New US highway bill gives tax breaks for alternative fuels

New US highway bill gives tax breaks for alternative fuels

Washington (Platts)--11Aug2005

Alternative fuels and vehicles received a boost this week when President Bush
signed the highway bill into law Wednesday. The $286-bil measure was primarily
written to improve aging roads and bridges. But it includes a new 50 ct/gal
"volumetric excise tax credit" for alternative fuels other than ethanol and
biodiesel, which received a similar credit from Congress last year. 

Eligible fuels include biofuels, compressed and liquefied natural gas, liquid
fuels derived from coal using the Fischer-Tropsch process and hydrogen. Except
for hydrogen, all of the fuels must pay an 18.3- or 24.3-ct/gal excise tax
that will pad the Highway Trust Fund. 

The law also directs the Transportation Department to fund a $50-mil research
and development program into bio-based fuels at multiple research centers;
start a National Fuel Cell Bus Technology Development Program; and offer
grants to public buses that run on alcohol-based fuels, batteries, biodiesel,
clean diesel, CNG, LNG, fuel cells or hybrid-electric technology.

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