Recognizing the substantial portion of energy consumption attributed to the light vehicle transportation sector, the need to conserve the Nation's energy resources, and the need to reduce the dependence upon foreign energy feed stocks and improve air quality, Congress passed the Energy Conservation and Policy Act of 1975 to institute fuel efficiency requirements for passenger cars and light trucks. Corporate average fuel economy, or "CAFE," the weighted sales average of a manufacturer's fleet of new passenger cars and light duty trucks, was mandated for newly manufactured passenger cars produced after 1977 and light trucks after 1978. Congress directed the Department of Transportation's National Highway Traffic Safety Administration (NHTSA) to promulgate these fuel economy standards and to enforce them via civil penalties levied against automakers that do not comply with established CAFE levels.

Along with the improvements in light transportation fleet fuel efficiency, legislators sought to address the conservation of domestic energy resources, or more specifically, the reduction in fossil fuel consumption, through a replacement strategy accomplished by use of alternative fuels. In order to promote this method of conserving fossil fuels, Congress enacted the Alternative Motor Fuels Act of 1988, Pub. L. 100-94, October 14, 1988, (AMFA). To assist in achieving the goals of promoting the use of alternative fuels, AMFA provided incentives for manufacturers of light vehicles to design, develop, manufacture and market passenger cars and light trucks that would operate on the alternative fuels. AMFA's manufacturing incentives were established through amendments to the Motor Vehicle Information and Cost Savings Act by allowing for special considerations in CAFE calculations for vehicles that operate intermittently or exclusively on the alcohol and natural gas fuels. The Energy Policy Act of 1992, Pub. L. 102-486, October, 24, 1992, (EPACT) sought to further reduce transportation fossil fuels consumption through replacement with alternative fuels, and expanded the definition of what constituted an alternative fuel.

Along with these provisions for light vehicle manufacturing incentives, AMFA directs the Department of Transportation, in consultation with DOE and the Environmental Protection Agency, to conduct an evaluation and issue a report on the impact of the CAFE incentives program on the extent of fossil fuel replacement and other associated benefits and to issue its findings to Congress, along with recommendations for continuing to offer these manufacturing incentives. AMFA also directs NHTSA to issue, by December 31, 2001, either a final rule that extends the incentive program for up to an additional four years with a reduced maximum mile per gallon CAFE credit attribution, or a Federal Register notice that the program will be discontinued with justification for that decision. The evaluation is to be conducted based on the availability to the public of alternative fueled automobiles and the alternative fuels; energy conservation and security; environmental considerations; and any other factors deemed to be relevant.

Multiple resources were used to collect and to analyze information and data to facilitate this study and report. The majority of information was extracted from U.S. Department of Energy data sources, including the Alternative Fuels Data Center (AFDC), the Energy Information Administration (EIA), the 19th edition of the Transportation Energy Data Book, publications from the Center for Transportation Research at Argonne National Laboratory, and the Oak Ridge National Laboratory (ORNL). The AFDC was created to facilitate the directives of AMFA. The purpose of the AFDC is to gather and analyze information on the fuel consumption, emissions, operation, and durability of alternative fuel vehicles, and to provide unbiased, accurate information on alternative fuel vehicles to government agencies, private industry, research institutions, and other related organizations. Other significant government and public resources include the EPA, the California Energy Commission, and the General Accounting Office. Private sector sources include the American Petroleum Institute (API) and the American Methanol Institute (AMI). Statistical data and related information were also accessed from NHTSA's in-house data and analyses.

In order to obtain specific information relative to alternative fuels and alternative fuel vehicles from the private sector, NHTSA published a Federal Register notice (65 FR 26805; May 9, 2000) requesting both specific information in the form of responses to questions, as well as other relevant factual information, including but not limited to statistical and cost data or marketing studies, and the sources of that information. Questions were grouped into three main categories: 1) Questions/ Issues Primarily Related to Automobile Manufacturers; 2) Questions/Issues Primarily Related to Fuel Producers, Distributors and Retailers; and 3) Questions/Issues of General Interest. Auto makers were requested to provide specific information on whether and to what extent the incentives program was a factor in offering alternative fuel vehicles for sale; what costs were incurred in the design and manufacturing of these vehicles; what costs were passed on to consumers in the form of a price differential to their baseline conventional fuel models; how and to what extent these vehicles were marketed; what specific technologies were developed to accommodate the alternative fuels; and what future plans would be with or without the extension of the incentives program.

The fuel producers, refiners, distributors and marketers were requested to provide relevant information on AMFA's effect on plans to produce alternative fuels; how the program directly affects the decisions to make the fuel accessible to consumers, expressed in terms of capital expenditures to improve and expand the supply and distribution infrastructure, and what efforts have been made to educate the consumers on the merits of alternative fuels as a replacement for conventional fossil fuels. Questions of general interest were targeted at consumers and focused on purchasing decisions, complaints or issues relative to vehicle driveability and dependability; what complimentary programs would aid in the proliferation of purchases of alternative fuels and vehicles; and other questions focusing on consumers' commercial acceptance of alternative fuels and vehicles. Responses to these questions and other comments of relevance are contained in Appendix A.


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