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Alternative Fuels
Senate Bill Would Accelerate Fuel Cell Car Introduction
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WASHINGTON (May 11, 1999) — Today, U.S. Senator John D. Rockefeller (D-WV), along with original cosponsors Senators Orrin G. Hatch (R-UT), Michael Crapo (R-ID), and Richard Bryan (D-NV), introduced the "Alternative Fuels Promotion Act," which will provide incentives to spur the commercialization of methanol-powered fuel cell cars and other alternative fuel vehicles.
"Short-term, targeted incentives are needed to ensure the smooth market introduction of fuel cell vehicles," said Methanol Institute President and CEO John Lynn. "This legislation is exactly what we need to jump start the commercialization of fuel cell cars in this country. We strongly endorse this bill, and offer our thanks to Senator Rockefeller for his visionary leadership in crafting this bill. The bipartisan support shown today for the Alternative Fuels Promotion Act proves that issues like energy security and cleaner air know no political bounds."
The Alternative Fuels Promotion Act includes the following provisions:
- Extends the sunset date for the existing federal tax credit of 10% of the purchase price of an electric or fuel cell vehicle -- up to $4,000 -- from 2004 to 2010. In addition, for vehicles capable of a driving range of at least 100 miles -- a viable target for methanol fuel cell vehicles -- the tax credit would increase to $5,000;
- Gives a tax deduction for the cost of installing an alternative fueling station of up to $30,000. Currently, there is a $100,000 tax deduction for the cost of capital equipment associated with alternative fueling stations;
- Provides a 50¢ gasoline-equivalent gallon tax credit (based on energy content) to sellers of methanol and other alternative fuels, which would expire on December 31, 2007. Offering the tax credit to the retail fuel seller will allow the savings to be easily passed along to the consumer at the pump;
- Gives states the authority to allow access to High Occupancy Vehicle (HOV) lanes to alternative fuel vehicles with a single occupant.
The world's largest auto manufacturing companies have all announced plans to commercialize fuel cell vehicles by 2004. Methanol, a liquid fuel made from natural gas or renewable resources, is likely to be the hydrogen carrier providing the energy needed to run fuel cell cars. The prototype fuel cell cars being built today cost more than vehicles powered by internal combustion engines. Ultimately, the auto industry believes it can offer fuel cell vehicles with no incremental cost. The Alternative Fuels Promotion Act would provide tax credits for the purchase of fuel cell cars that will be needed during the initial years of production.
This bill also provides needed incentives for infrastructure support. EA Engineering, Inc. recently completed a study for MI finding that the costs to adapt existing gasoline stations to methanol operation range from less than $20,000 using existing underground storage tanks to just over $62,000 to install a new tank. The capital costs for the new tank, piping and dispenser is $35,000, while the labor costs to install the equipment are $27,000. Providing an additional tax deduction of up to $30,000 for this installation work will greatly assist efforts to add methanol pumps to the existing retail service station network.
In California, the pump price for methanol at 38 retail stations ranges from 87.9¢ to $1.10 per gallon. According to the California Energy Commission, the average price for regular gasoline for the week of May 3rd was $1.54. However, methanol has about half the energy content of gasoline, so when it's used as an alternative fuel in an internal combustion engine you need almost twice the volume of fuel to go the same distance. Since fuel cell vehicles may be twice as efficient as cars using internal combustion engines, methanol can eventually compete with gasoline on a gallon for gallon basis. The fuel tax credit in the bill -- about 25¢ per gallon for methanol on a volume basis -- would offer significant savings for the consumer, and an attractive margin for the retail seller to encourage the investment needed to install methanol fueling capacity.
The bill also would provide a popular incentive for urban commuters by allowing drivers of fuel cell vehicles to use HOV lanes without having additional passengers. Since one of the purposes of HOV lanes is to reduce air pollution, encouraging the use of zero or near-zero emission fuel cell vehicles meets this objective.
The Methanol Institute serves as the trade association for the methanol industry.