Kicking The Gasoline & Petro-Diesel Habit

Background On The Alternative Fuel Market

July 29, 2008

  • The U.S. Department of Energy has identified bio-diesel is the fastest growing segment of the American alternative fuels market. Most of the U.S. market now involves liquid petroleum gas (LPG), with compressed natural gas (CNG), ethanol (E85), liquid natural gas (LNG), electricity, and hydrogen making up smaller segments of the current market, in that order of declining volume. [Notes 1 & 2]
  • Worldwide, non-petroleum energy used for transportation consists primarily of natural gas. One notable exception is Brazil, where ethanol derived from agricultural waste accounts for one fifth of the energy used in the transportation sector. Brazil’s extensive use of ethanol exists primarily because the government established many incentives in the 1970s to reduce its reliance on imported petroleum. [Note 3]
  • A survey conducted by Auto Trader magazine, discovered that 47% of U.K. car buyers are “ready to take the plunge” and purchase a more environmentally friendly vehicle. Some 60% of the 3,000 respondents indicated that they wanted more auto manufacturers to offer alternative fuel vehicles as an option. [Note 4]
  • Alternative fuel vehicles on the road in the U.S. in 2006 numbered 9 million. Sales of these vehicles are now at the rate of 1.4 million per year. There are now 46 models of alternative fuel vehicles including clean diesels, hybrids, and ethanol vehicles. Another 35 alternative fuel vehicles are now in development, according to a press release from the Alliance of Automobile Manufacturers. [Note 5]
  • According to Clean Edge, a Portland, Oregon-based research firm, the market for alternative fuels is growing by more than 30% annually. Clean Edge anticipates that the market for bio-fuels will increase more than 350% over the 2005-2015 time period. [Note 4]
  • U.S. President George W. Bush is calling for a nearly fivefold increase in America’s alternative fuel consumption by the year 2017. A U.S. government law called the Energy Conservation Reauthorization Act (amended and known as EPAct) now requires certain regulated fleets with over 50 vehicles, that are centrally fueled, and located in metropolitan areas, to buy alternative fuel vehicles. Likewise, according to Executive Order 13423, signed in 2007, U.S. government fleets must reduce their petroleum consumption by 2% per year relative to their FY 2005 consumption. This same order requires federal government agencies to increase their alternative fuel use by 10% per year relative to the previous year. [Notes 6 & 7]
  • The U.S. government has a wide variety of tax credits promoting the use of alternative fuels and more efficient vehicles. Credits are available for alternative fuel vehicles, low emission vehicles, and hybrid vehicles. Also available are excise tax credits for non-taxable uses of alternative fuels, as well as a fuel use credit for alternative fuels. Up to 30% of the cost of infrastructure supporting alternative fuels can also be deducted according to the Energy Policy Act of 2005. [Notes 7 & 8]
  • California’s government and its governor Arnold Schwarzenegger are also encouraging the development of an alternative fuels market. As a follow-up to its recent global warming legislation, California has adopted a State Alternative Fuels Plan (Assembly Bill 1007). This bill specifies market penetration goals for alternative fuels of 9% by 2012, 11% by 2017, and 26% by 2022. These targets will be encouraged through investment incentives and supportive regulations. [Note 9]
  • Likewise, the Pennsylvania government has recently been handing out $21 million in grants so as to promote the development of renewable energy technology. About half of this funding is going to local companies working on alternative fuels. Governor Ed Rendell seeks to establish an $850 million Energy Independence Fund that would create local expertise in this new clean technology market. [Note 10]
  • The European Union is now debating policies to promote the use of alternative fuels. The Commission on Alternative Fuels has set a target to replace 20% of petroleum-based fuel with alternative fuels by 2020. The objective of this proposed reduction is to improve the security fuel supplies as well as reduce greenhouse gas emissions. [Note 11]

    Notes: For further information about the above-mentioned topics, consult the following sources:

    [1] Momentum Biofuels, Inc., “Industry Overview,” 2006, posted at, accessed on 30 January 2008

    [2] U.S. Department of Energy, Alternative Fuels & Advanced Vehicles Data Center, “Data, Analysis & Trends,” updated 24 January 2008, posted at, accessed on 30 January 2008

    [3] U.S. Department of Energy, Energy Information Administration, “Transportation Energy Usage,” 6 April 1999, posted at, accessed on 30 January 2008

    [4] ConSenseUs: Energy For Transportation In The U.S., March 2006 news summary, posted at, accessed on 30 January 2008

    [5], “Alternative fuel vehicle sales growing,” 2007, posted at, accessed on 30 January 2008

    [6] Barta, Patrick, “Alternative-Fuels Push May Inspire Some Better Bets,” The Wall Street Journal, 29 January 2007, posted at, accessed on 30 January 2008

    [7] Harrow, Gerry, National Renewable Energy Laboratory, “Why the Time is Right to Deploy Alternative Fuels,” Tucson Leadership Forum, 14 September 2007 speech overheads, posted at, accessed on 30 January 2008

    [8] U.S. Department of Energy, Energy Efficiency and Renewable Energy, “United States (Federal) Incentives and Laws: Alternative Fuel Infrastructure Tax Credit,” undated,, accessed on 30 January 2008

    [9] Wilson Sonsini Goodrich & Rosati (a law firm), “California Takes Steps to Expand the Market Penetration of Alternative Fuels and Reduce Transportation Sector Greenhouse Gasses,” 14 November 2007, posted at, accessed on 30 January 2008

    [10] Ehrlich, David, “Pennsylvania hands out cash for alternative energy,” Cleantech, 16 October 2007, posted at, accessed on 30 January 2008

    [11] IMPCO Technologies, Inc., “IMPCO To Participate in European Union Commission Policy to Reduce 20% of Liquid Fuels with Alternative Fuels,” 7 February 2002, posted at, accessed on 30 January 2008

    [12] For further information on this topic, see Kicking The Gasoline & Petro-Diesel Habit: A Business Manager’s Blueprint For Action, by Charles Cresson Wood. This new research report is discussed at


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