Energy Policy Act of 2005

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Energy Policy Act of 2005

• Over 1700 pages
• 8 years in the making
• Tax incentives passed the House 5 times and the
  Senate 4 times
  
• Energy Bill to be signed by President on 8/8
• Highway Bill to be signed by President 8/14(?)
• Some provisions of interest to Clean Cities are
  in both bills
  
• This is the START of a long process with
  appropriations committees and Federal agencies as
  they struggle to develop budgets, rules, and
  procedures, and interpret legislative intent.

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Provisions of the Energy Policy Act of 2005 (HR6)
of Interest to Clean Cities

• Sec. 701 Federal Fleet Dual Fuel Vehicles Fed
  dual fuel vehicles must use alt fuel unless
  waiver is given. Waivers given if fuel is not
  reasonably available or cost is unreasonably
  expensive.
• Sec. 702 Federal Fleets Incremental Cost
  Distribution Requires GSA and other agencies
  that buy vehicles for other fleets to spread the
  incremental cost across all vehicles.
• Sec. 704 Review of EPAct 1992 Program DOE must
  report after 1 year on 1) number of vehicles
  acquired by covered fleets, 2) amount of AF used
  in AFVS by covered fleets, 3) amount of petroleum
  displaced, 4) cost of compliance (including
  benefits), 5) existence of obstacles preventing
  compliance, and 6) impacts of amendments in HR6.
• Sec. 706 Joint Flexible Fuel/Hybrid Vehicle
  Commercialization Initiative Establishes a
  research and grant program to advance the
  commercialization of hybrid/flex-fuel vehicles
  and plug in hybrid/flex fuel vehicles. Vehicles
  must achieve not less than 250 miles per gasoline
  gallon. 3M authorized for 2006, 7M in 2007,
  10M in 2008, and 20M in 2009.

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Provisions of the Energy Policy Act of 2005 (HR6)
of Interest to Clean Cities

• Sec. 712 Efficient Hybrid Advanced Diesel
  Vehicles DOE is directed to encourage the
  domestic production and sale of efficient hybrid
  and advanced diesel vehicles. No funds
  authorized. check on whether these are grants to
  industry
• Sec 721-723 Advanced Vehicles Pilot
  Demonstration Program Competitive grant program
  to fund up to 30 geographically dispersed
  advanced vehicle demonstration projects
  administered by Clean Cities. The goal is to
  reduce emissions, displace fossil fuel, promote
  advanced technology vehicles and promote
  sustainable transportation options. Grant
  recipients will be limited to state and local
  government agencies and MTAs. Applications must
  include a registered participant in the Clean
  Cities program. Participants can be public or
  private entities. Projects limited to 15M with
  50 cost share. Grant funds can pay for
• AFVs (including neighborhood electric vehicles)
• HEVs (only MDV and HDV)
• Fuel cell vehicles
• ULS diesel vehicles
• Acquisition and installation of fueling
  infrastructure
  
• Operation and maintenance of vehicles,
  infrastructure and equipment
  
• 200M authorized until expended

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Provisions of the Energy Policy Act of 2005 (HR6)
of Interest to Clean Cities

• Sec. 741 Clean School Bus Program EPA in
  consultation with DOE, provides funds to school
  districts and related organizations to replace,
  repower, or retrofit buses. EPA must achieve an
  appropriate balance between replacement and
  retrofit. For replacement buses, grantees
  receive 50 of the cost of the new bus if it
  meets
• For MY 2005 2006, 1.8 grams NOx plus NMHC and
  0.01 PM (which is the minimum standard for diesel
  engines)
  
• For MY 2007, 08, 09, regulatory requirements by
  EPA. This is assumed to mean the phase in
  requirement to 2010 which is 0.2 grams NOx plus
  NMHC and 0.01 PM
• Grantees receive 25 of the cost of the new bus
  if they meet less strict emissions standards
  
• For MY 2005 and 2006, 2.5 grams NOx plus NMHC and
  0.01 PM (minimum standard for diesel buses)
  
• For MY 2007, 2008, and 2009, regulatory
  requirements by EPA. Assumed to mean the
  phase-in requirement to 2010 which is 1.8 grams
  NOx plus NMHC and 0.01 PM

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Provisions of the Energy Policy Act of 2005 (HR6)
of Interest to Clean Cities

• Grantees can receive 100 of retrofit costs.
• No state can receive more than 10 of the monies
  made available each year. 55M authorized for
  2006, 55M for 2007, and such sums as are
  necessary for 2008-2010.
• Sec.742 Diesel Truck Retrofit and Fleet
  Modernization Program EPA, in consultation with
  DOE, administers a competitive grant program for
  fleet modernization and retrofit of diesel
  trucks. Grants go to state or local governments
  who will allocate funds with preference for ports
  and other major hauling operations. 50 cost
  share required. Replaced trucks must be 1998 or
  older. NGVC believes that alt fuel technologies
  will qualify.
• Authorization 2006 - 20M, 2007 - 35M, 2008 -
  45M, 2009-2010 such sums as are necessary.

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Provisions of the Energy Policy Act of 2005 (HR6)
of Interest to Clean Cities

• Sec. 754 Diesel Fueled Vehicles Meeting Tier
  2 Standards DOE accelerates efforts to ensure
  that diesel vehicles meet Tier 2 standards.
  Focuses on improving combustion and after
  treatment technologies. Goal is to enable diesel
  technologies by 2010 to meet the 2007 HD
  standards and the Tier 2 standards for LDV. No
  authorized.
• Sec. 756. - Heavy Duty Vehicle Idle Reduction
  Analysis and Deployment Program
  
• Requires EPA to conduct analysis on emissions,
  fuel savings, etc.
  
• Deployment Program EPA, in consultation with
  DOT (not DOE) to
  
• support deployment of IR technologies
• promote improved air quality and reduced
  emissions
  
• authorization 2006 - 19.5M, 2007 - 30M, 2008 -
  45M
  
• Costing 50 provided by non federal entitities
• IR means TSE and auzillary power unites that
  reduce idle and allow shut down of main drive
  engine or aux. refrigeration engine.
  
• Weight increase allows trucks to increase
  weight by 400 pounds w/o penalty if associated
  with added weight of IR technology.

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Provisions of the Energy Policy Act of 2005 (HR6)
of Interest to Clean Cities

• Sec. 757 Biodiesel Engine Testing Program DOE
  will work with engine manufacturers and fuel
  injection manufacturers to
  
• test advanced diesel fuel engines with biodiesel
• determine impact of different biodiesel
  blendstocks
  
• focus on emissions and warranty impacts of
  different blendstocks
  
• review options for optimizing engines for
  biodiesel use
  
• review impact on blends with ULSD
• Sec. 759 Fuel Economy Incentive Requirements
  Requires auto manufacturers to put a label on all
  dual fuel (bi-fuel and flex fuel) vehicles to
  inform owners that the vehicle can be operating
  on an alteranative fuel. Applies to autos
  manufactured after 9/1/06.
• Sec. 772 Extension of Maximum Fuel Economy
  Increase for AFVs (CAFÉ) Modifies the
  incentives for dual fuel AFVs by extending the
  current CAFÉ credits for dual-fuel AFVs through
  2010 and authorizes NHTSA to consider extending
  them through 2014.

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Provisions of the Energy Policy Act of 2005 (HR6)
of Interest to Clean Cities

• Sec. 773 Study of Reducing Use of Fuel for
  Autos (CAFÉ) NHTSA will study feasibility and
  effects of significantly reducing fuel consumed
  by autos by MY 2014 and make recommendations
  regarding
• current CAFÉ requirements
• alternative methods for achieving fuel economy
  reductions
  
• impacts of FCVs on achieving significant
  reductions in fuel economy by 2014
  
• the effects that the reductions would have on
  gasoline supplies, the auto industry, motor
  vehicle safety, and air quality.
  
• Sec. 774 Update Fuel Economy Test Procedures
  Requires EPA to evaluate/adjust fuel economy test
  procedures to reflect reality higher speeds,
  faster acceleration, temp. variation, use of A/c,
  etc.

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Provisions of the Energy Policy Act of 2005 (HR6)
of Interest to Clean Cities

• Sec. 1341 - Alternative Motor Vehicle Credit
  Provides a tax credit to the buyer for the
  purchase of a new, dedicated alternative fuel
  vehicle of 50 of the incremental cost of the
  vehicle, plus an additional 30 if the vehicle
  meets certain tighter emissions standards. These
  credits range from 5000- 40,000 depending on
  the size of the vehicle. For non-tax paying
  entities, the seller of the vehicle can take the
  credit. Credit is effective on purchases made
  after 12/31/05 and expires 12/31/10. This
  provision makes credits available for the
  acquisition of LD, MD and HD fuel cell vehicles,
  hybrids, and dedicated natural gas, propane,
  hydrogen and M85 alt fuel vehicles and LD lean
  burn diesel vehicles (less than 8500 lbs.)
• Sec. 1342 Credit for Installation of
  Alternative Fueling Stations Provides a tax
  credit equal to 30 (Highway Bill says 50) of
  the cost of alt fuel refueling equipment, up
  to30,000 in the case of large stations and
  1,000 for home refueling appliances. For
  non-tax-paying entities, the seller of the
  fueling equipment can take the credit. Credit
  applies to E85, natural gas, LPG, hydrogen, and
  biodiesel (at blends of at least 20). Credit is
  effective on purchases placed in service after
  12/31/05 and expires 12/31/09.

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Provisions of the Energy Policy Act of 2005 (HR6)
of Interest to Clean Cities

• Sec. 1344 Extension of Excise Tax Provisions
  and Income Tax Credit for Biodiesel Extends the
  current biodiesel excise tax provisions and
  income tax credit from 2006 to 2008.
• Sec. 1348 Sunset of Deduction for Clean fuel
  Vehicles and Certain Fueling Property. Repeals
  the existing 100,000 tax deduction for refueling
  property after 12/31/05.
• Sec. 791-797 Diesel Emission Reductions
• Establishes a program to make grants and loans
  available to State and local government agencies
  and non-profit organizations for reducing
  emissions from diesel engines. The program
  focuses on replacing/retrofitting engines in
  non-attainment areas and would require that at
  least 50 percent of the federal program funds be
  used on public fleets. EPA or CARB certified or
  verified technologies qualify. NGV repowers and
  replacements will be eligible. Legislation
  authorizes 200 million per year for FY 2006
  through 2010.

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Provisions of the Energy Policy Act of 2005 (HR6)
of Interest to Clean Cities

• Sec 1421-1424 Set America Free United States
  Commission On North American Energy Freedom
  
• Establishes a United States commission to make
  recommendations for a coordinated and
  comprehensive North American energy policy that
  will achieve energy self-sufficiency by 2025
  within the three contiguous North American nation
  areas of Canada, Mexico, and the United States.
• Sec. 1818 Natural Gas Supply Shortage Report
• Requires the DOE Secretary to study and develop
  recommendations for achieving a balance between
  natural gas supply and demand to, in part,
  facilitate the attainment of national ambient air
  quality standards under the Clean Air Act. In
  performing the study, the Secretary is directed
  to develop scenarios for decreasing natural gas
  demand and increasing natural gas supplies that
  compare the relative economic and environmental
  impacts of Federal policies that encourage or
  require the use of natural gas to meet air
  quality, carbon dioxide emission reduction, or
  security goals.

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Provisions of the Energy Policy Act of 2005 (HR6)
of Interest to Clean Cities

• Sec. 1823 Alternative Fuels Reports
• Requires the DOE Secretary to carry out a study
  on the potential for biodiesel and hythane to
  become major, sustainable, alternative fuels. The
  hythane report shall provide a detailed
  assessment of potential hythane markets and the
  research and development activities that are
  necessary to facilitate the commercialization of
  hythane as a competitive, environmentally
  friendly transportation fuel.
• THE FOLLOWING CLEAR ACT-RELATED PROVISION IS
  INCLUDED IN HIGHWAY BILL (H.R. 3)
  
• Sec. 1113 Volumetric Excise Tax Credit for
  Alternative Fuels
  
• Provides an excise tax credit (referred to as
  VEETC) to the seller of CNG or LNG. This credit
  is different than the fuel credit that had been
  included in previous versions of the CLEAR ACT.
  The credit is 50-cent per gasoline-gallon-equivale
  nt for CNG and 50-cents per liquid gallon for LNG
  for the sale of CNG and LNG for use as a motor
  vehicle fuel. It begins on October 1, 2006
  (delayed for budget reasons) and expires on
  September 30, 2009. Partially offsetting the
  value of the excise tax credit, however, is an
  increase in the motor fuels excise tax rate for
  both CNG and LNG. The CNG rate would increase
  from 4.3 cents per gge to 18.3 cents. The LNG
  rate would increase from 11.9 cents to 24.3 cents
  on a LNG gallon basis. The increased tax rate
  will go into effect on October 1, 2006. Under
  this approach, CNG and LNG will pay the same rate
  of tax into the Highway Trust Fund as all other
  transportation fuels, but then CNG and LNG would
  receive an excise tax credit paid out of the
  general fund. The credit will be paid to
  eligible recipients on a regular basis without
  regard to the actual amount of excise tax paid.
  Propane, hydrogen and some minor fuels also are
  eligible for this credit.

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Energy Policy Act of 2005

• For a copy of the complete bill go to
• http//energy.senate.gov/public