Alternative fuels are rapidly becoming realistic alternatives togasoline, but government regulations have not kept pace with new fuel options, according to a report released this summer by the California Policy Seminar. In the report, UC Davis transportation researchers propose a more flexible incentive-based regulatory system that accommodates the use of fuels other than gasoline. Current rigid "command-and-control" regulations favoring gasoline and diesel fuel are inherently unsuited to the 1990s, when so many other good fuel choices have surfaced, says the report's lead author, Daniel Sperling, the director of the Institute of Transportation Studies at UC Davis and a national expert on alternative fuels. The report proposes a marketable-credits system for vehicle manufacturers and fuel suppliers similar to the emissions trading program for power plants established by the 1990 Clean Air Act. The concept could be attractive to a broad range of special interest groups and policy-makers. "Such a system could save billions of dollars per year in California alone," says Sperling, who chairs an alternative fuels committee for the Transportation Research Board, a unit of the National Academy of Sciences. According to Sperling, the proposed market-based system would be more responsive to changing economic and technological conditions, more sensitive to regional differences and more adaptable to evolving social goals.