Congress, not Technology, is Deciding the Alt-fuel Market

Should Congress have let the hybrid, diesel and CNG tax credit die while keeping the ethanol fuel credit?

Chris Brown・Associate Publisher

December 16, 2010

2 min to read

By not including a provision in its $858 billion tax bill, Congress is ending a five-year-old tax credit of up to $4,000 for hybrid-electric, clean diesel vehicles and natural gas vehicles. It is possible Congress could try to restore the credit next year, but it's dead for now. While the most popular hybrid vehicles from Toyota, Honda and Ford are ineligible for the credit, 20 vehicles, including 14 hybrids, 5 clean diesel models and the Honda Civic that runs on natural gas will be affected.

Hybrids may very well be "maturing technology" not in need of a subsidy at this time. But natural gas technologies are just coming into their own. Killing subsidies for natural gas vehicles, including compressed natural gas (CNG) and liquefied petroleum gas (LPG, or autogas) would be a bummer for companies interested in greening their fleets with worthy new models such as GM's new Chevy Express and GMC Savana vans with factory-installed CNG systems, or Roush CleanTech's advanced LPG systems for Ford F-series trucks and E-Series vans.

Meanwhile, Congress voted to extend the 45 cents-per-gallon ethanol tax credit through 2011.

The credit goes to fuel blenders to add ethanol to their mix, which includes large oil and gas companies such as Shell, who count it against income tax owed to the United States. And of course the all-powerful farm lobby benefits as well. The cost to American taxpayers will be at least $5 billion in 2011. The measure still needs to pass the House.

While using ethanol fuel is certainly a way to cut our dependence on foreign oil, in the last few years we've done the math on corn-based ethanol's environmental benefits and it doesn't add up.

There is promising research into non-food cellulosic and algae-based ethanol as a fuel source, but at this time, it's just that-research. Congress might well have channeled the ethanol credit into research instead of a subsidy on existing corn-based fuel.

How do you feel? Should Congress have let the hybrid, diesel and CNG tax credit die while keeping the ethanol fuel credit?

Topics:Diesel Natural Gas Taxes ROUSH Natural Gas Vehicles General Motors Gasoline-Electric Hybrids

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