	Introduction

A range of federal incentives supports the development and deployment of alternatives to conventional fuels and engines in transportation. These incentives include tax deductions and credits for vehicle purchases and the installation of refueling systems, federal grants for conversion of older vehicles to newer technologies, mandates for the use of biofuels, and incentives for manufacturers to produce alternative fuel vehicles. Some of these incentives have expired in recent years when their authorizations expired. In addition to concerns over petroleum import dependence, other factors also have driven policy on alternative fuels and advanced vehicle technologies. Federal incentives do not reflect a single, comprehensive strategy but rather an aggregative approach to a range of discrete public policy issues, including improving environmental quality, expanding domestic manufacturing, and promoting agriculture and rural development. (This report does not evaluate the effectiveness of alternative fuel programs and incentives.) Many of the incentives for ethanol production have been included in farm-related legislation and appropriations acts and hence have been administered by the U.S. Department of Agriculture (USDA), or in tax provisions administered by the Internal Revenue Service (IRS). Reducing Fuel Consumption and Vehicle Emissions

Several agencies, including the Environmental Protection Agency (EPA) and the Department of Transportation (DOT), have been mandated by statute to address concerns over fuel consumption and vehicle emissions through programs for alternative fuels. Manufacturers can accrue credits toward meeting CAFE standards for the production and sale of certain types of alternative fuel vehicles. Structure and Content of the Report

The federal tax incentives and programs discussed in this report aim to support the development and deployment of alternative fuels. In general, they are independently administered by separate federal agencies, including five agencies: Department of the Treasury, DOE, DOT, EPA, and USDA. Current Federal Incentives

		Department of the Treasury

			Idle Reduction Equipment Tax Exemption6

			Motor Fuel Excise Taxes10

			Plug-In Electric Drive Vehicle Credit15

		Department of Energy

			Advanced Technology Vehicles Manufacturing Loan Program (ATVM)

			Bioenergy Technologies Program (formerly the Biomass and Biorefinery Systems R&D Program)

			Clean Cities Program

			Hydrogen and Fuel Cell Technologies Program

			Vehicle Technologies Program (VTP)

		Department of Transportation

			Congestion Mitigation and Air Quality Improvement Program

			Corporate Average Fuel Economy Program Alternative Fuel Vehicle Credits

			Low or No Emission Vehicle Program

		Environmental Protection Agency

			National Clean Diesel Campaign

			Renewable Fuel Standard

		Department of Agriculture19

			Bioenergy Program for Advanced Biofuels20

			Biomass Crop Assistance Program (BCAP; §9011)21

			Biomass Research and Development (BRDI)22

			Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program (formerly the Biorefinery Assistance Program)24

			Rural Energy for America Program (REAP) Grants and Loans25

Appendix A.
A wide array of federal incentives supports the development and deployment of alternatives to conventional fuels and engines in transportation. These incentives include tax deductions and credits for vehicle purchases and the installation of refueling systems, federal grants for conversion of older vehicles to newer technologies, mandates for the use of biofuels, and incentives for manufacturers to produce alternative fuel vehicles. The current array of incentives for alternative fuels and related technologies does not reflect a single, comprehensive strategy, but rather an aggregative approach to a range of discrete public policy issues, including goals of reducing petroleum consumption and import dependence, improving environmental quality, expanding domestic manufacturing, and promoting agriculture and rural development.
Current federal programs are administered by five key agencies: Department of the Treasury (Treasury), Department of Energy (DOE), Department of Transportation (DOT), Environmental Protection Agency (EPA), and the U.S. Department of Agriculture (USDA). The incentives and programs described in this report are organized by the responsible agency.
Treasury (through the Internal Revenue Service, IRS) administers tax credits and deductions for alternative fuel and advanced technology vehicle purchases, expansion of alternative fuel refueling infrastructure, and incentives for the production and/or distribution of alternative fuels. Many of these incentives have expired in recent years. DOE (mainly through the Office of Energy Efficiency and Renewable Energy, EERE) administers research and development (R&D) programs for advanced fuels and transportation technology, grant programs to deploy alternative fuels and vehicles, and a loan program to promote domestic manufacturing of high-efficiency vehicles. DOT (mainly through the Federal Highway Administration, FHWA, and Federal Transit Administration, FTA) administers grant programs to deploy "clean fuel" buses and other alternative fuel vehicles. DOT (through the National Highway Traffic Safety Administration, NHTSA) also administers federal Corporate Average Fuel Economy (CAFE) standards, which include incentives for production of alternative fuel vehicles. EPA (mainly through the Office of Transportation and Air Quality, OTAQ) administers the Renewable Fuel Standard, which mandates the use of biofuels in transportation. EPA also administers grant programs to replace older diesel engines with newer technology. USDA (mainly through the Rural Business-Cooperative Service, RBS) administers grant, loan, and loan guarantee programs to expand agricultural production of biofuel feedstocks, conduct R&D on biofuels and bioenergy, and establish and expand facilities to produce biofuels, bioenergy, and bioproducts.