New Legislation Aims To Boost Development Of Hydrogen Cars.

Two U.S. lawmakers unveiled legislation to develop hydrogen-powered automobiles and put them in the market within a decade, five years faster than a similar program pushed by the Bush administration. Hydrogen fuel cell cars, if widely accepted, would significantly reduce U.S. dependence on foreign imported oil and would cut pollution since the emission-free vehicles' only by-product is water.

The Bush administration has proposed spending $1.7 billion in research over the next 5 years to help develop and have on the road within 15 years hydrogen cars and the supporting hydrogen fuel supplies and service stations. Many environmental groups view the 15-year time frame as too long and want quicker government action to wean U.S. consumers off foreign oil.

In order to speed up the process, Democratic Sen. Ron Wyden of Oregon and Republican Rep. Christopher Cox of California said they will introduce legislation to put hydrogen cars on the road within 10 years and reduce U.S. foreign oil use by 30 million barrels a year. Their bill would offer financial incentives to put more of the vehicles on the road, increase production of hydrogen fuel and create the infrastructure throughout the country to guarantee accessibility to hydrogen fuel.

"Our bill will provide concrete rewards for everyone who takes steps to put hydrogen fuel cell cars on the road and reduce our dependence on foreign oil," Wyden said. The bill allows a maximum tax credit of 25 percent of the sale price of a hydrogen powered vehicle with a cap of $50,000. The tax credit would steadily decrease each year to a 5 percent credit and $10,000 cap in 2012.

The purchaser of a qualified fuel cell vehicle would be able to transfer the tax credit to another person. The bill also mandates that hydrogen powered vehicles must comprise a minimum percentage of federal car fleets, from 5 percent for fleets of 100 vehicles or more in 2006 to 20 percent for fleets of 50 vehicles or more in 2012.

To make hydrogen fuel readily accessible, the legislation establishes tax credits for the retail sale, production and use of hydrogen fuel. Specifically, sellers of hydrogen fuel would receive a tax credit of 50 cents for each gasoline gallon equivalent of hydrogen sold.

Producers of hydrogen fuel from any source would receive a tax credit of $10 per barrel of oil equivalent. An additional credit of $10 per barrel of oil equivalent is provided for hydrogen fuel produced from renewable sources. The legislation also calls for Congress not to impose a tax on hydrogen fuel for 10 years.