[Congressional Record Volume 152, Number 60 (Tuesday, May 16, 2006)]
[Senate]
[Pages S4624-S4625]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HARKIN (for himself, Mr. Lugar, Mr. Johnson, Mr. Dorgan, 
        and Mr. Biden):
  S. 2816. A bill to amend the Internal Revenue Code of 1986 to provide 
an income tax credit for the manufacture of flexible fuel motor 
vehicles and to extend and increase the income tax credit for 
alternative fuel refueling property, and for other purposes; to the 
Committee on Finance.
  Mr. HARKIN. Today, I am introducing, along with Senators Lugar, 
Johnson, Dorgan and Biden, tax legislation that is designed to 
complement the Biofuels Security Act of 2006, also being introduced 
today. I will walk through these provisions very briefly.
  The legislation amends the existing tax credit for installing 
alternative fueling infrastructure, such as E85 fueling pumps and tanks 
which was enacted as part of last year's energy bill. That existing 
provision allows a tax credit of 30 percent of the cost of 
installation, with a maximum credit of $30,000. Our bill modifies this 
credit in three ways. First, we would eliminate availability of the 
credit for the large oil companies that would be required to install 
such E85 pumps under the companion Biofuels Security Act. These 
companies have the financial wherewithal to install these pumps without 
the need for a tax credit. Second, for retailers who would not be 
required to install E85 pumps and tanks under our proposed legislation, 
our bill would enhance the tax credit to 50 percent of the cost of 
installation, with a maximum credit of $30,000. Third, for small 
retailers, that is, those with 5 or fewer stations, our bill would 
increase the credit to 75 percent of the cost of installation, up to a 
maximum credit of $45,000.
  This tax legislation would also create a new consumer tax credit for 
the purchase of flexfuel vehicles if the vehicles have no fuel 
efficiency loss from the use of E85 as compared to regular gasoline. 
Current flex-fuel models do have some mileage loss. We understand that 
there is technology available--for example, a Saab ``biofuel'' flex-
fuel E-85 vehicle on the market in parts of Europe--allowing vehicles 
to have no fuel efficiency loss when burning E85 in comparison to 
gasoline, and perhaps even some mileage gain. The tax incentive we 
propose here will help foster further development of biofuels-related 
technology and promote better fuel efficiency as well.
  I urge my colleagues to support this important legislation.
  Mr. JOHNSON. Mr. President, today I join Senators Harkin, Lugar, and 
Dorgan in introducing a broad package of initiatives to jump-start the 
distribution of renewable fuels, empower consumers, and achieve our 
long-standing goal of displacing foreign sources of energy.
  The Biofuels Security Act of 2006 stakes out three broad approaches 
toward increasing production of renewable fuels and connecting the 
infrastructure required to deliver biofuels to a new fleet of flexible 
fuel vehicles. In combination these policies can extend home-grown 
renewable fuels to a predominate place in America's energy mix.
  The Biofuels Security Act of 2006 moves forward to aggressively 
increase the amount of renewable fuels used in the marketplace to a 
requirement of 60 billion gallons in 2030. Our approach is phased 
through a realistic and technically feasible glide path beginning with 
a 10 billion gallon requirement in 2010, escalating to 30 billion 
gallons in 2020 and doubling that standard in the final decade. 
Existing ethanol capacity is anticipated to grow by approximately 30 
percent in 2006, from 4.4 billion gallons to 6.3 billion gallons by the 
end of 2006. Domestic ethanol production is meeting demand and ethanol 
from corn has the capability of producing upwards of another 10 to 15 
billion gallons in the next decade. As ethanol production from corn 
matures, new feedstocks, such as switch grass will compliment corn as a 
driver toward ethanol production. Setting benchmarks and creating long-
term market stability through a demand-driven standard will ensure a 
competitive biofuel market and help drive down the cost of gasoline and 
other refined products that pinch consumer budgets.
  Tying together future demand are 2 sets of standards and incentives 
that will transform the availability of higher blends of ethanol fuels. 
Our bipartisan approach requires auto manufactures to produce vehicles 
that can run on higher blends of renewable fuels. Flexible fuel 
vehicles are capable of optimal performance with high ethanol blended 
fuels, such as E85--a blend of 85 percent ethanol and 15 percent 
gasoline. Auto manufacturers are gradually

[[Page S4625]]

moving toward production methods that can inexpensively modify trucks 
and cars to perform at the highest standards on E85 fuel. The Nation 
lacks, however, a long-term policy that sets benchmarks and targets to 
manufacture dual-fueled vehicles. Today, there are approximately 6 
million dual-fueled vehicles in the United States, a small fraction of 
the 230 million gasoline an diesel-fueled vehicles filling our roads. 
Through introducing this bill we are committing to the public that a 
decade after enactment of the Biofuels Security Act all vehicles sold 
in the in the United States will be dual-fueled vehicles providing 
maximum performance on all fuel blends.
  The second basket of requirements and incentives is targeted toward 
ensuring that as Americans purchase dual-fueled vehicles that the 
fueling infrastructure is in place to meet the demand. Retail gasolene 
stations that market E85 and B20--diesel fuel mixed with biodiesel and 
petroleum diesel fuel--are few and far between. Fuel distributors and 
retail station owners who want to market E85 are often locked out 
through contractual agreements with big oil companies offering certain 
fuel blends. Accordingly, most gasoline marketers offering E85 are 
independent distributors and station owners that understand the 
competitive advantage from distributing alternative fuels. The Biofuels 
Security Act ties together dual-fueled vehicles with refueling 
infrastructure through an enhanced tax credit of 75 percent capped at 
$45,000 for the installation of refueling equipment for small business 
gas station owners. The credit is phased-back to 50 percent and capped 
at $30,000 for larger retail gasoline station owners. Our goal is that 
in a decade at least 40 percent of all retail gasoline stations include 
an alternative fuel pump.
  The Biofuels Security Act of 2006 builds upon the strong consumer 
demand pushing our country toward portfolio of biofuels--ethanol, 
biodiesel--from diversified feedstocks grown and refined throughout the 
country. Combining a long-term renewable fuel requirement to 
infrastructure and vehicle preference can decrease our reliance on 
imported energy sources and lower consumer energy costs. All 3 of these 
pieces need to move in concert in order to maximize the transition from 
a hydrocarbon-based society to a more balanced and sustainable model.
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