Government Regulations for Alternative Fuels

There are currently many regulations that subsidize the production, sale, and use of alternative fuel vehicles. Some of these encourage the production and usage of alternative fuel vehicles, while others restrict the emissions a company’s vehicle lineup can produce.

Mobile Emission Reduction Credit
The Mobile Emission Reduction Credit was setup by the Clean Air Act Amendment of 1990. This is a federal program authorizing states to use voluntary emissions control methods to improve air quality and decrease other environmental impacts by the transportation industry. The system works as follows: the state sets a maximum emission rating for all vehicles in a manufacturer’s fleet; if the manufacturer meets the requirements, no action is taken. If the manufacturer’s vehicle fleet produces more emissions than the maximum allowed, they are charged a fine. If the manufacturer’s fleet produces less emission than the maximum, they are given emission credits that they can store for later use or sell to other manufacturers who have exceeded their maximum allowed emissions. With emission regulations getting more stringent, this encourages manufacturers to significantly decrease vehicle fleet emissions to store credits that they could use later on an emergency basis.

Alternative Fuel Tax Exemption
According to this law, alternative fuels used in certain manners are exempt from federal fuel taxes. These generally include various fleet vehicles such as intercity buses and school buses.

Alternative Fuel and Advanced Vehicle Technology Research and Demonstration Bonds
This provides state and local governments with the authority to sell bonds to fund projects and research on alternative fuel technology. The specific details of the bonds are left to the discretion of the state/local governments.

Others
There are various other federal programs that support alternative fuel vehicles. A more complete list can be found at this link.