[Congressional Record Volume 146, Number 62 (Thursday, May 18, 2000)]
[Senate]
[Pages S4199-S4201]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. JEFFORDS (for himself, Mr. Hatch, Mr. Rockefeller, Mr. 
        Robb, Mr. L. Chafee, Mr. Bryan, and Mr. Kerry):
  S. 2591. A bill to amend the Internal Revenue Code of 1986 to allow 
tax credits for alternative fuel vehicles and retail sale of 
alternative fuels, and for other purposes; to the Committee on Finance.


                  alternative fuels tax incentives act

 Mr. JEFFORDS. Mr. President, today, Senator Hatch and I, 
together with Senators Rockefeller, Chafee, Bryan, and Kerry are 
introducing a bill which we believe will serve two important national 
interests: air quality and energy security. We call it the 
``Alternative Fuels Tax Incentives Act,'' and it consists of a series 
of temporary tax provisions to encourage purchases of cars and trucks 
operating on alternative fuels, and to promote the retail sale of these 
fuels.
  The sharp gasoline price spikes earlier this year were a reminder of 
what can happen when the United States is not in control of the source 
of the energy it consumes. Some of us remember the long lines in the 
mid-1970s, when the Middle East pipeline was shut down, when service 
stations rationed the amount of gas you could buy, and when fistfights 
broke out over gasoline purchases. Science is now taking us to a point 
where we can develop other sources of energy and free ourselves from 
this over-reliance on foreign oil.
  Imports of foreign oil now exceed 50 percent of our oil consumption. 
Most of the oil that we use--more than two-thirds--is used for 
transportation. But there's some good news: cars and trucks that 
operate with alternative fuels are rapidly becoming a fact of life. 
Each of the major automobile manufacturers offers alternative fuel 
vehicles, but low production volume and high initial costs have impeded 
their widespread use and adoption. Consumers and businesses are 
receptive to alternative fuel vehicles and electric vehicles, but are 
often reluctant to pay the additional costs manufacturers charge for 
them.
  This bill's tax incentives will make those vehicles more cost 
competitive. With their environmentally-friendly fuels, these vehicles 
will mean significant benefits to the air we breathe. The levels of 
pollutants emitted by these alternative fuels vehicles are a tiny 
fraction of those released from a conventional gasoline or diesel 
engine. Some of these cars don't even have tail-pipes. To assure that 
owners of alternative fuel vehicles can find fuels

[[Page S4200]]

for their cars, the bill also provides for two incentives to encourage 
the retail sales of alternative fuels: a tax credit for retailers for 
each gasoline gallon-equivalent of alternative fuel sold, and a 
provision allowing retailers to immediately expense up to $100,000 of 
the costs of alternative fuel refueling infrastructure.
  Passing this bill would mean cleaner air, energy independence, and 
more jobs in a developing sector of the auto industry. We have the 
technology and the resources to accomplish these goals. And we have 
manufacturers ready to deliver. It shouldn't take another oil crisis 
for us to get moving on this.
  Mr. HATCH. Mr. President, I rise today with my friend and colleague, 
Senator Jeffords, to introduce the Alternative Fuels Tax Incentives 
Act. I am pleased that we are being joined by Senators Rockefeller, 
Robb, Chafee, and Bryan as original cosponsors.
  This bill is an outgrowth of S. 1003, the Alternative Fuels Promotion 
Act of 1999, which was sponsored by many of the same sponsors of this 
year's bill. And, like S. 1003, the bill we are introducing today is 
designed to achieve two vital goals--reduce our dependency on foreign 
oil and reduce air pollution from motor vehicles.
  While the goals of both of these bills are the same, Mr. President, 
the Alternative Fuels Incentive Act takes a similar, but more 
comprehensive approach to achieving them.
  There is a little dispute that our growing dependency on imported oil 
is dangerous, not only to our continued economic growth, but also to 
our national security. We are witnessing again this year just how 
volatile the price of gasoline and other motor fuels are and how 
decisions made by oil producers far from our shores affect the everyday 
lives of all Americans. As we increase our dependence of energy from 
others nations, we are literally placing our future in the hands of 
foreign entities. Yet, we are stymied at every turn in trying to 
significantly increase the discovery and development of new domestic 
sources of oil.
  At the same time, we continue to face serious air quality challenges 
from our almost exclusive use of conventional fuels for motor vehicles. 
Just in my home state of Utah, transportation vehicles account for 87 
percent of carbon monoxide emissions, 52 percent of nitrogen oxide 
emissions, 34 percent of hydrocarbon emissions, and 22 percent of 
coarse particulate matter in the air. All of these emissions can be 
harmful to individuals suffering from chronic respiratory illnesses, 
heart disease, asthma, and other ailments.
  More than just harming our health, however, these emissions detract 
from the natural beauty of our country. Furthermore, as the United 
States grows in population and dependency on automobile transportation, 
these problems will only become worse unless something is done to turn 
the tide.
  Fortunately, Mr. President, answers to both problems exist. Vehicle 
technology using domestically plentiful and clean-burning alternative 
fuels have advanced to the point that, if widely adapted by Americans, 
we could reverse the course on both foreign dependence and clean air. 
The challenge is in getting over the hurdle of initial acceptance of 
the new technologies by the American public.
  In essence, there are currently three market barriers to this initial 
acceptance of alternative fuels vehicles by Americans--the incremental 
cost of the vehicles over conventionally-fueled vehicles, the cost of 
the fuel, and the lack of convenient fueling stations. Providing 
incentives--not mandates--to overcome all three of these barriers is 
what this bill is all about.
  Mr. President, the bill addresses the first barrier--the extra cost 
of the alternative fuels vehicles--by providing a tax credit for a 
portion of the difference in cost. This is key component of the bill 
that was lacking in S. 1003. By bringing the cost of these vehicles 
within the range where savings on the cost of the alternative fuel will 
make owning these vehicles economically viable over the life of the 
vehicle, public acceptance of the technology should rapidly increase. 
Once this occurs, production economies of scale will bring the price of 
the vehicles down further.
  The bill addresses the second and third market barriers, that of fuel 
cost and availability, by providing tax credits for the alternative 
fuels and tax benefits for suppliers who decide to sell it to the 
public. This is important because the ready availability of the fuel in 
all geographic locations where the public needs to go or to send goods 
is key to their acceptance of alternative fuels vehicles. These tax 
benefits, when combined with the market effect caused by the demand for 
more fueling stations created by the purchase of more vehicles, will 
help ensure that such stations will appear where people need them.
  Mr. President, the incentive approach taken by this bill is meant to 
provide a temporary bridge over these barriers. If this approach works, 
the tax incentives will not be needed in the long run. This is why we 
have placed a seven-year sunset on these provisions. At the end of this 
period, Congress should take a close look at how well these incentives 
worked and how the market has developed.
  There is little doubt that sooner or later this Nation will have to 
turn to alternative fuels to help solve the two problems I mentioned 
earlier. I believe it should be sooner and the move should be 
incentive-based and market-driven. The bill we are introducing today 
can create the momentum to get us to a cleaner and more secure America 
much sooner. I urge my colleagues to support this legislation.
  Mr. ROCKEFELLER. Mr. President, today I gladly lend my support to the 
Alternative Fuels Tax Incentives Act being introduced by Senator 
Jeffords, along with Senators Hatch, Robb, Kerry, Bryan, and Chafee. I 
join with my colleagues because of my longstanding dedication to 
increasing the use of alternative fuels for transportation, and my 
understanding that to do so we must stimulate interest in the still 
fledgling alternative fuel vehicle industry. The success of this 
industry, and the acceptance of these vehicles in the market place, is 
critical to lowering our dependence on imported oil, improving the 
quality of the air we breathe, and reducing the greenhouse gases our 
nation emits.
  Let me take a few moments to relate some of the reasons why it is so 
important that we reduce our consumption of petroleum and use 
alternative sources of energy. The first and most tangible reason is 
the need to reduce our nation's dependence on foreign oil. Currently, 
we import more than half of the oil consumed in this nation. That 
translates to $180,000 per minute that is being spent to purchase 
foreign oil. That's bad for our balance of trade, but more important, 
none of us want to continue to have our energy costs fluctuate and 
spike at the whim of OPEC or any other foreign organization. The recent 
price increase shows just how important this is, and how vulnerable we 
are.
  A second reason is that it is critical that we reduce the 
transportation sector's negative impact on air quality. While the 
automobile industry has made great strides in reducing the emissions of 
cars and trucks, the improvement has been largely offset by the 
dramatically increasing number of miles these vehicles are driven each 
year, and by our increasing desire for larger, more powerful vehicles. 
In 1980, light trucks, a category that includes minivans and SUVs, 
accounted for only 19.9 percent of the U.S. automobile market. 
Traditionally, these vehicles have been exempted from corporate average 
fuel economy (CAFE) standards. In the past couple of years, some in 
Congress have been successful in blocking any adjustment to CAFE 
standards, including the inclusion of SUVs and minivans. Now the reason 
for including them is even more obvious. By 1998, these larger vehicles 
accounted for 47.5 percent of the automobile market, with SUVs alone 
accounting for 18.1 percent. Clearly, doing something to cut air 
pollution and to reduce greenhouse gas emissions will require an 
enormous change in our transportation sector.
  Because I believe it is the right thing to do for the people of West 
Virginia, and for the nation as a whole, I have been a long-time 
supporter of research into, incentives for, and commercial 
implementation of alternative fuel technologies. During my first term 
in the United States Senate, I introduced the Alternative Motor Vehicle 
Act of 1988. That legislation has been credited with a dramatic 
increase in the production of alternatively fueled vehicles,

[[Page S4201]]

notably the so-called flexibly-fueled vehicles, which run on either 
alternative fuels or gasoline. In fact, 500,000 of the 17 million cars 
sold in the United States in 1999 were flexible-fuel vehicles. In 1992, 
when Congress passed the Energy Policy Act (EPAct), I authored and 
supported a number of provisions in that law to promote the use of 
alternatively-fueled and electric vehicles through tax credits for 
vehicle purchase and installation of supporting infrastructure.

  Finally, just over a year ago, along with my colleagues Senators 
Hatch, Crapo, and Bryan, I introduced the Alternative Fuels Promotion 
Act, S. 1003. Both the Alternative Fuels Tax Incentives Act introduced 
today, and the Alternative Fuels Promotion Act introduced last year, 
would provide the alternative fuel vehicle industry some of the help it 
needs to begin to get a sustainable foothold in the market place. While 
these bills differ in the size and type of tax incentives, I strongly 
believe that both bills are appropriate steps toward a cleaner 
environment and a more energy independent nation.
  As I have stated on the Floor of the Senate before, the options for 
bringing about change in the transportation sector are somewhat 
limited. Congress could impose new taxes, mandates, or regulations. 
However, these approaches are sometimes unpopular with both the 
American people and our colleagues in Congress. I believe the best way 
to bring about the change we need is to provide incentives for 
manufacturers to develop and sell clean technology and for consumers to 
buy and use this technology. I believe that the Alternative Fuels Tax 
Incentives Act being introduced today offers manufacturers and 
consumers these necessary incentives.
  Our domestic automobile manufacturers have developed a number of 
clean-running and efficient vehicles. These vehicles are virtually 
indistinguishable from their gasoline-powered counterparts in terms of 
performance, safety, and comfort. However, there are still two major 
barriers to widespread acceptance. The first is cost. Though 
manufacturers have made great strides in reducing the cost of these 
vehicles, most, including those powered by natural gas, propane, 
methanol, and electricity, are still significantly more expensive than 
their gasoline-powered counterparts.
  A second critical roadblock impeding acceptance of alternatively 
fueled vehicles is the lack of an adequate refueling infrastructure. I 
received a call a few months ago from a woman who had just purchased a 
compressed natural gas-powered car made by a domestic manufacturer. Her 
entire car pool loved the car, especially the absence of any ``exhaust 
smell'' when you stood behind the car. She was calling to find out if 
we could help her locate more places to fuel it. She lives in Boston, 
and knew of only three fueling stations within a reasonable driving 
area. If this is the case in a major metropolitan area--which has a 
significant number of compressed natural gas-powered fleets in 
operation--it is clear that we have a long way to go. The Alternative 
Fuels Promotion Act offers strong incentives aimed at minimizing these 
roadblocks.
  We know that when national policy supports the creative energies and 
potential of the private sector, progress is made at a faster rate. The 
private sector is leading the way in developing alternative fuel 
vehicle technology. We need to provide consumers with a strong 
financial incentive to use this technology. Certainly, our continued 
dependence on foreign oil and the contribution of conventionally-
powered vehicles to air pollution--including greenhouse gases--compels 
us to try. I encourage my colleagues to take a hard look at our 
environment and our national energy security, and to pass the 
Alternative Fuels Tax Incentives Act during this Congress.
  I ask unanimous consent that this statement be inserted in the Record 
immediately after Senator Jeffords' statement introducing the 
Alternative Fuels Tax Incentives Act.
  Mr. ROBB. Mr. President, I am pleased to be an original co-sponsor of 
the Alternative Fuels Tax Incentive Act. This legislation will help 
accomplish two things. First, it will promote the production and use of 
cars that use clean fuels, and will consequently improve air quality. 
Secondly, the tax credit will improve our energy independence. I 
honestly believe that one of the best things we can do for this country 
is to find a way to fuel transportation that is cleaner, and more 
reliable. Our automobile emissions get cleaner every year. But there 
are more of us on the road every year, and we drive more miles every 
year. So we have to keep increasing our efforts in the direction of 
more efficient vehicles and cleaner fuels.
  Earlier this year, we experienced a sharp spike in fuel prices, 
courtesy of OPEC. It wasn't the first time and it won't be the last. It 
is imperative for our country to keep moving in the direction of energy 
independence, and I am convinced that it can be done without 
sacrificing convenience, mobility, or the environment. But we need to 
find a substitute for gasoline, and we need to combine the most 
efficient technologies in a way that provides convenient 
transportation.
  New automotive technologies are being developed by automobile 
companies, in concert with some of our fine engineering schools. All 
these technologies show promise, but after the pilot stage and before 
achieving mass appeal, there is a critical phase at which we can help a 
new idea grow, or we can ignore it and perhaps let it fail. This tax 
credit is a tool that can be used to bridge the gap between an 
experimental vehicle and a commercially available vehicle. It 
encompasses the kind of creative thinking that we need to employ if we 
are going to reach a new standard of efficiency in automotive 
technology.
  I look forward to a full discussion of the benefits of this bill, and 
hope my colleagues will join me in supporting this bill, and move for 
quick passage.
                                 ______