transportation Research, Argonne National Laboratory, Guidebook for
Handling, Dispensing, & Storing Fuel Ethanol.

88For more information, see CRS Report 98-435E, Alcohol Fuels Tax Incentives.

CRS-17
Methanol
Methanol, the simplest alcohol, is also called “wood alcohol.”89 It is usually
derived from natural gas, but can also be derived from coal or biomass. As a fuel,
methanol is most often used as a blend with gasoline called M85 (85% methanol, 15%
gasoline), although the fuel can also be used in an almost pure (neat) form called
M100. In addition to general transportation, Indianapolis-type race cars use methanol
exclusively. As a motor fuel it has many benefits, but also many drawbacks.
Consumption. Because of its drawbacks, methanol consumption is relatively
low. In 2000, 1.4 million GEG of M85 were consumed, along with 0.45 million GEG
of M100.90 This corresponds to roughly 1/1000th of 1% of the approximately 125
billion gallons of gasoline demand. Methanol consumption peaked in 1996 and has
decreased since.
There are few methanol-powered vehicles operating in the United States.
Consistent with the decline in methanol consumption, after a peak in 1996, the
number of M85 and M100 vehicles has declined. There were approximately 18,000
M85 vehicles (both dedicated and dual-fuel) and approximately 200 M100 vehicles
in 2000. The federal government operated 206 light-duty dual-fuel M85 vehicles in
the same year, and zero M100 vehicles.91 The major automobile manufacturers did
not sell methanol-powered production cars in model year 2002.92
Cost. A notable concern with methanol is its cost. Per GEG, methanol tends
to be more expensive than gasoline. As of January 1, 2000, the price for methanol
was between $0.95 and $1.20 per gallon.93 However, due to the lower energy content
of methanol, the fuel costs roughly $1.73 to $2.10 per GEG.94 In the future, the
California Energy Commission predicts that as production facilities are introduced,
M85 price could decline to $1.27 per GEG by the year 2010, as compared to gasoline
at $1.48 per gallon.95
In addition to the fuel cost, incremental vehicle cost is higher with the use of
methanol. The incremental cost for the purchase of a methanol-fueled vehicle (or the
conversion of an existing gasoline-fueled vehicle) can range from $500 to $2,000,
though some of this incremental cost currently may be defrayed by purchase
incentives. The most notable part of the incremental cost is replacing parts (such as
certain seals) that may be corroded by alcohol.
89Its chemical formula is CH OH.
3
90EIA, Alternatives to Traditional Transportation Fuels. Table 10.
91EIA, Alternatives to Traditional Transportation Fuels. Table 20.
92National Alternative Fuels Hotline, Model Year 2002.
93GAO, Limited Progress. Appendix 1.
94Based on 1.77 gallons of M85 per GEG.
95California Energy Commission, Methanol Powered Flexible Fuel Vehicles.
[http://www.energy.ca.gov/afvs/m85/methanolhistory.html.] Updated December 14, 1998.

CRS-18
Infrastructure. Another barrier to the wide use of methanol as a motor fuel
is the lack of fueling infrastructure. As of July 30, 2001, there were only two M85
refueling sites in California.96 This lack of infrastructure makes it difficult for the
methanol vehicle market to expand. In fact, due to lack of demand, methanol
infrastructure has declined in the past few years. However, existing gasoline tanks
and pumping equipment could be readily converted to store and deliver methanol, and
vehicle users would experience little difference between a methanol pump and a
gasoline pump.
Because methanol can be produced from natural gas and petroleum, a raw
material shortage would be unlikely if methanol consumption increased. However, in
terms of delivery to stations, most methanol is transported by tanker truck from the
methanol plant.97 This delivery method tends to be less flexible and more costly
compared to the existing gasoline infrastructure, which relies primarily on pipeline
delivery. Methanol cannot travel through pipelines due to its physical properties.
Performance. One of the key benefits of methanol vehicles is improved
environmental performance over gasoline vehicles. M85 vehicles tend to emit 30%
to 50% less ozone-forming compounds. And while formaldehyde emissions tend to
be higher with methanol than gasoline, all M85 vehicles will be able to meet new
emissions standards for formaldehyde.98
A key performance drawback with methanol vehicles is a reduction in vehicle
range. Since it requires 1.77 gallons of methanol to equal the energy in one gallon of
gasoline, range per gallon is decreased by approximately 40%. By increasing the size
of the fuel tank, the loss of range can be significantly improved or even eliminated.
However, a larger fuel tank would decrease fuel economy and cargo space.
Safety. On the whole, methanol fuel is safer than gasoline. Since methanol
vapor is only slightly heavier than air, vapors disperse quickly compared to gasoline.
Furthermore, methanol vapors must be more concentrated than gasoline to ignite, and
methanol fires release less heat. Since methanol burns with a light blue flame, one key
drawback is that in bright daylight it may be difficult to see a methanol fire, although
it may be possible to add colorants to the fuel.99
Fuel Cells. Methanol has been touted as the most likely step from gasoline to
hydrogen in fuel cell vehicles because the fueling infrastructure is similar to gasoline,
96AFDC, Refueling Sites.
97In contrast, gasoline is usually shipped in pipelines from the refinery to a distribution
terminal, where tanker trucks transport the fuel to the fueling stations. This distribution
network is considerably more cost effective than relying solely on tanker trucks.
98California Energy Commission, Questions and Answers About M85 and Flexible Fuel
Vehicles
[http://www.energy.ca.gov/afvs/m85/methanolq-a.html.], updated December 14,
1998.
99Environmental Protection Agency, Fact Sheet OMS-8: Methanol Fuels and Fire Safety.
August 1994.

CRS-19
while the fuel is much cleaner.100 Fuel cells are a type of power source that generates
electricity from hydrogen (or a hydrogen-bearing compound) without combustion.
The chemical process is highly efficient and drastically reduces vehicle emissions.101
For more information on fuel cells, see CRS Report 30484, Advanced Vehicle
Technologies: Energy, Environment, and Development Issues.
Another potential advantage of methanol is that it can be derived from biomass
waste products. Research is ongoing, and there have been a few, small-scale
demonstration projects at landfills.
Electricity102
An electric vehicle (EV) is powered by an electric motor, as opposed to an
internal combustion engine. Energy is supplied to the motor by a set of rechargeable
batteries. When the vehicle is not being used, these batteries are recharged.
Because no fuel is burned, there are no emissions from the vehicle, making it a
zero emissions vehicle (ZEV). However, there are emissions from electricity
production associated with electric vehicles. When the entire fuel cycle is considered,
pollutant emissions from EVs are still low relative to gasoline vehicles. Like other
AFVs, however, there are key cost and performance drawbacks associated with these
vehicles.
Consumption. Approximately 1.8 million GEG of electric fuel were
consumed in the United States in 2000 by approximately 8,700 electric vehicles.103,104
Most of these vehicles are located in California, and several models are available
exclusively in that state. One of the most popular EVs is the General Motors EV1.
Others include the Dodge Caravan, Ford Ranger, Nissan Altra (fleet only), Solectria
Force, and Toyota RAV4.105 The federal government operated approximately 170
electric vehicles in 1999.106
100Vanessa Houlder, “Big push to reduce fuel emission problems,” Financial Times.
September 21, 2000. p. 5.
101If pure hydrogen is used, the only emissions would be water vapor.
102For more information on electric vehicles, hybrid electric vehicles, and fuel cell vehicles,
see CRS Report RL30484, Advanced Vehicle Technologies: Energy, Environment, and
Development Issues.

103EIA, Alternatives to Traditional Transportation Fuels. Tables 1 and 10.
104These vehicles are light- and heavy-duty highway vehicles. Golf carts are another popular
application for electric vehicles, and there are many of these in operation in the United States,
especially in smaller communities.
105National Alternative Fuels Hotline, Model Year 2000.
106EIA, Alternatives to Traditional Transportation Fuels. Table 20.

CRS-20
Cost. Electric fuel is considerably less expensive than using gasoline, about 2.5
to 3.3 cents per mile, as opposed to 4 to 6 cents per mile for a gasoline vehicle.107
Despite the fuel cost advantages, a major drawback with EVs is the incremental
vehicle purchase cost, which can be as much as $20,000. Most of this cost is related
to the batteries, which are very expensive to produce.108
Infrastructure. There are very few electric recharging sites in the United
States. Currently, there are 685 recharging sites, mostly in California.109 With the
extensive nature of the electricity infrastructure in the United States, there are few
technical barriers to expanding EV recharging sites. However, with existing
technology, cost is a major factor because only a few vehicles can access a single
charger in one day, as opposed to a gasoline pump which can serve a new vehicle
every few minutes. While faster, “quick-charge” stations are being studied, none are
currently in use.110
Performance. The environmental performance of EVs is very good. When
the entire fuel cycle is considered, electric vehicles produce low overall levels of toxic
and ozone-forming pollutants.111 Depending on the fuel mix for local electric power
generation, overall emissions can be decreased by 90% or more as compared to
gasoline vehicles.112
A major performance drawback of EVs is their relatively short range. On a full
charge, an electric vehicle can travel between 50 and 130 miles, as opposed to a range
of 300 to 400 miles with a conventional vehicle.113 Another drawback is that fueling
an electric vehicle takes between 3 and 8 hours, as opposed to a few minutes for a
conventional vehicle.114
Safety. Few additional safety issues are associated with electric vehicles.
Because no chemicals are transferred during fueling, there is no risk of spillage or
inhalation, and with existing recharging systems, electric shocks are unlikely. In the
107Because of the vast differences between electric and conventional vehicles, cents per mile
are used to discuss fuel cost, as opposed to dollars per GEG. In this case, it was assumed that
electricity was 10 cents per kilowatt-hour (kWh), an electric vehicle achieved between 3 and
4 miles per kWh, gasoline cost $1.20 per gallon, and a gasoline vehicle achieved between 20
and 30 miles per gallon. Currently, electricity prices are somewhat lower than 10 cents per
kWh, while gasoline prices are above $1.20 per gallon.
108This is based on suggested retail prices for the EV1 and the Chevrolet Cavalier, a similar
gasoline vehicle.
109AFDC, Refueling Sites.
110California Energy Commission, Questions & Answers About Electric Vehicles.
[http://www.energy.ca.gov/afvs/ev/q_a.html.] Updated July 30, 1998.
111The fuel mix plays a key role in the overall fuel-cycle emissions for electric vehicles because
power plant emissions can vary greatly depending on the fuel used for generation.
112California Energy Commission, Questions & Answers About Electric Vehicles.
113Alternative Fuels Data Center, Model Year 2000.
114California Energy Commission, Questions & Answers About Electric Vehicles.

CRS-21
event of an accident, there is no combustible fuel so there is no danger of fire or
explosion. However, because of the acid contained in some types of batteries, there
could be concern over acid leaks if batteries were to rupture in a collision.
Fuel Cell and Hybrid Vehicles. While battery-powered electric vehicles
tend to be very expensive, and have many other drawbacks, there is growing interest
in fuel cell and hybrid electric vehicles. Research into batteries, electric drivetrains,
and lightweight materials will play a key role in the development of EVs, as well as
both hybrid and fuel cell vehicle technology. For a more detailed discussion of fuel
cell and hybrid technologies, see CRS Report 30484, Advanced Vehicle
Technologies: Energy, Environment, and Development Issues.
Fuel Cell Vehicles. Unlike a conventional vehicle, a fuel cell vehicle uses
chemical reaction (as opposed to combustion) to produce electricity to power an
electric motor. Unlike a battery-powered EV, fuel cell vehicles have a fuel tank,
eliminating the long recharging time. These systems can be very efficient, although
the technology is far from commercialization.
Hybrid Electric Vehicles. A hybrid electric vehicle combines an electric
motor with a gasoline or diesel engine. This combination leads to very high fuel
efficiency and low emissions while avoiding some of the problems associated with
pure electric vehicles. Most hybrids operate solely on conventional fuel, with the
engine providing power to the wheels and to an electric generator simultaneously.
Therefore, hybrids can be fueled as quickly and conveniently as conventional vehicles,
while achieving even longer ranges.
Two hybrid production vehicles are currently available, the Honda Insight and
the Toyota Prius, and the three major American car companies plan to introduce
hybrid vehicles in the next few years.115 Although hybrid electric vehicles are not
considered AFVs (because they utilize conventional fuel), their environmental
performance has led to legislation to promote their commercialization.116
Hydrogen
Due to its presence in water, hydrogen is the most common element on the
planet, although it does not appear in pure form in any significant quantity.117 The
hydrogen in water can be separated from oxygen through a process called
hydrolysis.118 Other key hydrogen sources are fossil fuels and other hydrocarbons.
Hydrogen fuel is of interest because it can be used in a zero-emission fuel cell.
Because fuel can be continuously supplied, fuel cell-powered electric vehicles do not
face some of the range and fueling limitations as battery-powered electric vehicles.
115Gregg Easterbrook, “Hybrid Vigor,” The Atlantic Monthly. November 2000. p. 5.
116Several bills in the 106th Congress would have provided tax credits for the purchase of
hybrids, although none of these bills passed their respective committees. See section below
on Congressional Action.
117The chemical formula for hydrogen gas is H .
2
118The chemical formula for water is H O.
2

CRS-22
Currently, no production vehicles are powered by pure hydrogen, although all
of the major domestic and foreign automobile manufacturers are researching hydrogen
fuel cells, and several plan to introduce production vehicles by 2004. However, it is
likely that the first commercially available fuel cell vehicles will be operated on a liquid
fuel such as gasoline or methanol, because these fuels are much easier to deliver and
are more readily available at present (see above section on methanol).
Key concerns about hydrogen include its extreme flammability and the potential
cost of the fuel. Furthermore, while hydrogen fuel could be generated using
electricity from solar cells to electrolyze water, thus making the fuel cycle emission-
free, the most likely source for hydrogen in the near term is natural gas. Although not
emission-free, the use of natural gas as a feedstock for hydrogen would still lead to
much lower overall emissions compared to petroleum.
Coal-Derived Liquid Fuels
Although EPAct recognizes coal-derived fuels as alternative fuels, these fuels
have seen little commercial success. This is largely due to their high production costs
and poor environmental performance.119 However, research to reduce costs and
improve environmental performance is ongoing, mostly through support of the
Department of Energy.120 A potential advantage of coal-derived fuels is that the
feedstock is an abundant domestic resource.
Conclusions
Alternative fuels have reached varying levels of commercial success, although
currently none are able to compete with conventional fuels. LPG and natural gas fuels
and vehicles have been successfully commercialized, and are widely used in both
private and public fleets. Ethanol is a common additive in gasoline, but is used
sparsely as an alternative fuel. Other fuels, such as methanol and electricity have had
less commercial success, but may play a key role in the future of transportation.
The degree to which various alternative fuels have been used has been a result
of economic factors, as well as government tax policies and regulatory mandates.
Further, the performance characteristics of the fuels have also played a major role.
In general, there are potential energy security benefits to alternative fuels, as
most alternative fuels can be derived from domestic sources. Further possible benefits
include lower emissions of toxic pollutants, ozone-forming pollutants, and greenhouse
gases. However, performance and cost are key barriers to consumer acceptance.
Without considerable advances in alternative fuel and vehicle technology, or
significant petroleum price increases, it is unlikely that any fuel or fuels will replace
petroleum-based fuels in the near future.
119In fact, while the fuels themselves may result in lower vehicle emissions, the processes for
converting coal to liquid fuel tends to lead to high pollutant emissions.
120Nicholas P. Chowey, “Coal Conversion Keeps Itself Relevant,” Chemical Engineering.
September 1998. p. 35.

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Congressional Action
Recent policy debate has focused on American energy security. Because of this,
discussion has turned to alternative fuels. Proponents argue that expanding
alternative fuel tax credits and other incentives would promote improved air quality
and energy security. Opponents argue that alternative fuel programs could lead to
“corporate welfare” and that there are less expensive ways to reduce pollution and cut
fuel consumption, such as efficiency improvements and conservation. For example,
an increase in fuel economy of one mile per gallon across all passenger vehicles in the
United States would cut petroleum consumption more than all alternative fuels and
replacement fuels121 combined.122
The Bush Administration’s National Energy Policy supports an increased role
for alternative fuels, as do several bills in the 107th Congress.123 Provisions in various
bills would provide tax credits for the purchase of alternative fuel and hybrid vehicles,
and would expand the existing electric vehicle tax credit. Further, some bills would
expand the existing tax credits and deductions for the installation of alternative fuel
refueling infrastructure. Some bills would provide per gallon tax credits for the retail
sale of alternative fuels, and some bills would allow states to exempt alternative fuel
and/or hybrid vehicles from high occupancy vehicle (HOV) restrictions. Finally, some
bills would provide grants to schools, municipalities, and/or transit systems for the
purchase of alternative fuel vehicles, refueling infrastructure and/or fuel. These
various bills are presented in Appendix 1.
Most notably, the Congress is considering comprehensive energy legislation.
The House version (H.R. 4) which passed the House on August 2, 2001. The Senate
version (S. 517)124 was brought up for floor debate in early March, 2002. Both bills
contain provisions for research and development funding, tax credits, and other
incentives for alternative fuels.
121Replacement fuels include blending agents such as ethanol in E10, that are used in gasoline
but do not qualify as alternative fuels.
122 Source: CRS analysis of data from the Department of Energy.
123National Energy Policy Development Group, National Energy Policy. May 2001.
124While S.517 is the vehicle for Senate floor debate, much of the language from S.1766 will
be inserted into S.517 by S.Amdt. 2917.

CRS-24
Appendix 1. Alternative Fuel Vehicle Bills in the 107th Congress
Bill No.
Sponsor
Last Major Action
Key Provisions
H.R. 4
Tauzin
Passed House August 2, 2001; referred

Comprehensive energy policy bill including provisions for
to Senate.

Tax credits for alternative fuel, fuel cell, electric, and hybrid vehicles

Tax credits for alternative fuel refueling infrastructure

Grants for alternative fuel school buses

Exemptions of alternative fuel and hybrid vehicles from HOV restrictions
H.R. 377
Serrano
Referred to House Ways & Means

Provides incentives for the use of clean-fuel vehicles by enterprise zone
businesses within empowerment zones and enterprise communities.
H.R. 1864
Camp
Referred to House Ways & Means

Provides tax credits for the purchase of alternative fuel, fuel cell, and
hybrid vehicles; expands electric vehicle (EV) tax credit

Expands tax credits for the installation of alternative fuel infrastructure

Provides a tax credit of 50 cents per gasoline equivalent gallon (GEG) for
the retail sale of alternative fuels
H.R. 2000
Nussle
Referred to House Ways & Means,

Provides a tax exemption of 3 cents per gallon for blends of 2% or more
Government Reform
biodiesel

Requires the use of biodiesel by the Federal Government unless it is cost
prohibitive
H.R. 2088
Shimkus
Referred to House Transportation and

Allows funds from the Congestion Mitigation and Air Quality
Infrastructure
Improvement Program (CMAQ) to be used for alternative fuel purchases
H.R. 2263
Gilman
Referred to House Government Reform

Requires 10% of Federal Government vehicle purchases to be alternative
fuel or hybrid vehicles
H.R. 2326
Boehlert
Referred to House Science

Authorizes $200 million in grants for the installation of AFV refueling
infrastructure
H.R. 2369
Issa
Referred to House Transportation and

Allows states to exempt hybrid vehicles from HOV restrictions
Infrastructure
H.R 2392
Inslee
Referred to House Ways & Means

Similar to H.R. 1864, except that it provides a 25 cent per gallon tax credit
for the retail sale of alternative fuels (as opposed to 50 cents)

CRS-25
Bill No.
Sponsor
Last Major Action
Key Provisions
H.R. 2518
Boehlert
Referred to House Science

Creates a pilot program to provide grants for the purchase of alternative
fuel school buses

Authorizes $40 million in FY2002, increasing to $80 million in FY2006
S. 388
Murkowski
Referred to Senate Energy and Natural

Allows states to exempt hybrid vehicles from HOV restrictions
Resources; hearings held

Allows state and local fleets to coordinate alternative fuel procurement
arrangements with federal fueling sites

Requires that 50% of fuel used by federal agencies be alternative fuel by
2005, if cost-effective

Authorizes $100 million per year between FY2002 and FY2006 for grants
to local governments for alternative fuel infrastructure
S. 389
Murkowski
Referred to Senate Finance

Same provisions as S. 388; contains tax provisions, as well

Provides tax credits for the purchase of alternative fuel, fuel cell, and
hybrid vehicle; expands the EV tax credit

Expands tax credits for the installation of alternative fuel infrastructure

Provides a tax credit of 25 cents per GEG for the retail sale of alternative
fuels
S. 517
Bingaman
Considered by Senate, March 5, 2002

Vehicle for floor debate of S. 1766

S. Amdt. 2917 contains provisions for:

Tax credits for alternative fuel, fuel cell, electric, and hybrid vehicles

Tax credits for alternative fuel refueling infrastructure

Grants for alternative fuel school buses

Exemptions of alternative fuel and hybrid vehicles from HOV restrictions

Provisions for biodiesel credits under EPAct

Requires the use of renewable fuels in motor fuel

Requires increased use of alternative fuel by the federal government
S. 597
Bingaman
Referred to Senate Energy and Natural

Requires increased use of alternative fuels by federal vehicle
Resources; markup held

Allows states to exempt AFVs from HOV restrictions
S. 760
Hatch
Referred to Senate Finance

Similar to H.R. 1864
S. 1058
Hutchinson
Referred to Senate Finance

Provides tax credits for the blending of biodiesel

Provides a partial excise tax exemption for biodiesel mixtures

CRS-26
Bill No.
Sponsor
Last Major Action
Key Provisions
S. 1071
Bond
Referred to Senate Environment and

Allows funds from the Congestion Mitigation and Air Quality
Public Works
Improvement Program (CMAQ) to be used for alternative fuel purchases
S. 1766
Daschle
Placed on Senate Legislative Calendar,

Grants for alternative fuel school buses
December 6, 2001

Exemptions of alternative fuel and hybrid vehicles from HOV restrictions

Provisions for biodiesel credits under EPAct

Requires the use of renewable fuels in motor fuel

Requires increased use of alternative fuel by the federal government