WASHINGTON -- Despite President Bush's new call for tax credits for buyers of diesel vehicles, a consensus on the best way to use government subsidies to reduce fuel use remains elusive.
Seven years after federal officials first proposed tax credits to promote sales of fuel-efficient vehicles, there's no guarantee the breaks will become law soon.
On Wednesday, April 27, in a speech before small-business owners, Bush proposed a $2.5 billion program of credits for buyers of new diesels and gasoline-electric hybrids. But the next day, Sen. Orrin Hatch, R-Utah, introduced a subsidy bill that omits diesels. Instead, it focuses on hybrids, electric vehicles, alternative fuels and fuel cells.
"We're certainly interested," Hatch says of Bush's proposal. "It really has to be a clean technology, though."
New diesels are subject to the same clean-air regulations as gasoline engines. But their emissions will continue to be in the higher ranges of what the rules permit.
Diesel advocates call the engines "clean," but environmental groups do not.
"We will fight to keep diesels out of" subsidy legislation, says David Friedman, research director for clean vehicles of the Union of Concerned Scientists of Cambridge, Mass.
Friedman's group is one of several major environmental organizations that support Hatch's bill.
Automakers generally claim to support tax credits for a wide range of
fuel-saving technologies. But each company tends to lobby for only the provisions that would benefit its vehicles.
Executives of three automakers last month endorsed the Hatch bill. They were Ed Cohen, vice president for government and industry relations at Honda North America Inc.; Charles Ing, director of government affairs for Toyota Motor North America Inc.; and Tom Watson, a top engineer for advanced vehicles at Ford Motor Co.
The Bush administration favors tax credits of as much as $4,000 for gasoline-electric hybrids and as much as $8,000 for fuel cell-powered vehicles, once they become available.
Bush added diesels to his plan during last week's speech but did not propose a credit amount.
The House of Representatives approved its latest version of comprehensive energy legislation on April 22. It includes tax credits of as much as $3,500 for buyers of new diesels, but it offers no direct breaks for buyers of hybrid or fuel cell vehicles.
Some key House members say it makes no sense to subsidize hybrid vehicles that have customer waiting lists.
The Senate version of the energy bill is expected to include tax credits for a broader range of fuel-saving technologies.
A conference committee would reconcile differences between the two versions.
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