Alternative Fuel and Advanced Vehicle
Technology Incentives: A Summary of Federal
Programs
Lynn J. Cunningham
Information Research Specialist
Beth A. Roberts
Information Research Specialist
Bill Canis
Specialist in Industrial Organization and Business
Brent D. Yacobucci
Section Research Manager
June 12, 2012
Congressional Research Service
7-5700
www.crs.gov
R42566
CRS Report for Congress
Pr
epared for Members and Committees of Congress
Alternative Fuel and Advanced Vehicle Technology Incentives
Summary
A wide array of federal incentives support the development and deployment of alternatives to
conventional fuels and engines in transportation. These incentives include tax deductions and
credits for vehicle purchases and the installation of refueling systems, federal grants for
conversion of older vehicles to newer technologies, mandates for the use of biofuels, and
incentives for manufacturers to produce alternative fuel vehicles. The current array of incentives
for alternative fuels and related technologies do not reflect a single, comprehensive strategy, but
rather an aggregative approach to a range of discreet public policy issues, including goals of
reducing petroleum consumption and import dependence, improving environmental quality,
expanding domestic manufacturing, and promoting agriculture and rural development.
Current federal programs are administered by five key agencies: Department of the Treasury,
Department of Energy, Department of Transportation, Environmental Protection Agency, and the
U.S. Department of Agriculture. The incentives and programs described in this report are
organized by the responsible agency.
• Treasury (through the Internal Revenue Service, IRS) administers tax credits and
deductions for alternative fuel and advanced technology vehicle purchases,
expansion of alternative fuel refueling infrastructure, and incentives for the
production and/or distribution of alternative fuels. Many of these incentives have
expired in recent years and may or may not be reinstated.
• DOE (mainly through the Office of Energy Efficiency and Renewable Energy,
EERE) administers research and development (R&D) programs for advanced
fuels and transportation technology, grant programs to deploy alternative fuels
and vehicles, and a loan program to promote domestic manufacturing of high-
efficiency vehicles.
• DOT (mainly through the Federal Highway Administration, FHWA, and Federal
Transit Administration, FTA) administers grant programs to deploy “clean fuel”
buses and other alternative fuel vehicles. DOT (through the National Highway
Traffic Safety Administration, NHTSA) also administers federal Corporate
Average Fuel Economy (CAFE) standards, which include incentives for
production of alternative fuel vehicles.
• EPA (mainly through the Office of Transportation and Air Quality, OTAQ)
administers the Renewable Fuel Standard, which mandates the use of biofuels in
transportation. EPA also administers grant programs to replace older diesel
engines with newer technology.
• USDA (mainly through the Rural Business-Cooperative Service, RBS)
administers grant, loan, and loan guarantee programs to expand agricultural
production of biofuel feedstocks, conduct R&D on biofuels and bioenergy, and
establish and expand facilities to produce biofuels, bioenergy, and bioproducts.
Congressional Research Service
Alternative Fuel and Advanced Vehicle Technology Incentives
Contents
Introduction...................................................................................................................................... 1
Factors Behind Alternative Fuels and Technologies Incentives ...................................................... 2
Developing Domestic Ethanol Production ................................................................................ 2
Establishing Other New Alternative Fuels ................................................................................ 3
Encouraging the Purchase of Non-Petroleum Vehicles ............................................................. 3
Reducing Fuel Consumption and Greenhouse Gases................................................................ 3
Supporting U.S. Motor Vehicle Manufacturing......................................................................... 4
Highway Funding and Fuels Taxes............................................................................................ 4
Structure and Content of the Report ................................................................................................ 4
Department of the Treasury ............................................................................................................. 5
Motor Fuels Excise Taxes.......................................................................................................... 5
Incentives for Alternative Fuel and Alternative Fuel Mixtures (other than Liquefied
Hydrogen)............................................................................................................................... 6
Alternative Motor Vehicle Credit .............................................................................................. 7
Plug-in Electric Drive Vehicle Credit........................................................................................ 7
Plug-in Electric Vehicle Credit .................................................................................................. 8
Conversion Kits ......................................................................................................................... 9
Alternative Fuel Refueling Property Credit............................................................................... 9
Volumetric Ethanol Excise Tax Credit..................................................................................... 10
Small Ethanol Producer Credit ................................................................................................ 11
Biodiesel Tax Credit ................................................................................................................ 11
Small Agri-Biodiesel Producer Credit..................................................................................... 12
Renewable Diesel Tax Credit .................................................................................................. 13
Credit for Production of Cellulosic Biofuel ............................................................................ 13
Special Depreciation Allowance for Cellulosic Biofuel Plant Property.................................. 14
Department of Energy.................................................................................................................... 15
Advanced Technology Vehicle Manufacturing Loan Program................................................ 15
Vehicle Technologies Program ................................................................................................ 16
Biomass and Biorefinery Systems Program ............................................................................ 16
Hydrogen and Fuel Cell Technologies Program...................................................................... 17
Clean Cities Program............................................................................................................... 18
Department of Transportation........................................................................................................ 19
Corporate Average Fuel Economy Program Alternative Fuel Vehicle Credits........................ 19
Congestion Mitigation and Air Quality Improvement Program .............................................. 19
Clean Fuels Grant Program ..................................................................................................... 20
Environmental Protection Agency ................................................................................................. 21
National Clean Diesel Campaign ............................................................................................ 21
Renewable Fuel Standard ........................................................................................................ 22
Department of Agriculture............................................................................................................. 23
Biorefinery Assistance............................................................................................................. 23
Repowering Assistance............................................................................................................ 23
Bioenergy Program for Advanced Biofuels............................................................................. 24
Biomass Crop Assistance Program.......................................................................................... 24
Rural Energy for America Program......................................................................................... 25
Congressional Research Service
Alternative Fuel and Advanced Vehicle Technology Incentives
Biomass Research and Development ...................................................................................... 25
U.S. Customs and Border Protection—Import Duty on Fuel Ethanol........................................... 26
Figures
Figure 1. Net Oil Imports................................................................................................................. 2
Tables
Table A-1. Federal Programs by Agency ....................................................................................... 28
Table A-2. Federal Taxes and Incentives for Alternative Fuels ..................................................... 35
Table A-3. Federal Incentives for Alternative Fuel and Advanced Technology Vehicles.............. 37
Appendixes
Appendix. Summary Tables........................................................................................................... 27
Contacts
Author Contact Information........................................................................................................... 38
Congressional Research Service
Alternative Fuel and Advanced Vehicle Technology Incentives
Introduction
A wide array of federal incentives support the development and deployment of alternatives to
conventional fuels and engines in transportation. These incentives include tax deductions and
credits for vehicle purchases and the installation of refueling systems, federal grants for
conversion of older vehicles to newer technologies, mandates for the use of biofuels, and
incentives for manufacturers to produce alternative fuel vehicles.
Many of the policy choices presented for alternative fuel and advanced vehicle technologies
originated as a response to the nation’s interest in reducing petroleum imports, a goal first
articulated at the time of the two OPEC oil embargoes in the 1970s. While President Richard
Nixon is often cited as the first president to call for “energy independence,” successive presidents
and Congresses have made efforts to reduce petroleum imports as well.
As shown in Figure 1, since peaking in 2005, net U.S. oil imports have fallen by one-third, and
now represent 45% of domestic consumption, down from 60% seven years ago.1 Factors in this
reversal have been the recent recession and the rise in petroleum prices in 2008, both of which
reduced domestic demand, as well as a rise in the supply of U.S. oil and oil alternatives due to
increased private sector investment and federal incentives, some of which are cited in this report.
In addition, the U.S. has become a net exporter of petroleum products (while it remains a net
importer of crude oil).
In addition to concerns over petroleum dependence, other factors have also driven policy on
alternative fuels and advanced vehicle technologies. The current array of incentives does not
reflect a single, comprehensive strategy but rather an aggregative approach to a range of discreet
public policy issues, including improving environmental quality, expanding domestic
manufacturing, and promoting agriculture and rural development.
1 CRS Report R42465, U.S. Oil Imports and Exports, by Neelesh Nerurkar.
Congressional Research Service
1
Alternative Fuel and Advanced Vehicle Technology Incentives
Figure 1. Net Oil Imports
In millions of barrels a day (Mb/d) and as share of U.S. consumption
Source: EIA, Petroleum & Other Liquid Fuels, February 28, 2012, http://www.eia.gov/petroleum/data.cfm.
Note: Net oil imports are gross imports minus exports.
Factors Behind Alternative Fuels and Technologies
Incentives
While a reliance on foreign sources of petroleum has been an overriding concern for the past 40
years, other factors, such as rural development, promotion of domestic manufacturing, and
environmental concerns, have also shaped congressional interest in alternative fuels and
technologies. A variety of programs affecting alternative fuels and technologies have been
proposed and enacted, each with its own benefits and drawbacks. (This report does not evaluate
the effectiveness of alternative fuel programs and incentives). Alternative fuels programs fall into
one of the following six categories: expanding domestic ethanol production; establishing other
alternative fuels; encouraging the purchase of non-petroleum vehicles; reducing fuel consumption
and greenhouse gas emissions; supporting U.S. vehicle manufacturing; and funding U.S.
highways.
Developing Domestic Ethanol Production
Ethanol has been seen as a homegrown alternative to imported oil and a number of programs
were put in place to encourage its domestic development (instead of importing from other ethanol
producers, such as Brazil). To spur establishment of this domestic industry, Congress has enacted
a number of laws, which are also beneficial to states that have a large concentration of corn
growers (corn being the raw material feedstock in most U.S. ethanol). Until recently, the
incentives for ethanol production have most often been included in farm-related legislation and
appropriations and hence have been administered by the U.S. Department of Agriculture (USDA),
or in tax provisions administered by the Internal Revenue Service (IRS). Notably, the volumetric
Congressional Research Service
2
Alternative Fuel and Advanced Vehicle Technology Incentives
ethanol excise tax credit (VEETC), which expired at the end of 2011, provided a tax credit to
gasoline suppliers who blend ethanol with gasoline. The small ethanol producer tax credit
provided a limited additional credit for small ethanol producers.
Establishing Other New Alternative Fuels
In addition to ethanol, Congress has sought to spur development of other alternative fuels, such as
biodiesel, cellulosic biofuel, hydrogen, liquefied petroleum gas (LPG), compressed natural gas
(CNG), and liquefied natural gas (LNG). Some of these fuels have been supported through tax
credits (such as the biodiesel tax credit), federal mandates (mainly the Renewable Fuel Standard
(RFS)), and R&D programs (such as the Biomass Research and Development Initiative, which
provides grants for new technologies leading to the commercialization of biofuels).
Encouraging the Purchase of Non-Petroleum Vehicles
Congress has enacted laws that seek to boost consumer interest by providing tax credits for the
purchase of some vehicles that consume far less petroleum or do not consume petroleum at all.
These tax credit programs are generally limited in duration as a way to encourage early adopters
to take a risk on new kinds of vehicles. The assumption behind these laws is that once a
significant number of such new cars enter the mainstream, more and more car buyers would be
attracted to them, prices would fall and the credits would no longer be needed. The credits have
been available for plug-in vehicles (pure battery-electric and plug-in hybrid), hybrid vehicles, and
those with fuel cells, advanced lean burn2 technology, and certain alternative fuels technologies.
Congress has also enacted tax credits to spur the expansion of infrastructure to fuel such vehicles.
Reducing Fuel Consumption and Greenhouse Gases
Several agencies have been mandated by Congress and by the Obama Administration to address
concerns over air quality through programs for alternative fuels, including the Environmental
Protection Agency (EPA) and the Department of Transportation (DOT). The most significant and
long-standing program to reduce vehicle fuel consumption is the Corporate Average Fuel
Economy (CAFE) program administered by DOT.3 Under CAFE, manufacturers can accrue
credits for the production and sale of certain types of alternative fuel vehicles. A new joint
rulemaking process between DOT and EPA links future CAFE standards with Clean Air Act
greenhouse gas (GHG) standards under the Clean Air Act. DOT also established the Congestion
Mitigation and Air Quality Improvement Program (CMAQ) to fund programs that will reduce
emissions in urban areas that may exceed certain air quality standards. At EPA, the Diesel
Emission Reduction Act (DERA) was implemented with a goal of reducing diesel emissions by
funding and implementing new technologies. In addition, EPA’s Renewable Fuel Standard (RFS)
mandates the scalable use of renewable fuels in gasoline between 2006 and 2022.4 Under RFS,
GHG emission reduction requirements apply to biofuels from newer refineries.
2 In general these are advanced diesel vehicles.
3 For more information, see CRS Report R40166, Automobile and Light Truck Fuel Economy: The CAFE Standards,
by Brent D. Yacobucci.
4 CRS Report R40155, Renewable Fuel Standard (RFS): Overview and Issues, by Randy Schnepf and Brent D.
Yacobucci.
Congressional Research Service
3
Alternative Fuel and Advanced Vehicle Technology Incentives
Supporting U.S. Motor Vehicle Manufacturing
The Department of Energy (DOE), in partnership with U.S. automakers and academic
institutions, has overseen research and development programs on vehicle electrification for nearly
40 years, in particular research focused on how to produce economical batteries that extend
electric vehicle range. These R&D programs were supplemented in the American Recovery and
Reinvestment Act (ARRA; P.L. 111-5) to include grants to build lithium-ion battery
manufacturing plants in a bid to boost the international competitiveness of this sector. The
Advanced Technology Vehicles Manufacturing (ATVM) loan program at DOE supports
manufacturing plant investments to enable the development of technologies to reduce petroleum
consumption, including the manufacture of electric and hybrid vehicles.5
Highway Funding and Fuels Taxes
As described below (see “Motor Fuels Excise Taxes”), one of the earliest fuels-related federal
programs is the motor vehicle fuels excise tax first passed in the Highway Revenue Act of 1956
to fund construction and then maintenance of the interstate highway system.6 Originally, only
gasoline and diesel were taxed, but as newer fuels became available (such as ethanol and
compressed natural gas), they were added to the federal revenue program, but often at lower tax
rates than gasoline or diesel. Lower tax burdens for some fuels or vehicles effectively incentivize
those choices over conventional options. However, lower tax burdens for some vehicles or fuels
could ultimately compromise federal highway revenue. The vehicles responsible for lower tax
revenues include traditional internal combustion engine vehicles with higher mileage per gallon
as well as new technology electric and hybrid cars.
Structure and Content of the Report
The federal tax incentives and programs discussed in this report aim to support the development
and deployment of alternative fuels. There is no central coordination of how these incentives
interact. In general, they are independently administered by separate federal agencies, including
five key agencies: Treasury, DOE, DOT, EPA, and USDA.
This report focuses strictly on those programs that directly support alternative fuels or advanced
vehicles, and does not address more general programs (e.g., general manufacturing loans, rural
development loans.), or those that have been authorized but never funded. The programs are
presented by agency, starting with those that generally address these issues, followed by those
that are fuel- or technology-specific. Expired programs are included because there may be
congressional interest in reinstating these programs or establishing similar programs in the future.
5 For more information, see CRS Report R42064, The Advanced Technology Vehicles Manufacturing (ATVM) Loan
Program: Status and Issues, by Brent D. Yacobucci and Bill Canis.
6 The gasoline tax was originally enacted in 1932 and dedicated solely to reducing a federal budget deficit. It remained
that way until the passage of the Federal Aid Highway Act of 1956 (P.L. 84-627) which established the Highway Trust
Fund; the Highway Revenue Act was Title II of P.L. 84-627. For more details about the role of the fuels tax in funding
the federal highway program, see CRS Report RL30304, The Federal Excise Tax on Gasoline and the Highway Trust
Fund: A Short History, by James M. Bickley.
Congressional Research Service
4
Alternative Fuel and Advanced Vehicle Technology Incentives
The Appendix contains three tables:
1. A summary of the programs discussed in the body of the report, listed by agency
(Table A-1);
2. A listing of programs and incentives for alternative fuels, by fuel type (Table A-
2); and
3. A listing of programs and incentives for advanced technology vehicles, by
vehicle type (Table A-3).
Department of the Treasury
Motor Fuels Excise Taxes
• Administered by: Internal Revenue Service (IRS)
• Original authorizing legislation and legislative history: Most motor fuels taxes
(some of which were initially enacted in 1932) were included in the Highway
Revenue Act of 1956 (P.L. 84-627) primarily to support the Highway Trust Fund,
except for the tax on compressed natural gas, which was enacted in 1993
(Omnibus Budget Reconciliation Act of 1993; P.L. 103-66). Taxes that support
the Highway Trust Fund have been extended numerous times, most recently by
P.L. 112-102, which also extended spending authority out of the Highway Trust
Fund through June 30, 2012.7
• Joint Committee on Taxation (JCT) estimated tax expenditure for FY2012: N/A
• Scheduled termination: 4.3 cents per gallon of the gasoline/diesel fuel tax is
permanent; the rest of the motor fuels taxes expire on June 30, 2012 when major
parts of the current Highway Trust Fund expire.
• Description: The motor fuels taxes that were included in the Highway Revenue
Act of 1956 (P.L. 84-627) were dedicated to supporting the Highway Trust Fund,
except for the tax on compressed natural gas, which was enacted in 1993. The
federal excise tax on most of these fuels was last raised by Congress in 1993.
Taxes vary by fuel: gasoline, 18.4 cents per gallon; diesel fuel, 24.4 cents per
gallon; biodiesel, 24.4 cents per gallon; ethanol, 18.4 cents per gallon; hydrogen,
18.4 cents per gallon equivalent; liquefied petroleum gas (LPG), 18.3 cents per
gallon; compressed natural gas (CNG), 18.3 cents per gallon equivalent; liquefied
natural gas (LNG), 24.3 cents per gallon equivalent. Electricity for electric
vehicles is untaxed. Similarly, until recently other fuels (e.g., ethanol-blended
gasoline) were subject to exemptions from, or credits against, these taxes. These
exemptions/credits effectively incentivize selected fuels/vehicles relative to
conventional options.
7 Taxes dedicated to the Highway Trust Fund (HTF), authority to place those taxes into the HTF and to spend funds out
of the HTF all have expiration dates which must be extended by Congress periodically.
Congressional Research Service
5
Alternative Fuel and Advanced Vehicle Technology Incentives
• Qualified applicant/Covered entity: Manufacturers who produce applicable fuel
types.8
• Applicable fuel/technology: Gasoline, diesel, hydrogen, liquefied petroleum gas,
liquefied natural gas, compressed natural gas, ethanol and methanol (electricity is
exempt).
• For more information: See IRS publication 510, Excise Taxes http://www.irs.gov/
publications/p510/index.html; and Federal Highway Administration, Financing
Federal-aid Highways, Appendix L http://www.fhwa.dot.gov/reports/
financingfederalaid/appl.htm.
• Related CRS Reports: CRS Report RL30304, The Federal Excise Tax on
Gasoline and the Highway Trust Fund: A Short History, by James M. Bickley
and CRS Report R41490, Surface Transportation Funding and Finance, by
Robert S. Kirk and William J. Mallett
Incentives for Alternative Fuel and Alternative Fuel Mixtures
(other than Liquefied Hydrogen)
• Administered by: IRS
• Original authorizing legislation and legislative history: Established by the Safe,
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users
(SAFETEA-LU; P.L. 109-59); Section 5 of the Tax Technical Corrections Act of
2007 (P.L. 110-172) modified the rules for filing excise tax refund claims for
alternative fuel mixtures and the definition of alternative fuels relating to
hydrogen and carbon resources. The Emergency Economic Stabilization Act (P.L.
110-343 §204) extended through 2009 the excise tax credit for alternative fuel
and fuel mixtures. The Tax Relief, Unemployment Insurance Reauthorization,
and Job Creation Act of 2010 (§704 of P.L. 111-312;) extended through 2011 the
excise tax credits and outlay payments for alternative fuel and alternative fuel
mixtures.
• JCT estimated tax expenditure for FY2012:9 $0
• Scheduled termination: Expired December 31, 2011.
• Description: This provision established a 50-cents-per gallon excise tax credit for
certain alternative fuels used as fuel in a motor vehicle, motor boat, or airplane
and a 50-cents-per gallon credit for alternative fuels mixed with a traditional fuel
(gasoline, diesel or kerosene) for use as a fuel.
• Qualified applicant/Covered entity: Taxpayers who supplied or mixed qualifying
fuel types.
• Applicable fuel/technology: Liquefied petroleum gas, P Series fuels, compressed
or liquefied natural gas, any liquefied fuel derived from coal or peat, liquefied
8 The tax is imposed on the producer of such fuels.
9 For JCT tax expenditure estimates, see U.S. Congress, Joint Committee on Taxation, Estimates of Federal Tax
Expenditures for Fiscal Years 2011-2015, 112th Cong., 1st sess., January 17, 2012, JCS-1-12 (Washington: GPO, 2012),
pp. 33-35.
Congressional Research Service
6
Alternative Fuel and Advanced Vehicle Technology Incentives
hydrocarbons derived from biomass. (Ethanol, methanol, and biodiesel do not
qualify for the alternative fuel or alternative fuel mixture credit).
• For more information: See IRS Publication 510 and IRS Forms 637, 720, 4136,
and 8849, on the IRS website at http://www.irs.gov.
• Related CRS Reports: CRS Report R40168, Alternative Fuels and Advanced
Technology Vehicles: Issues in Congress, by Brent D. Yacobucci and CRS Report
R41769, Energy Tax Policy: Issues in the 112th Congress, by Molly F. Sherlock
and Margot L. Crandall-Hollick
Alternative Motor Vehicle Credit
• Administered by: IRS
• Original authorizing legislation and legislative history: Established by the Energy
Policy Act of 2005 (P.L. 109-58§ 1341(a)) American Recovery and Reinvestment
Act of 2009 (P.L. 111-5, Div. B, § 1141-1144).
• JCT Estimated Tax Expenditure for FY2012: Less than $50 million
• Scheduled termination: December 31, 2014 for fuel cell vehicles; expired
December 31, 2010 or earlier for all other vehicles.
• Description: Enacted in the Energy Policy Act of 2005, the provision includes
separate credits for four distinct types of vehicles: using fuel cells, advanced lean
burn technologies, and qualified hybrid.
• Qualified applicant/Covered entity: Taxpayers purchasing a qualified fuel or
technology.
• Applicable fuel/technology: Hybrid gasoline-electric; diesel; battery-electric;
alternative fuel and fuel cell vehicles; and advanced lean-burn technology
vehicles.
• For more information: See the IRS website for the Alternative Motor Vehicle
Credit at http://www.irs.gov/businesses/corporations/article/0,,id=
202341,00.html.
• Related CRS Reports: CRS Report R40913, Renewable Energy and Energy
Efficiency Incentives: A Summary of Federal Programs, by Lynn J. Cunningham
and Beth A. Roberts and CRS Report R41769, Energy Tax Policy: Issues in the
112th Congress, by Molly F. Sherlock and Margot L. Crandall-Hollick
Plug-in Electric Drive Vehicle Credit
• Administered by: IRS
• Original authorizing legislation and legislative history: Established by the Energy
Improvement and Extension Act of 2008, 26 U.S.C. 38(b)(35), 30D, P.L. 110-
343, Div. B, Title II, §205(a). The American Recovery and Reinvestment Act of
2009 (P.L. 111-5, §141) amended section 30D effective for vehicles acquired
after December 31, 2009.
• JCT estimated tax expenditure for FY2012: $200 million
Congressional Research Service
7
Alternative Fuel and Advanced Vehicle Technology Incentives
• Scheduled termination: Phased out when an automaker has sold a total of
200,000 qualified vehicles.
• Description: Purchasers of plug-in electric vehicles may file to obtain a tax credit
of up to $7,500 per vehicle, depending on battery capacity. The vehicle must be
acquired for use or lease and not for resale. Additionally, the original use of the
vehicle must commence with the taxpayer and the vehicle must be used
predominantly in the United States. For purposes of the 30D credit, a vehicle is
not considered acquired prior to the time when title to the vehicle passes to the
taxpayer under state law.
• Qualified applicant/Covered entity: Purchasers of qualified vehicles.
• Applicable fuel/technology: Plug-in electric vehicles.
• For more information: See the IRS website at http://www.irs.gov/businesses/
article/0,,id=214841,00.html and The U.S. Department of Energy’s Alternative
Fuels & Advanced Vehicles Data Center website at http://www.afdc.energy.gov/
afdc/laws/law/US/409.
• Related CRS Reports: CRS Report R41154, The U.S. Motor Vehicle Industry: A
Review of Recent Domestic and International Developments, by Bill Canis and
Brent D. Yacobucci and CRS Report R41769, Energy Tax Policy: Issues in the
112th Congress, by Molly F. Sherlock and Margot L. Crandall-Hollick
Plug-in Electric Vehicle Credit
• Administered by: IRS
• Original authorizing legislation and legislative history: American Recovery and
Reinvestment Act, P.L. 111-5, §1142.
• JCT estimated tax expenditure for FY2012: Less than $50 million
• Scheduled termination: For Plug-in Electric Vehicles (IRC 30) vehicles must
have been acquired after February 17, 2009, and before January 1, 2012.
• Description: Internal Revenue Code Section 30 provided a tax credit for qualified
plug-in electric vehicles. The credit was equal to 10% of the cost of a qualified
plug-in electric vehicle and limited to $2,500. Qualified vehicles included low-
speed vehicles or vehicles that have two or three wheels. The vehicle must have
been acquired for use or lease and not for resale. The original use of the vehicle
must have commenced with the taxpayer and the vehicle must have been used
predominantly in the United States.
• Qualified applicant/Covered entity: Taxpayers purchasing qualifying vehicles.
• Applicable fuel/technology: Two- or three-wheeled plug-in electric vehicles or
certain low-speed vehicles.
• For more information: See the IRS website at http://www.irs.gov/businesses/
article/0,,id=214841,00.html and http://www.irs.gov/irb/2009-30_IRB/ar07.html.
• Related CRS Reports: CRS Report R41154, The U.S. Motor Vehicle Industry: A
Review of Recent Domestic and International Developments, by Bill Canis and
Congressional Research Service
8
Alternative Fuel and Advanced Vehicle Technology Incentives
Brent D. Yacobucci and CRS Report R41769, Energy Tax Policy: Issues in the
112th Congress, by Molly F. Sherlock and Margot L. Crandall-Hollick
Conversion Kits
• Administered by: IRS
• Original authorizing legislation and legislative history: American Recovery and
Reinvestment Act ( P.L. 111-5, §1143)
• JCT estimated tax expenditure for FY2012: $0
• Scheduled termination: Expired December 31, 2011.
• Description: The credit was equal to 10% of the cost of converting a vehicle to a
qualified plug-in electric drive motor vehicle and placed in service after February
17, 2009. The maximum amount of the credit was $4,000. The credit does not
apply to conversions made after December 31, 2011. A taxpayer was able to
claim this credit even if the taxpayer claimed a hybrid vehicle credit for the same
vehicle in an earlier year.
• Qualified applicant/Covered entity: Taxpayers who purchased the applicable
technology.
• Applicable fuel/technology: Qualified plug-in electric vehicle kits.
• For more information: See the IRS website at http://www.irs.gov/newsroom/
article/0,,id=206871,00.html/.
• Related CRS Reports: CRS Report R41154, The U.S. Motor Vehicle Industry: A
Review of Recent Domestic and International Developments, by Bill Canis and
Brent D. Yacobucci and CRS Report R41769, Energy Tax Policy: Issues in the
112th Congress, by Molly F. Sherlock and Margot L. Crandall-Hollick
Alternative Fuel Refueling Property Credit
• Administered by: IRS
• Original authorizing legislation and legislative history: Established by the Energy
Policy Act of 2005 ( P.L. 109-58), Title XIII, §1342(a), extended by the American
Recovery and Reinvestment Act (P.L. 111-5) and Tax Relief, Unemployment
Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312).
Amended by: P.L. 109-135, Title IV, §402(k), 412(d) and P.L. 110-172, §6(b).
• JCT estimated tax expenditure for FY2012: Less than $50 million
• Scheduled termination: December 31, 2014, for hydrogen refueling property;
expired December 31, 2011, for all other fuels.
• Description: Consumers who purchased qualified residential non-hydrogen
fueling equipment received a 30% tax credit of up to $1,000; businesses received
a credit up to $30,000. Special rules in place for 2009 and 2010 increased the
credit rate to 50% for non-hydrogen property. Credit limits were also temporarily
increased to $2,000 for non-business property, $50,000 for business property. The
Congressional Research Service
9
Alternative Fuel and Advanced Vehicle Technology Incentives
credit rate remained at 30% for hydrogen property in 2009 and 2010, but the
maximum credit for businesses was increased to $200,000.
• Qualified applicant/Covered entity: Consumers or businesses who purchased
qualifying equipment/property.
• Applicable fuel/technology: Natural gas, liquefied petroleum gas, hydrogen,
electricity, E85, or diesel fuel blends containing a minimum of 20% biodiesel.
• For more information: See IRS Form 8911 at http://www.irs.gov/pub/irs-pdf/
f8911.pdf.
• Related CRS Reports: CRS Report R40168, Alternative Fuels and Advanced
Technology Vehicles: Issues in Congress, by Brent D. Yacobucci and CRS Report
R41769, Energy Tax Policy: Issues in the 112th Congress, by Molly F. Sherlock
and Margot L. Crandall-Hollick
Volumetric Ethanol Excise Tax Credit
• Administered by: IRS
• Original authorizing legislation and legislative history: Established in 2005 by
the American Jobs Creation Act of 2004, §301 (P.L. 108-357); modified by the
Food, Conservation, and Energy Act of 2008, §15331 (P.L. 110-246); further
amended by the Energy Improvement and Extension Act of 2008 (P.L. 110-343,
Division B), §203; extended by the Tax Relief, Unemployment Insurance
Reauthorization, and Job Creation Act of 2010 (P.L. 111-312), §708.
• JCT estimated tax expenditure for FY2012: Foregone revenue of approximately
$6 billion10
• Scheduled termination: Expired December 31, 2011.
• Description: Gasoline suppliers who blend ethanol with gasoline were eligible for
a tax credit of 45 cents per gallon of ethanol. This credit replaced a long-standing
partial tax exemption for ethanol-blended gasoline.
• Qualified applicant/Covered entity: Blenders of gasohol (i.e., gasoline suppliers
and marketers).
• Applicable fuel/technology: Ethanol and other alcohol fuels.
• For more information: see IRS Publication 510, Chapter 2: Fuel Tax Credits and
Refunds at http://www.irs.gov/publications/p510/ch02.html; or DOE’s Web page
for Volumetric Ethanol Excise Tax Credit (VEETC) at
http://www.afdc.energy.gov/afdc/laws/law/US/399.
• Related CRS Reports: CRS Report R41227, Energy Tax Policy: Historical
Perspectives on and Current Status of Energy Tax Expenditures, by Molly F.
Sherlock and CRS Report R41769, Energy Tax Policy: Issues in the 112th
Congress, by Molly F. Sherlock and Margot L. Crandall-Hollick
10 Because of the nature of the credit, the actual tax expenditure is $0, although tax receipts are reduced by
approximately $6 billion.
Congressional Research Service
10
Alternative Fuel and Advanced Vehicle Technology Incentives
Small Ethanol Producer Credit
• Administered by: IRS
• Original authorizing legislation and legislative history: Established by the
Omnibus Budget Reconciliation Act of 1990, §11502 (P.L. 101-508); extended
by the American Jobs Creation Act of 2004, §301 (P.L. 108-357); expanded by
the Energy Policy Act of 2005, §1347 (P.L. 109-58); amended by the Energy
Improvement and Extension Act of 2008 (P.L. 110-343, Division B), §203;
extended by the Tax Relief, Unemployment Insurance Reauthorization, and Job
Creation Act of 2010 (P.L. 111-312), §708.
• JCT estimated tax expenditure for FY2012: $100 million
• Scheduled termination: Expired December 31, 2011.
• Description: The small ethanol producer credit was valued at 10 cents per gallon
of ethanol produced through the end of 2011. The credit was claimed on the first
15 million gallons of ethanol produced by a small producer in a given year.
• Qualified applicant/Covered entity: Any ethanol producer with production
capacity below 60 million gallons per year.
• Applicable fuel/technology: Ethanol.
• For more information: see IRS Publication 510, Chapter 2: Fuel Tax Credits and
Refunds http://www.irs.gov/publications/p510/ch02.html; and the Alternative
Fuels and Advanced Vehicles Data Center’s (AFDC’s) Web page for the Small
Ethanol Producer Credit at http://www.afdc.energy.gov/afdc/laws/law/US/352.
• Related CRS Reports: CRS Report R40168, Alternative Fuels and Advanced
Technology Vehicles: Issues in Congress, by Brent D. Yacobucci and CRS Report
R41769, Energy Tax Policy: Issues in the 112th Congress, by Molly F. Sherlock
and Margot L. Crandall-Hollick
Biodiesel Tax Credit
• Administered by: IRS
• Original authorizing legislation and legislative history: Established in 2005 by
the American Jobs Creation Act of 2004, §302 (P.L. 108-357); extended by the
Energy Policy Act of 2005, §1344 (P.L. 109-58); amended by the Energy
Improvement and Extension Act of 2008 (P.L. 110-343, Division B), §202-203;
extended by the Tax Relief, Unemployment Insurance Reauthorization, and Job
Creation Act of 2010 (P.L. 111-312), §701.
• JCT estimated tax expenditure for FY2012: $0
• Scheduled termination: Expired December 31, 2011.
• Description: Biodiesel producers (or producers of diesel/biodiesel blends)
claimed a per-gallon tax credit through the end of 2011. The credit was valued at
$1.00 per gallon. Before amendment by P.L. 110-343, the credit was valued at
$1.00 per gallon of “agri-biodiesel” (biodiesel produced from virgin agricultural
products such as soybean oil or animal fats), or 50 cents per gallon of biodiesel
Congressional Research Service
11
Alternative Fuel and Advanced Vehicle Technology Incentives
produced from previously used agricultural products (e.g., recycled fryer grease).
The tax credit expired at the end of 2009 and was not extended until the passage
of P.L. 111-312, which retroactively applied the extension to fuel produced in
2010.
• Qualified applicant/Covered entity: Biodiesel producers and blenders.
• Applicable fuel/technology: Biodiesel.
• For more information: see IRS Publication 510, Chapter 2: Fuel Tax Credits and
Refunds at http://www.irs.gov/publications/p510/ch02.html; and the Alternative
Fuels and Advanced Vehicles Data Center’s (AFDC’s) Web page for the
Biodiesel Mixture Excise Tax Credit at http://www.afdc.energy.gov/afdc/laws/
law/US/395.
• Related CRS Reports: CRS Report R41631, The Market for Biomass-Based
Diesel Fuel in the Renewable Fuel Standard (RFS), by Brent D. Yacobucci and
CRS Report R41769, Energy Tax Policy: Issues in the 112th Congress, by Molly
F. Sherlock and Margot L. Crandall-Hollick
Small Agri-Biodiesel Producer Credit
• Administered by: IRS
• Original authorizing legislation and legislative history: Established in 2005 by
the Energy Policy Act of 2005, §1345 (P.L. 109-58); amended by the Energy
Improvement and Extension Act of 2008 (P.L. 110-343, Division B), §202-203;
extended by the Tax Relief, Unemployment Insurance Reauthorization, and Job
Creation Act of 2010 (P.L. 111-312), §701.
• JCT estimated tax expenditure for FY2012: $0
• Scheduled termination: Expired December 31, 2011.
• Description: The small agri-biodiesel producer credit was valued at 10 cents per
gallon of “agri-biodiesel” (see Biodiesel Tax Credit, above) produced. The credit
was claimed on the first 15 million gallons of ethanol produced by a small
producer in a given year through the end of 2011. The tax credit expired at the
end of 2009 and was not extended until the passage of P.L. 111-312, which
retroactively applies the extension to fuel produced in 2010.
• Qualified applicant/Covered entity: Any agri-biodiesel producers with production
capacity less than 60 million gallons per year
• Applicable fuel/technology: Biodiesel.
• For more information: see IRS Publication 510, Chapter 2: Fuel Tax Credits and
Refunds at http://www.irs.gov/publications/p510/ch02.html; and the Alternative
Fuels and Advanced Vehicles Data Center’s (AFDC’s) Web page for the
Biodiesel Mixture Excise Tax Credit at http://www.afdc.energy.gov/afdc/laws/
law/US/342.
• Related CRS Reports: CRS Report R41631, The Market for Biomass-Based
Diesel Fuel in the Renewable Fuel Standard (RFS), by Brent D. Yacobucci and
Congressional Research Service
12
Alternative Fuel and Advanced Vehicle Technology Incentives
CRS Report R41769, Energy Tax Policy: Issues in the 112th Congress, by Molly
F. Sherlock and Margot L. Crandall-Hollick
Renewable Diesel Tax Credit
• Administered by: IRS
• Original authorizing legislation and legislative history: Established in 2005 by
the Energy Policy Act of 2005 (P.L. 109-58), §1346 ; amended by the Energy
Improvement and Extension Act of 2008 (P.L. 110-343, Division B), §202-203;
extended by the Tax Relief, Unemployment Insurance Reauthorization, and Job
Creation Act of 2010 (P.L. 111-312), §701.
• JCT estimated tax expenditure for FY2012: $0
• Scheduled termination: Expired December 31, 2011.
• Description: Producers of biomass-based diesel fuel (or producers of
diesel/renewable biodiesel blends) claimed a $1.00 per gallon tax credit through
the end of 2011. Renewable diesel is similar to biodiesel, but it is produced
through different processes and thus was ineligible for the (above) biodiesel
credits. The tax credit expired at the end of 2009 and was not extended until the
passage of P.L. 111-312, which retroactively applied the extension to fuel
produced in 2010.
• Qualified applicant/Covered entity: Renewable diesel producers and blenders.
• Applicable fuel/technology: Renewable diesel.
• For more information: see IRS Publication 510, Chapter 2: Fuel Tax Credits and
Refunds at http://www.irs.gov/publications/p510/ch02.html; and the Alternative
Fuels and Advanced Vehicles Data Center’s (AFDC’s) Web page for the
Biodiesel Mixture Excise Tax Credit at http://www.afdc.energy.gov/afdc/laws/
law/US/342.
• Related CRS Reports: CRS Report R40168, Alternative Fuels and Advanced
Technology Vehicles: Issues in Congress, by Brent D. Yacobucci; CRS Report
R41631, The Market for Biomass-Based Diesel Fuel in the Renewable Fuel
Standard (RFS), by Brent D. Yacobucci; and CRS Report R41769, Energy Tax
Policy: Issues in the 112th Congress, by Molly F. Sherlock and Margot L.
Crandall-Hollick
Credit for Production of Cellulosic Biofuel
• Administered by: IRS
• Original authorizing legislation and legislative history: Established on January 1,
2009, by the Food, Conservation, and Energy Act of 2008, §15321 (P.L. 110-
246); amended by the Health Care and Education Reconciliation Act of 2010
(P.L. 111-152), §1408; and amended by the Small Business Jobs Act of 2010
(P.L. 111-240), §2121.
• JCT estimated tax expenditure for FY2012: $0
• Scheduled termination: December 31, 2012.
Congressional Research Service
13
Alternative Fuel and Advanced Vehicle Technology Incentives
• Description: Producers of cellulosic biofuel may claim a tax credit of $1.01 per
gallon. For cellulosic ethanol producers, the value of the production tax credit is
reduced by the value of the volumetric ethanol excise tax credit and the small
ethanol producer credit—the credit is currently valued at $1.01 cents per gallon
(the offsetting tax credits have expired).
• The credit applies to fuel produced after December 31, 2008.
• Qualified applicant/Covered entity: Cellulosic biofuel producers
• Applicable fuel/technology: Cellulosic biofuels
• For more information: see the Alternative Fuels and Advanced Vehicles Data
Center’s (AFDC’s) Web page for the Cellulosic Biofuel Producer Tax Credit at
http://www.afdc.energy.gov/afdc/laws/law/US/413; and IRS Publication 510 and
IRS Forms 637 and 6478, which are available via the IRS website.
• Related CRS Reports: CRS Report RL34738, Cellulosic Biofuels: Analysis of
Policy Issues for Congress, by Kelsi Bracmort et al.; CRS Report R41460,
Cellulosic Ethanol: Feedstocks, Conversion Technologies, Economics, and
Policy Options, by Randy Schnepf; and CRS Report R41769, Energy Tax Policy:
Issues in the 112th Congress, by Molly F. Sherlock and Margot L. Crandall-
Hollick
Special Depreciation Allowance for Cellulosic Biofuel Plant
Property
• Administered by: IRS
• Original authorizing legislation and legislative history: Established in 2006 by
the Tax Relief and Health Care Act of 2006 (P.L. 109-432), §209; amended by
the Energy Improvement and Extension Act of 2008 (P.L. 110-343, Division B),
§201; modified by the Tax Relief, Unemployment Insurance Reauthorization, and
Job Creation Act of 2010 (P.L. 111-312), §401.
• JCT estimated tax expenditure for FY2012: $0
• Scheduled termination: December 31, 2012.
• Description: A taxpayer may take a depreciation deduction of 50% of the
adjusted basis of a new cellulosic biofuel plant in the year it is put in service. Any
portion of the cost financed through tax-exempt bonds is exempted from the
depreciation allowance. Before amendment by P.L. 110-343, the accelerated
depreciation applied only to cellulosic ethanol plants that break down cellulose
through enzymatic processes—the amended provision applies to all cellulosic
biofuel plants.
• Qualified applicant/Covered entity: Any cellulosic ethanol plant acquired after
December 20, 2006, and placed in service before January 1, 2013. Any plant that
had a binding contract for acquisition before December 20, 2006, does not
qualify.
• Applicable fuel/technology: Cellulosic biofuels
Congressional Research Service
14
Alternative Fuel and Advanced Vehicle Technology Incentives
• For more information: See Senate Finance Committee, Summary of House-
Senate Agreement on Tax, Trade, Health, and Other Provisions, December 7,
2006 at http://www.finance.senate.gov/newsroom/ranking/release/?id=97221a88-
8b93-4000-b51c-5b03bc06e6fb.
• Related CRS Reports: CRS Report RL34738, Cellulosic Biofuels: Analysis of
Policy Issues for Congress, by Kelsi Bracmort et al. and CRS Report R41769,
Energy Tax Policy: Issues in the 112th Congress, by Molly F. Sherlock and
Margot L. Crandall-Hollick
Department of Energy
Advanced Technology Vehicle Manufacturing Loan Program
• Administered by: Loan Programs Office (LPO)
• Original authorizing legislation and legislative history: Authorized by the Energy
Independence and Security Act of 2007 §136 (P.L. 110-140), funded by the
Consolidated Security, Disaster Assistance, and Continuing Appropriations Act,
P.L. 110-329).
• FY2012 appropriated funds: $6 million (for program administration)
• Scheduled termination: Facilities funded must be placed in service by the end of
2020.
• Description: Advanced Technology Vehicle Manufacturing (ATVM) was
established in 2007 to help automakers meet mandated vehicle fuel economy
standards and to encourage domestic production of more fuel-efficient cars and
light trucks. It provides up to $25 billion in revolving loans to qualified
automakers for investment in their manufacturing operations. In FY2008, $7.51
billion was appropriated for the direct loans—$7.5 billion for the loan subsidies
(available until expended) and $10 million for administration. Although
appropriations are provided annually for administration, Congress only approved
the program loan subsidy authority one time. Currently, loans have been made to
five companies, using $8.4 billion of the $25 billion loan authority.
• Qualified applicant/Covered entity: an automotive manufacturer satisfying
specified fuel economy requirements or a manufacturer of qualifying
components. To be financially eligible for an ATVM loan, an applicant must be
financially viable without the receipt of additional federal funding for the
proposed project.
• Applicable fuel/technology: No limitations on specific technologies; rather, limits
are stipulated for vehicle emissions and fuel consumption.
• For more information: DOE website, https://lpo.energy.gov/?page_id=43.
• Related CRS Reports: CRS Report R42064, The Advanced Technology Vehicles
Manufacturing (ATVM) Loan Program: Status and Issues by Brent D. Yacobucci
and Bill Canis; and CRS Report R40168, Alternative Fuels and Advanced
Technology Vehicles: Issues in Congress by Brent D. Yacobucci
Congressional Research Service
15
Alternative Fuel and Advanced Vehicle Technology Incentives
Vehicle Technologies Program
• Administered by: Office of Energy Efficiency and Renewable Energy (EERE)
• Original authorizing legislation and legislative history: Department of Energy
Organization Act of 1977 (P.L. 95-91); Energy Policy Act of 1992 (EPACT; P.L.
102-486); Energy Policy Act of 2005 (EPACT 2005; P.L. 109-58); Energy
Independence and Security Act of 2007 (EISA; P.L. 110-140); American
Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5).
• FY2012 appropriated funds: $329 million—of that $118 million for Batteries and
Electric Drive Technology
• Scheduled termination: None.
• Description: Through research and development, VTP supports partnerships with
other public and private organizations that will enhance energy efficiency and
productivity, bring clean and affordable technologies to market, and enhance
advanced technology vehicle choices for consumers. VTP supports, and works
through, two major government-industry endeavors: the US DRIVE Partnership
and the 21st century Truck Partnership.
• Qualified applicant/Covered entity: universities, vehicle and engine
manufacturers, material suppliers, nonprofit technology organizations, energy
suppliers, and national laboratories.
• Applicable fuel/technology: Advanced batteries, power electronics and electric
motors, advanced combustion, lightweight materials, vehicle-to-grid interaction,
and fuel cell and hydrogen technologies.
• For more information: See EERE’s Vehicle Technology Program website at
http://www1.eere.energy.gov/vehiclesandfuels; and Vehicle Technologies
Program Factsheet at http://www1.eere.energy.gov/vehiclesandfuels/pdfs/
vehicles_fs.pdf.
• Related CRS Reports: CRS Report R42064, The Advanced Technology Vehicles
Manufacturing (ATVM) Loan Program: Status and Issues, by Brent D. Yacobucci
and Bill Canis
Biomass and Biorefinery Systems Program
• Administered by: EERE
• Original authorizing legislation and legislative history: Federal Nonnuclear
Energy Research and Development Act of 1974 (P.L. 93-577); Energy Policy and
Conservation Act of 1975 (EPCA; P.L. 94-163); Energy Conservation and
Production Act of 1976 (ECPA; P.L. 94-385); Department of Energy
Organization Act of 1977 (P.L. 95-91); Energy Tax Act (P.L. 95-618); National
Energy Conservation Policy Act of 1978 (NECPA; P.L. 95-619); Powerplant and
Industrial Fuel Use Act of 1978 (P.L. 95-620); Energy Security Act of 1980 (P.L.
96-294); National Appliance Energy Conservation Act of 1987 (P.L. 100-12);
Federal Energy Management Improvement Act of 1988 (P.L. 100-615);
Renewable Energy and Energy Efficiency Technology Competitiveness Act of
1989 (P.L. 101-218); Clean Air Act Amendments of 1990 (P.L. 101-549); Solar,
Congressional Research Service
16
Alternative Fuel and Advanced Vehicle Technology Incentives
Wind, Waste, and Geothermal Power Production Incentives Act of 1990 (P.L.
101-575); Energy Policy Act of 1992 (EPACT; P.L. 102-486); Biomass Research
and Development Act of 2000 (Title III of Agricultural Risk Protection Act of
2000; P.L. 106-224); Farm Security and Rural Investment Act of 2002 (P.L. 107-
171); Healthy Forest Restoration Act of 2003 (P.L. 108-148); Energy Policy Act
of 2005 (EPACT 2005; P.L. 109-58); Energy Independence and Security Act of
2007 (EISA; P.L. 110-140); The Food, Conservation, and Energy Act of 2008
(P.L. 110-234); American Recovery and Reinvestment Act of 2009 (ARRA; P.L.
111-5).
• FY2012 appropriated funds: $199 million
• Scheduled termination: None.
• Description: The Biomass Program primarily focuses on research, development,
demonstration, and deployment (RDD&D) to ensure that cellulosic ethanol is
commercially viable by 2012 and that biobased aviation fuel, diesel fuel, and
gasoline are price competitive by 2017. However, other non-transportation
applications for biomass and bioenergy systems are also studied under this
program.
• Qualified applicant/Covered entity: universities and businesses.
• Applicable fuel/technology: Biofuels.
• For more information: See http://www1.eere.energy.gov/biomass/.
• Related CRS Reports: CRS Report R41985, Renewable Energy Programs and
the Farm Bill: Status and Issues, by Randy Schnepf
Hydrogen and Fuel Cell Technologies Program
• Administered by: EERE
• Original authorizing legislation and legislative history: Federal Energy
Administration Act of 1974 (P.L. 93-275); Federal Nonnuclear Energy Research
and Development Act of 1974 (P.L. 93-577); Energy Policy and Conservation Act
of 1975 (EPCA; P.L. 94-163); Electric and Hybrid Vehicle Research,
Development and Demonstration Act (P.L. 94-413); Department of Energy
Organization Act of 1977 (P.L. 95-91); Automotive Propulsion Research and
Development Act of 1978 (Title III of Department of Energy Act of 1978-
Civilian Applications; P.L. 95-238); Methane Transportation Research,
Development and Demonstration Act of 1980 (P.L. 96-512); Energy Security Act
of 1980 (P.L. 96-294); Alternative Motor Fuels Act of 1988 (P.L. 100-494); Spark
M. Matsunaga Hydrogen Research, Development, and Demonstration Act of
1990 (P.L. 101-566); Energy Policy Act of 1992 (EPACT; P.L. 102-486);
Hydrogen Future Act of 1996 (P.L. 104-271); Energy Policy Act of 2005 (EPACT
2005; P.L. 109-58); Energy Independence and Security Act of 2007 (EISA; P.L.
110-140); American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-
5).
• FY2012 appropriated funds: $104 million
• Scheduled termination: None.
Congressional Research Service
17
Alternative Fuel and Advanced Vehicle Technology Incentives
• Description: This program works with industry, national laboratories,
universities, government agencies, and other partners to overcome barriers to the
use of hydrogen and fuel cells. It includes a research and development (R&D)
effort focused on advancing the performance and reducing the cost of these
technologies. R&D applies to both transportation and stationary applications.
• Qualified applicant/Covered entity: Federal government; national laboratories;
colleges and universities; and for-profit organizations.
• Applicable fuel/technology: Hydrogen, fuel cells.
• For more information: See EERE’s Hydrogen and Fuel Cell Technologies
website at http://www1.eere.energy.gov/hydrogenandfuelcells/.
• Related CRS Reports: CRS Report R40168, Alternative Fuels and Advanced
Technology Vehicles: Issues in Congress, by Brent D. Yacobucci
Clean Cities Program
• Administered by: EERE and sponsored by the Vehicle Technologies Program.
• Original authorizing legislation and legislative history: Established by the
Alternative Motor Fuels Act of 1988 (P.L. 100-494), and amended by the Energy
Policy Act of 1992 (P.L. 102-486).
• FY2012 appropriated funds: Approximately $30 million
• Scheduled termination: None.
• Description: Initially started in 1993 as a DOE program to promote alternative
fuel vehicles among the states, it is now a broader program to reduce petroleum
consumption in transportation, with 100 Clean Cities coalitions that focus on
deployment of alternative and renewable fuels, idle-reduction measures, fuel
economy improvements, and emerging transportation technologies. Clean Cities
provides technical, informational, and financial assistance to communities.
• Qualified applicant/Covered entity: Businesses, fuel providers, vehicle fleets,
state and local government agencies, and community organizations, led by nearly
100 Vehicle Technologies Program Clean Cities coordinators.
• Applicable fuel/technology: Electricity, natural gas, propane, bio-methane,
ethanol, biodiesel, hydrogen.
• For more information: See the DOE Clean Cities website at
http://www1.eere.energy.gov/cleancities/.
• Related CRS Reports: N/A
Congressional Research Service
18
Alternative Fuel and Advanced Vehicle Technology Incentives
Department of Transportation
Corporate Average Fuel Economy Program Alternative Fuel Vehicle
Credits
• Administered by: National Highway Traffic Safety Administration (NHTSA)
• Original authorizing legislation and legislative history: Corporate Average Fuel
Economy (CAFÉ) program established in the Energy Policy and Conservation
Act (EPCA) of 1975 (P.L. 94-163); alternative fuels incentives established in the
Alternative Motor Fuels Act (P.L. 100-494); amended multiple times, most
recently by the Energy Independence and Security Act of 2007, §109 (P.L. 110-
140), to extend the expiration date through model year 2019 for dual fueled
vehicles.
• FY2012 appropriated funds: N/A
• Scheduled Termination: No expiration for dedicated vehicles; after model year
2019 for dual fueled vehicles.
• Description: Automakers that sell passenger cars and light trucks in the United
States must comply with federal CAFE standards. Those standards set fuel
economy targets that automakers must meet, averaged across their car and light
truck fleets. Those targets vary by vehicle class and size. To promote the
production and sale of alternative fuel vehicles and provide flexibility in
compliance, automakers may accrue CAFE credits by selling alternative fuel
vehicles. For dedicated vehicles (i.e., vehicles that run solely on alternative fuel)
credits are unlimited. For dual fueled vehicles (i.e., that may run on conventional
or alternative fuel) credits are limited: The maximum fuel economy increase
allowed through the use of dual fueled vehicle credits is 1.2 miles per gallon
through model year (MY) 2014. After 2014 the credits are phased down and
completely eliminated after MY 2019.
• Covered entity: Automakers that produce vehicles for sale in the United States
• Applicable fuel/technology: Incentives apply to vehicles capable of operating on
methanol (at least 85%), ethanol (at least 85%), natural gas, liquefied petroleum
gas, hydrogen, coal-derived liquid fuels, biologically-derived fuels, and
electricity.
• For more information: See NHTSA’s CAFE website at http://www.nhtsa.gov/
fuel-economy
• Related CRS Reports: CRS Report R40166, Automobile and Light Truck Fuel
Economy: The CAFE Standards, by Brent D. Yacobucci
Congestion Mitigation and Air Quality Improvement Program
• Administered by: Federal Highway Administration (FHWA) and Federal Transit
Administration (FTA)
Congressional Research Service
19
Alternative Fuel and Advanced Vehicle Technology Incentives
• Original authorizing legislation and legislative history: Established by the
Intermodal Surface Transportation Efficiency Act (ISTEA) of 1991 (P.L. 102-
240); reauthorized multiple times, most recently by the Safe, Accountable,
Flexible, and Efficient Transportation Equity Act: A Legacy for Users
(SAFETEA-LU) of 2005 (P.L. 109-59); extended multiple times, most recently
by the Surface Transportation Extension Act of 2012 (P.L. 112-102).
• FY2012 appropriated funds (estimated): $1.35 billion
• Scheduled Termination: June 30, 2012.
• Description: Congestion Mitigation and Air Quality Improvement (CMAQ)
provides funds to states for transportation projects designed to reduce traffic
congestion and improve air quality, particularly in areas of the country that do not
attain National Ambient Air Quality Standards. In particular, it authorizes funding
for programs and projects intended to reduce carbon monoxide, particulate
matter, and ozone. CMAQ funds are apportioned in accordance with a formula
based largely on a state’s population and pollution reduction needs.
• Qualified applicant/Covered entity: State departments of transportation and
metropolitan planning organizations (MPOs).
• Applicable fuel/technology: Any transportation project or technology that can
lead to reductions in congestion or help improve air quality.
• For more information: See FHWA’s CMAQ website at http://www.fhwa.dot.gov/
environment/air_quality/cmaq/
• Related CRS Reports: CRS Report R42445, Surface Transportation
Reauthorization Legislation in the 112th Congress: MAP-21, H.R. 7, and H.R.
4348—Major Provisions, coordinated by Robert S. Kirk; and CRS Report
R41512, Surface Transportation Program Reauthorization Issues for the 112th
Congress, by Robert S. Kirk
Clean Fuels Grant Program
• Administered by: Federal Transit Administration (FTA)
• Original authorizing legislation and legislative history: Established by the
Surface Transportation and Uniform Relocation Assistance Act of 1987 (P.L.
100-17) §313; reauthorized and amended multiple times, most recently by the
Safe, Accountable, Flexible, and Efficient Transportation Equity Act: A Legacy
for Users (SAFETEA-LU) of 2005 (P.L. 109-59) §3010.
• FY2012 appropriated funds: $51.5 million
• Scheduled termination: June 30, 2012.
• Description: The program provides grants for the purchase of alternative fuel and
advanced technology transit buses. Under conventional bus grants, FTA will fund
up to 80% of the cost of a bus; under the Clean Fuels Grant Program, FTA funds
90% of the incremental cost of a “clean fuel” bus. The incremental cost is the
difference between the cost of the clean fuel bus and a comparable conventional
bus.
Congressional Research Service
20
Alternative Fuel and Advanced Vehicle Technology Incentives
• Qualified applicant/Covered entity: Tribes, states, state departments of
transportation, and metropolitan planning organizations.
• Applicable fuel/technology: buses run on compressed natural gas, liquefied
natural gas, biodiesel, battery electric, ethanol, methanol, fuel cells, and clean
diesel (clean diesel projects limited to 25% of total funding).
• For more information: See FTA, Clean Fuels Grant Program website at
http://www.fta.dot.gov/grants/13094_3560.html.
• Related CRS Reports: CRS Report R42445, Surface Transportation
Reauthorization Legislation in the 112th Congress: MAP-21, H.R. 7, and H.R.
4348—Major Provisions, coordinated by Robert S. Kirk
Environmental Protection Agency
National Clean Diesel Campaign
• Administered by: Office of Transportation and Air Quality (OTAQ)
• Original authorizing legislation and legislative history: Established in 2005 by
the Energy Policy Act of 2005 (P.L. 109-58), §§791-797; amended in 2008 by
P.L. 110-255, §3; and amended in 2011 by the Diesel Emissions Reduction Act of
2010 (P.L. 111-364), §2.
• FY2012 appropriated funds: $30 million
• Scheduled termination: September 30, 2016.
• Description: EPA’s National Clean Diesel Campaign (NCDC) promotes clean air
strategies by working with manufacturers, fleet operators, air quality
professionals, environmental and community organizations, and state and local
officials to reduce diesel emissions. States are allocated funds for their clean
diesel programs through the Diesel Emission Reduction Act (DERA).
• Qualified applicant/Covered entity: Manufacturers, fleet operators, air quality
professionals, environmental and community organizations, and state and local
governments.
• Applicable fuel/technology: Technologies that significantly reduce emissions
(EPA maintains a list of verified retrofit technologies and emerging technologies
at http://www.epa.gov/cleandiesel/verification/verif-list.htm/).
• For more information: See EPA’s National Clean Diesel Campaign website at
http://www.epa.gov/cleandiesel/.
• Related CRS Reports: CRS Report R42520, Environmental Protection Agency
(EPA): Appropriations for FY2013, by Robert Esworthy et al.
Congressional Research Service
21
Alternative Fuel and Advanced Vehicle Technology Incentives
Renewable Fuel Standard
• Administered by: Office of Transportation and Air Quality (OTAQ)
• Original authorizing legislation and legislative history: Established in 2005 by
the Energy Policy Act of 2005, §1501 (P.L. 109-58); expanded by the Energy
Independence and Security Act of 2007, §202 (P.L. 110-140)
• FY2012 appropriated funds: N/A
• Scheduled termination: None.
• Description: The Energy Policy Act of 2005 established a renewable fuel
standard (RFS) for automotive fuels. The RFS was expanded by the Energy
Independence and Security Act of 2007. The RFS requires the use of renewable
fuels (including ethanol and biodiesel) in transportation fuel. In 2011, fuel
suppliers were required to include 13.95 billion gallons of renewable fuels in the
national transportation fuel supply; this requirement increases annually to 36
billion gallons in 2022. The expanded RFS also specifically mandates the use of
“advanced biofuels”—fuels produced from non-corn feedstocks and with 50%
lower lifecycle greenhouse gas emissions than petroleum fuel—starting in 2009.
Of the 36 billion gallons required in 2022, at least 21 billion gallons must be
advanced biofuels. There are also specific quotas for cellulosic biofuels and for
biomass-based diesel fuel. On May 1, 2007, EPA issued a final rule on the
original RFS program detailing compliance standards for fuel suppliers, as well
as a system to trade renewable fuel credits between suppliers. On March 26,
2010, EPA issued final rules for the expanded program (RFS2), including
lifecycle analysis methods necessary to categorize fuels as advanced biofuels,
and new rules for credit verification and trading. While this program is not a
direct subsidy for the construction of biofuels plants, the guaranteed market
created by the RFS is expected to stimulate growth of the biofuels industry and to
raise prices above where they would have been in the absence of the mandate.
• Covered entity: Gasoline and diesel fuel suppliers—generally refiners, but other
entities may also be covered.
• Applicable fuel: All biofuels (conventional ethanol, biodiesel, renewable diesel,
cellulosic biofuels, advanced biofuels).
• For more information: EPA website, Renewable Fuel Standard (RFS)
http://www.epa.gov/otaq/fuels/renewablefuels/index.htm.
• Related CRS Reports: CRS Report R40155, Renewable Fuel Standard (RFS):
Overview and Issues, by Randy Schnepf and Brent D. Yacobucci; CRS Report
R41106, Meeting the Renewable Fuel Standard (RFS) Mandate for Cellulosic
Biofuels: Questions and Answers, by Kelsi Bracmort and CRS Report R41631,
The Market for Biomass-Based Diesel Fuel in the Renewable Fuel Standard
(RFS), by Brent D. Yacobucci
Congressional Research Service
22
Alternative Fuel and Advanced Vehicle Technology Incentives
Department of Agriculture11
Biorefinery Assistance
• Administered by: Rural Business-Cooperative Service (RBS)
• Original authorizing legislation and legislative history: Established by the Food,
Conservation, and Energy Act of 2008, §9001 (P.L. 110-246).
• FY2012 appropriated funds: Mandatory funding of $74 million in FY2009 and
$245 million in FY2010 was authorized for loan guarantees; no discretionary
funding has been appropriated through FY2012
• Scheduled termination: September 30, 2012.
• Description: Grants to biorefineries that use renewable biomass to reduce or
eliminate fossil fuel use.
• Qualified applicant: Biorefineries in existence at the date of enactment.
• For more information: See RBS website at http://www.rurdev.usda.gov/rbs/busp/
baplg9003.htm.
• Related CRS Reports: CRS Report R41985, Renewable Energy Programs and
the Farm Bill: Status and Issues, by Randy Schnepf
Repowering Assistance
• Administered by: RBS
• Original authorizing legislation and legislative history: Established by the Food,
Conservation, and Energy Act of 2008, §9001 (P.L. 110-246).
• FY2012 appropriated funds: Discretionary funding of $15 million was
appropriated only in FY2010
• Scheduled termination: September 30, 2012.
• Description: Grants to biorefineries that use renewable biomass to reduce or
eliminate fossil fuel use. RBS issued a Notice of Funding Availability June 12,
2009, at http://www.rurdev.usda.gov/rbs/busp/9004%20FR%20NOFA.pdf.
• Qualified applicant: Biorefineries in existence at the date of enactment.
• For more information: See RBS website at http://www.rurdev.usda.gov/rbs/busp/
RepoweringAssistance.htmBioenergy Program for Advanced Biofuels.
• Related CRS Reports: CRS Report R41985, Renewable Energy Programs and
the Farm Bill: Status and Issues, by Randy Schnepf
11 For program details, see CRS Report R41985, Renewable Energy Programs and the Farm Bill: Status and Issues, by
Randy Schnepf.
Congressional Research Service
23
Alternative Fuel and Advanced Vehicle Technology Incentives
Bioenergy Program for Advanced Biofuels
• Administered by: RBS
• Original authorizing legislation and legislative history: Established by the Food,
Conservation, and Energy Act of 2008, §9001 (P.L. 110-246).
• FY2012 appropriated funds: No discretionary funding has been appropriated
through FY2012; mandatory funding for FY2012 of $65 million
• Scheduled termination: September 30, 2012.
• Description: Provides payments to producers to support and expand production
of advanced biofuels refined from sources other than corn kernal starch. RBS
issued a Notice of Contract Proposal June 12, 2009, at
http://www.rurdev.usda.gov/rbs/busp/NOCP%20FR%209005.pdf.
• Qualified applicant: Producers of advanced biofuels.
• For more information: See RBS website at http://www.rurdev.usda.gov/rbs/busp/
9005Biofuels.htm.
• Related CRS Reports: CRS Report R41985, Renewable Energy Programs and
the Farm Bill: Status and Issues, by Randy Schnepf
Biomass Crop Assistance Program
• Administered by: Farm Service Agency (FSA)
• Original authorizing legislation and legislative history: Established by the Food,
Conservation, and Energy Act of 2008, §9001 (P.L. 110-246).
• FY2012 appropriated funds: Mandatory Commodity Credit Corporation (CCC)
funds of such sums as necessary are made available for each of FY2008-F2012.
In FY2012, Biomass Crop Assistance Program (BCAP) mandatory spending was
limited to $17 million
• Scheduled termination: September 30, 2012.
• Description: Two separate payment programs for the establishment and supply of
advanced biofuel feedstocks: (1) Establishment and annual payments, including a
one-time payment of up to 75% of the cost of establishment for perennial crops,
and annual payments for up to five or 15 years depending on the type of crop;
and (2) dollar-for-dollar matching payments for collection, harvesting, storage,
and transportation (CHST) of biomass to qualified biofuel production facilities
(as well as bioenergy or biobased products), up to $45 per ton.
• Qualified applicant: Individuals who establish and produce qualified perennial
biomass feedstock crops; individuals who deliver eligible biomass to a qualified
facility.
• For more information: See FSA website at http://www.fsa.usda.gov/FSA/
webapp?area=home&subject=ener&topic=bcap.
• Related CRS Reports: CRS Report R41985, Renewable Energy Programs and
the Farm Bill: Status and Issues, by Randy Schnepf
Congressional Research Service
24
Alternative Fuel and Advanced Vehicle Technology Incentives
Rural Energy for America Program
• Administered by: RBS
• Original authorizing legislation and legislative history: Established in 2002 by
the Farm Security and Rural Investment Act of 2002 (P.L. 107-171), §9007;
amended in 2008 by the Food Conservation, and Energy Act of 2008 (P.L. 110-
246), §9007. The new section 9007 converted the federal Renewable Energy
Systems and Energy Efficiency Improvements Program into the Rural Energy for
America Program (REAP).
• FY2012 appropriated funds: $25 million ($22 million in mandatory funds are
available and $3 million in discretionary funds)
• Scheduled termination: September 30, 2012.
• Description: Provides grants and loans for a variety of rural energy projects,
including efficiency improvements and renewable energy projects. Although
REAP is not exclusively aimed at biofuels projects, the program could be a
significant source of loan funds for such projects.
• Qualified applicant/Covered entity: Rural small businesses and agricultural
producers.
• Applicable fuel/technology: Biofuels (see description above), among other
technologies.
• For more information: See the program website at http://www.rurdev.usda.gov/
rbs/farmbill/.
• Related CRS Reports: CRS Report R41985, Renewable Energy Programs and
the Farm Bill: Status and Issues, by Randy Schnepf
Biomass Research and Development
• Administered by: National Institute of Food and Agriculture (NIFA)
• Original authorizing legislation and legislative history: Established by the
Biomass Research and Development Act of 2000, §307 (P.L. 106-224); program
extended and mandatory appropriations provided by the Farm Security and Rural
Investment Act of 2002, §9008 (P.L. 107-171); program extended and funding
authorization expanded by the Energy Policy Act of 2005, §941 (P.L. 109-58);
significantly modified by the Food, Conservation and Energy Act of 2008, §9008
(P.L. 110-246).
• FY2012 appropriated funds: $40 million in mandatory funding
• Scheduled termination: September 30, 2012.
• Description: Grants are provided for biomass research, development, and
demonstration projects. Eligible projects include ethanol and biodiesel
demonstration plants.
• Qualified applicant: Wide range of possible applicants.
• For more information: See http://www.brdisolutions.com/default.aspx.
Congressional Research Service
25
Alternative Fuel and Advanced Vehicle Technology Incentives
• Related CRS Reports: CRS Report R41985, Renewable Energy Programs and
the Farm Bill: Status and Issues, by Randy Schnepf
U.S. Customs and Border Protection—Import Duty
on Fuel Ethanol
• Administered by: U.S. Customs and Border Protection
• Original authorizing legislation and legislative history: Established in 1980 by
the Omnibus Reconciliation Act of 1980 (P.L. 96-499); amended by the Tax
Reform Act of 1986, §423 (P.L. 99-514) extended by the Tax Relief and Health
Care Act of 2006, §302 (P.L. 109-432); further extended by the Food,
Conservation, and Energy Act of 2008, §15333 (P.L. 110-246), and the Tax
Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
(P.L. 111-312), §708.
• FY2012 appropriated funds: N/A
• Scheduled termination: Expired December 31, 2011.
• Description: A 2.5% ad valorem tariff and a most-favored-nation duty of $0.54
per gallon of ethanol (for fuel use) applied to imports into the United States from
most countries through the end of 2011; most ethanol from Caribbean Basin
Initiative (CBI) countries imported duty-free.
• Covered entities: Fuel ethanol importers.
• Applicable fuel: Ethanol (from all feedstocks).
• For more information: See Senate Finance Committee, Summary of House-
Senate Agreement on Tax, Trade, Health, and Other Provisions, December 7,
2006, at http://www.finance.senate.gov/newsroom/ranking/release/?id=
97221a88-8b93-4000-b51c-5b03bc06e6fb
• Related CRS Reports: CRS Report RS21930, Ethanol Imports and the Caribbean
Basin Initiative (CBI), by Brent D. Yacobucci
Congressional Research Service
26
Alternative Fuel and Advanced Vehicle Technology Incentives
Appendix. Summary Tables
This appendix contains three tables:
• Table A-1 provides a summary of the programs discussed in the body of the
report, listed by agency;
• Table A-2 lists programs and incentives for alternative fuels, by fuel type; and
• Table A-3 lists programs and incentives for advanced technology vehicles, by
vehicle type.
Congressional Research Service
27
Table A-1. Federal Programs by Agency
FY2012
Appropriation
or JCT
Estimated
Eligible Fuels or
Program Description
Expenditure Expiration
Date
Technologies
Internal Revenue Service
Motor Fuels Excise
Most motor fuels taxes were enacted in the Highway Revenue Act of 1956
N/A
4.3 cents per gal on
Gasoline, diesel, liquefied
Taxes
primarily to support the Highway Trust Fund, except for the tax on
of the gasoline/
petroleum gas, liquefied
compressed natural gas, which was enacted in 1993. The federal excise tax
diesel fuel tax is
natural gas, fuels with
on most of these fuels was last raised by Congress in 1993. Taxes vary by
permanent; the rest
methanol from natural gas,
fuel: gasoline, 18.4 cents per gal on; diesel fuel, 24.4 cents per gal on;
of the motor fuels
and compressed natural gas.
biodiesel, 24.4 cents per gal on; ethanol, 18.4 cents per gal on; hydrogen,
taxes expire on
18.4 cents per gal on equivalent; liquefied petroleum gas, 18.3 cents per
6/30/12 when the
gal on; compressed natural gas, 18.3 cents per gal on equivalent; liquefied
current Highway
natural gas, 24.3 cents per gallon equivalent. Electricity for electric vehicles
Trust Fund
is exempt from taxation, and exemptions for other fuels existed until
authorization
recently. Differences between tax rates effectively incentivizes certain
expires
options over others.
Incentives for
This provision established a 50-cents-per gallon excise tax credit for
$0
Expired 12/31/2011
Liquefied petroleum gas, P
alternative fuel and
certain alternative fuel used as fuel in a motor vehicle, motor boat, or
Series fuels, compressed or
alternative fuel
airplane and a 50-cents-per gallon credit for alternative fuel mixed with a
liquefied natural gas, liquefied
mixtures (other
traditional fuel (gasoline, diesel or kerosene) for use as a fuel.
hydrogen, any liquefied fuel
than liquefied
derived from coal or peat,
hydrogen)
liquefied hydrocarbons
derived from biomass. (Doe
not include ethanol, methanol
or biodiesel.)
Alternative Motor
This provision includes separate credits for four distinct types of vehicles:
Less than $50
12/31/2014 for fuel
Compressed natural gas,
Vehicle Credit
using fuel cells, advanced lean burn technologies, qualified hybrid
million
cell vehicles, expired liquefied natural gas, liquefied
technology or qualified alternative fuels technologies.
12/31/2010 or
petroleum gas, hydrogen, any
earlier for all other
liquid that is at least 85%
vehicles
methanol or a mixture of one
of these fuels with a
petroleum fuel.
CRS-28
FY2012
Appropriation
or JCT
Estimated
Eligible Fuels or
Program Description
Expenditure Expiration
Date
Technologies
Plug-in Electric
Purchasers of plug-in electric vehicles may file to obtain a tax credit of up
$200 million
The credit is phased
Plug-in electric vehicles.
Drive Vehicle
to $7,500 per vehicle, depending on battery capacity.
out when an
Credit
automaker has sold
a total of 200,000
qualified vehicles
Plug-in Electric
A maximum credit of $2,500 was al owed for certain types of new vehicles.
Less than $50
Expired 12/31/11
Two- or three-wheeled plug-
Vehicle Credit
million
in electric vehicles or certain
low-speed vehicles.
Conversion Kits
A credit of up to $4,000 was al owed for purchasing a kit to convert a
$0
Expired 12/31/11
Qualified plug-in electric
vehicle to a plug-in electric drive vehicle.
vehicle kits.
Alternative Fuel
Consumers who purchased qualified residential non-hydrogen fueling
Less than $50
12/31/2014 for
Natural gas, liquefied
Refueling Property
equipment received a 30% tax credit of up to $1,000; businesses received a
million
hydrogen refueling
petroleum gas, hydrogen,
Credit
credit up to $30,000 (maximum credits were increased for 2009 and 2010,
property; expired
electricity, E85, or diesel fuel
except for hydrogen property). Hydrogen refueling property may receive
12/31/11 for al
blends containing a minimum
respective credits of up to $1,000 and $200,000.
other fuels
of 20% biodiesel.
Volumetric Ethanol
Gasoline suppliers who blend ethanol with gasoline were eligible for a tax
$6 billion in
Expired 12/31/2011
Ethanol (and other alcohol
Excise Tax Credit
credit of 45 cents per gal on of ethanol.
foregone tax
fuels).
receipts
Smal Ethanol
An ethanol producer with less than 60 million gal ons per year in
$100 million
Expired 12/31/2011
Ethanol.
Producer Credit
production capacity could claim a credit of 10 cents per gal on on the first
15 million gallons produced each year.
Biodiesel Tax
Producers of biodiesel or diesel/biodiesel blends could claim a tax credit of
$0 Expired
12/31/2011
Biodiesel.
Credit
$1.00 per gallon of biodiesel.
Small Agri-
An agri-biodiesel (produced from virgin agricultural products) producer
$0 Expired
12/31/2011
Biodiesel.
Biodiesel Producer
with less than 60 million gallons per year in production capacity could claim
Credit
a credit of 10 cents per gallon on the first 15 million gallons produced in a
year.
Renewable Diesel
Producers of renewable diesel (similar to biodiesel, but produced through a
$0 Expired
12/31/2011
Renewable
diesel.
Tax Credit
different process) could claim a tax credit of $1.00 per gal on of renewable
diesel.
CRS-29
FY2012
Appropriation
or JCT
Estimated
Eligible Fuels or
Program Description
Expenditure Expiration
Date
Technologies
Credit for
Producers of cellulosic biofuel may claim a tax credit of $1.01 per gallon.
$0 12/31/2012 Cellulosic
biofuels.
Production of
For cellulosic ethanol producers, the value of the production tax credit is
Cellulosic Biofuel
reduced by the value of the volumetric ethanol excise tax credit and the
small ethanol producer credit—the credit is currently valued at 46 cents
per gal on. The credit applies to fuel produced after December 31, 2008.
Special
Plants producing cel ulosic biofuels may take a 50% depreciation allowance
$0 12/31/2012 Cellulosic
biofuels.
Depreciation
in the first year of operation, subject to certain restrictions.
Allowance for
Cellulosic Biofuel
Plant Property
Department of Energy
Advanced
ATVM was established in 2007 to help automakers meet mandated vehicle
$6 million (for
Facilities funded
No limitations on specific
Technology
fuel economy standards and to encourage domestic production of more
administration)
must be placed in
technologies; rather, limits are
Vehicles
fuel-efficient cars and light trucks. It was first funded in 2008 to provide
service by
stipulated for vehicle
Manufacturing
$25 billion in revolving loans to qualified automakers for investment in
12/31/2020
emissions and fuel
(ATVM) Program
their manufacturing operations. In FY2008, $7.51 billion was appropriated
consumption.
for the direct loans—$7.5 billion for the loan subsidies (available until
expended) and $10 million for administration. Currently, loans have been
made to five companies, using $8.4 billion of the $25 billion loan authority.
Vehicle
Through research and development, VTP supports partnerships with other
$329 million – of
None
Advanced batteries, power
Technologies
public and private organizations that will enhance energy efficiency and
that $118 million
electronics and electric
Program (VTP)
productivity, bring clean and affordable technologies to market, and
for Batteries and
motors, advanced
enhance advanced technology vehicle choices for consumers.
Electric Drive
combustion, lightweight
Technology
materials, vehicle-to-grid
interaction, and fuel cell and
hydrogen technologies.
Biomass and
The Biomass Program primarily focuses on research, development,
$199 million
None
Biofuels.
Biorefinery Systems demonstration, and deployment (RDD&D) to ensure that cel ulosic ethanol
Program
is commercially viable by 2012 and that biobased aviation fuel, diesel fuel,
and gasoline are price competitive by 2017.
CRS-30
FY2012
Appropriation
or JCT
Estimated
Eligible Fuels or
Program Description
Expenditure Expiration
Date
Technologies
Hydrogen and Fuel
The DOE Hydrogen Program works with industry, national laboratories,
$104 million
None
Hydrogen, fuel cells.
Cell Technologies
universities, government agencies, and other partners to overcome the
Program
barriers to the use of hydrogen and fuel cells. It includes a research and
development (R&D) effort focused on advancing the performance and
reducing the cost of these technologies.
Clean Cities
Initially started in 1993 as a DOE program to promote alternative fuel
Approximately
None
Electricity, natural gas,
Program
vehicles among the states, it is now a broader program to reduce
$30 million
propane, bio-methane,
petroleum consumption in transportation, with 100 Clean Cities coalitions
ethanol, biodiesel, hydrogen.
that focus on deployment of alternative and renewable fuels, idle-reduction
measures, fuel economy improvements, and emerging transportation
technologies. Clean Cities provides technical, informational, and financial
assistance to communities.
Department of Transportation
Congestion
Congress directed the DOT to establish the CMAQ program to provide
$1.35 billion
Extended through
Not limited to alternative
Mitigation and Air
funds for projects and programs that may reduce the emissions of
6/30/2012, by P.L.
fuels or advanced
Quality
transportation-related pol utants that may cause an area within a state to
112-102
technologies.
Improvement
exceed certain air quality standards.
Program (CMAQ)
Corporate Average Automakers subject to Corporate Average Fuel Economy (CAFE)
N/A
No expiration for
Methanol (at least 85%),
Fuel Economy
standards may accrue credits under that program for the production and
dedicated vehicles;
ethanol (at least 85%), natural
(CAFE) Incentives
sale of alternative fuel vehicles. For dedicated vehicles (i.e., vehicles that
after MY 2019 for
gas, liquefied petroleum gas,
for Alternative Fuel run solely on alternative fuel) credits are unlimited. For dual fueled vehicles
dual fueled vehicles
hydrogen, coal-derived liquid
Vehicles
(i.e., that may run on conventional or alternative fuel) credits are limited:
fuels, biologically derived
The maximum fuel economy increase allowed through the use of these
fuels, and electricity.
credits is 1.2 miles per gal on through model year (MY) 2014. After 2014
the credits are phased down and completely eliminated after MY 2019.
Clean Fuels Grant
This program provides grants to state departments of transportation and
$51.5 million
6/30/2012
Buses powered by
Program
metropolitan planning organizations (among others) to purchase “clean
compressed natural gas,
fuel” transit buses. Federal Transit Administration (FTA) grants for
liquefied natural gas, biodiesel,
conventional buses cover 80% of the cost, while Clean Fuels grants cover
batteries, ethanol, methanol,
90% of the incremental cost of clean fuel buses over conventional buses.
fuel cells, and clean diesel.
Alternative fuels and advanced technologies qualify, including advanced
diesel: however, only 25% of funding may be used for advanced diesel
projects.
CRS-31
FY2012
Appropriation
or JCT
Estimated
Eligible Fuels or
Program Description
Expenditure Expiration
Date
Technologies
Environmental Protection Agency
National Clean
EPA’s National Clean Diesel Campaign (NCDC) promotes clean air
$30 million
9/30/2016
Primarily for technologies
Diesel Campaign
strategies by working with manufacturers, fleet operators, air quality
which significantly reduce
professionals, environmental and community organizations, and state and
emissions (EPA maintains a
local officials to reduce diesel emissions. States are allocated funds for their
list of verified retrofit
clean diesel programs through the Diesel Emission Reduction Act (DERA).
technologies and emerging
technologies at
http://www.epa.gov/
cleandiesel/).
Renewable Fuel
Mandated use of renewable fuel in gasoline and diesel fuel: 4.0 billion
N/A None
Biofuels
(specific
Standard (RFS)
gallons in 2006, increasing to 36 billion gallons in 2022. There are specific
requirements for advanced
sub-mandates for advanced biofuels (fuels other than corn-based ethanol),
biofuels, cellulosic fuels, and
cellulosic biofuels, and biomass-based diesel fuels. Greenhouse gas emission
biomass-based diesel fuels).
reduction requirements apply to al advanced biofuels and to conventional
biofuels from refineries built after 2007.
U.S. Department of Agriculture
Biorefinery
The Biorefinery Assistance Program (BAP) assists in the development of
No FY2012
9/30/2012 Advanced
biofuels.
Assistance
new and emerging technologies for advanced biofuels. BAP provides
appropriation, but
competitive grants and loan guarantees for construction and/or retrofitting
any mandatory
of demonstration-scale biorefineries to demonstrate the commercial
funding unspent
viability of one or more processes for converting renewable biomass to
from the FY2010
advanced biofuels. Biorefinery grants can provide for up to 30% of total
allocation of $245
project costs. Each loan guarantee is limited to $250 million or 80% of
million remains
project cost.
available in
FY2012.
CRS-32
FY2012
Appropriation
or JCT
Estimated
Eligible Fuels or
Program Description
Expenditure Expiration
Date
Technologies
Repowering
The Repowering Assistance Program (RAP) makes payments to eligible
$15 million in
9/30/2012 Renewable
biomass.
Assistance
biorefineries (those in existence on the date of enactment of the 2008 farm FY2010 was
bill, June 18, 2008) to encourage the use of renewable biomass as a
appropriated
replacement for fossil fuels used to provide heat for processing or power
through FY2012.
in the operation of these eligible biorefineries. Not more than 5% of the
Any mandatory
funds shal be made available to eligible producers with a refining capacity
funding unspent
exceeding 150 million gallons of advanced biofuel per year.
from the FY2009
allocation of $35
million remains
available in
FY2012.
Bioenergy Program
To support and ensure an expanding production of advanced biofuels by
Mandatory
9/30/2012 Advanced
biofuels.
for Advanced
providing payments to eligible advanced biofuel producers
Commodity
Biofuels
Credit
Corporation
(CCC) funding of
$105 million for
FY2012 was
authorized to
remain available
until expended.
P.L. 112-55 limits
mandatory
spending to $65
million.
Biomass Crop
The Biomass Crop Assistance Program (BCAP) provides financial assistance In the FY2012
9/30/2012
Feedstocks for the production
Assistance Program to owners and operators of agricultural land and non-industrial private
Agriculture
of advanced biofuels.
(BCAP)
forest land who wish to establish, produce, and deliver biomass feedstocks.
appropriations
BCAP provides two categories of assistance:
act (P.L. 112-55),
1. establishment and annual payments, including a one-time payment of up
BCAP mandatory
to 75% of the cost of establishment for perennial crops, and annual
spending was
payments (i.e., rental rates based on a set of criteria) of up to 5 years for
limited to $17
non-woody and 15 years for woody perennial biomass crops; and
million.
2. matching payments, up to $45 per ton, which may be available to help
eligible material owners with collection, harvest, storage, and
transportation (CHST) of eligible material for use in a qualified biomass
conversion facility.
CRS-33
FY2012
Appropriation
or JCT
Estimated
Eligible Fuels or
Program Description
Expenditure Expiration
Date
Technologies
Rural Energy for
Provides grants and loans for a variety of rural energy projects, including
$25 million ($22
9/30/2012
Rural energy projects broadly.
America Program
efficiency improvements and renewable energy projects.
million in
(REAP)
mandatory funds,
$3 million
discretionary)
Biomass Research
Provides competitive funding in the form of grants, contracts, and financial
$40 million
9/30/2012
Biomass energy and biobased
and Development
assistance for research, development, and demonstration of technologies
products (not limited to
Initiative (BRDI)
and processes leading to significant commercial production of biofuels,
transportation applications).
biobased energy innovations, development of biobased feedstocks,
biobased products, and other such related processes, including
development of cost-competitive cellulosic ethanol.
Customs and Border Protection
Import Duty on
A 2.5% ad valorem tariff and a most-favored nation duty of $0.54 per gallon
N/A
Expired 12/21/2011
Imported ethanol for fuel use.
Fuel Ethanol
of fuel ethanol applied to imports from most countries.
Source: CRS Analysis
Notes: N/A = not applicable
CRS-34
Table A-2. Federal Taxes and Incentives for Alternative Fuels
Excise Tax
Rate (¢ per
Production
Incentive for Blending
Fuel
gallon)
Incentive
and/or Fuel Use
Federal R&D
Other Programs
Biofuels
General
DOE Biomass R&D program -
Renewable fuel standard (RFS) mandates
$199 million in FY2012,a USDA
biofuel use by gasoline and diesel fuel
Biomass R&D - $40 million in
suppliers—mandate of 15.2 billion
FY2012.b
gallons in 2012.
Conventional
18.4 None
$0.54 per gallon [expired]
Majority of RFS met through use of
Ethanol
conventional (corn-based) ethanol.
Biodiesel and
24.4
$1.00 plus $0.10 for
$1.00 per gallon (may not
Specific carve-out in RFS for biomass-
Renewable Diesel
small producers
claim this and the producer
based diesel—1 billion gal ons in 2012.
[expired]
credit)[expired]
Cellulosic Biofuels
Varies
$1.01 per gallon, plus $0.54 per gallon for cellulosic
DOE and USDA biomass
Specific carve-out in RFS for cellulosic
accelerated
ethanol (producer credit
programs focused on cellulosic
biofuels—8.65 million gallons in 2012.
depreciation of plant
reduced by this amount plus
biofuel development.
property
the small producer credit )
[expired]
Advanced Biofuelsc
Varies
Varies
Varies
DOE Biomass Program.
USDA Farm Bill programs, including
Biorefinery Assistance, Repowering
Assistance, Bioenergy Program, Biomass
Crop Assistance Program (BCAP).
Hydrogen
18.4 None
$0.50 per gallon [expired]
DOE Hydrogen and Fuel Cell
Technologies Program—$104
mil ion in FY2012.d
Liquefied
18.3 None
$0.50 per gallon [expired]
Petroleum Gas
(LPG)
Natural Gas
Compressed
18.3 None
$0.50 per gallon [expired]
Natural Gas
(CNG)
Liquefied Natural
24.3 None
$0.50 per gallon [expired]
Gas (LNG)
Source: CRS Analysis.
CRS-35
Notes: For more details, see Table 1. Italics indicate expired provisions.
a. Program not exclusively for transportation biofuels—also covers bioenergy (i.e., stationary sources) and bioproducts.
b. Program not exclusively for transportation biofuels—also covers bioenergy (i.e., stationary sources) and bioproducts.
c. This category generally encompasses others, including cellulosic biofuels, algae-based biofuels, and biomass-based diesel fuels.
d. Program not exclusively focused on transportation.
CRS-36
Table A-3. Federal Incentives for Alternative Fuel and Advanced Technology Vehicles
Vehicle Technology
or Fuel Type
Manufacturing Incentive
Purchase Incentive
Federal R&D
Other Programs
Electrified Vehicles
General
$118 million in FY2012 under
National Clean Diesel Campaign
DOE’s Vehicle Technologies
(NCDC), Clean Cities.
Program covers hybrid, battery
electric, and plug-in technologies.
Hybrid
ATVM loan program generally applies.
Up to $3,400 for passenger vehicles
[expired]
Battery Electric
Credits under CAFE program; ATVM
Up to $7,500 for passenger
loan program generally applies.
vehicles;
up to $4,000 for conversion kits; up
to $2,500 for two- and three-
wheeled and low-speed vehicles
[expired]
Plug-in Hybrid
Credits under CAFE program; ATVM
Up to $7,500 for passenger
loan program generally applies.
vehicles;
up to $4,000 for conversion kits; up
to $2,500 for two- and three-
wheeled and low-speed vehicles
[expired]
Ethanol Flexible
Credits under CAFE program expire
None
Limited
National Clean Diesel Campaign
Fuel Vehicle (FFV)
after 2019 model year.
(NCDC), Clean Cities.
Fuel Cell Vehicles
Credits under CAFE program; ATVM
Up to $8,000 for passenger
DOE Hydrogen and Fuel Cell
National Clean Diesel Campaign
loan program generally applies.
vehicles
Technologies Program—$104
(NCDC), Clean Cities.
mil ion in FY2012.a
Natural Gas Vehicles
Limited
Compressed Natural
Credits under CAFE program; ATVM
Up to $4,000 for passenger vehicles
National Clean Diesel Campaign
Gas (CNG)
loan program generally applies.
[expired]
(NCDC), Clean Cities.
Liquefied Natural Gas
Credits under CAFE program; ATVM
Up to $4,000 for passenger vehicles
National Clean Diesel Campaign
(LNG)
loan program generally applies.
[expired]
(NCDC), Clean Cities.
Source: CRS Analysis.
Notes: For more details, see Table 1. Italics indicate expired provisions.
a. Program not exclusively focused on transportation.
CRS-37
Alternative Fuel and Advanced Vehicle Technology Incentives
Author Contact Information
Lynn J. Cunningham
Bill Canis
Information Research Specialist
Specialist in Industrial Organization and Business
lcunningham@crs.loc.gov, 7-8971
bcanis@crs.loc.gov, 7-1568
Beth A. Roberts
Brent D. Yacobucci
Information Research Specialist
Section Research Manager
eroberts@crs.loc.gov, 7-9090
byacobucci@crs.loc.gov, 7-9662
Congressional Research Service
38