Alternative Fuel Impacts

Introduction

In recent years, much attention has been paid to alternative fuels because of their potential to decrease the amount of greenhouse gases released into the atmosphere. The development of alternative fuels for transportation is an important goal because in some areas, transportation is responsible for 50% of greenhouse-gas emissions. Unlike biofuels, fossil fuels release carbon dioxide that was previously trapped in the earth, increasing the overall amount of carbon in the atmosphere.

Alternative fuels must be carefully produced and managed to avoid serious unintended consequences of their use. The definition of alternative fuels must also be appropriately specified. Some consider alternative fuels to be simply those sources that are not manufactured from liquid petroleum. This would place some fossil fuels, such as natural gas and liquefied coal, in the same category as ethanol and biodiesel. Some of these so-called alternative fuels produce more carbon emissions than liquid petroleum, worsening the problem they were intended to solve.

Historical Background and Scientific Foundations

Many of the earliest engines were powered by fuels that are called alternative today. In the early 1900s, most farm equipment used ethanol, a kind of alcohol, as its source of fuel. Ethanol had the great advantage of being able to be produced on the very farms it was used on. Crops were grown for the specific purpose of making ethanol and were fermented and distilled right on the farm. This meant that farmers did not need to rely on fuel deliveries or worry about any volatility in fuel prices. Luminaries such as Henry Ford (1863–1947) and Alexander Graham Bell (1847–1922) were proponents of ethanol as fuel, citing its ease of manufacture from almost any plant material, not just food crops. Bell even predicted the eventual exhaustion of fossil fuel supplies, saying that new plants could always be grown to make ethanol. Early diesel engines ran on pure vegetable oil, unlike the diesel engines of today, which require refined vegetable oil to function.

The practical reasons for using some alternative fuels remain the same today as they were in the early twentieth century. Production of fuel from plant sources will remain a renewable source of energy while stocks of petroleum will continue to decrease. The ability to produce biofuel in areas that lack fossil fuel reserves has many advantages. The transportation of fuel over long distances is an expensive process that itself consumes fuel. Furthermore, the centralization of fossil fuel production in a few areas, and the reliance on a large transportation network to take it to consumers, leaves supplies vulnerable to natural disasters or other kinds of disruptions.

The looming crisis of global warming is the largest issue driving interest in biofuels today. As fossil fuels release new carbon dioxide into Earth’s atmosphere, heat from the sun is less able to escape back into space. As global temperatures increase, Earth’s climate is also changing, becoming more volatile and less hospitable in many places. With melting polar ice caps, sea levels are rising around the world, endangering coastal communities. Climate change is also threatening the elaborate relationships between animals and their environments. A large number of scientists are concerned that the loss of key species will result in the collapse of ecosystems.

Many people are also concerned about the rising price of oil and the geopolitical effect of sending billions of dollars overseas to oil-producing countries. The oil embargo of the 1970s showed the serious effects of high fuel prices and poor relations with the members of the Organization of the Petroleum Exporting Countries (OPEC) oil cartel. Today, there is concern that the United States’ need for oil will force the country to pursue favorable relationships with petroleum-rich countries whose policies on other issues are distasteful to many Americans.

Issues and Impacts

Most alternative fuels have great potential to decrease the amount of carbon dioxide released into the atmosphere. The effect that a fuel has on carbon emissions depends on several factors, including the way it burns, the material from which it is manufactured, and the amount of fuel it takes to produce or refine it. One of the most popular alternative fuels is the same ethanol that was used in farm tractors in the early 1900s. Producing it from cellulose, which is found in plant stems and wood waste, is the most carbon-efficient method, reducing emissions by up to 90%. Cellulose is a particularly attractive source of ethanol because a great deal could be produced from existing agricultural waste. Ethanol produced from sugar, a process popular in Brazil, reduces carbon emissions by about 56% and ethanol from corn by about 22%. Ethanol produced from crops tends to be less efficient, partly because of the fertilizers required to grow the plants, which are carbon-intensive to produce and transport.

WORDS TO KNOW

BIODIESEL: A fuel made from a combination of plant and animal fat. It can be safely mixed with petro diesel.

ETHANOL: A compound of carbon, hydrogen, and oxygen (CH3CH2OH) that is a clear liquid at room temperature; also known as drinking alcohol or ethyl alcohol.

HYDROGEN: The simplest and most abundant element in the universe, which is being investigated as a fuel source.

Modern diesel engines can be quickly converted to run on biodiesel, which is easily made from vegetable oil. One popular advantage of biodiesel is that it can be produced from used fryer oil as well as new vegetable oil, providing a use for waste that would otherwise be thrown out. Biodiesel is currently one of the most efficient alternative fuels, achieving almost 68% reductions in carbon emissions. Use of biodiesel also decreases emissions of particulate matter, which can cause serious health problems, as well as the release of un-burned hydrocarbons. A source of some controversy has been that biodiesel does release greater amounts of nitrogen oxides than petroleum diesel, which form dangerous smog in the atmosphere.

IN CONTEXT: ALTERNATIVE FUEL SOURCE MATERIALS

Ethanol is synthesized as a renewable alternative fuel to petroleum-based fuels, like gasoline. Presently ethanol is mostly produced from corn and sugar cane. Since both are also food crops, the production of ethanol for fuel is competing with world food supply demands. Research continues on the development of enzymes that make possible the conversion of cellulose (such as found in paper waste and wood fibers) into ethanol.

Hydrogen, a popular alternative fuel in concept cars, is a gas that is the lightest and most abundant element in the universe. Hydrogen is attractive because, when burned, it produces only water and heat as a byproduct. However, there are significant safety issues in distributing and handling hydrogen, and widespread use will require the installation of specialized filling equipment. The greatest obstacle facing hydrogen as an alternative fuel is that there is no convenient source for it, and producing it now creates more carbon dioxide than a comparable amount of petroleum.

A significant problem with alternative fuels produced from crops is that they can decrease the supply of important foods. Crops like soybeans, palm oil, and corn are increasingly being diverted from food uses to be made into biofuels. This has increased the overall price of food, making it more difficult for the world’s poor to afford adequate nutrition. The World Food Programme has already warned that its ability to respond to famine is decreased by having to pay fuel prices for food. Some studies disagree with claims that demand for biofuels increases food prices, and it is clear that other factors have also contributed to recent soaring food prices. Higher demand for alternative fuels may also mean that more land is deforested to grow biofuel crops. Deforestation of tropical rainforests may worsen global warming since these forests absorb carbon dioxide as they grow.

Most alternative transportation fuels will require significant changes in engine technology to be utilized on a wide scale. It will take many years for the current cars using gasoline to fall out of use. Few alternative fuels can currently be produced at levels high enough to meet current demand, though research into better manufacturing methods and more suitable source plants is continuing. Alternative fuels remain an area of interest to many scientists, policy makers, and individuals, who seek to find viable ways to decrease carbon emissions without creating adverse consequences to humanity.

Primary Source Connection

Public Law 109-58, commonly known as the Energy Policy Act of 2005, consists of an introduction and sixteen sections, known as titles, that occupy more than 1,700 pages of text and cover a broad range of energy issues during the early years of the twenty-first century. Its full title is “An Act to Ensure Jobs for Our Future with Secure, Affordable, and Reliable Energy.” The act includes provisions such as incentives to increase domestic oil and gas exploration, the promotion of nuclear power and hydropower, advanced research and development, tax credits to encourage hybrid automobiles, and bureaucratic maneuvering such as the authorization of an additional assistant secretary of energy.

The Energy Policy Act of 2005 is a wide-ranging and controversial piece of legislation that is intended to provide long-term guidance for national energy policy decisions. It contains a mixture of provisions that promote innovative technologies such as hybrid automobiles and hydrogen fuel cells as well as subsidies for those producing traditional forms of energy such as oil and nuclear power.

ENERGY POLICY ACT OF 2005

SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT.

(a) Allowance of Credit—There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of—

(1) the new qualified fuel cell motor vehicle credit determined under subsection (b),

(2) the new advanced lean burn technology motor vehicle credit determined under subsection (c),

(3) the new qualified hybrid motor vehicle credit determined under subsection (d), and

(4) the new qualified alternative fuel motor vehicle credit determined under subsection (e).

(b) New Qualified Fuel Cell Motor Vehicle Credit—

(1) IN GENERAL—For purposes of subsection (a), the new qualified fuel cell motor vehicle credit determined under this subsection with respect to a new qualified fuel cell motor vehicle placed in service by the taxpayer during the taxable year is—

1. $8,000 ($4,000 in the case of a vehicle placed in service after December 31, 2009), if such vehicle has a gross vehicle weight rating of not more than 8,500 pounds,
2. $10,000, if such vehicle has a gross vehicle weight rating of more than 8,500 pounds but not more than 14,000 pounds,
3. $20,000, if such vehicle has a gross vehicle weight rating of more than 14,000 pounds but not more than 26,000 pounds, and
4. $40,000, if such vehicle has a gross vehicle weight rating of more than 26,000 pounds.

(2) INCREASE FOR FUEL EFFICIENCY—(A) IN GENERAL—The amount determined under paragraph (1)(A) with respect to a new qualified fuel cell motor vehicle which is a passenger automobile or light truck shall be increased by—

1. $1,000, if such vehicle achieves at least 150 percent but less than 175 percent of the 2002 model year city fuel economy,
2. $1,500, if such vehicle achieves at least 175 percent but less than 200 percent of the 2002 model year city fuel economy,
3. $2,000, if such vehicle achieves at least 200 percent but less than 225 percent of the 2002 model year city fuel economy,
4. $2,500, if such vehicle achieves at least 225 percent but less than 250 percent of the 2002 model year city fuel economy,
5. $3,000, if such vehicle achieves at least 250 percent but less than 275 percent of the 2002 model year city fuel economy,
6. $3,500, if such vehicle achieves at least 275 percent but less than 300 percent of the 2002 model year city fuel economy, and
7. $4,000, if such vehicle achieves at least 300 percent of the 2002 model year city fuel economy.

(3) NEW QUALIFIED FUEL CELL MOTOR VEHICLE—For purposes of this subsection, the term ‘new qualified fuel cell motor vehicle’ means motor vehicle—

1. which is propelled by power derived from 1 or more cells which convert chemical energy directly into electricity by combining oxygen with hydrogen fuel which is stored on board the vehicle in any form and may or may not require reformation prior to use,
2. which, in the case of a passenger automobile or light truck, has received on or after the date of the enactment of this section a certificate that such vehicle meets or exceeds the Bin 5 Tier II emission level established in regulations prescribed by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act for that make and model year vehicle,
3. the original use of which commences with the taxpayer,
4. which is acquired for use or lease by the taxpayer and not for resale, and
5. which is made by a manufacturer.

New Advanced Lean Burn Technology Motor Vehicle Credit—

(1) IN GENERAL—For purposes of subsection (a), the new advanced lean burn technology motor vehicle credit determined under this subsection for the taxable year is the credit amount determined under paragraph (2) with respect to a new advanced lean burn technology motor vehicle placed in service by the taxpayer during the taxable year.

(2) CREDIT AMOUNT—

(A) FUEL ECONOMY—

(i) IN GENERAL—The credit amount determined under this paragraph shall be determined in accordance with the following table:

In the case of a vehicle which achieves a fuel economy of (expressed as a percentage of the 2002 model year city fuel economy) the credit amount is—

At least 125 percent but less than 150 percent: $400

At least 150 percent but less than 175 percent: $800

At least 175 percent but less than 200 percent: $1,200

At least 200 percent but less than 225 percent: $1,600

At least 225 percent but less than 250 percent: $2,000

At least 250 percent: $2,400.

(ii) 2002 MODEL YEAR CITY FUEL ECONOMY—For purposes of clause (i), the 2002 model year city fuel economy with respect to a vehicle shall be determined on a gasoline gallon equivalent basis as determined by the Administrator of the Environmental Protection Agency using the tables provided in subsection (b)(2)(B) with respect to such vehicle.

(B) CONSERVATION CREDIT—The amount determined under subparagraph (A) with respect to a new advanced lean burn technology motor vehicle shall be increased by the conservation credit amount determined in accordance with the following table:

In the case of a vehicle which achieves a lifetime fuel savings of (expressed in gallons of gasoline) the conservation credit amount is—

At least 1,200 but less than 1,800: $250

At least 1,800 but less than 2,400: $500

At least 2,400 but less than 3,000: $750

At least 3,000: $1,000.

(3) NEW ADVANCED LEAN BURN TECHNOLOGY MOTOR VEHICLE—For purposes of this subsection, the term ‘new advanced lean burn technology motor vehicle’ means a passenger automobile or a light truck—

(A) with an internal combustion engine which—(i) is designed to operate primarily using more air than is necessary for complete combustion of the fuel, (ii) incorporates direct injection, (iii) achieves at least 125 percent of the 2002 model year city fuel economy, (iv) for 2004 and later model vehicles, has received a certificate that such vehicle meets or exceeds—

1. in the case of a vehicle having a gross vehicle weight rating of 6,000 pounds or less, the Bin 5 Tier II emission standard established in regulations prescribed by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act for that make and model year vehicle, and
2. ) in the case of a vehicle having a gross vehicle weight rating of more than 6,000 pounds but not more than 8,500 pounds, the Bin 8 Tier II emission standard which is so established,

(B) the original use of which commences with the taxpayer,

(C) which is acquired for use or lease by the taxpayer and not for resale, and

(D) which is made by a manufacturer.

(4) LIFETIME FUEL SAVINGS—For purposes of this subsection, the term ‘lifetime fuel savings’ means, in the case of any new advanced lean burn technology motor vehicle, an amount equal to the excess (if any) of—

(A) 120,000 divided by the 2002 model year city fuel economy for the vehicle inertia weight class, over

(B) 120,000 divided by the city fuel economy for such vehicle.

(d) New Qualified Hybrid Motor Vehicle Credit—

(1) IN GENERAL—For purposes of subsection (a), the new qualified hybrid motor vehicle credit determined under this subsection for the taxable year is the credit amount determined under paragraph (2) with respect to a new qualified hybrid motor vehicle placed in service by the taxpayer during the taxable year.

(2) CREDIT AMOUNT—

(A) CREDIT AMOUNT FOR PASSENGER AUTOMOBILES AND LIGHT TRUCKS—In the case of a new qualified hybrid motor vehicle which is a passenger automobile or light truck and which has a gross vehicle weight rating of not more than 8,500 pounds, the amount determined under this paragraph is the sum of the amounts determined under clauses (i) and (ii).

1. FUEL ECONOMY—The amount determined under this clause is the amount which would be determined under subsection (c)(2)(A) if such vehicle were a vehicle referred to in such subsection.
2. CONSERVATION CREDIT—The amount determined under this clause is the amount which would be determined under subsection (c)(2)(B) if such vehicle were a vehicle referred to in such subsection.

(B) CREDIT AMOUNT FOR OTHER MOTOR VEHICLES—

1. IN GENERAL—In the case of any new qualified hybrid motor vehicle to which subparagraph (A) does not apply, the amount determined under this paragraph is the amount equal to the applicable percentage of the qualified incremental hybrid cost of the vehicle as certified under clause (v).
2. APPLICABLE PERCENTAGE—For purposes of clause (i), the applicable percentage is—(I) 20 percent if the vehicle achieves an increase in city fuel economy relative to a comparable vehicle of at least 30 percent but less than 40 percent, (II) 30 percent if the vehicle achieves such an increase of at least 40 percent but less than 50 percent, and (III) 40 percent if the vehicle achieves such an increase of at least 50 percent.
3. (i) QUALIFIED INCREMENTAL HYBRID COST—For purposes of this subparagraph, the qualified incremental hybrid cost of any vehicle is equal to the amount of the excess of the manufacturer’s suggested retail price for such vehicle over such price for a comparable vehicle, to the extent such amount does not exceed—(I) $7,500, if such vehicle has a gross vehicle weight rating of not more than 14,000 pounds, (II) $15,000, if such vehicle has a gross vehicle weight rating of more than 14,000 pounds but not more than 26,000 pounds, and (III) $30,000, if such vehicle has a gross vehicle weight rating of more than 26,000 pounds.

(3) NEW QUALIFIED HYBRID MOTOR VEHICLE—For purposes of this subsection—

(A) IN GENERAL—The term ‘new qualified hybrid motor vehicle’ means a motor vehicle—

1. which draws propulsion energy from onboard sources of stored energy which are both—(I) an internal combustion or heat engine using consumable fuel, and (II) a rechargeable energy storage system,
2. which, in the case of a vehicle to which paragraph (2)(A) applies, has received a certificate of conformity under the Clean Air Act and meets or exceeds the equivalent qualifying California low emission vehicle standard under section 243(e)(2) of the Clean Air Act for that make and model year, and (I) in the case of a vehicle having a gross vehicle weight rating of 6,000 pounds or less, the Bin 5 Tier II emission standard established in regulations prescribed by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act for that make and model year vehicle, and (II) in the case of a vehicle having a gross vehicle weight rating of more than 6,000 pounds but not more than 8,500 pounds, the Bin 8 Tier II emission standard which is so established,
3. which has a maximum available power of at least—(I) 4 percent in the case of a vehicle to which paragraph (2)(A) applies, (II) 10 percent in the case of a vehicle which has a gross vehicle weight rating of more than 8,500 pounds and not more than 14,000 pounds, and (III) 15 percent in the case of a vehicle in excess of 14,000 pounds,
4. which, in the case of a vehicle to which paragraph (2)(B) applies, has an internal combustion or heat engine which has received a certificate of conformity under the Clean Air Act as meeting the emission standards set in the regulations prescribed by the Administrator of the Environmental Protection Agency for 2004 through 2007 model year diesel heavy duty engines or ottocycle heavy duty engines, as applicable,
5. the original use of which commences with the taxpayer,
6. which is acquired for use or lease by the taxpayer and not for resale, and
7. which is made by a manufacturer.

IN CONTEXT: AGRIBUSINESS AND BIOFUEL PRACTICE

Critics assert that some modern agribusiness practices can be environmentally destructive, especially those leading to the rapid erosion of irreplaceable soil. In the production of corn-based ethanol for example, even if ethanol yielded an energy profit, these critics say, it would only be a means of mining the soil, which is a non-renewable resource. Some agricultural scientists have also argued that the removal of roots, husks, and stalks from fields to make cellulosic ethanol would accelerate erosion and bleed soil fertility. Such materials slow erosion and aid the penetration of the soil by rainwater.

Critics of ethanol also claim that it puts arable land at the service of the automobile, against which the poor and hungry of the world must then compete for food. As recently as 2007, before another surge in global food prices exacerbated the plight of the poor, the New York Times reported that food prices were on the rise globally, driven partly by sharply rising demand for corn ethanol, and these rising prices had caused U.S. foreign food-aid dollars to buy less than half the food they bought in 2000.

(e) New Qualified Alternative Fuel Motor Vehicle Credit—

(1) ALLOWANCE OF CREDIT—Except as provided in paragraph (5), the new qualified alternative fuel motor vehicle credit determined under this subsection is an amount equal to the applicable percentage of the incremental cost of any new qualified alternative fuel motor vehicle placed in service by the taxpayer during the taxable year.

(2) APPLICABLE PERCENTAGE—For purposes of paragraph (1), the applicable percentage with respect to any new qualified alternative fuel motor vehicle is—

(A) 50 percent, plus

(B) 30 percent, if such vehicle—

1. has received a certificate of conformity under the Clean Air Act and meets or exceeds the most stringent standard available for certification under the Clean Air Act for that make and model year vehicle (other than a zero emission standard), or
2. has received an order certifying the vehicle as meeting the same requirements as vehicles which may be sold or leased in California and meets or exceeds the most stringent standard available for certification under the State laws of California (enacted in accordance with a waiver granted under section 209(b) of the Clean Air Act) for that make and model year vehicle (other than a zero emission standard). For purposes of the preceding sentence, in the case of any new qualified alternative fuel motor vehicle which weighs more than 14,000 pounds gross vehicle weight rating, the most stringent standard available shall be such standard available for certification on the date of the enactment of the Energy Tax Incentives Act of 2005.

(4) NEW QUALIFIED ALTERNATIVE FUEL MOTOR VEHICLE—For purposes of this subsection—

(A) IN GENERAL—The term ‘new qualified alternative fuel motor vehicle’ means any motor vehicle—

1. which is only capable of operating on an alternative fuel,
2. the original use of which commences with the taxpayer,
3. which is acquired by the taxpayer for use or ease, but not for resale, and
4. which is made by a manufacturer.

(B) ALTERNATIVE FUEL—The term ‘alternative fuel’ means compressed natural gas, liquefied natural gas, liquefied petroleum gas, hydrogen, and any liquid at least 85 percent of the volume of which consists of methanol.

(5) CREDIT FOR MIXED-FUEL VEHICLES—

(A) IN GENERAL—In the case of a mixed-fuel vehicle placed in service by the taxpayer during the taxable year, the credit determined under this subsection is an amount equal to—

1. in the case of a 75/25 mixed-fuel vehicle, 70 percent of the credit which would have been allowed under this subsection if such vehicle was a qualified alternative fuel motor vehicle, and
2. in the case of a 90/10 mixed-fuel vehicle, 90 percent of the credit which would have been allowed under this subsection if such vehicle was a qualified alternative fuel motor vehicle.

U.S. Congress

U.S. CONGRESS. “ENERGY POLICY ACT OF 2005.” SEC. 1342, SEC. 30B. WASHINGTON, D.C.: U.S. CONGRESS, 2005.

See Also Carbon Dioxide (CO₂) Emissions; Emissions Standards; Sustainable Development

BIBLIOGRAPHY

Periodicals

Schmidt, Charles W. “Biodiesel: Cultivating Alternative Fuels.” Environmental Health Perspectives 115 (February 2007): A86-A91.

Web Sites

New Scientist. “Biofuel Production May Raise Price of Food.” May 9, 2007. http://www.newscientist.com/article/dn11811-biofuel-production-may-raise-price-of-food-.html (accessed March 7, 2008).

Rutgers University, Bill Kovarik. “Renewable Energy History Project.” http://www.runet.edu/~wkovarik/envhist/RenHist/1.biofuelsl.html (accessed March 8, 2008)

The Times, South Africa. “WFP warns EU about biofuels.” March 7, 2008. http://www.thetimes.co.za/News/Article.aspx?id=722306 (accessed March 8, 2008).

Union of Concerned Scientists. “Biodiesel Basics.” December 20, 2007. http://www.ucsusa.org/lean_vehicles/big_rig_cleanup/biodiesel.html (accessed March 7, 2008).

U.S. Environmental Protection Agency (EPA). “Greenhouse Gas Impacts of Expanded Renewable and Alternative Fuels Use.” April, 2007. http://earthl.epa.gov/otaq/renewablefuels/420f07035.htm (accessed March 8, 2008).

Kenneth Travis LaPensee