LEGISLATION & INITIATIVES

WHAT FEDERAL LAWS AND INCENTIVES DRIVE R&D/EXPANSION/USAGE OF HYDROGEN ENERGY?

Laws and Regulations

Alternative Fuel Definition: The Energy Policy Act (EPAct) of 1992 defines Hydrogen as an alternative fuel, and the Internal Revenue Service defines liquefied hydrogen as an alternative fuel. For more information, see the EPAct website. (Reference 42 U.S. Code 13211); (Reference 26 U.S. Code 6426).[1]

Alternative Fuel Labeling Requirements: Retailers offering alternative fuel for sale must ensure dispensers are labeled with information to help consumers make informed decisions about fueling a vehicle, including the name of the fuel and the minimum percentage of the main component of the fuel. Labels may also list the percentage of other fuel components. This requirement applies to a variety of fuel types and fuel mixtures, including hydrogen. Electric vehicle supply equipment (EVSE) manufacturers must determine and disclose (via a delivery ticket or permanent label or marking) kilowatt capacity, voltage, whether the voltage is alternating current or direct current, amperage, and whether the system is conductive or inductive. (Reference 81 Federal Register 2054 and 16 CFR 306 and 309).[2]

High Occupancy Vehicle (HOV) Lane Exemption: States are allowed to exempt certified alternative fuel vehicles (AFVs) and plug-in electric vehicles (PEVs) from HOV lane requirements within the state. States are also allowed to establish programs allowing low-emission and energy-efficient vehicles to pay a toll to access HOV lanes. Vehicles must be certified by the U.S. Environmental Protection Agency (EPA) and appropriately labeled for use in HOV lanes. The U.S. Department of Transportation (DOT) is responsible for planning and implementing HOV programs, including the low-emission and energy-efficient vehicle criteria EPA established. States that choose to adopt these requirements will be responsible for enforcement and vehicle labeling. The HOV exemption for AFVs and PEVs expires September 30, 2025 and low-emission and energy-efficient vehicle toll-access to HOV lanes expired September 30, 2019. (Reference Public Law 114-94 and 23 U.S. Code 166).[3]

National Alternative Fuels Corridors: The U.S. Department of Transportation Federal Highway Administration (FHWA) designates  a national network of plug-in electric vehicle charging and hydrogen, propane, and natural gas fueling corridors in strategic locations along major highways to improve the mobility of alternative fuel vehicles. To designate the corridors, DOT solicited nominations from state and local officials and worked with industry stakeholders.  FHWA must establish an AFC grant program to award grants to eligible entities, by November 15, 2022. During the designation and redesignation process, in consultation with the U.S. Department of Energy, FHWA will issue a report identifying charging and fueling infrastructure, best practices and guidance for predictable infrastructure deployment, analyzing standardization needs for fuel providers and purchasers, and reestablishing the goal of achieving strategic deployment of fueling infrastructure in the designated corridors. For the 2022 Request for Nominations(PDF), state and local officials must submit nominations to FHWA by May 13, 2022. FHWA must update and redesignate corridors periodically thereafter. States are encouraged to complete EV AFCs, which are eligible for separate funding from the National Electric Vehicle Infrastructure (NEVI) Formula Program, and will be considered fully built out once they meet the conditions specified in the NEVI Formula Program Guidance.

For more information, see the DOT Alternative Fuel Corridors website. (Reference Public Law 114-94).[4]

Procurement Preference for Electric and Hybrid Electric Vehicles: The U.S. Department of Defense (DOD) must exhibit a preference for the lease or procurement of motor vehicles with electric or hybrid electric propulsion systems, including plug-in hybrid systems, if the vehicles are commercially available at a cost reasonably comparable to motor vehicles with internal combustion engines. Tactical vehicles designed for use in combat are excluded from the requirement. (Reference 10 U.S. Code 2922g).[5]

Vehicle Acquisition and Fuel Use Requirements for Federal Fleets: Under the Energy Policy Act (EPAct) of 1992, 75% of new light-duty vehicles acquired by covered federal fleets must be alternative fuel vehicles (AFVs). As amended in January 2008, Section 301 of EPAct 1992 defines AFVs to include hybrid electric vehicles, fuel cell vehicles, and advanced lean burn vehicles. Fleets that use fuel blends containing at least 20% biodiesel (B20) may earn credits toward their annual requirements. Federal fleets are also required to use alternative fuels in dual-fuel vehicles unless the U.S. Department of Energy (DOE) determines an agency's vehicle requests qualify for waivers; grounds for a waiver include lack of alternative fuel availability and cost restrictions (per EPAct 2007, section 701). Additional requirements for federal fleets were included in the Energy Independence and Security Act of 2007, including fleet management plan requirements (Section 142), low greenhouse gas (GHG) emitting vehicle acquisition requirements (Section 141), and renewable fuel infrastructure installation requirements (Section 246). For more information, see the Federal Fleet Management website.  Executive Order 14008, issued January 2021, requires the Chair of the Council on Environmental Quality, the Administrator of General Services, and the Director of the Office and Management and Budget, in coordination with the Secretary of Commerce, the Secretary of Labor, the Secretary, and the heads of other relevant agencies, to assist the National Climate Advisor in developing a comprehensive plan to facilitate clean and zero-emission vehicles for federal, state, local, and tribal government fleets, including vehicles of the U.S. Postal Service.  (Reference 42 U.S. Code 13212 and Executive Order 13834 (PDF)).[6]

Vehicle Acquisition and Fuel Use Requirements for Private and Local Government Fleets: Under the Energy Policy Act (EPAct) of 1992, the U.S. Department of Energy (DOE) was directed to determine whether private and local government fleets should be mandated to acquire alternative fuel vehicles (AFVs). In January 2004, DOE published a final rule announcing its decision not to implement an AFV acquisition mandate for private and local government fleets. In response to a March 2006 ruling by a U.S. District Court, DOE issued a subsequent final rulemaking on the new Replacement Fuel Goal in March 2007, which extended the EPAct 1992 goal to 2030. The goal is to achieve a domestic production capacity for replacement fuels sufficient to replace 30% of the U.S. motor fuel consumption. In March 2008, DOE issued its determination not to implement a fleet compliance mandate for private and local government fleets, concluding that such a mandate is not necessary to achieve the Replacement Fuel Goal. For more information on the Private and Local Government Fleet Rule compliance, visit the EPAct Private and Local Government Fleet Determination website. (Reference 42 U.S. Code 13257).[7]

Vehicle Acquisition and Fuel Use Requirements for State and Alternative Fuel Provider Fleets: Under the Energy Policy Act (EPAct) of 1992, as amended, certain state government and alternative fuel provider fleets are required to acquire alternative fuel vehicles (AFVs) as a portion of their annual light-duty vehicle acquisitions. Compliance is required by fleets that operate, lease, or control 50 or more light-duty vehicles within the United States. Of those 50 vehicles, at least 20 must be used primarily within a single Metropolitan Statistical Area/Consolidated Metropolitan Statistical Area, and those same 20 vehicles must also be capable of being centrally fueled for the fleet to be subject to the regulatory requirements. Under Standard Compliance, the AFVs that covered fleets acquire help them achieve compliance, with each AFV acquired earning the fleet one AFV-acquisition credit. Covered fleets may earn additional credits for AFVs earned in excess of their requirements, and these credits may be banked for future use toward compliance or traded with other fleets. Additionally, fleets that use fuel blends containing at least 20% biodiesel (B20) in medium- and heavy-duty vehicles may earn credits toward their annual AFV-acquisition requirements. A fleet may also earn credits that may be used toward compliance or banked once the fleet achieves compliance for investments in alternative fuel infrastructure, mobile non-road equipment, and emerging technologies associated with certain electric drive vehicle technologies. Fleets may also opt into Alternative Compliance, which allows fleets the option to choose a petroleum reduction path in lieu of acquiring AFVs under Standard Compliance. Interested fleets must obtain from DOE a waiver from Standard Compliance by submitting a plan that demonstrates a path by which they will achieve a certain level of petroleum reduction specific to their fleet composition. For more information, visit the EPAct State and Alternative Fuel Provider Fleets website. (Reference 42 U.S. Code 13251 and 13263a, and 10 CFR 490).[8]

Vehicle Incremental Cost Allocation: The U.S. General Services Administration (GSA) must allocate the incremental cost of purchasing alternative fuel vehicles (AFVs) across the entire fleet of vehicles distributed by GSA. This mandate also applies to other federal agencies that procure vehicles for federal fleets. For more information, see the GSA's AFV website. (Reference 42 U.S. Code 13212 (c)).[9]

Programs

Clean Construction and Agriculture: Clean Construction is a voluntary program that promotes the reduction of diesel exhaust emissions from construction equipment and vehicles by encouraging proper operations and maintenance, use of emissions-reducing technologies, and use of cleaner fuels. Clean Agriculture is a voluntary program that promotes the reduction of diesel exhaust emissions from agricultural equipment and vehicles by encouraging proper operations and maintenance by farmers, ranchers, and agribusinesses, use of emissions-reducing technologies, and use of cleaner fuels.. Clean Construction and Clean Agriculture are part of the U.S. Environmental Protection Agency’s Diesel Emissions Reduction Act (DERA) Program, which offers funding for clean diesel construction and agricultural equipment projects.[10]

Clean Cities Coalition Network: The mission of Clean Cities Coalition Network is to foster the economic, environmental, and energy security of the United States by working locally to advance affordable, domestic transportation fuels and technologies. Nearly 100 volunteer coalitions carry out this mission by developing public/private partnerships to promote alternative and renewable fuels, idle-reduction measures, fuel economy, improvements, and emerging transportation technologies. The Clean Cities Coalition Network provides information about financial opportunities, coordinates technical assistance projects, updates and maintains databases and websites, and publishes technical and informational materials. For more information, see the Clean Cities Coalition Network website.[11]

Congestion Mitigation and Air Quality (CMAQ) Improvement Program: The CMAQ Program provides funding to state departments of transportation (DOTs), local governments, and transit agencies for projects and programs that help meet the requirements of the Clean Air Act by reducing mobile source emissions and regional congestion on transportation networks. Eligible activities include transit improvements, travel demand management strategies, congestion relief efforts (such as high occupancy vehicle lanes), diesel retrofit projects, and alternative fuel vehicles and infrastructure. Projects supported with CMAQ funds must demonstrate emissions reductions, be located in or benefit a U.S. Environmental Protection Agency-designated nonattainment or maintenance area, and be a transportation project. For more information, see the FAST Act CMAQ fact sheet and CMAQ Improvement Program website. (Reference Public Law 112-141, 23 U.S. Code 149, and 23 U.S. Code 151).[12]

Ports Initiative: The EPA's Ports Initiative is an incentive-based program designed to reduce emissions by encouraging port authorities and terminal operators to retrofit and replace older diesel engines with new technologies and use cleaner fuels. EPA's Ports Initiative   offers funds to port authorities and public entities to help them overcome barriers that impede the adoption of cleaner diesel technologies and strategies.[13]

State Energy Program (SEP) Funding: The SEP provides grants to states to assist in designing, developing, and implementing renewable energy and energy efficiency programs. Each states energy office receives SEP funding and manages all SEP-funded projects. States may also receive project funding from technology programs in the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy (EERE) for SEP Special Projects. EERE distributes the funding through an annual competitive solicitation to state energy offices. SEP is authorized through fiscal year 2026. For more information, see the SEP website.[14]

Voluntary Airport Low Emission (VALE) Program: The goal of the VALE Program is to reduce ground level emissions at commercial service airports located in designated ozone and carbon monoxide air quality nonattainment and maintenance areas. The VALE Program provides funding through the Airport Improvement Program and the Passenger Facility Charges program for the purchase of low emission vehicles, development of fueling and recharging stations, implementing gate electrification, and other airport air quality improvements. For more information, see the VALE Program website. (Reference 49 U.S. Code 47139).[15]

Incentives

Airport Zero Emission Vehicle (ZEV) and Infrastructure Incentives: The Zero Emissions Airport Vehicle and Infrastructure Pilot Program provides funding to airports for up to 50% of the cost to acquire ZEVs and install or modify supporting infrastructure for acquired vehicles. Grant funding must be used for airport-owned, on-road vehicles used exclusively for airport purposes. Vehicles and infrastructure must meet the Federal Aviation Administration's Airport Improvement Program requirements, including Buy American requirements. To be eligible, an airport must be for public use. The program will give priority to applicants located in nonattainment areas, as defined by the Clean Air Act, and projects that achieve the greatest air quality benefits, as measured by the amount of emissions reduced per dollar of funds spent under the program. For more information, see the Zero Emissions Airport Vehicle and Infrastructure Pilot Program website. (Reference Public Law 112-95 and 49 U.S. Code 47136a).[16]

Alternative Fuel Tax Exemption: Alternative fuels used in a manner that the Internal Revenue Service (IRS) deems as nontaxable are exempt from federal fuel taxes. Common nontaxable uses in a motor vehicle are: on a farm for farming purposes; in certain intercity and local buses; in a school bus; for exclusive use by a non-profit educational organization; and for exclusive use by a state, political subdivision of a state, or the District of Columbia. This exemption is not available to tax exempt entities that are not liable for excise taxes on transportation fuel. For more information, see IRS Publication 510 (PDF). (Reference 26 U.S. Code 4041).[17]

Alternative Fuel and Advanced Vehicle Technology Research and Demonstration Bonds: Qualified state, tribal, and local governments may issue Qualified Energy Conservation Bonds subsidized by the U.S. Department of Treasury at competitive rates to fund capital expenditures on qualified energy conservation projects. Eligible activities include research and demonstration projects related to cellulosic ethanol and other non-fossil fuels, as well as advanced battery manufacturing technologies. Government entities may choose to issue tax credit bonds or direct payment bonds to subsidize the borrowing costs. For information on eligibility, processes, and limitations, see IRS Notices 2009-29 (PDF), 2010-35 (PDF), and 2012-44 (PDF) or contact local issuing agencies. (Reference 26 U.S. Code 54D).[18]

Improved Energy Technology Loans: The U.S. Department of Energy (DOE) provides loan guarantees through the Loan Guarantee Program to eligible projects that reduce air pollution and greenhouse gases and support early commercial use of advanced technologies, including biofuels and alternative fuel vehicles. The program is not intended for research and development projects. DOE may issue loan guarantees for up to 100% of the amount of the loan for an eligible project. Eligible projects may include the deployment of fueling infrastructure, including associated hardware and software, for alternative fuels. For loan guarantees of over 80%, the loan must be issued and funded by the Treasury Department's Federal Financing Bank. For more information, see the Loan Guarantee Program website and the Alternative Fuel Infrastructure (PDF) fact sheet. (Reference 42 U.S. Code 16513).[19]

Low and Zero Emission Public Transportation Funding: The Department of Transportation’s Federal Transit Administration (FTA) administers the Low or No Emission Grant (Low-No) Program. Financial assistance is available to local and state government entities for the purchase or lease of low-emission or zero-emission transit buses, in addition to the acquisition, construction, or lease of supporting facilities. Eligible vehicles must be designated for public transportation use and significantly reduce energy consumption or harmful emissions compared to a standard or low emission vehicle. The Low-No Program is a competitive grant program. Funding is available through fiscal year (FY) 2026. $1.1 billion is available for FY 2022. Applicants must apply by May 31, 2022. Applicants must submit a zero-emission vehicle fleet transition plan to the FTA that includes a utility partnership description and workforce development training. For more information, including details about the current round of funding, see the Low or No Emission Grant (Low-No) Program website. (Reference Public Laws 117-58, 113-159, and 114-94, and 49 U.S. Code 5312 and 5339) [20]

Recent State Actions: New and recently updated state laws, incentives, and regulations related to alternative fuels and advanced vehicles can be found at: https://afdc.energy.gov/laws/recent

Federal & State Specific Laws and Incentives

Federal laws and incentives as well as state specific laws and incentives are available through the DOE's Alternative Fuel Data Center sources; as captured below.

Source: Department of Energy[21]

Updated June 2022 by Erin Bennett