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Abstract: The sharp increase in petroleum prices beginning in mid-1999, experiences with tighter supply, and international instability have renewed concern about our dependence on petroleum imports. One of the strategies for reducing this dependence is to produce vehicles that run on alternatives to gasoline and diesel fuel. These alternatives include alcohols, gaseous fuels, renewable fuels, electricity, and fuels derived from coal. The push to develop alternative fuels, although driven by energy security concerns, has been aided by concerns over the environment, because many alternative fuels lead to reductions in emissions of toxic chemicals, ozoneforming compounds, and other pollutants, as well as greenhouse gases.

Each fuel (and associated vehicle) has various advantages and drawbacks. The key drawback of all alternative fuels is that because of higher fuel and/or vehicle prices, alternative fuel vehicles (AFVs) are generally more expensive to own than conventional vehicles. And while many AFVs have superior environmental performance compared to conventional vehicles, their performance in terms of range, cargo capacity, and ease of fueling may not compare favorably with conventional vehicles. Furthermore, because there is little fueling infrastructure (as compared to gasoline and diesel fuel), fueling an AFV can be inconvenient.

Any policy to support AFVs must address the performance and cost concerns, as well as the issue of fueling infrastructure. Within this context, a “chicken and egg” dilemma stands out: The vehicles will not become popular without the fueling infrastructure, and the fueling infrastructure will not expand if there are no customers to serve.

Three key laws, the Alternative Motor Fuels Act of 1988 (P.L. 100-494), the Clean Air Act Amendments of 1990 (P.L. 101-549), and the Energy Policy Act of 1992 (P.L. 102-486), as well as three Executive Orders, support the development and commercialization of alternative fuels and alternative fuel vehicles. These legislative acts and administrative actions provide tax incentives to purchase AFVs, promote the expansion of alternative fueling infrastructure, and require the use of AFVs by various public and private entities.

The 108th Congress considered comprehensive energy legislation, but a final bill was not submitted to the President for signature. H.R. 6 would have promoted the development of renewable fuels, especially ethanol and hydrogen. Further, it would have provided incentives for the development and purchase of alternative fuel and advanced technology vehicles. In addition to the energy bill, other bills were introduced to create vehicle purchase tax credits, promote research and development of fuels, and require the use of alternative fuels. It is likely that similar legislation will be introduced in the 109th Congress.
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