At the urging of the American Methanol Institute and other alternative fuel industry representatives, the Taxpayer Relief Act of 1997 changed the excise tax structure for methanol by basing the rate of tax on its BTU equivalence with gasoline. California is the only other state that makes a similar adjustment, every other state taxes methanol on a volume basis just like gasoline. Since methanol has roughly half the energy content of gasoline, the excise tax is effectively doubled for methanol. A strong case can be made for the need to offer tax incentives for the use of methanol fuel. Existing federal tax credits for the purchase of electric and fuel cell vehicles are set to expire in 2004, just as fuel cell vehicles are entering the marketplace.
Many states offer a variety of incentives for the use of alternative fuel vehicles.
Federal laws such as the Energy Policy Act and the Clean Air Act contain a number of goals and requirements regarding the use of alternative fuels. However, the implementation of these federal laws has not had the desired effect of stimulated broad markets for alternative fuel vehicles. A series of public policy options will then be offered to encourage and accelerate the successful market introduction of methanol fuel cell vehicles. These public policy options will focus on federal legislative and administrative initiatives, as well as what can be done at the state level. While methanol is a liquid and is handled just like gasoline, it is a different fuel that consumers are largely unaccustomed to using.