Vehicle Efficiency in the Energy Bill

In July 2005, Congress passed a broad energy bill with over $14 billion in energy-related tax credits. Even with oil consumption and import issues at the forefront of the national agenda, however, Congress included nothing to ensure that the fuel efficiency of cars and light trucks will increase. While the bill does provide tax credits to promote certain advanced vehicle technologies, it omitted some helpful provisions from the Senate version and continued certain provisions that increase oil use.

Beneficial elements of the energy bill include:
Alternative motor vehicle tax credits were implemented; hybrid, diesel, alternative fuel and fuel cell vehicle tax credits should stimulate vehicle development and sales. The credit amounts, determined by a vehicle's fuel economy and emissions level, can be worth up to several times the federal tax deductions currently in place for similar vehicles.

Problematic elements of the energy bill include:
1. CAFE standards were not increased: Although the technology exists to increase average fuel economy of the U.S. passenger vehicle fleet to over 40 miles per gallon, Congress did not improve CAFE standards. The average fuel economy of today's new vehicles is at the same level it was in 1983.
2. Dual fuel vehicle credits were extended: This provision, designed to stimulate growth of alternative fuel vehicle sales with the intent of curbing oil use, has had the opposite effect by facilitating sales of less-efficient cars, pickups, and SUVs. The credits, previously due to expire in 2008, are now extended through 2014.
3. Missed opportunities: The Senate energy bill included one provision requiring replacement tires to be as fuel-efficient as the tires on new vehicles, and another calling for a one-million barrel per day reduction in oil consumption by 2015. Both provisions were omitted from the final bill.

For more on energy efficiency in the energy bill, see our policy section.