2005 US Energy Bill highlights

Vehicle Tax Credits

Buying hybrid electric vehicles and vehicles with cleaner burning diesel engines, known as advanced lean-burn engines, can earn you a tax credit of up to $3,400. The credit is largest for the vehicles that save the most fuel, but the credit will phase out shortly after an automaker sells 60,000 eligible cars. Tax credits of up to $4,000 are also available for alternative fuel cars. Businesses can earn the same tax credits, as well as credits of up to $12,000 for buying large hybrid vehicles, such as buses, and up to $32,000 for the purchase of large alternative fuel vehicles. And although fuel cell vehicles are not on the market yet, the act also establishes tax credits for these vehicles. See "Energy Bill Signed" on the DOE Web site and the Alliance to Save Energy press release.

For more information, see pages 1332 to 1433 of the full 1,724-page energy act (also referred to as the "conference report"), which is available as a "Featured Item" on the Web site of the Senate Committee on Energy and Natural Resources as a 2.6-MB PDF file. The Web site also features an 8-page summary by fuel and a 17-page summary by title. See the Senate Committee Web site.


Biofuel Requirement and Tax Incentives Included in Energy Act

The Energy Policy Act of 2005, which President Bush signed on August 8th, sets a new national minimum requirement for the use of biofuels, particularly ethanol. The new "Renewable Fuels Standard" requires that gasoline sold in the United States contain a total of 4 billion gallons of biofuels in 2006, increasing to 7.5 billion gallons in 2012. The standard provides greater flexibility for refiners by allowing renewable fuel credits and by eliminating the reformulated gasoline oxygenate standard.
The bill allows a credit of 2.5 gallons for every gallon of ethanol produced from wastes or cellulosic (woody) biomass sources. A recent report by DOE's Energy Information Administration analyzed a similar requirement and found it had a negligible impact on fuel prices. See the report.

Should you install a refueling station for alternative fuels at your home or business, you can earn a 30 percent tax credit (this sounds unlikely for the home, but Honda is now offering home natural gas fueling stations in California). The credit applies to fueling stations for ethanol, natural gas, compressed natural gas, liquefied petroleum gas, hydrogen, and biodiesel blends containing at least 20 percent biodiesel. The act also extended tax incentives for fuel distributors that blend biodiesel into their diesel fuel. See the press releases from the Renewable Fuels Association and the National Biodiesel Board (PDF 22 KB).

The act also requires federal alternative fuel fleets with flexible fuel vehicles (vehicles that can be fueled with gasoline or alternative fuels) to actually use alternative fuels, provided they are reasonably available and not unreasonably expensive. Currently, many federal fleets are buying the flexible fuel vehicles but fueling them only with gasoline or diesel fuel. See pages 682 to 1724 of the energy act (PDF 2.6 MB).

Thanks to:

J. David Dunagan, Project Officer
U.S. Department of Energy
Southeast Regional Office
david.dunagan@ee.doe.gov
http://www.eere.energy.gov/regions/southeast

For information provided in this post