U.S. energy bill packs powerful diesel provisions

By | October 01, 2005
As a fuel, biodiesel cannot meet its full potential without recognition from the companies manufacturing the diesel engines in which it operates. Accordingly, in addition to the biodiesel tax credit expiration date being extended from 2006 to 2008, several other diesel-related provisions were passed as part of the Energy Policy Act of 2005.

Tax credits totaling $875 million were authorized for vehicles meeting certain efficiency requirements. Beginning January 2006, if a vehicle with "advanced lean-burn technology" is bought, the purchaser may be eligible for up to $3,400 in tax credits. "'Advanced lean-burn technology' is essentially code for diesel," said Allen Schaeffer, executive director of the Diesel Technology Forum, an organization representing diesel engine, fuel and emission control system manufacturers.

Diesel engines are fuel efficient by design. The high air-to-fuel ratio and basic thermal efficiency of the diesel engine allow compression ignition engines to conserve fuel at a higher rate than gasoline engines. "With continually rising oil prices, more people are becoming aware of the fuel economy of their vehicles," Schaeffer said.

There are no diesel vehicles on the U.S. market that currently meet the stringent "Tier 2, Bin 5" emission standards required for these new credits, but Schaeffer hopes this monetary incentive might encourage manufacturers to introduce eligible diesels to the domestic vehicle market soon. Sales in the last couple of years show promise, however. "From 2000 to 2004, sales of diesel vehicles increased 56 percent in the U.S.," Schaeffer said.

Another provision, the Diesel Emissions Reduction Act (DERA), authorizes $1 billion over five years to retrofit older on-road trucks, buses and off-road equipment with diesel particulate filters, NOx traps and selective catalytic reduction systems. Schaeffer said 70 percent of the funding would go to the U.S. EPA for distribution to vehicles operating in the nation's highest-ranking non-attainment zones where ambient air quality suffers the most. Thirty percent will be doled out to the states for localized programs. "[The non-attainment and near non-attainment zones] will get the first bite of the apple," he said. The size of that "apple" isn't determined yet, but Schaeffer hopes appropriation funding will approach or match what has been authorized.

Nearly $200 million was authorized for two more programs: an idle emission reduction program to help the EPA's SmartWay Transport Partnership get auxiliary power units in play, and a 50 percent cost share program to retrofit and modernize truck fleets in ports and large-haul operations.

The inclusion of these diesel incentives is good news for diesel and biodiesel. "It offers a ray of hope and opportunity for both manufacturers and consumers," Schaeffer said. The growth of both the diesel vehicle and biodiesel fuel markets will likely coincide, which Schaeffer said raises questions like, "What happens if I put biodiesel in a diesel vehicle with a particulate filter?"

Working together, both industries can successfully address these concerns. "The diesel industry recognizes the biodiesel industry's success," Schaeffer told Biodiesel Magazine. "And together we're taking steps down the right road."
-Staff Report
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