The U.S. Environmental Protection Agency’s fiscal 2012 budget reduces the Clean Diesel Program’s budget from $80 million in 2010 to zero. The program was reauthorized by Congress for five years and a total of $500 million in December.

“It’s clearly difficult budget times, but it’s hard to imagine a program that delivers more concrete benefits at a lower cost than the diesel-emissions reduction program,” said Allen Schaeffer, executive director of the Diesel Technology Forum, a trade group based in Frederick, Maryland.

President Barack Obama is working to realign the U.S. government’s vehicle-technology priorities. His budget proposes diverting funds from a dozen energy-company tax breaks to help pay for putting more electric vehicles on the road, doubling the share of electricity from so-called clean energy by 2035 and increasing the efficiency of energy use in buildings by 20 percent.

The budget proposal would transform a $7,500 tax credit for buyers of plug-in electric cars into a rebate at the dealership so purchasers wouldn’t have to wait to claim the credit on tax returns. Obama, in his State of the Union address last month, reiterated his goal of having 1 million electric vehicles, both plug-in and hybrid electric, on U.S. roads in four years.

Diesel Grants

An extension of the current clean-diesel spending plan was signed into law in January and pays local governments to retrofit buses, trucks and construction equipment.

The program has been giving out grants since 2005, benefiting makers of retrofit equipment, such as Corning Inc., and newer, cleaner engines and vehicles, like Cummins Inc., Caterpillar Inc. and Navistar International Corp.

In addition to eliminating the diesel grants, the budget proposes allocating no money to a hydrogen fuel-cell program in the Energy Department that had $49 million in the 2010 fiscal year.

A hydrogen fuel-cell industry trade group criticized Obama’s cuts, saying it would be foolish to abandon government investment. President George W. Bush proposed a $1.2 billion program for the technology.

Fuel Cells

“We ask Congress to act now and restore funding to fuel cell and hydrogen energy programs, or risk ceding our leadership to strategic competitors as we have done with wind, solar, and batteries,” Ruth Cox, president of the Fuel Cell and Hydrogen Energy Association, said in a statement. Honda Motor Co., Toyota Motor Corp., 3M Co. and Boeing Co. are members of the group.

Honda, which doesn’t have an electric car on the market, has leased FCX Clarity hydrogen cars to drivers in the Los Angeles area since 2008. Daimler AG started leasing fuel-cell Mercedes-Benz hatchbacks in California last year. Toyota has said it plans to sell hydrogen cars in California, Japan and Germany by 2015.

The president’s budget only marks the beginning of the process that will decide how federal money gets spent, said Schaeffer of the diesel group. A substantial, bipartisan majority in the Senate approved the program on a 92-7 vote, he said.

“It’s great to invest in something that’s a moon shot, 15 or 20 years from now, but what are you going to do until then?” Schaeffer said. “Modest sums to help modernize and upgrade some of these older engines would be dollars well spent.”