Refining, Locomotives, Alt-Fuels In Energy Security Bill

Diesel Fuel News, March 5, 2001 by Jack Peckham

The U.S. Senate Republican "National Energy Security Act of 2001" -- the starting point for what's likely to become a major energy bill this year -- might help U.S. refiners find new ways to comply with tough U.S. EPA fuels regulations this decade.

The bill would give refiners faster, 7-year depreciation "to foster investment in infrastructure needed to increase refining capacity," a problem expected to grow because of costly EPA diesel and gasoline desulfurization regulations this decade.

It also "requires an annual DOE [U.S. Dept. of Energy] report on the condition of domestic petroleum refining and distribution system, including looking at incentives, streamlining permitting and siting decisions, and effect of overlapping regulations." That's a reference to what refiners complain are EPA's problematic diesel and gasoline regulations piled on top of one another between 2004-2006.

The bill also earmarks $180 million for diesel locomotive emissions and fuel-economy research to help offset EPA mandates (see related story, p13). But the bill doesn't subsidize commercialization of diesel technology.

On the other hand, the bill earmarks plenty of taxpayer subsidies for alternate-fuels commercialization that interferes in the free marketplace. The bill would boost the value of alt-fuel fleet-fueling credits, give up to $30,000/refueling station tax deduction for alt-fuel infrastructure, make federal agencies use alt fuels for 50% of fuel purchases by 2005, give a 50% tax credit for the incremental cost of an alt-fuel vehicle, plus give a 25 cents/gallon business tax credit for each "gasoline-gallon equivalent of alternative fuel sold at retail.

Clean-diesel would get none of these commercial tax breaks. That's ironic because expanded dieselization, rather than conversion to alt-fuels, would do more to reduce U.S. dependence on foreign oil -- at lowest cost to taxpayers and consumers -- than any other technology besides clean-coal development.

Ironically, the Senate bill as now written could shift portions of the highly efficient diesel vehicle fleet to inefficient, costly technologies including compressed natural gas, while worsening the electric power supply crisis.

The bill would divert natural gas from current use -- for power generation, where gas is in short supply -- to transport use, where it would penalize energy efficiency and prompt more gas imports. Diesel defenders point out that diesel, with high energy density, is superior to low-density gaseous fuels for power, mileage and cost-efficiency. Bonus: Diesel doesn't need any commercialization subsidy.