Energy Bill

On August 8, 2005 the President signed the Energy Policy Act of 2005 into law.  The Act contains several provisions related to diesel emission reductions.

Diesel Emissions Reduction (originally the Voinovich bill) (Title VII, Subtitle G, Sections 791-797, Pages 756-774)

• Authorizes $200 million each year for FY07 through FY11 ($1 billion over five years).
• Directs the Administrator of the EPA to establish a new program to significantly reduce diesel emissions in terms of “tons” and diesel emission exposure particularly in “poor air quality areas” as designated by EPA.
• Requires that 70% of the funds made available under the program be used to provide grants and low-cost revolving loans to regional, state, local, tribal, and port authorities for the purpose of installing diesel retrofits (defined as “certified engine configurations or verified technologies”).
• Requires that 30% of the funds made available under the program be awarded to states for the purpose of funding their own state grant and loan programs to significantly reduce diesel emissions by financing the installation of diesel retrofits.
• Up to two-thirds of the funds made available to states must be allocated equally among states that apply to EPA for funding and whose applications are approved, with the remaining one-third made available to states that match their federal funding.

Efficient Hybrid and Advanced Diesel Vehicles (Title VII, Subtitle B, Part 1, Section 712, Pages 692-693)

• Directs the Secretary of Energy to establish a new program to provide grants to automobile manufacturers to encourage domestic production of efficient hybrid and advanced diesel vehicles.
• Authorizes “sums as may be necessary” to carry out the program from FY06 through FY15. 

Advanced Vehicles Pilot Program (Title VII, Subtitle B, Part 2, Section 721, Pages 693-700)

• Authorizes $200 million “to remain available until expended” in competitive grants to be administered under the Clean Cities Coalition to fund state and local governments and MTAs (public/private partnerships are eligible) for alternative fuel vehicles, fuel cell vehicles, hybrid vehicles, ULSD vehicles, infrastructure and operation and maintenance. 
  

Clean School Bus USA Program (Title VII, Subtitle C, Section 741, Pages 703-713)

• Authorizes $55 million each year for FY06 and FY07 ($110 million over two years) and “sums that may be necessary” for FY08 through FY10.
• Directs the Administrator of EPA to establish a new program for awarding to school districts and their bus contractors grants for the purpose of retrofitting (i.e., repowering, after-treatment, engine remanufacturing) or replacing existing school buses.
• EPA retains substantial discretion to decide which grant applications to fund and what technologies to deploy.

Diesel Truck Retrofits and Fleet Modification Program (Title VII, Subtitle C, Section 742, Pages 713-717)

• Authorizes $20 million for FY06, $35 million for FY07, $45 million for FY08 ($100 million over three years), and “sums as may be necessary” for FY09-FY10.
• Directs the Administrator of EPA to establish a new program to award grants to state and local governments and their agencies to replace or retrofit (an undefined term) heavy-duty diesel vehicles used for the transportation of cargo especially in port areas and for major hauling operations.

Diesel Fueled Vehicles (Title VII, Subtitle D, Section 754, Pages 723-725)

• Directs the Secretary of Energy to accelerate efforts to improve diesel combustion and after-treatment technologies to meet the Tier II emission standards and the 2007 Heavy Duty Diesel Rule standards.
• Directs the Secretary of Energy to develop the next generation of low emission, high-efficiency diesel engine technologies including homogenous charge compression ignition technology.
• No specific authorization.

Reduction of Engine Idling (Title VII, Subtitle D, Section 756, Pages 729-738)

• Authorizes $19.5 million for 2006, $30 million for 2007, $45 million for 2008 (total of $94.5 million) for heavy-duty vehicle idle reduction and energy conservation technologies through the EPA SmartWay Transport Partnership over three years
• Authorizes $10 million for 2006, $15 million for 2007, $20 million for 2008 (total of $45 million) for locomotive idle reduction and energy conservation technologies through the EPA SmartWay Transport Partnership over three years

Amendments to the Biomass Research and Development Act of 2000 (Title IX, Subtitle D, Section 941, Pages 868-884)

• Authorizes $200 million for 10 years (FY 2006-2015) to develop technologies and processes necessary for abundant commercial production of biobased fuels at prices competitive with fossil fuels and a diversity of sustainable domestic sources of biomass for conversion to biobased fuels and biobased products.
• Of the funds authorized, approximately 20% will be directed toward feedstock production, 45% toward overcoming recalcitrance of cellulosic biomass, 30% toward product diversification, and 5% for strategic guidance.

Alternative Motor Vehicles and Fuels Incentives (Title XIII, Subtitle D, Section 1341, Pages 1391-1426)

• Establishes a Fuel Economy Credit and a Conservation Credit for taxpayers who purchase an advanced lean burn technology motor vehicle.
• An “advanced lean burn technology motor vehicle” is defined as a passenger automobile or light truck with an internal combustion engine that is designed to operate primarily using more air than necessary, incorporates direct injection, achieves at least 125% of the 2002 model year city fuel economy, meets BIN Tier II for vehicles below 6,000 pounds, and meets BIN 8 Tier II for vehicles between 6,000 and 8,500 pounds.  This covers clean diesel.
• The Fuel Economy Credit is $400 for a vehicle with 125% of the 2002 base fuel economy and increases by $400 increments as fuel economy increases in increments of 25% over the 2002 level.
• The Conservation Credit ranges between $250 to $1,000 based upon the life-time fuel savings in the range of 1,200 gallons to 3,000 gallons. 
• The credits are phased out for vehicles purchased from a particular manufacturer after the manufacturer sells 60,000 vehicles, with the credit reduced by 50% in the first two calendar quarters after the 60,000th vehicle is sold and 25% for the next two calendar quarters.
• The credits are in effect for 2006 through 2010.
• New Qualified Alternative Fuel Motor Vehicle Credit amounts to the applicable percentage (50% plus 30% if the vehicle meets the most stringent standards under the CAA for that make and model year) of incremental cost (excess for the MSRP over the price for a gasoline or diesel of same model not exceeding a specified dollar amount which varies by vehicle weight) of any new qualified alternative fueled vehicle placed in service by the taxpayer.

Advanced Biofuel Technologies Program (Title XV, Subtitle A, Section 1514, Pages 1558-1560)

• Authorizes EPA to spend $110 million/year for 5 years (2005 to 2009) on biofuels technology development.
• EPA, in consultation with USDA and the Biomass Research and Development Technical Advisory Committee, is authorized to establish a program to demonstrate advanced technologies for the production of alternative transportation fuels. 
• Priority shall be given to projects that enhance geographic diversity of alternative fuels and utilize feedstocks that represent 10% or less of ethanol or biodiesel fuel production in the US during the previous fiscal year.