 | Hybrid Watchdog: Hybrid v. Diesel Tax Incentives |
UCS has worked with a bipartisan group of senators and representatives to develop a comprehensive package of tax credits for the purchase of the full range of alternative-fuel or advanced-technology vehicles, from cars and SUVs to buses and delivery trucks. Most importantly, UCS has worked hard to ensure that these credits are tied to strong fuel economy and emissions performance. These incentives are supported by three of the largest automakers in the U.S. market (Ford, Honda, and Toyota), alternative fuel providers, and several other science and environmental groups. While these tax credits will not solve our oil dependency and environmental problems, they are an important step in the right direction. CLEAR ACT Background On March 3, 2003, UCS joined with Senator Orrin Hatch (R-Utah), Representative Dave Camp (R-Mich.), and representatives of the alternative-fuels industry and the auto industry to announce the reintroduction of the CLEAR Act (S. 505), which is designed to provide tax incentives for clean advanced vehicles. On April 3, 2003, the CLEAR Act passed through the Senate Finance Committee with strong environmental performance criteria intact. In the House, Representative Camp introduced the companion bill, H.R. 1054. Unfortunately, the House Ways and Means Committee dramatically weakened the bill by removing the hybrid tax credit and replacing it with a credit for diesel vehicles, which are 4-10 times dirtier than the hybrids and other technologies targeted in the original bill. This weakened version then passed the full House on April 11, 2003. A compromise version including hybrid, alternative fuel, and some diesel credits was eventually agreed to as part of an overall poorly designed Energy Bill, but ultimately that legislation stalled under its own weight. The only advanced technology vehicle consumer incentive that became law to last year was a one-year extension of the $2,000 hybrid tax deduction. Dirty Diesel Incentives Return in the House Unfortunately, a similar dynamic seems to be cropping up in 2005. The recently passed House Energy Bill (H.R. 6) includes no incentives for advanced hybrid or alternative fuel technologies, but instead focuses exclusively on diesels that are held only to the most lenient of pollution standards set to fully phase in by 2009. As the recent UCS report, The Diesel Dilemma notes, a vehicle package that includes conventional gasoline technologies can more cost-effectively provide fuel economy benefits equal to diesel's without any of the pollution hazards. As a result, the House Energy Bill incentive language is nothing more than an attempt to subsidize dirtier diesel technologies at taxpayer expense. CLEAR ACT Gives Clear Choice on Consumer Incentives An aggressive fuel economy strategy, focused on hybrids, could be saving us as much as 6 million barrels of oil every day by 2025, but this will take good hybrids that more than double fuel economy compared to today. In contrast, Senator Hatch's reintroduced CLEAR ACT (S.971) would focus on advanced technologies that present both and oil savings and emissions benefit, such as hybrid vehicles, compressed natural gas, ethanol or methanol fuel, or hydrogen fuel cells. Hybrid technology would be expected to receive the majority of the immediate tax credits given that it has the best potential for near term market growth. Unlike today's $2,000 tax deduction (which is worth only about $600 in the consumers' pocket and is on the way out), the tax credits in the CLEAR ACT, if enacted, would effectively take $2,000-$3,000 off the price of hybrids, depending on the technology on board and the fuel economy of the vehicle relative to conventional versions. The Civic would be at the lower end, the Escape in the middle, and the Prius on the high end. Even more would be provided for fuel cell vehicles and medium and heavy-duty hybrid and alternative fuel trucks and buses. See the UCS statement on the CLEAR ACT. The Senator's proposal would cost around $2.5 billion over 9 years. Some automakers are already attempting to press for diesel to be included in the Senate bill, and GM is pushing for generous credits for their GMC Sierra and Chevy Silverado "hollow hybrids" despite a lack of advanced technology, improved environmental performance, or dramatic fuel savings. If we are to use taxpayer dollars to help automakers sell their merchandise, it would be sensible to spend it in a way that would benefit both the consumer and public health. The CLEAR ACT does this. The House approach, bluntly, does not. Update: CLEAR ACT credits passed as part of the energy bill A version of the CLEAR ACT tax credits passed as part of the Fiscal Year 2006 comprehensive Energy bill. Click here to go to our Hybridblog.org analysis of the tax credits and what it might mean for you as a consumer.
| 
