Senate Floor: TAX CREDITS FOR HYBRID VEHICLES

Mr. President, tomorrow the administration will unveil its energy plan. From the early reports we have been given, I am concerned that the proposals are too heavily weighted on the production side and fail to adequately address the need for conservation. One bright note that I have found is a general support for hybrid vehicles, the topic that I wish to address briefly today.

Specifically, I want to voice my support for legislation creating a hybrid vehicle tax credit. A hybrid vehicle combines an electric motor and battery pack with an internal combustion engine. The engine and the electric motor work in tandem, with either system providing primary or secondary power depending on driving conditions. For example, when stopped at a light, the vehicle shifts from an internal combustion engine to electric power and then back again upon acceleration. In addition, the batteries are re-charged during operation, eliminating the need for an external charger. This is new technology and the result of years of hard work.

I would like to see my colleagues join me in passing legislation to create a tax credit that would encourage consumers to purchase hybrid vehicles. I have known for years that this technology would become available and I have been looking for the right opportunity to draft legislation that would help put hybrid vehicles on our roads. I think that there are two components that must be addressed in a tax credit bill. To begin, I firmly believe that we must reward the integration of the technology into the vehicle with a base credit. In addition, however, I feel strongly that an important goal that must be achieved through legislation is to reward a vehicle that significantly decreases the amount of fuel consumed. I have proposed a plan that provides both a base credit of up to $2000 for the use of the technology, as well as a bonus credit, up to $1000, calculated based upon the lifetime fuel savings of the vehicle.

I think that this approach is a sound one. Placing the emphasis on gallons saved speaks directly to the importance of conservation and with our country facing an energy crisis is critical. And I also know that the biggest improvements in the reduction of fuel consumption will come from getting larger volumes of hybrid vehicles into the hands of consumers.

But in crafting this legislation, there are certain realities that we must accept. Today, there is a significant portion of the population that wants to drive a larger vehicle. This is America and people are entitled to personal choice. It is for this reason that I applaud the efforts of car manufacturers who have chosen to place hybrid technology in larger vehicles and SUV's. For example, DaimlerChrysler has committed to hybridizing the popular Dodge Durango with the vehicle scheduled to come on like in 2003 and this will bring a 20 percent improvement in fuel consumption.

I am also aware that others have advocated different approaches to crafting legislation that creates a tax credit for hybrid vehicles. My colleague Senator Hatch has introduced a bill, S. 760, that would provide a tax credit for hybrid vehicles as well as other advanced motor vehicle technologies. While his bill provides a base credit, up to $1,000, for the inclusion of hybrid technology, the bonus credit in this bill, up to $3,000, is calculated depending upon the fuel economy performance of the vehicle.

In addition to the Hatch bill and the administration's general statements, members of the automobile industry as well as environmentalists are also engaged in discussions to draft language that will create an incentive for consumers to purchase a hybrid vehicle. In the next few weeks, we need to have a thorough discussion among members of the automobile industry and environmentalists so that we can reach consensus on the language of this important legislation and move forward to passage of a bill. There is not just one approach that solves the problem and I am prepared to listen to all views. I hope that the other stakeholders are also ready to work for a compromise. While we may differ on our approach to drafting the legislation, I am sure that we can all agree that the goal should be passage of legislation that creates a tax credit for hybrid vehicles and provides the necessary encouragement to bring this important technology into the marketplace.