ENERGY POLICY ACT GOALS WILL NOT BE MET, ACCORDING TO GAO

The United States General Accounting Office (GAO) has released a report documenting what it says is the "limited progress" the nation has seen to date in complying with the goals and mandates of the Energy Policy Act of 1992 (EPACT). EPACT set goals for replacing the use of petroleum fuels by 10 percent by the year 2000 and by 30 percent by the year 2010. EPACT also required that a certain percentage of the vehicles acquired each year by fleet operators be alternative fuel vehicles. In addition, President Clinton in 1993 and again in 1996 issued Executive Orders directing federal agencies to implement aggressive plans to fulfill the Act’s requirements.

GAO’s analysts found that, while Congress and the President mandated the purchase of alternative fuel vehicles by federal agencies, they did not provide agency heads with increased budgets for the more expensive vehicles. As a result, federal agencies report "mixed results" in meeting the mandates. Some agencies are exceeding their yearly mandates; others have acquired very few or no alternative fuel vehicles at all. For example, in 1998 the total number of alternative fuel vehicles acquired to meet the mandates set for state and federal agencies and fuel providers was 14,205; the United States Postal Service alone accounted for 10,000 of these when it purchased ethanol-powered vehicles for mail delivery.

And even though a federal agency might purchase the requisite number of vehicles, GAO says, this is no guarantee the fleet managers will purchase alternative fuels. "Fleet managers or drivers often run their alternative fuel vehicles on gasoline. In some cases, fleet managers have had to run the vehicles on gasoline because there were no refueling stations for alternative fuels in the area. In other cases, fleet managers used gasoline because they had concerns about the safety or reliability of alternative fuels."

The lack of refueling stations that provide alternative fuels has been a major impediment to using alternative fuel vehicles. Officials from federal agencies and state governments who administer vehicle fleets cited the lack of a refueling infrastructure more than any other impediment to using alternative fuels. Because of the lack of demand for alternative fuel vehicles, owners of refueling stations are reluctant to provide facilities to refuel them. In addition the high cost of providing some alternative fuels at existing refueling stations reduces station owners’ willingness to provide the facilities. For example, building facilities to provide compressed natural gas costs approximately $300,000--significantly more than the cost of refueling stations for gasoline, ethanol or methanol. Conversely, the lack of refueling stations for alternative fuels makes it less convenient for the general public to obtain the fuels, and, thus, deters the general public from buying the vehicles.

The number of refueling stations for alternative fuels in the United States is far below the level that would be necessary to support the Act’s goals for fuel replacement (see Figures 1 and 2). DOE has estimated that the number of alternative fuel refueling stations necessary to reach the Act’s 30-percent goal by 2010 ranges from 60,000 to 69,300. This represents more than 10 times the number of refueling stations for alternative fuels that were available in 1999.

Figure 1

Figure 2

GAO says that, if the real goal of the authors of EPACT had been to reduce petroleum use, perhaps they should have simply written a requirement into the Act that fleets reduce gasoline consumption, rather than the requirement that fleets acquire alternative fuel vehicles.

Another problem with this requirement is that fleets subject to the Act’s mandates could not satisfy their requirements by using emerging technologies, such as hybrid electric vehicles, which claim fuel efficiencies ranging from 50 to more than 70 miles per gallon. The EPACT, however, excluded this kind of vehicle from the definition of "alternative fuel vehicle" because they can also run on petroleum fuels, not just on the alternative fuels the government sought to promote.

GAO sees no chance of success for the goal of replacing 10 percent of petroleum fuels with alternative fuels in 2000, and little or no chance the 30 percent replacement goal by 2010 will be met. The report cites statistics from the Department of Energy’s (DOE) Energy Information Administration that, of the estimated 212 million vehicles on the road in the United States in 1998, only 1 million, or about 0.4 percent, were alternative fuel vehicles. DOE estimates that in 1998 alternative fuels replaced about 334 million gallons of gasoline, or about 0.3 percent of the total gasoline consumed that year. In addition, about 3.9 billion gallons of ethanol and methanol were blended with gasoline and used in conventional vehicles in 1998, for a total of 4.2 billion, or approximately 3.6 percent of all highway gasoline use.

The report concludes that consumers will purchase alternative fuel vehicles only if gasoline prices become so high that the increased spending on gasoline surpasses all the added costs of purchasing and driving alternative fuels. Market forces alone, says GAO, will not make this happen. "In an analysis conducted for GAO, DOE estimated that even if crude oil prices [were to go as high as $40] per barrel, alternative fuels’ share of the market among transportation fuels would not increase."