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Benefits and Limitations of Flex Fuel Vehicles

Will passenger vehicles that can run on Ethanol, biodiesel or another kind of alternative fuel be successful?

While there are potential benefits from getting more flex fuel vehicles out on the road, those benefits are not worth an increase in our oil dependence. Some current legislative and automaker proposals would seek to get more of these vehicles on the road, but they could increase our oil dependence by as much oil as we currently import from Iraq. A simple solution that gives consumers vehicles with the capability to use alternative fuels without increasing our oil addiction is the best approach—reasonable flex fuel vehicle requirements along side phasing out the dual fuel loophole.

Pitfall: Expansion of Dual Fuel Loophole
The dual-fuel loophole allows manufacturers to earn credits towards meeting federal fuel economy standards by producing vehicles that are able to run on both petroleum and an alternative fuel, even if they never actually use the alternative fuel. As a result, automakers can sell fleets of vehicles that fall short of federal fuel economy targets. In 2004, this loophole was already increasing U.S. oil dependence by 80,000 barrels per day.

Recently, several proposals have been circulating that have the potential to significantly increase the amount of oil we are wasting as a result of the dual-fuel loophole. The most harmful changes would be ones that increase the "cap" on the credit above its current level of 1.2 mpg or extend the credit beyond its scheduled expiration in 2014. When compared to closing the loophole, raising the cap to two mpg and extending it through 2020 would increase oil dependence by as much as 500,000 barrels per day in that year alone. This is equivalent to our current imports from Iraq.

Promise: Consumer Options without the Oil Drain
The best way to get more flex fuel vehicles on the road is to ask all automakers to do their part through a flex fuel vehicle requirement which phases out the oil draining dual fuel loophole. The technology cost for an E85 flex fuel vehicle is only $50 to $100 per vehicle, depending on the approach used. This would allow automakers to ensure that the fuel tank, emissions equipment, fuel injectors, sensor, and other materials are in place as needed to ensure a vehicle can work reliably on E85.

On the other hand, a requirement on automakers to produce dual fuel vehicles that preserves or extends the current credit would prove harmful. Such a program would dramatically increase the number of credits being earned, since many manufacturers are not currently earning any dual fuel credits, and would be a disincentive for automakers to use technology to achieve real fuel economy improvements. Once a manufacturer is earning the credits, and is spending money to do so, it would not necessarily have any reason to deliver actual increases in fuel economy.

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