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Tuesday, January 4, 2011

Alternative Fuels and Advanced Technology Vehicles: Issues in Congress

Brent D. Yacobucci
Specialist in Energy and Environmental Policy

Alternative fuels and advanced technology vehicles are seen by proponents as integral to improving urban air quality, decreasing dependence on foreign oil, and reducing emissions of greenhouse gases. However, major barriers—especially economics—currently prevent the widespread use of these fuels and technologies. Because of these barriers, and the potential benefits, there is continued congressional interest in providing incentives and other support for their development and commercialization.

On February 3, 2010, the Environmental Protection Agency (EPA) finalized new rules for the renewable fuel standard (RFS) that was expanded by the Energy Independence and Security Act of 2007 (EISA, P.L. 110-140). In 2010, the RFS required the use of 12.95 billion gallons of ethanol and other biofuels in transportation fuel. Within that mandate, the RFS required the use of 0.95 billion gallons of advanced biofuels, including 6.5 million gallons of cellulosic biofuels. For 2011, the RFS mandate is 13.95 billion gallons, including 6.6 billion gallons of cellulosic fuel. EISA also requires that advanced biofuels (as well as conventional biofuels from newly built refineries) meet certain lifecycle greenhouse gas reduction requirements. EPA’s methodology and conclusions on various biofuels’ lifecycle emissions have been controversial.

EPA is also reviewing a waiver petition from Growth Energy to allow blends of up to 15% ethanol in gasoline: currently gasoline is limited to 10% ethanol content under EPA implementation of the Clean Air Act. Allowing higher blends of ethanol under the Clean Air Act would remove one component of the “blend wall,” which limits the total amount of ethanol that can be blended in gasoline nationwide; other blend wall components include vehicle and pump certification and warranties, and state and local fire codes and other laws. In October 2010 EPA granted a partial waiver allowing the use of E15 in model year (MY) 2007 and newer vehicles, but deferred a decision on MY2001-MY2006 vehicles. Because EPA determined there was insufficient data to alleviate concerns over emissions performance in older vehicles, as well as motorcycles, heavy trucks, and non-road engines, the agency denied a waiver for the use of E15 in those vehicles and engines.

The 112
th Congress may debate alternative fuels and advanced technology vehicles as it addresses other key topics. These include their role in any federal policy to address climate change, and their role in federal energy policy. The 112th Congress may also play an oversight role in the development of major regulations: EPA’s implementation of the RFS and greenhouse gas controls under the Clean Air Act; the Department of Transportation’s implementation of fuel economy standards enacted in 2007; and the Department of Agriculture’s implementation of the 2008 Farm Bill. Further, some key tax incentives for alternative fuels that had expired or were set to at the end of 2010 were extended through the end of 2011 by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312). The 112th Congress may revisit these incentives and discuss whether they should be extended beyond 2011.

Date of Report: December 23, 2010
Number of Pages: 21
Order Number: R40168
Price: $29.95

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