| Abstract: | Accounting for the largest share of the Texas State Highway Fund, federal and state fuel taxes are levied on a per-gallon basis, so that as vehicles get more fuel efficient, they return less revenue for every mile traveled. From a funding standpoint, this is problematic since increased fuel efficiency of passenger and commercial vehicles are expected to continue rising. Also, vehicles using alternative fuels such as ethanol and compressed natural gas (CNG) are becoming popular. Furthermore, vehicles using fuels that are not taxed for transportation-related purposes (e.g., electric vehicles) are being produced and sold increasingly. Should the commuting public in Texas use battery electric vehicles and other alternatively fueled vehicles more, then there would be a marked decrease in revenues going to the State Highway Fund in the long term. It is imperative that state planners are aware of trends in the alternative fuel industry and the potential impact on fuel consumption and associated fuel tax revenue generation, and thus formulate policies that would address upcoming funding issues. This report provides a summary of recent trends in the development of alternative fuel technologies and factors impacting their adoption by the passenger vehicle and commercial vehicle fleets. Researchers relied on government, academic, and private-sector resources in compiling this report. This report also discusses the potential revenue impacts to the State of Texas with a specific focus on how alternative fuel technology adoption could affect long-term state fuel tax revenues. Finally, this report includes summary information and discussion on federal, state, and local incentives aimed at encouraging alternative vehicle technology development, deployment, and adoption. |
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