Propane incentives aplenty in national energy policy

June 1, 2002 By    

Tax credits and grants to encourage propane use have cleared both houses of Congress. A conference committee is trying to resolve differences between the Energy Policy Act of 2002 the Senate passed recently and a different version the House passed last summer.

The bill would create a series of tax credits for energy suppliers and end users for increasing their efficiency. The conference must resolve many differences. The 976-page Senate bill comes with a price tag of $13-14 billion in tax breaks and spending, while the larger House bill would cost about $33 billion, according to Lisa Bontempo, director of legislative affairs for the National Propane Gas Association.

The Senate would encourage use of propane as auto fuel in several ways. Buyers could claim a credit of 30 cents per gallon equivalent this year, 40 cents in 2003 and 50 cents in the two following years for using alternative motor fuels. The House bill doesn’t include this provision and it tops NPGA’s priority list for conference, Bontempo says.

She warns that outlook remains uncertain because Congress will be watching tax breaks as the deficit mounts and tax revenues decrease.

The Senate bill attempts to spur propane motor fuel consumption in several other ways. Federal agencies would be required to buy hybrid vehicles whenever possible, while the Department of Transportation would study how cities could convert their bus fleets to cleaner vehicles.

Both the House and Senate bills contain tax credits for buying hybrid vehicles, but only if they meet emissions standards. Depending on the weight and power of the vehicles, the credit would vary, between $4,000 and $40,000.

Homeowners would get up to $300 per home in tax credits for saving energy by installing smart meters to track energy use and for buying energy-efficient appliances. Builders could get a credit of up to $2,000 for energy-efficient homes. Manufacturers could get credits of up to $30 million per company for energy-efficient clothes washers and other appliances. The House bill includes similar provisions.

The Senate legislation would extend by a year (through 2007) the tax deductions for refueling property and alternative fueling stations. The Senate also voted to pay half the costs of state programs that offer tax rebates or credits for buying Energy Star products.

In addition to tax provisions, both bills would create a Green School Bus Pilot Program to award grants competitively to develop alternative fuel school buses and subsidize the cost of buying them. The Department of Energy and DOT would jointly run the program. The Senate version would authorize $50 million in 2003, $60 million in 2004, $70 million in 2005 and $80 million in 2006; $10 million a year more than the House.

The Senate bill also calls for a few studies. An 11-member Consumer Energy Commission would study energy price spikes since 1990. The commission would get six months and a $400,000 budget to recommend legislative, administrative and private action to protect against future spikes.

The National Academy of Sciences would get a year to explore the best ways to measure the impact of energy efficiency standards. The academy would evaluate whether energy consumption measurements should be made solely at the source of use, or starting where the energy gets produced.

DOE also would examine possible ways to improve the product labeling systems that inform consumers of product energy efficiency.

The on-again, off-again heat pump and air conditioner energy efficiency standards would be on again if the Senate provision prevails. The legislation would enact the energy standards adopted by the Clinton administration but rescinded by the Bush administration. Also, the bill would require DOE to develop energy efficiency standards for other appliances, including commercial unit heaters. DOE would get two years to promulgate the standards, which would have to take effect in three years.

The Senate bill also includes a major overhaul of pipeline safety. All operators of interstate pipelines must submit plans to improve their staff qualifications and safety programs. States would have to report the same for intrastate operators. DOT would issue rules to cut pipeline risks in heavily populated and environmentally sensitive areas.

Pipeline operators would also face much stiffer penalties – with the maximum rising from $25,000 to $500,000 per incident or $1 million total – for failing to accurately mark location of lines in construction areas. Operators would have to report each release of more than five gallons of hazardous liquid.

DOT would get $30 million in each of the next three years for pipeline research. It would conduct a study on protecting the environment in pipeline rights-of-way.

Other benefits in the Senate bill:

  • States could allow drivers of alternative fuel autos to ride in high occupancy vehicle lanes, same provision as the House passed.
  • The Low-Income Home Energy Assistance Program could get funded up to $3.4 billion a year during the next three years, just as in the House bill.
  • The Weatherization Assistance Program could get $325 million in 2003, $400 million in 2004 and $500 million in 2005. The House voted for fewer dollars.
  • DOE could give $20 million a year in the next three years for grants to local governments and non-profits to improve energy efficiency and conservation in low-income areas.
  • The Department of Housing & Urban Development would set up an office to help improve energy efficiency in public housing.
  • DOE would get $50 million for energy efficiency research.

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