Coalition examines effective alternative fuel policies

By Sue Retka Schill | September 25, 2014

Local policies to promote alternative fuel vehicles (AFVs) are among the most effective, a recent study by the Clean Energy Coalition finds. Funded by the U.S. DOE, “Alternative Fuels: A State Policy Analysis” compares the number of alternative fuel vehicles in each state to the types of policies.

Every U.S. state has passed some form of alternative fuel policy, the report says, but the wide differences in approaches makes the policy landscape hard to navigate. “This piecemeal approach to policy has undoubtedly been one of the contributing factors to significant differences in AFV adoption rates across the nation, and a cause for hesitation in investment by the commercial and residential sectors. The purpose of this paper is to categorically examine policies across all 50 states, and create a framework to better understanding state-level alternative fuel policy.”

More than 900 policies were categorized into groups. Biofuel policies were included, and categorized into ethanol-only and nonethanol-directed biofuels (primarily biodiesel), However, the analysis focused on policies geared toward compressed natural gas, propane, and electric vehicles. “The analysis was less on the volume used and more on the types of vehicles,” explained Joshua Rego, a project associate at the coalition and one of the authors of the study, along with Allison Skinner. “And biofuels have the advantage of being able to be used in conventional vehicles.” That ability to be used in conventional vehicles also makes it harder to compare policy impact.

 

The Clean Energy Coalition analysis suggests that states with more laws and incentives that originate at the local or utility level are more likely to have a higher number of alternative vehicles per capita. “This indicates that decision makers should encourage the use of local policy to promote AFVs, and work with utilities or the state’s public service commission to promote the use of alternative fuels and AFVs.”

The research also found while most current policy is targeted toward the commercial sector for grants and rebates, the states with more laws and incentives targeted to the residential sector have higher numbers of AFVs per capita.

Finally, three types of policy mechanisms were found to have the strongest relationships to AFVs per capita. Grant or rebate policies had the biggest impact, regardless of the targeted market segment. Discounts for fuel use had a relatively strong correlation to the number AFVs and exception policies, such as tax exemptions, had strong correlations.

California led states with the most polices targeted at alternative fuels and vehicles, followed, in order, by Washington, Illinois, Indiana, Virginia, Oregon, Minnesota, Texas, Oklahoma and Florida in the top 10. When looking at policies by fuel type, those targeted at biofuels (specifically nonethanol) led with 413, electric vehicle incentives were second with 401, compressed natural gas third at 372, and ethanol-directed policies followed with 364.  Other fuels categorized included plug-in hybrid, LPG, LNG and fuel cells. Policies regarding fuel cells numbered in last place at 251.

In the conclusion, the authors say this research is a starting point for policymakers. “Rating specific policies based on their effectiveness would be extremely valuable in guiding both how policy is chosen and crafted. This is a challenging next step, however, as some states do not have mechanisms in place to track or evaluate their policies.”

To read the complete report, click here.