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With volatile gas prices, and a struggling U.S. auto industry, some legislators are drafting legislation aimed at encouraging automakers to produce advanced, fuel-efficient vehicles and vehicle components. Bills have been introduced at both the federal and state level.
In November 2005, Senator Barrack Obama (D-IL) and Representative Jay Inslee (D-WA) introduced the "Health Care for Hybrids" bill in Congress. The bill follows closely from a new report, Compeitiveness, Accountability, & Innovation - Investing in Oil Savings, Retiree Health Care, and a Revitalized Auto Industry for a Stronger America, which outlines a model policy framework that would help the US auto industry take actions to reduce the nation's addiction to oil.
The report was written jointly by the Breakthrough Institute , the Natural Resources Defense Council. It outlines a new strategy to strengthen incentives for the auto industry to invest in good manufacturing jobs in energy saving technology by offering legacy health care cost relief. The report finds that by investing in assistance for catastrophic retiree health care costs, it would be possible to save over a million barrels of oil a day, while improving the competitiveness of US business and the retirement security of American workers.
The policy framework includes the following key elements:
- Legacy Health Care Cost Relief - By joining a voluntary program, manufacturers could receive relief for a percentage of their total retiree health care costs. The level of relief could then rise with domestic investment in oil saving technology.
- Manufacturing Incentives - Firms participating in this program would commit to reinvest a significant portion of health care cost savings into the domestic manufacture and commercialization of fuel-efficient vehicle technologies, including hybrids and clean diesels.
- Oil Savings - The incentives would be structured to ensure that firms achieve real oil savings by deploying new technology in their fleet. Continued participation in the program would be tied to ensuring that investments lead to real savings.
- Trust Fund Financing - By establishing a self-sustaining trust fund, capitalized with a one-time federal appropriation, a program could be designed to minimize costs to the treasury and ensure reliable and sustained funding of retiree benefits.
- Cost Offsets - Financing such a measure by closing tax loopholes that reward the outsourcing of U.S. jobs and accounting manipulation, or by linking this program to new revenue streams from climate policies, would further improve incentives.
Senator Obama has been outspoken about the policy framework. Video and text of his recent speeches on the subject are available at:
- Energy Security is National Security - Barrack Obama Website
- Securing Our Energy Future - Resources for the Future
In November 2005, Senator Joe Lieberman (D-CT), Senator Sam Brownback (R-KS), and others introduced the "Vehicle and Fuel Choices for American Security" bill. The bill aims to break American dependence on foreign oil by mandating 10 million barrels of oil savings per day by 2031.
Specifically, the bill would provide the followig incentives:
- Manufacturer Incentives - Federal tax credits for manufacturers and suppliers who are retooling to manufacture advanced diesels and hybrids. The credits would cover 35% of investment for incremental costs incurred to refurbish facilities (up to $75,000,000 yearly).
- Consumer Incentives - Lift the per manufacturer cap that currently exists on consumer tax credits for hybrids and advanced diesels.
- Fleet Incentives - Provide tax credits for companies that have fleets of 100 or more vehicles to purchase more fuel-efficient vehicles for their fleet.
The bill also includes other measures to reduce oil use, such as setting targets for manufacturers to produce hybrids, advanced diesels, plug-in hybrids and alternative fuel vehicles, increasing incentives for ethanol infrastructure development, setting regulations for federal and state fleets to reduce their petroleum consumption. More information about the bill can be found on Senator Lieberman's website.
In Michigan, the legislature has introduced modifications to the Next Energy Act, an act that provides tax incentives for businesses in Michigan engaged in the development or manufacture alternative energy technologies. The proposed legislation would extend the current act to include incentives for research, development and manufacturing of alternative energy vehicles, including hybrid-electric vehicles. Details of the proposed changes to the to the Next Energy Act and status of the bill are available on the Michigan Legislature website.