U.S. Department of Energy - Energy Efficiency and Renewable Energy 

Alternative Fuels and Advanced Vehicles Data Center 

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Search incentives and laws related to alternative fuels and advanced vehicles. Choose one or more jurisdictions to start your 

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Jurisdiction: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Dist. of Columbia, Florida, Georgia, Hawaii, Idaho, 

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Technology/Fuel: Biodiesel 

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Last Updated May 2010

State Incentives 

Biofuel Production Facility Tax Credit 

Companies that invest in the development of a biofuel production facility may be eligible for a tax credit of up to 5% of 

the capital costs of the project, which can be claimed against the state income tax or financial institution excise tax 

liability the project generates each year for up to 20 years. For the purposes of the credit, biofuel is defined as a motor 

vehicle fuel that is produced from grain, starch, oilseeds, vegetable, algae, animal, or fish materials including fats, 

greases and oils, sugarcane, sugar beets, sugar components, tobacco, potatoes, and lignocellulosic or other biomass. To 

be eligible for the tax credit, the capital costs of the production facility must be at least $2,000,000 if the facility is not

located in a favored geographic area, and $500,000 if the facility is located in a favored geographic area. A favored 

geographic area is defined as an area or county that is designated as an enterprise zone or that the Alabama Department 

of Industrial Relations considers to be less developed. (Reference Code of Alabama 40-9B-3, 40-18-190, 40-18-193, 40-

18-194, and 40-18-202.1) 

Laws and Regulations 

Fuel Efficient Green Fleets Policy 

The Alabama Legislature will establish a Green Fleets Policy (Policy) outlining a procedure for procuring state vehicles 

based on criteria that include fuel economy and lifecycle costing. State fleet managers will be required to classify their 

vehicle inventory for compliance with the Policy and submit annual plans for procuring fuel-efficient vehicles. These plans 

must reflect a 4% annual increase in average fleet fuel economy for light-duty vehicles, a 3% annual increase in average 

fleet fuel economy for medium-duty vehicles, and a 2% annual increase in average fleet fuel economy for heavy-duty 

vehicles per fiscal year. The Policy will also require that government entities manage and operate their fleets in a manner 

that is energy efficient, minimizes emissions, and reduces petroleum dependency by utilizing specified proven technology 

the Green Fleet Review Committee identifies. (Reference Code of Alabama 41-17A) 

Biodiesel Use in School Buses and Government Vehicles 

The Alabama Legislature encourages the use of biodiesel blends in the state. Public school systems are urged to use B20 

in all diesel-powered school buses and state entities are encouraged to use biodiesel blends of at least B5 in dieselpowered motor vehicles. (Reference Senate Joint Resolution 14 and 15, 2009) 

Last Updated June 2010

Laws and Regulations 

Alternative Fuel Vehicle Acquisition Requirement 

The Alaska Department of Transportation and Public Facilities (Department) must evaluate the cost, efficiency, and 

commercial availability of alternative fuels for automotive purposes every five years, and purchase or convert to vehicles 

that operate using alternative fuels whenever practical. The Department may participate in joint ventures with public or 

Alabama

Alaska

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private partners to foster the availability of alternative fuels for all consumers of automotive fuel. (Reference Alaska

Statutes 44.42.020) 

Laws and Regulations 

State Alternative Fuel Vehicle (AFV) Acquisition Requirements 

State agencies, boards, and commissions must purchase hybrid electric vehicles, AFVs, and/or vehicles that meet 

greenhouse gas emissions standards. At least 75% of light-duty state fleet vehicles operating in counties with a 

population of more than 250,000 people must be capable of operating on alternative fuels. If the AFVs operate in 

counties with populations of more than 1.2 million people, those vehicles must meet U.S. Environmental Protection 

Agency emissions standards for Low Emission Vehicles. Alternatively, the state fleet may meet AFV acquisition 

requirements through biodiesel or alternative fuel use or apply for waivers. Recognized alternative fuels include propane, 

natural gas, hydrogen, qualified diesel fuel substitutes, E85, and a blend of hydrogen with propane or natural gas. 

(Reference Executive Order 2010-06, 2010, and Arizona Revised Statutes 41-803) 

Municipal Alternative Fuel Vehicle (AFV) Acquisition Requirements 

Local governments in defined areas of Maricopa, Pinal, and Yavapai counties that have a population of more than 1.2 

million people must develop and implement vehicle fleet plans for the purpose of encouraging and increasing the use of 

alternative fuels in vehicles the city or town owns. At least 75% of the total local government fleet must operate on 

alternative fuels. Alternatively, local government fleets may meet AFV acquisition requirements through biodiesel or 

alternative fuel use or apply for waivers. Any local governments that purchase buses for use in counties with populations 

of more than 500,000 people must purchase or convert buses to operate on alternative fuels. Recognized alternative 

fuels include propane, natural gas, hydrogen, qualified diesel fuel substitutes, E85, and a blend of hydrogen with propane 

or natural gas. (Reference Arizona Revised Statutes 9-500.04, 49-474.01, 49-541, and 49-571) 

School District Alternative Fuel Vehicle Acquisition Requirements 

Within defined areas of Maricopa, Pinal, and Yavapai counties, school districts with an average student population of more 

than 3,000 students must ensure that 50% of the portion of the fleet with a gross vehicle weight rating of at least 17,500 

pounds per vehicle operates on alternative fuels, ultra low sulfur diesel, or meets specified emissions standards. 

Alternatively, school districts may meet acquisition requirements through alternative fuel use or apply for waivers. 

Recognized alternative fuels include propane, natural gas, hydrogen, qualified diesel fuel substitutes, E85, and a blend of 

hydrogen with propane or natural gas. (Reference Arizona Revised Statutes 15-349 and 49-541) 

Federal Fleet Operation Regulations 

Federal fleets based in Arizona that operate primarily in counties with a population of more than 1.2 million people must 

be comprised of at least 90% alternative fuel vehicles. Alternatively, federal fleets may meet acquisition requirements 

through alternative fuel use or apply for waivers. Recognized alternative fuels include propane, natural gas, hydrogen, 

qualified diesel fuel substitutes, E85, and a blend of hydrogen with propane or natural gas. (Reference Arizona Revised 

Statutes 49-573) 

Laws and Regulations 

Biofuels Use Requirement 

All diesel-powered motor vehicles, light trucks, and equipment owned or leased by a state agency are required to operate 

using diesel fuel that contains a minimum of 2% biofuel by volume. For the purpose of this requirement, biofuel includes: 

biodiesel; renewable diesel; and other renewable, biodegradable mono alkyl ester combustible fuel derived from biomass. 

Waivers to the 2% biofuel standards for state agency vehicles may be granted if the fuel is not available in certain 

geographic area, the fuel price is at least $0.15 cents more per gallon then the petroleum equivalent, or compliance with 

the standard is not otherwise economically feasible. The Arkansas Bureau of Standards will work to ensure fuel quality 

standards. (Reference Arkansas Code 15-13-101, 15-13-102, and 15-13-202 to 15-13-205) 

Alternative Fuels Tax 

Excise taxes on alternative fuels are imposed on a gasoline gallon equivalent basis. The tax rate for each type of 

alternative fuel is based on the number of motor vehicles licensed in the state that use each fuel type, not including 

vehicles the federal government owns or leases. (Reference Arkansas Code 26-62-201) 

Arizona

Arkansas

California

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State Incentives 

Low Emission Vehicle Incentives and Technical Training - San Joaquin Valley 

The San Joaquin Valley Air Pollution Control District (APCD) administers the REMOVE II program, which provides 

incentives for the purchase of low emission passenger vehicles, light-duty trucks, small buses, and trucks with gross 

vehicle weight ratings of 14,000 pounds or less. The purpose of REMOVE II is to encourage the early introduction of low 

emission vehicles in the San Joaquin Valley. Funding in the amount of $1,000 to $3,000 is available per vehicle according 

to the emissions certification level and size of the vehicle. Vehicles must be powered by alternative fuel or electric or 

hybrid electric engines/motors. REMOVE II also includes an Alternative Fuel Vehicle (AFV) Mechanic Training Component

that provides incentives to educate personnel on the mechanics, operation safety, and maintenance of AFVs, fueling 

stations, and tools involved in the implementation of alternative fuel technologies. 

Laws and Regulations 

Vehicle Acquisition and Petroleum Reduction Requirements 

The California Department of General Services (DGS) is responsible for maintaining specifications and standards for 

passenger cars and light-duty trucks that are purchased or leased for state office, agency, and department use. These 

specifications include minimum vehicle emissions standards and encourage the purchase or lease of fuel-efficient and 

alternative fuel vehicles (AFVs). On an annual basis, DGS must compile information including, but not limited to, the 

number of AFVs and hybrid electric vehicles acquired, the locations of the alternative fuel pumps available for those 

vehicles, and the total amount of alternative fuels used.

Vehicles the state owns or leases that are capable of operating on alternative fuel must operate on that fuel unless the 

alternative fuel is not available. Additionally, the California State and Consumer Services Agency, in consultation with 

DGS and other appropriate state agencies, must develop, implement, and submit to the California Legislature and 

governor a plan to increase the state fleet's use of alternative fuels, synthetic lubricants, and fuel-efficient vehicles. This

must be done by reducing or displacing the fleet's consumption of petroleum products by 10% by January 1, 2012, and 

20% by January 1, 2020, as compared to the 2003 consumption level. DGS must also take steps to transfer vehicles 

between agencies and departments to ensure that the most fuel-efficient vehicles are used and to eliminate the least 

fuel-efficient vehicles from the state's motor vehicle fleet. DGS must submit annual progress reports to the California 

Department of Finance, related committees of the Legislature, and the general public via the DGS Web site. 

(Reference Executive Order S-14-09, 2009 , and California Public Resources Code 25722.5, 25722.6, and 25722.8)

Fleet Fuel Use and Vehicle Acquisition Requirements - San Francisco, CA 

The City of San Francisco (City) requires that diesel vehicles in the City's municipal fleet operate using biodiesel blends of 

at least 20% (B20). City departments must also pursue actions to use higher biodiesel blends, up to and including neat 

biodiesel (B100). Additionally, bi-fuel vehicles owned by the City are not allowed to use petroleum-based fuels while 

operating within the City and County of San Francisco. All vehicles purchased or leased by City departments must meet 

or exceed specified emissions standards. For more information, see the May 2006 Executive Directive on Biodiesel for 

Municipal Fleets and the City and County of San Francisco Environmental Code (Sections 406 and 407). 

Mobile Source Emissions Reduction Requirements 

Through its Mobile Sources Program, the California Air Resources Board has developed programs and policies to reduce 

emissions. A drayage/port truck rule regulates heavy-duty diesel-fueled vehicles that transport cargo to and from 

California's ports and intermodal rail facilities. The rule requires that drayage trucks be equipped with engines certified to 

current California or federal emissions standards. A public transit agency fleet rule regulates public transit fleets and sets 

emissions reduction standards for new transit vehicles. A solid waste collection vehicle rule regulates solid waste 

collection vehicles with a gross vehicle weight rating of 14,000 pounds or more that operate on diesel fuel, have 1960 

through 2006 engine models, and collect waste for a fee. The fleet rule for public agencies and utilities requires fleets to 

install Best Available Control Technology devices on vehicles or purchase vehicles that run on alternative fuels or use 

advanced technologies to achieve emissions requirements by specified implementation dates. (Reference California Code 

of Regulations Title 13, 2021-2027) 

Fleet Emissions Reduction Requirements - South Coast 

The South Coast Air Quality Management District (SCAQMD) requires government fleets and private contractors under 

contract with public entities to purchase lower emission and alternative fuel vehicles. The rule applies to transit bus, 

school bus, refuse hauler, and other vehicle fleets of at least 15 vehicles that operate in Los Angeles, San Bernardino, 

Riverside, and Orange counties. (Reference SCAQMD Rules 1186.1 and 1191-1196) 

Point of Contact

Fleet Rule Implementation Hotline 

South Coast Air Quality Management District 

Phone: (909) 396-3044 

fleetrules@aqmd.gov

http://www.aqmd.gov/tao/FleetRules

State Incentives 

Colorado

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Alternative Fuel Infrastructure Tax Credit 

For tax years beginning prior to January 1, 2011, the Colorado Department of Revenue offers an income tax credit of 

20% of the cost of construction, reconstruction, or acquisition of an alternative fueling facility that is directly attributable 

to the storage, compression, charging, or dispensing of alternative fuels to motor vehicles. For an alternative fueling 

facility that will be generally accessible for public use in addition to the person claiming the credit, the credit is multiplied 

by 1.25. If at least 70% of the alternative fuel dispensed annually is derived from a renewable energy source for a period 

of 10 years, the credit is multiplied by 1.25. Certification for the percentage of renewable energy must be presented to 

the Department of Revenue upon request. The credit has a maximum value of $400,000 in any consecutive five-year 

period for each fueling facility. Excess credit may be carried forward for up to five years. For additional information, see 

the Department of Revenue's Income 9 FYI publication. (Reference Colorado Revised Statutes 39-22-516) 

Laws and Regulations 

Alternative Fuel Use and Vehicle Acquisition Requirement 

The Colorado Department of Personnel and Administration (DPA) has adopted a policy that requires all state-owned 

diesel vehicles and equipment to be fueled with a fuel blend of 20% biodiesel (B20), subject to the availability of the fuel 

and so long as the price differential is not greater than $0.10 more per gallon as compared to conventional diesel. 

Biodiesel is defined as fuel composed of mono-alkyl esters of long chain fatty acids derived from plant or animal matter 

that meets ASTM specifications and is produced in Colorado.

Additionally, DPA has adopted a policy to increase the use of alternative fuels and establish objectives to increase its use 

for each succeeding year. DPA must purchase motor vehicles that operate on compressed natural gas (CNG), subject to 

the availability of vehicles and adequate fueling infrastructure. If purchases of CNG vehicles are not possible due to the 

incremental cost being more than 10%, DPA must purchase another type of flexible fuel or hybrid electric vehicle, again 

subject to availability and incremental costs. DPA may adopt a policy to allow some vehicles to be exempt from this 

requirement. 

(Reference Executive Order D0012 07, 2007, and Colorado Revised Statutes 24-30-1104) 

Point of Contact

Art Hale 

Colorado State Fleet Manager 

Colorado Department of Personnel and Administration, Division of Central Services 

Phone: (303) 866-5531 

Fax: (303) 866-5511 

art.hale@state.co.us

Laws and Regulations 

Alternative Fuel and Fuel-Efficient Vehicle Acquisition and Emissions Reduction Requirements 

Cars and light-duty trucks a state agency purchases must: 1) have an average U.S. Environmental Protection Agency 

estimated fuel economy of at least 40 miles per gallon; 2) comply with state fleet vehicle acquisition requirements set 

forth under the Energy Policy Act of 1992; and 3) obtain the best achievable fuel economy per pound of carbon dioxide 

emitted for the applicable vehicle classes. Alternative fuel vehicles (AFVs) the state purchases to comply with these 

requirements must be capable of operating on an alternative fuel that is available in the state.

In addition, at least 50% of all cars and light-duty trucks the state purchases or leases must be hybrid electric vehicles, 

plug-in hybrid electric vehicles, or capable of using alternative fuel. All AFVs purchased or leased must be certified to the 

California Air Resources Board's (ARB) Low Emission Vehicle II Ultra Low Emission Vehicle Standard, and all light-duty 

gasoline vehicles and hybrid electric vehicles the state purchases or leases must be certified, at a minimum, to the 

California ARB Low Emission Vehicle II Ultra Low Emission Vehicle Standard. Beginning January 1, 2012, the required 

percentage of alternative fuel or advanced vehicles increases to 100%. The Department of Administrative Services must 

report annually on the composition of the state fleet, including the volume of alternative fuels used. 

Vehicles that the Connecticut Department of Public Safety designates as necessary for the Department of Public Safety to 

carry out its mission are exempt from these provisions. 

(Reference Executive Order 22, 2009, and Connecticut General Statutes 4a-67d) 

School Bus Emissions Reduction 

Each full-sized school bus with an engine model year of 1994 or newer that transports children in the state, must be 

equipped with specific emissions control systems, including either: 1) a closed crankcase filtration system and a level 1 

device, level 2 device or level 3 device; 2) an engine the U.S. Environmental Protection Agency (EPA) has certified to 

meet Model Year 2007 emission standards; or 3) use of compressed natural gas or other alternative fuel the EPA or the 

California Air Resources Board has certified to reduce particulate matter emissions by at least 85% as compared to ultralow sulfur diesel fuel. (Reference Connecticut General Statutes 14-164o) 

Connecticut

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State Incentives 

Alternative Fuel Tax Exemption 

Taxes imposed on alternative fuels used in official vehicles for the United States government or any Delaware state 

governmental agency, including volunteer fire and rescue companies, are waived. Additionally, alternative fuel retailers 

must obtain a fuel supplier's license from the Delaware Department of Transportation (DelDOT), and operators or owners 

of vehicles using alternative fuel must obtain either a special fuel user's license from DelDOT or pay the special fuel tax. 

(Reference Delaware Code Title 30, Chapter 51, Subchapter II) 

Laws and Regulations 

State Agency Energy Plan 

To improve air quality and reduce operating expenses from state vehicle use, all state agencies must reduce petroleum 

consumption by 25%, vehicle emissions by 25%, and vehicle miles traveled by 15% by the end of 2012 as compared to 

Fiscal Year 2008 levels. This will be achieved through alternative fuel vehicle acquisition, the use of alternative fuels, and 

implementation of idle reduction measures. (Reference Executive Order 18, 2010) 

Alternative Fuel and Advanced Vehicle Acquisition Requirements 

All new light-duty vehicles state agencies, departments, and offices purchase after March 1, 2010, must be hybrid 

electric, alternative fuel, fuel efficient, or low emissions vehicles, unless such a purchase compromises health, safety, or 

law enforcement needs. Additionally, the state must develop procedures for diesel fleet vehicles to use biodiesel fuel 

blends of the highest practical percent content. (Reference Executive Order 18, 2010) 

State Incentives 

Hydrogen and Biofuels Investment Tax Credit 

An income tax credit is available for costs incurred between July 1, 2006, and June 30, 2010, for the following: 1) 75% 

of all capital, operation and maintenance, and research and development costs incurred in connection with an investment 

in hydrogen-powered vehicles and hydrogen vehicle fueling stations in the state, up to a maximum of $3 million each 

fiscal year for all taxpayers; and 2) 75% of all capital operation and maintenance, and research and development costs 

incurred in connection with an investment in the production, storage, and distribution of biodiesel (B10-B100) and 

ethanol (E10-E100) in the state, up to a maximum of $6.5 million each fiscal year for all taxpayers. This includes the 

costs of constructing, installing, and equipping such technologies; gasoline fueling station dispenser retrofits for ethanol 

(E10-E100) distribution also qualify. Credits may be used in tax years through December 31, 2010. If the credit is not 

fully used in any one tax year because of insufficient tax liability, the unused amount may be carried forward through 

December 31, 2012. Any entity that is allowed the investment tax credit may transfer the credit, in whole or in part, to 

any taxpayer by written agreement without transferring ownership interest in the qualified property. (Reference Florida 

Statutes 220.192)

Point of Contact

Kelley Smith 

Chief Analyst and Grant Manager 

Florida Energy and Climate Commission 

Phone: (850) 487-4644 

Fax: (850) 922-9701 

kelley.smith@eog.myflorida.com

http://myfloridaclimate.com/climate_quick_links/florida_energy_climate_commission

Excise Tax Exemption for Biodiesel Production at Schools 

Biodiesel fuel manufactured by a public or private secondary school is exempt from the diesel fuel excise tax and the 

associated registration requirements. To be eligible for the exemption, total annual production of biodiesel must be less 

than 1,000 gallons and may only be used by the school, its employees, or its students. (Reference Senate Bill 1730, 

2010, and Florida Statutes 206.874) 

Laws and Regulations 

Fuel-Efficient Vehicle Acquisition and Alternative Fuel Use Requirements 

When procuring new vehicles under a state purchasing plan, all Florida state agency, state university, community 

college, and local government fleets must select the vehicle with the greatest fuel efficiency available for a given use 

class. Exceptions may be made for emergency responder vehicles if these entities provide documentation. In addition, all 

state agencies must use ethanol and biodiesel blended fuels when available. State agencies administering central fueling 

operations for state-owned vehicles must purchase ethanol and biodiesel fuels to use in their vehicle fleet as much as 

possible. (Reference Florida Statutes 286.29) 

Delaware

Florida

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Biofuels Promotion 

The Florida Department of Management Services (DMS), in coordination with the Florida Department of Transportation 

(DOT), must conduct an analysis of fuel additives and biofuels the DOT uses through its central fueling facilities. The DMS 

must also encourage other state government entities to analyze transportation fuel usage, including the types and 

percentages of fuels consumed, and report this information to the DMS. (Reference Florida Statutes 287.16) 

Alternative Fuels Study 

The Florida Energy and Climate Commission (FECC) must conduct a study to evaluate lifecycle greenhouse gas (GHG) 

emissions associated with all renewable fuels including biodiesel, renewable diesel, biobutanol, and ethanol derived from 

any source. The FECC must also evaluate and recommend a requirement that all renewable fuels sold in Florida reduce 

lifecycle GHG emissions by an average percentage. The FECC may also evaluate the benefits associated with creating, 

banking, transferring, and selling GHG emissions credits among fuel refiners, blenders, and importers. The FECC must 

submit specific recommendations to the state legislature by December 31, 2010. (Reference Florida Statutes 526.207) 

Alternative Fuels Tax 

A person operating an alternative fuel vehicle (AFV) must purchase an annual decal from the Florida Department of Motor 

Vehicles instead of paying the excise tax on gasoline. Fueling stations are not allowed to fuel a vehicle with propane or 

compressed natural gas that does not display the proper decal. State and local government AFV fleets are exempt from 

paying the decal fee. In addition to the state alternative fuel fee, a person fueling a vehicle from their own facility is 

required to pay a local alternative fuel fee instead of each cent of excise tax a county levies. (Reference Florida Statutes

206.877) 

State Incentives 

Alternative Fuel Vehicle (AFV) Tax Credit 

An income tax credit is available for 10% of the cost to purchase or lease a new dedicated AFV or to convert a vehicle to 

operate solely on an alternative fuel, or $2,500 per vehicle, whichever is less. Qualified vehicles must meet emissions 

standards defined by the Georgia Board of Natural Resources. Eligible alternative fuels include E85, natural gas, propane, 

hydrogen, coal derived liquid fuels, fuels other than alcohol derived from biological materials, and electricity. Any portion 

of the credit not used in the year the AFV is purchased or converted may be carried over for up to five years. This 

incentive does not apply to hybrid electric vehicles. (Reference Georgia Code 48-7-40.16) 

Point of Contact

James Udi 

Environmental Specialist 

Georgia Environmental Protection Division 

Phone: (404) 363-7046 

Fax: (404) 362-2534 

james_udi@dnr.state.ga.us

Alternative Fuel Production Facility Tax Exemption 

Tangible personal property used in, or for, the construction of an alternative fuel production facility dedicated to the 

production of ethanol, biodiesel, butanol, and their by-products is exempt from the state sales and use tax. To qualify, 

alternative fuels produced in the facility must be derived from biomass materials such as agricultural products, animal 

fats, or the wastes of such products or fats. The tax exemption does not apply to property purchased after the production 

and processing of alternative fuels has begun at the facility. The exemption applies to tangible personal property 

purchased between July 1, 2007, and June 30, 2012. (Reference Georgia Code 48-8-3) 

Laws and Regulations 

Alternative Fuel Use and Alternative Fuel Vehicle (AFV) Acquisition Requirements 

State agencies and departments must prioritize the procurement of high fuel efficiency and flexible fuel vehicles when 

such technologies are commercially available and economically practical. Additionally, all state-owned fueling facilities 

must purchase gasoline blended with ethanol and diesel fuel blended with biodiesel for use in state vehicles when 

available and economically practical. (Reference Executive Order 02.28.06.02, 2006) 

Motor Fuel Excise Tax 

An excise tax is imposed at the rate of $0.075 per gallon on distributors who sell or use motor fuel, including special 

fuels. Motor fuels that are not commonly sold or measured by the gallon and are used in motor vehicles on public 

highways are taxed according to their gasoline gallon equivalent. Propane and special fuels sold in bulk to a licensed 

consumer distributor are exempt from this tax. (Reference Georgia Code 48-9-3) 

Georgia

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State Incentives 

Business Investment Tax Credit 

Through December 31, 2010, taxpayers making a high technology business investment are eligible for a tax credit the 

year in which the investment is made. A qualified high technology business is a business in which more than 50% of the 

activities are qualified research (75% of which is conducted in Hawaii) and in which more than 75% of the income (i.e., 

income from products sold from, manufactured or produced in Hawaii or from services performed in Hawaii) is derived 

from qualified research. Qualified research includes research that is related to non-fossil fuel energy-related technology. 

The tax credit is equal to a percentage of the investment made, up to the following maximums:

Tax credits may not exceed the amount of the investment or exceed 80% of the taxpayer's income tax liability in the 

year in which the credit is claimed. Credits may be carried over for up to four additional years. 

(Reference Hawaii Revised Statutes 235-7.3, 235-109.5, and 235-110.9) 

Point of Contact

Hawaii State Department of Taxation 

Phone: (800) 222-3229 

http://www.state.hi.us/tax/tax.html

Laws and Regulations 

Alternative Fuel and Advanced Vehicle Acquisition Requirements 

Once the state has met its federal and state vehicle acquisition mandates, state and county agencies must move toward 

purchasing light-duty vehicles that meet the needs of the agency while reducing petroleum consumption. The priority to 

be used for purchasing such vehicles is as follows:

1. electric vehicles (EVs) or plug-in hybrid electric vehicles; 

2. hydrogen or fuel cell vehicles; 

3. other alternative fuel vehicles; 

4. hybrid electric vehicles; and 

5. vehicles identified as top performers for fuel economy in the U.S. Environmental Protection Agency's annual "Fuel 

Economy Leaders" report. 

Exemptions may apply. State agencies must purchase alternative fuels and ethanol blended gasoline when available, 

evaluate a purchase preference for biodiesel blends, and promote efficient operation of vehicles. For the purpose of this 

requirement, an alternative fuel is defined as an alcohol fuel, an alcohol fuel blend containing at least 85% alcohol, 

natural gas, liquefied petroleum gas (propane), hydrogen, biodiesel, a biodiesel blend containing at least 20% biodiesel, 

a fuel derived from biological materials, and electricity from off-board energy sources. 

(Reference Hawaii Revised Statutes 103D-412 and 196-9) 

Alternative Fuel Tax Rate 

A distributor of any alternative fuel for operation in an internal combustion engine must pay a license tax of $0.0025 for 

each gallon of alternative fuel the distributor sells or uses. In addition, a distributor must pay a license tax for each 

gallon of fuel sold or used by the distributor for operating a motor vehicle on state public highways according to the 

following rates:

For other alternative fuels, the rate is based on the energy content of the fuels as compared to diesel fuel, using a lower 

heating value of 130,000 British thermal units per gallon as a standard for diesel, so that the tax rate, on an energy 

Year

Tax Credit (percent of 

investment made)

Maximum Value 

of Credit

Year of Investment 35% $700,000

1st Year Following Investment 25% $500,000

2nd Year Following Investment 20% $400,000

3rd Year Following Investment 10% $200,000

4th Year Following Investment 10% $200,000

Fuel Type Tax

Ethanol 0.145 times the rate for diesel

Methanol 0.11 times the rate for diesel

Biodiesel 0.25 times the rate for diesel

Liquefied Petroleum Gas 0.33 times the rate for diesel

Hawaii

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content basis, is equal to one-quarter the rate for diesel fuel. Counties may also impose additional taxes. (Reference 

Hawaii Revised Statutes 243-4) 

Last Updated April 2010

State Incentives 

Biofuel Fueling Infrastructure Tax Credit 

Qualified biofuel fueling infrastructure is eligible for an income tax credit of 6% of the cost to install new, or upgrade 

existing, fueling infrastructure dedicated to the purpose of selling and dispensing biofuel. The allowable credit cannot 

exceed 50% of the taxpayer's income tax liability. For the purpose of this incentive, biofuel is defined as any fuel offered 

for sale as a transportation fuel that is agriculturally derived and meets applicable ASTM standards, including, but not 

limited to, ethanol, ethanol blended fuels, biodiesel, and biodiesel blended fuels. This incentive expires after December 

31, 2011. (Reference Idaho Statutes 63-3029M) 

Alternative Fuels Tax Refund 

State excise tax paid on special fuels used in motor vehicles that the state or federal government owns or leases may be 

refunded, as long as the tax was originally paid directly to the special fuel vendor. Special fuels include compressed and 

liquefied natural gas, liquefied petroleum gas (propane), hydrogen, and fuel suitable for use in diesel engines. The tax 

refund is not available for special fuels a registered motor vehicle uses while idling. Idling means a period of time greater 

than 15 minutes when the motor vehicle is stationary with the engine operating. (Reference Idaho Statutes 63-2401, 63-

2402, and 63-2423) 

State Incentives 

Alternative Fuel Vehicle (AFV) and Alternative Fuel Rebates 

The Illinois Alternate Fuels Rebate Program (Program) provides a rebate for 80% of the incremental cost of purchasing 

an AFV (up to $4,000), 80% of the cost of converting a conventional vehicle or a hybrid electric vehicle to an AFV using a 

federally certified conversion (up to $4,000), and for the incremental cost of purchasing alternative fuels. Eligible fuels for

the program include E85, fuel blends containing at least 20% biodiesel (B20), natural gas, propane, electricity, and 

hydrogen. A vehicle may receive one rebate in its lifetime. Only AFVs or conversion systems purchased from an Illinoisbased company or vendor are eligible, except if the vehicle is a heavy-duty specialty vehicle that is not sold in Illinois, 

and only hybrid electric vehicles fueled with alternative fuels are eligible. To be eligible for a fuel rebate, the entity or 

individual must purchase the majority of E85 or biodiesel fuel from Illinois retail stations or fuel suppliers. The E85 fuel 

rebate is up to $450 per year (depending on vehicle miles traveled) for up to three years for each flexible fuel vehicle 

that uses E85 at least half the time. The biodiesel fuel rebate (for B20 and higher blends) is for 80% of the incremental 

cost of the biodiesel fuel, as compared to conventional diesel. The Program is open to all Illinois residents, businesses, 

government units (except federal government), and organizations located in Illinois. (Reference House Bill 6047, 2010, 

and 415 Illinois Compiled Statutes 120/30) 

Point of Contact

Darwin Burkhart 

Manager, Clean Air Programs 

Illinois Environmental Protection Agency and Chicago Area Clean Cities Coalition 

Phone: (217) 524-5008 

Fax: (217) 557-2559 

darwin.burkhart@illinois.gov

http://www.illinoisgreenfleets.org

School Bus Retrofit Reimbursement 

The Illinois Department of Education will reimburse any qualifying school district for the cost of converting gasoline buses 

to more fuel-efficient engines or to engines using alternative fuels. Restrictions may apply. (Reference 105 Illinois

Compiled Statutes 5/29-5) 

Laws and Regulations 

Fuel-Efficient Vehicle Acquisition Goals 

To help achieve the statewide goal of reducing petroleum use by 20% by July 1, 2012, as compared to 2008 petroleum 

use, Illinois state agencies must work towards meeting the following goals:

z By July 1, 2015, at least 20% of new passenger vehicles purchased must be hybrid electric vehicles (HEVs) and 5% 

must be battery electric vehicles (EVs); 

z By July 1, 2025, at least 60% of new passenger vehicles purchased must be HEVs and 15% must be EVs; 

Agencies that operate medium- and heavy-duty vehicles must implement strategies to reduce fuel consumption through 

Idaho

Illinois

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diesel emission control devices, HEV and EVs technologies, alternative fuel use, and fuel efficient technologies. Agencies 

must also implement strategies to promote the use of biofuels in state vehicles; reduce the environmental impacts of 

employee travel; and encourage employees to adopt alternative travel methods, such as carpooling. 

(Reference Executive Order 11, 2009) 

Biodiesel Production Tax 

A private biodiesel producer that produces less than 5,000 gallons of biodiesel annually is subject to the annual state 

motor fuel tax. The return and payment of taxes for a given year are due by January 20 of the following year. A private 

biodiesel producer that produces more than 5,000 gallons of biodiesel annually must file returns and make state motor 

fuel tax payments on a monthly basis. The return and payment of taxes are due by the 20th day of each calendar month 

for the preceding calendar month. A private biodiesel fuel producer is defined as a person whose only activities with 

respect to motor fuel are: 1) the conversion of any biomass materials into biodiesel fuel that is produced exclusively for 

personal use and not for sale; or 2) the blending of biodiesel fuel resulting in biodiesel blends that are produced 

exclusively for personal use and not for sale. (Reference 35 Illinois Compiled Statutes 505/2, 505/2a, and 505/2d) 

Biodiesel Blend Use Requirement 

The following entities are required to use a biodiesel blend that contains at least 5% biodiesel (B5) when fueling at a bulk 

central fueling facility: any diesel powered vehicle owned or operated by the state, county or local government, school 

district, community college, public college or university, or mass transit agency. These entities are required to use B5 

where available, unless the vehicle engine is designed or retrofitted to operate on a higher percentage of biodiesel or on 

ultra low sulfur diesel fuel. Biodiesel is defined as a renewable fuel conforming to ASTM standard D6751 and registered 

with the U.S. Environmental Protection Agency. (Reference 625 Illinois Compiled Statutes 5/12-705.1, 415 Illinois

Compiled Statutes 120/10, and 815 Illinois Compiled Statutes 370/4) 

Advanced Vehicle Acquisition and Biodiesel Fuel Use Requirement 

All gasoline-powered vehicles purchased with state funds must be flexible fuel vehicles (FFVs) or fuel-efficient hybrid 

electric vehicles (HEVs). Fuel-efficient HEVs are defined as automobiles or light trucks that use a gasoline or diesel engine 

and an electric motor to provide power and that gain at least a 20% increase in combined U.S. Environmental Protection 

Agency city-highway fuel economy over the equivalent or most-similar conventionally-powered model. Furthermore, any 

vehicle purchased with state funds that is fueled with diesel fuel must be certified by the manufacturer to run on 5% 

biodiesel (B5) fuel. The Chief Procurement Officer may determine that certain vehicle procurements are exempt from 

these requirements based on intended use or other reasonable considerations such as health and safety of Illinois 

citizens. (Reference 30 Illinois Compiled Statutes 500/25-75) 

Biofuels Preference for State Vehicle Procurement 

In awarding contracts that require vehicle procurement, state agencies may give preference to an otherwise qualified 

bidder who will fulfill the contract through the use of vehicles powered by ethanol produced from Illinois corn or biodiesel 

produced from Illinois soybeans. (Reference 30 Illinois Compiled Statutes 500/45-60) 

Alternative Fuel Taxicab Regulation - Chicago, IL 

Chicago taxi companies with 50 or more vehicles in their fleet must operate at least one alternative fuel taxi. Alternative 

fuel taxis include vehicles designed to operate on compressed natural gas, biodiesel (20% blend or higher), propane, 

hydrogen, or electricity. No more than 2% of the taxi fleet's licensed taxicabs may be subject to this requirement. In 

addition, an alternative fuel vehicle can be licensed as a taxi for an additional year beyond the age limit of a conventional 

vehicle. For more information, see the City of Chicago Rules and Regulations for Taxicab Medallion License Holders Rule 

5.01 (PDF 387 KB ). Download Adobe Reader

State Incentives 

Biodiesel Production Tax Credit 

A biodiesel producer located in Indiana is entitled to a credit of $1.00 per gallon of biodiesel produced. The Indiana 

Economic Development Corporation (IEDC) must review and approve applications for this incentive. The total amount of 

credits granted to single taxpayer may not exceed $3 million for all taxable years, but may be increased to $5 million 

with prior approval from IEDC. As of August 2010, no funds have been appropriated for this incentive. (Reference Indiana 

Code 6-3.1-27-8) 

Biodiesel Blending Tax Credit 

A biodiesel blender located in Indiana is entitled to a credit of $0.02 per gallon of blended biodiesel produced at a facility 

located in Indiana. The Indiana Economic Development Corporation must review and approve applications for this 

incentive. The total amount of credits granted to single taxpayer may not exceed $3 million for all taxable years. As of 

August 2010, no funds have been appropriated for this incentive. (Reference Indiana Code 6-3.1-27-9) 

Biodiesel Blend Tax Exemption 

Indiana

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Biodiesel blends of at least 20% that are used for personal, noncommercial use by the individual that produced the 

biodiesel content of the fuel are exempt from the $0.16 per gallon license tax. The number of gallons of fuel for which the 

exemption may be claimed is based on the percentage volume of biodiesel in each gallon used. (Reference Indiana Code

6-6-2.5-30.5) 

Laws and Regulations 

Biobased Products Purchase Requirement 

A state governmental body or educational institution must purchase biobased products whenever possible, provided that 

biobased products are available and the purchase is economically feasible. Biobased products are defined as commercial 

or industrial products other than food or feed produced from plant or animal sources, including renewable agricultural and 

forestry materials. (Reference Indiana Code 5-22-5-9) 

Biofuels Blend Use Requirement 

Whenever possible, governmental entities and state educational institutions must fuel diesel vehicles with biodiesel 

blends containing at least 2% biodiesel, gasoline vehicles with mid-level ethanol blends between 20% and 73%, and 

flexible fuel vehicles with E85. This requirement does not apply if such blends are prohibited under federal regulations or 

have not been approved by the vehicle manufacturer. (Reference Indiana Code 5-22-5-8 and 21-31-9-3) 

Last Updated April 2010

State Incentives 

Biodiesel Tax Credit 

Through December 31, 2011, retailers whose diesel sales consist of at least 50% biodiesel blends containing a minimum 

2% biodiesel are eligible for a $0.03 per gallon tax credit on each gallon of biodiesel sold. (Reference Iowa Code

422.11P) 

Alternative Fuel Production Tax Credits 

The Enterprise Zone Program and the High Quality Jobs Program offer state tax incentives to business projects for the 

production of biomass or alternative fuels. Depending on the program, incentives may include: an investment tax credit 

equal to a percentage of the qualifying investment, amortized over five years; a refund of state sales, service, or use 

taxes paid to contractors or subcontractors during construction; a doubling of the state's refundable research activities 

credit; additional funding for training new employees; and a local property tax exemption of up to 100% of the value 

added to the property. 

Point of Contact

Business Finance Program 

Program Coordinator 

Iowa Dept. of Economic Development, Business Development Division 

Phone: (515) 725-3133 

Fax: (515) 725-3010 

businessfinance@iowa.gov

http://www.iowalifechanging.com

Laws and Regulations 

Renewable Fuel Replacement Goal 

The Iowa legislature set a goal of replacing 25% of conventional fuels sold in the state with biofuels by January 1, 2020. 

To reach this goal, the state encourages retailers to sell a certain percentage of renewable fuels in relation to their total 

gasoline sales by offering tax credits. (Reference Iowa Code 422.11N) 

Biodiesel Fuel Use 

The Iowa Department of Transportation (IDOT) may purchase biodiesel for use in IDOT vehicles through the biodiesel 

fuel revolving fund created in the state treasury. The fund consists of money received from the sale of Energy Policy Act 

of 1992 (EPAct) credits IDOT has banked and other money IDOT has obtained or accepted for deposit in the fund. 

(Reference Iowa Code 307.20) 

Alternative Fuel Vehicle (AFV) Acquisition Requirements 

At least 10% of new light-duty vehicles purchased by institutions under the control of the state fleet administrator, Iowa 

Department of Transportation administrator, board of directors of community colleges, state board of regents, 

commission for the blind, and department of corrections must be capable of using alternative fuels. Vehicles and trucks 

purchased and directly used for law enforcement, off-road maintenance work, or to pull loaded trailers are exempt from 

this requirement. (Reference Iowa Code 8A.362, 216B.3, 260C.19A, 262.25A, 307.21 and 904.312A) 

Iowa

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State Incentives 

Alternative Fuel Vehicle (AFV) Tax Credit 

An income tax credit is available for up to 40% of the incremental or conversion cost for qualified AFVs, as outlined in the 

table below. Qualified AFVs include vehicles that operate on a combustible liquid derived from grain starch, oil seed, 

animal fat, or other biomass, or produced from a biogas source.

Alternatively, a tax credit of $750 or 5% of the cost of the AFV, whichever is less, is available for the purchase of an 

original equipment manufacturer AFV. This credit is allowed only to the first individual to take title of the vehicle. For 

motor vehicles capable of operating on E85, the individual claiming the credit must provide evidence of purchasing at 

least 500 gallons of E85 between the time the vehicle was purchased and December 31 of the following calendar year. 

Excess credits may be carried over for up to three years after the year in which the expenditures were made. For more 

information, see the Kansas Department of Revenue Alternative Fuel Tax Credit Web page. 

(Reference Kansas Statutes 79-32,201) 

Alternative Fueling Infrastructure Tax Credit 

An income tax credit is available for up to 40% of the total cost to install alternative fueling infrastructure after January 

1, 2009. Qualified property must be directly related to the delivery of alternative fuel into the fuel tank of a motor vehicle 

propelled by such fuel. The tax credit may not exceed $100,000 per fueling station. Alternative fuels are defined as 

combustible liquids derived from grain starch, oil seed, animal fat, or other biomass, or produced from a biogas source. 

Excess credits may be carried over for up to three years after the year in which the expenditures were made. For more 

information, see the Kansas Department of Revenue Alternative Fuel Tax Credit Web page. (Reference Kansas Statutes

79-32,201) 

Renewable Fuel Retailer Incentive 

A licensed retail motor fuel dealer may receive a quarterly incentive for selling and dispensing renewable fuels, including 

biodiesel. A qualified motor fuel dealer is eligible for up to $0.065 for every gallon of renewable fuel sold and up to $0.03 

for every gallon of biodiesel sold, if the required threshold percentage is met. The threshold percentage for the incentive 

payment will increase incrementally on an annual basis from 10% for renewable fuel and 2% for biodiesel in 2009 to 

25% for each fuel type beginning on January 1, 2024. As of April 2010, this incentive was on hold until further notice. 

(Reference Kansas Statutes 79-34,171 through 79-34,176) 

Point of Contact

Cindy Mongold 

Public Service Administrator II 

Kansas Department of Revenue 

Phone: (785) 296-7048 

Fax: (785) 296-4993 

cindy_mongold@kdor.state.ks.us

Biofuel Blending Equipment Tax Incentives 

A Storage and Blending Equipment Credit is available for the purchase, construction, or installation of qualified 

equipment used for storing and blending petroleum-based fuel with biodiesel, ethanol, or other biofuel. The equipment 

must be installed at a fuel terminal, refinery, or biofuel production facility. The tax credit is equal to 10% of the qualified

investment for the first $10,000,000 invested, and 5% of the investment in excess of $10,000,000. The credit may be 

taken in 10 equal annual installments beginning with the year in which the equipment is placed into service. Excess 

credits may be carried over into subsequent years for a maximum of 14 years after the first installment. To be eligible for 

the tax credit, the taxpayer must continue to operate the equipment for at least 10 years. The credit expires January 1, 

2012.

Biofuel blenders may also be eligible for an income tax deduction based on the accelerated depreciation for storage and 

blending equipment. This deduction extends over a 10-year period and is equal to 55% of the depreciated value for the 

first year and 5% of the depreciated value for each of the nine subsequent years that the equipment remains in 

production. 

(Reference Kansas Statutes 79-32,251 through 79-32,255) 

Biofuel Blending Equipment Tax Exemption 

Qualified equipment used for storing and blending petroleum-based fuel and biodiesel, ethanol, or other biofuel is 

exempt from state property taxes. The exemption begins at the time of installation at a fuel terminal, refinery, or biofuel 

production plant, and ends 10 taxable years following the year in which the equipment was installed. Equipment used 

GVWR Credit

Less than 10,000 pounds (lbs.) Up to $2,400

10,000 to 26,000 lbs. Up to $4,000

Over 26,000 lbs. Up to $40,000

Kansas

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only for denaturing ethyl alcohol is not eligible. (Reference Kansas Statutes 79-232 and 79-32,251) 

Biodiesel Production Incentive 

A qualified Kansas biodiesel producer is eligible for a biodiesel production incentive of $0.30 per gallon of biodiesel sold. 

The incentive is payable from the Kansas Qualified Biodiesel Fuel Producer Incentive Fund. Producers must file for the 

incentive on a quarterly basis through the Kansas Department of Revenue. (Reference Kansas Statutes 79-34,158) 

Laws and Regulations 

Biofuels Use Requirement 

State-owned diesel-powered vehicles and equipment must use a biodiesel blend that contains at least 2% biodiesel (B2), 

where available, as long as the price of biodiesel is not more than $0.10 per gallon as compared to the price of diesel 

fuel. Individuals operating state-owned motor vehicles must purchase fuel blends containing at least 10% ethanol (E10), 

as long as these fuel blends are not more than $0.10 per gallon as compared to the price per gallon of regular gasoline 

fuel. (Reference Kansas Statutes 75-3744a) 

State Incentives 

Biodiesel Production and Blending Tax Credit 

Qualified biodiesel producers or blenders are eligible for an income tax credit of $1.00 per gallon of pure biodiesel (B100) 

or renewable diesel produced or used in the blending process. Re-blending of blended biodiesel does not qualify. The total 

amount of credit for all biodiesel producers may not exceed the annual biodiesel tax credit cap of $10 million. Unused 

credits may not be carried forward. For the purpose of this credit, biodiesel must meet ASTM specification D6751. 

Renewable diesel is defined as a renewable, biodegradable, non-ester combustible liquid derived from biomass resources 

that meets ASTM specification D975 or D396. (Reference Kentucky Revised Statutes 141.422 to 141.424) 

Alternative Fuel Production Tax Incentives 

The Kentucky Economic Development and Finance Authority (KEDFA) provides tax incentives to construct, retrofit, or 

upgrade an alternative fuel production or gasification facility that uses coal or biomass as a feedstock. Beginning August 

1, 2010, tax incentives are also available for energy-efficient alternative fuel production facilities and up to five 

alternative fuel production facilities that use natural gas or natural gas liquids as a feedstock. Energy-efficient alternative

fuels are defined as homogeneous fuels that are produced from processes designed to densify feedstocks such as coal, 

waste coal, or biomass resources, and have an energy content that is greater than the feedstock. The incentives may 

consist of: 1) a refund of up to 100% of the state sales tax paid on the purchase of personal property used to construct 

the facility; 2) a credit of up to 100% of an approved company's state income tax and limited liability entity tax that the 

project generates; 3) up to 4% of the wage assessment of employees whose jobs were created as a result of the 

construction, retrofit, upgrade or operation of a qualified facility; and 4) a credit for up to 80% of the severance tax paid 

for coal, natural gas, or natural gas liquids used as a feedstock. 

The incentives expire at the time of receipt of the authorized incentives or 25 years from activation of the project, 

whichever occurs first. Approved companies may recover up to 50% of their capital investment via the authorized tax 

incentives. The minimum capital investment for incentive eligibility is $25 million for an alternative fuel or gasification 

facility that uses biomass as the primary feedstock, $100 million for an alternative fuel or gasification facility that uses 

coal, natural gas, or natural gas liquids as the primary feedstock, and $25 million for an energy-efficient alternative fuel 

facility. 

(Reference House Bills 552 and 589, 2010, and Kentucky Revised Statutes 154.27-010 to 154.27-090) 

Point of Contact

Don Goodin 

Kentucky Economic Development Finance Authority 

Phone: (502) 564-4554 

Fax: (502) 564-7697 

don.goodin@ky.gov

http://www.thinkkentucky.com/

Laws and Regulations 

Vehicle Acquisition Priorities and Alternative Fuel Use Requirement 

The Kentucky Finance and Administration Cabinet (Cabinet) must develop a strategy to replace at least 50% of 

commonwealth motor fleet light-duty vehicles with energy-efficient vehicles including hybrid electric vehicles, fuel cell 

vehicles, and alternative fuel vehicles. The Cabinet must also develop a strategy to increase the use of ethanol, biodiesel, 

and other alternative fuels in commonwealth motor vehicle fleets. The Cabinet must report targeted vehicle and fuel 

usage amounts annually. (Reference Kentucky Revised Statutes 45A.625) 

Biofuels Use Requirement 

Kentucky

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The Kentucky Transportation Cabinet and the Kentucky Finance and Administration Cabinet must establish procurement 

contracts that maximize the market availability of ethanol and biodiesel fuel blends. Additionally, employees using 

conventional vehicles in the Transportation Cabinet's fleet must use either a 10% blend of ethanol (E10) or a 2% blend of 

biodiesel (B2) as their primary fueling option, and the Transportation Cabinet must maximize the use of E85 in its flexible 

fuel vehicle fleet. The Transportation Cabinet must promote clean fuels through employee education, vendor 

identification, and by holding employees accountable for electing to use clean fuels in commonwealth vehicles. (Reference 

Executive Order 2005-124, 2005) 

Last Updated September 2010

State Incentives 

Alternative Fuel Vehicle (AFV) and Fueling Infrastructure Tax Credit 

The state offers an income tax credit worth 50% of the cost of converting a vehicle to operate on an alternative fuel, 

50% of the incremental cost of purchasing an original equipment manufacturer AFV, and 50% of the cost of constructing 

an alternative fueling station. Only vehicles registered in Louisiana may receive the tax credit. Alternatively, a taxpayer 

may take a tax credit worth 10% of the cost of the motor vehicle or up to $3,000, whichever is less. For the purpose of 

this incentive, alternative fuels include compressed natural gas, liquefied natural gas, liquefied petroleum gas/propane, 

biofuel, biodiesel, methanol, ethanol, electricity, and any other fuels that meet or exceed federal clean air standards. 

(Reference Louisiana Revised Statutes 47:6035) 

Green Jobs Tax Credit 

The state offers a corporate or income tax credit for qualified capital infrastructure projects in Louisiana that are directly 

related to industries including but not limited to the energy efficient and advanced drive train vehicle industry and the 

biofuels industry. The tax credit is for 10% to 25% of the project costs, calculated based on the investment costs, up to 

$1 million per state-certified green project. The portion of the base investment expended on payroll for Louisiana 

residents employed in connection with the construction of the project may be eligible for an additional 10% tax credit on 

the payroll. Restrictions may apply. (Reference Louisiana Revised Statutes 47:6037) 

Biodiesel Equipment and Fuel Tax Exemption 

Certain property and equipment used to manufacture, produce, or extract unblended biodiesel, as well as unblended 

biodiesel used as fuel by a registered manufacturer, are exempt from state sales and use taxes. Unblended biodiesel is 

defined as B100 fuel that meets ASTM specification D6751. These provisions are effective through June 30, 2012. 

(Reference Louisiana Revised Statutes 47:301) 

Laws and Regulations 

Renewable Fuel Standard 

Within six months following the point at which cumulative monthly production of denatured ethanol produced in Louisiana 

equals or exceeds a minimum annual production volume of 50 million gallons, at least 2% of the total gasoline sold by 

volume in the state must be denatured ethanol. Ethanol is defined an ethyl alcohol that has a purity of at least 99%, 

exclusive of added denaturants; meets U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives and ASTM specification 

D4806; and is produced from domestic agricultural or biomass products. This requirement will not be effective until six 

months after the average wholesale price of a gallon of Louisiana-manufactured ethanol, less any federal tax incentives 

or credits, is equal to or below the average wholesale price of a gallon of regular unleaded gasoline in Louisiana for a 

period of not less than 60 days, as determined by the Louisiana Biofuel Panel. The Legislature urges the Louisiana 

Department of Agriculture and Forestry not to implement the minimum ethanol requirements if the requirements raise 

the price of gasoline by more than $0.02 per gallon.

Within six months following the point at which cumulative monthly production of biodiesel produced in the state equals or 

exceeds a minimum annual production volume of 10 million gallons, at least 2% of the total diesel sold by volume in the 

state must be biodiesel. Biodiesel is defined as a fuel comprised of mono-alkyl esters of long chain fatty acids derived 

from domestic, renewable resources and meeting the requirements of ASTM specification D6751, or a diesel fuel 

substitute produced from non-petroleum renewable resources such as vegetable oils and animal fats that meet U.S. 

Environmental Protection Agency fuel and fuel additive requirements. 

Alternatively, these requirements may be met through the production of an alternate renewable fuel, defined as a liquid 

fuel that is domestically produced from renewable biomass, can be used in place of ethanol or biodiesel, and meets the 

definition of renewable fuel in the Energy Policy Act of 2005. Within six months following the point at which cumulative 

monthly production of an alternate renewable fuel produced in the state equals or exceeds a minimum annual production 

volume of 20 million gallons, at least 2% of the total motor fuel sold by volume in the state must be the alternate 

renewable fuel produced from domestically grown feedstock. This requirement may not exceed 2% of the total motor fuel 

sold by volume by owners or operators of fuel distribution terminals. 

Blenders and retailers will have six months to meet the new minimum ethanol, biodiesel, or alternate renewable fuel 

content requirements, unless the Department of Weights and Measures determines there is an insufficient supply of 

ethanol or biodiesel in the state. Any combination of alternative fuels, including but not limited to denatured ethanol, 

biodiesel, and alternative renewable fuel may be used to meet these requirements. Fuels containing ethanol or biodiesel 

will not be required to be sold in ozone non-attainment areas. The Department of Agriculture and Forestry will adopt 

rules and regulations requiring incentives to compensate for any costs associated with achieving the minimum ethanol 

and biodiesel standards. 

Louisiana

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The Legislature encourages Louisiana restaurants to provide their waste fats, oils, and grease to biodiesel production 

facilities and store their waste fats, oils, and grease in a manner that facilitates the use of these products in a biodiesel 

production facility. 

(Reference Louisiana Revised Statutes 3:4674, 3:4674.1, and 3:3712) 

Last Updated June 2010

State Incentives 

Biofuels Production Tax Credit 

A certified producer of ethanol, biodiesel, hydrogen, or methanol derived from biomass is allowed an income tax credit of 

$0.05 per gallon for the commercial production of biofuels for use in motor vehicles or otherwise used as a substitute for 

liquid fuels. A taxpayer claiming this credit must receive a letter from the Commissioner of the Maine Department of 

Environmental Protection that certifies the biofuels produced during the taxable year are eligible for the tax credit. For 

biofuels blended with petroleum or other non-biofuels, the credit is allowed only on the biofuels portion of that blend. Any 

portion of unused credits may be carried over for up to 10 taxable years. (Reference Maine Revised Statutes Title 36, 

Section 5219-X) 

Laws and Regulations 

Alternative Fuel Tax Rates 

Blended fuels that contain at least 10% gasoline or diesel are now taxed at the full tax rates of gasoline ($0.295 per 

gallon) or diesel ($0.307 per gallon). Alternative fuel tax rates are as follows:

For more information see the Maine Revenue Services Web site. (Reference Maine Revised Statutes Title 36, Section 

3203) 

Fuel Tax Rate

E85 $0.295 per gallon

Biodiesel blends of up to 90% $0.307 per gallon

Biodiesel blends of 90-100% $0.282 per gallon

Propane/liquefied petroleum gas $0.215 per gallon

Compressed natural gas (CNG) $0.239 per 100 cubic feet

Hydrogen $0.069 per 100 cubic feet

Hydrogen CNG $0.205 per 100 cubic feet

State Incentives 

Biofuels Production Incentive 

Qualified ethanol and biodiesel producers are eligible for production incentives on a per gallon credit. To be eligible for 

the incentive, the producer must first apply for and receive certification from the Renewable Fuels Incentive Board 

(Board). Credits are offered to certified producers in Maryland for ethanol or biodiesel produced December 31, 2007 to 

December 31, 2017. 

Ethanol production credits are as follows: a) $0.20 per gallon of ethanol produced from small grains such as wheat, rye, 

triticale, oats, and hulled or hull-less barley; or b) $0.05 per gallon of ethanol produced from other agricultural products. 

The Board may not certify ethanol production credits for more than a total of 15 million gallons per calendar year, of 

which at least 10 million gallons must be produced from small grains. 

Biodiesel production credits are as follows: a) $0.20 per gallon of biodiesel produced from soybean oil (the soybean oil 

must be produced in a facility or through expanded capacity of a facility that began operating after December 31, 2004), 

or b) $0.05 per gallon for biodiesel produced from other feedstocks, including soybean oil produced in a facility that 

began operating on or before December 31, 2004. The Board may not certify biodiesel production credits for more than a 

total of five million gallons per calendar year, of which at least two million gallons must be from soybean oil produced in a 

facility as described above. 

(Reference Maryland Statutes, Agriculture Code 10-1501 through 10-1507) 

Laws and Regulations 

Alternative Fuel Use Requirement 

At least 50% of state vehicles must use a minimum biodiesel blend of 5% (B5). This requirement does not apply to any 

Maine

Maryland

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state vehicles for which the use of biodiesel will void the manufacturer's warranty for that vehicle. Additionally, bi-fuel 

and flexible fuel vehicles capable of operating on either alternative fuel or conventional fuel must use alternative fuel 

when it is available. (Reference Maryland Statutes, State Finance and Procurement Code 14-408, and and Policies and 

Procedures for Vehicle Fleet Management (PDF 580 KB )) Download Adobe Reader) 

Laws and Regulations 

Biodiesel Blend Mandate 

Pursuant to state law, all diesel motor vehicle fuel and all other liquid fuel used to operate motor vehicle diesel engines 

must contain at least 2% renewable diesel fuel by July 1, 2010; 3% renewable diesel fuel by July 1, 2011; 4% renewable 

diesel fuel by July 1, 2012; and 5% renewable diesel fuel by July 1, 2013. For these purposes, eligible renewable diesel 

fuel includes diesel fuel that is derived predominantly from renewable biomass and yields at least a 50% reduction in 

lifecycle greenhouse gas (GHG) emissions relative to the average lifecycle GHG emissions for petroleum-based diesel fuel 

sold in 2005. The Massachusetts Department of Energy Resources (DOER) must also study the feasibility, benefits, and 

costs of applying the percentage mandates on a statewide average basis rather than for every gallon of diesel motor fuel 

sold.

DOER may delay the implementation of the biodiesel blend mandate if DOER determines that it is not feasible to meet 

the mandate due to lack of supply, lack of blending facilities, or unreasonable cost. As of June 2010, DOER suspended the 

formal requirement on grounds of unreasonable cost. 

(Reference Massachusetts General Laws Chapter 94, Section 295G1/2) 

Voluntary Biofuels Program 

The Massachusetts Department of Energy Resources (DOER) is launching a voluntary biofuels program through which 

DOER will work with biodiesel suppliers to certify biofuels. Lessons learned from this voluntary program will provide the 

basis for future expansion and full implementation of a state biofuels mandate. For more information, refer to the 

Massachusetts Energy and Environmental Affairs Web site. 

Hybrid Electric (HEV) Alternative Fuel Vehicle (AFV) Acquisition Requirements 

When purchasing new motor vehicles, the Commonwealth of Massachusetts must purchase HEVs or AFVs to the 

maximum extent feasible and consistent with the ability of such vehicles to perform their intended functions. HEVs and 

AFVs must be acquired at a rate of at least 5% annually for all new motor vehicle purchases so that not less than 50% of 

the motor vehicles the Commonwealth owns and operates will be HEVs or AFVs by 2018. (Reference Massachusetts 

General Laws Chapter 7, Section 9A) 

State Agency Alternative Fuel Use Requirement 

All Massachusetts agencies must use a minimum of 5% biodiesel (B5) in all on- and off-road diesel engines. The 

Massachusetts Department of Energy Resources (DOER) will set guidelines for a minimum required use of E85 in state 

flexible fuel vehicles, depending on the availability of the fuel in the state. Agencies may apply for exemptions from the 

biodiesel and E85 fuel use requirements if the agencies demonstrate that the alternative fuel is not available within a 

reasonable distance and/or the price of the alternative fuel is cost prohibitive, as determined by DOER. (Reference 

Massachusetts Executive Office of Administration and Finance Administrative Bulletin 13, 2006) 

State Agency Alternative Fuel Vehicle (AFV) Acquisition Requirement 

State fleets must acquire AFVs according to the requirements of the Energy Policy Act (EPAct) of 1992 and the 

Massachusetts Office of Vehicle Management (OVM) must approve any light-duty vehicle acquisition. All agencies must 

purchase the most economical, fuel-efficient, and low emissions vehicles appropriate to their mission. OVM, in 

collaboration with the Massachusetts Department of Energy Resources, will set new minimum standards for vehicle 

mileage and work with agencies to acquire vehicles that provide the best value for the Commonwealth on a total cost of 

ownership basis. (Reference Executive Order 388, 1996, and Massachusetts Executive Office of Administration and 

Finance Administrative Bulletin 10, 2010) 

State Incentives 

Alternative Fueling Infrastructure Tax Credit 

The Michigan Department of Energy, Labor and Economic Growth (DELEG) offers an income tax credit to fueling station 

owners who convert existing fuel delivery systems or install new systems to provide E85 or biodiesel blends to the public. 

The tax credit is for 30% of the eligible costs of an installed or converted fuel delivery system with a maximum tax credit 

of $20,000 per applicant. To qualify, a station owner must apply for a certificate of eligibility from DELEG. Each 

installation will be inspected to ensure all work has been completed and E85 or biodiesel is being dispensed to the public. 

Any federal and state grants and incentives the station owner receives will be subtracted from the cost of the project 

Massachusetts

Michigan

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before computing the amount of the tax credit. Federal tax credits do not need to be subtracted when determining the 

tax credit amount. The tax credit is available for projects completed between January 1, 2009, and December 31, 2012. 

(Reference Michigan Compiled Laws 208.1460) 

Point of Contact

Tim Shireman 

Project Manager, Bureau of Energy Systems 

Michigan Department of Energy, Labor and Economic Growth 

Phone: (517) 241-6281 

Fax: (517) 241-6229 

shiremant@michigan.gov

Alternative Fuel and Vehicle Research, Development, and Manufacturing Tax Credits 

Qualified taxpayers may claim a nonrefundable credit for tax liability attributable to research, development, or 

manufacturing of qualified alternative fuel vehicles (AFVs) and renewable fuel. For the purpose of this incentive, AFVs 

include fuel cell, electric, hybrid electric, natural gas, E85, liquefied petroleum gas, and hydrogen vehicles. Renewable 

fuels include biodiesel blends of at least 20%. The Michigan NextEnergy Authority must certify eligible taxpayers. 

Additionally, businesses located within the designated Alternative Energy Zone that are engaged in qualified activities 

may claim a credit for the qualified payroll amount. (Reference Michigan Compiled Laws 207.821-207.827 and 208.1429) 

Reduced Biofuels Tax 

A tax of $0.12 per gallon is imposed on gasoline containing at least 70% ethanol and diesel fuel containing at least 5% 

biodiesel. This is a $0.07 discount compared to the conventional gasoline tax of $0.19 per gallon and a $0.03 discount 

compared to the conventional diesel tax of $0.15 per gallon. Ethanol is defined as denatured fuel ethanol that is suitable 

for use in a spark-ignition engine when mixed with gasoline and must meet ASTM D5798 specification. Biodiesel is 

defined as a fuel composed of mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats and 

meets ASTM D6571 specification, as approved by the Michigan Department of Agriculture. Funding for this tax reduction 

is subject to appropriation. (Reference Michigan Compiled Laws 207.1008) 

Alternative Fuel Development Property Tax Exemption 

A tax exemption may apply to industrial property that is used for, among other purposes, high-technology activities or 

the creation or synthesis of biodiesel fuel. High-technology activities include those related to advanced vehicle 

technologies such as electric, hybrid electric, or alternative fuel vehicles and their components. To qualify for the tax 

exemptions, an industrial facility must obtain an exemption certificate for the property from the Michigan State Tax 

Commission. (Reference Michigan Compiled Laws 207.552 and 207.803) 

Last Updated July 2010

Laws and Regulations 

Biodiesel Blend Mandate 

Diesel fuel sold or offered for sale in the state for use in internal combustion engines must contain at least 5% biodiesel 

(B5). Beginning May 1, 2012, during the months of April through October, diesel fuel must contain at least 10% biodiesel 

(B10). By May 1, 2015, diesel fuel must contain 20% biodiesel (B20) during these months. Diesel fuel sold during the 

remainder of the year must be B5. The Minnesota Department of Agriculture, Department of Commerce, and the Pollution 

Control Agency, in consultation with the Biodiesel Task Force and other technical experts, may allow the specified 

biodiesel blend level to be effective year round if determined that an ASTM specification or equivalent federal standard 

exists for the specified biodiesel blend level that adequately addresses technical issues associated with Minnesota's cold 

weather and publish a notice in the State Register to that effect. Additional exceptions may apply. (Reference Minnesota 

Statutes 239.75 and 239.77) 

Biofuel Use Requirement 

State agencies must take all reasonable actions to develop the infrastructure necessary to increase the availability and 

use of E85 and biodiesel throughout the state. Employees using state vehicles are expected to use E85 fuel when 

operating flexible fuel vehicles, whenever E85 is reasonably available. The state's SmartFleet Committee must develop a 

plan to facilitate the use of E85 and biodiesel in state vehicles, including actively pursuing the establishment of additional 

E85 fueling facilities at public retail outlets throughout the state. (Reference Executive Order 06-03, 2006) 

Alternative Fuel Use and Alternative Fuel Vehicle (AFV) Acquisition Requirements 

State agencies must use alternative fuels, including biodiesel blends of 20% (B20) or greater, compressed or liquefied 

natural gas, ethanol blends of 70% (E70) or greater, hydrogen, or propane, to operate state motor vehicles if the clean 

fuels are reasonably available at comparable costs to conventional fuels and are compatible with the intended use of the 

motor vehicle. Additionally, state agencies must purchase AFVs, which include those capable of being powered by the 

fuels listed above or motor vehicles powered by electricity or by a combination of electricity and liquid fuel, if such motor 

vehicles are reasonably available at comparable costs to other vehicles and if the vehicles are capable of carrying out the 

purpose for which they are purchased. (Reference Minnesota Statutes 16C.135) 

Minnesota

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State Agency Petroleum Reduction Requirement 

Using 2005 as a baseline, the state must achieve a 25% and 50% reduction in gasoline used to operate state agency 

owned on-road vehicles by 2010 and 2015, respectively. Additionally, the state must achieve a 10% and 25% reduction 

in the use of petroleum-based diesel fuel for state owned on-road vehicles by 2010 and 2015, respectively. To meet 

these goals, each state agency will, whenever legally, technically, and economically feasible, ensure that all new on-road 

vehicles purchased operate on alternative fuels, specifically biodiesel blends of 20% (B20) or greater, ethanol blends of 

70% (E70) or greater, hydrogen, or electricity. Alternatively, each state agency must ensure that new on-road vehicles 

purchased have fuel economy ratings that exceed 30 miles per gallon (mpg) for city usage or 35 mpg for highway usage, 

including but not limited to hybrid electric and hydrogen vehicles. (Reference Executive Orders 04-08 and 04-10, 2004, 

and Minnesota Statutes 16C.137) 

Last Updated April 2010

Laws and Regulations 

Fuel-Efficient and Alternative Fuel Vehicle Use 

The Bureau of Fleet Management (Bureau) was established within the Mississippi Department of Finance and 

Administration to coordinate and promote efficiency and economy when state agencies purchase, lease, rent, acquire, 

use, maintain, and dispose of vehicles. The Bureau encourages state agencies to use fuel-efficient or hybrid electric 

vehicles appropriate for the intended purpose and, when feasible, to use alternative fuels, including but not limited to, 

ethanol, biodiesel, natural gas, or electricity to operate the vehicles. By July 1, 2014, at least 75% of all vehicles titled 

under the Bureau must have a U.S. Environmental Protection Agency estimated fuel economy rating of at least 40 miles 

per gallon for highway driving. (Reference Mississippi Code 25-1-77) 

State Employee Travel Policy 

All state agencies and institutions must develop and adopt travel policies that include strategies to reduce petroleum 

consumption, such as carpooling to meetings and purchasing alternative fuels where available. (Reference Executive 

Order 82, 2009) 

State Incentives 

Alternative Fueling Infrastructure Tax Credit 

An income tax credit is available for the cost of constructing a qualified alternative fueling station. The tax credit may not 

exceed 20% of the costs directly associated with the purchase and installation of any alternative fuel storage and 

dispensing equipment or $20,000, whichever is less. The total amount of tax credits claimed may not exceed $2 million 

for the 2010 tax year and $1 million for the 2011 tax year. Tax credits may be carried forward for two years and may be 

transferred or sold, but will be forfeited if a tax credit recipient stops selling alternative fuel. Eligible fuels include those 

containing at least 70% of the following alternative fuels: ethanol, compressed natural gas, liquefied natural gas, 

liquefied petroleum gas or propane, any mixture of biodiesel and diesel fuel, and hydrogen. (Reference Missouri Revised 

Statutes 135.710) 

Point of Contact

Cindy Carroll 

Energy Specialist 

Missouri Department of Natural Resources, Missouri Energy Center 

Phone: (573) 751-3443 

Fax: (573) 751-6860 

cindy.carroll@dnr.mo.gov

Laws and Regulations 

Alternative Fuel Vehicle (AFV) Acquisition and Alternative Fuel Use Requirements 

A state agency that operates a vehicle fleet consisting of 15 vehicles or more must ensure that at least 50% of new 

vehicles purchased are capable of operating using an alternative fuel. Excess acquisitions of AFVs may be credited 

towards future biennial goals. If a state agency fails to meet a biennial acquisition goal, purchases of any non-AFVs are 

not permitted until the goals are met or an exemption or goal reduction has been granted. In addition, 30% of the fuel 

purchased annually for use in operating state fleet vehicles must be alternative fuels. (Reference Missouri Revised 

Statutes 414.400 and 414.410) 

Biodiesel Use Requirement 

The Missouri Department of Transportation (MoDOT) must develop a program that increases the use of biodiesel blends 

in its vehicle fleet. At least 75% of the MoDOT vehicle fleet and heavy equipment that uses diesel fuel must be fueled 

with biodiesel blends of at least 20% (B20) if such fuel is commercially available. The blended biodiesel fuel will be 

considered commercially available if the incremental cost of purchasing the fuel is not more than $0.25 as compared to 

Mississippi

Missouri

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conventional diesel fuel. To the maximum extent practicable, MoDOT must obtain funding for the incremental cost of the 

blended biodiesel fuel from the state's Biodiesel Fuel Revolving Fund. (Reference Missouri Revised Statutes 414.365) 

Alternative Fuel Vehicle (AFV) Decal 

The $0.17 per gallon motor fuel tax does not apply to passenger vehicles, certain buses, or commercial vehicles that are 

powered by an alternative fuel. The owners or operators of such vehicles are required to pay an annual alternative fuel 

decal fee as follows (certain restrictions apply):

A vehicle that requires an alternative fuel decal may not operate on state highways without a valid decal. No person may 

fuel an AFV with liquefied petroleum gas (propane) or natural gas unless the vehicle has a valid decal. Motor vehicles 

licensed as historic vehicles that are powered by alternative fuels are exempt from the motor fuels tax as well as the 

alternative fuel decal requirement. 

(Reference Missouri Revised Statutes 142.803 and 142.869) 

Gross Vehicle Weight Type of Vehicle Decal Fee

18,000 pounds (lbs.) or less Passenger, School Bus, or Commercial $75

18,000 lbs.-36,000 lbs. Farm or Farming Transportation with an 'F' License Plate $100

18,000 lbs.-36,000 lbs. Passenger-Carrying and Other Motor Vehicles $150

36,000 lbs. or more Farm or Farming Transportation with an 'F' License Plate $250

36,000 lbs. or more All Other Motor Vehicles $1,000

State Incentives 

Biodiesel Blending Tax Credit 

Businesses and individuals are eligible for a tax credit of up to 15% of the cost of qualified equipment used for storing or 

blending biodiesel with petroleum diesel offered for sale. The amount of the credit may not exceed $52,500 for a special 

fuel distributor and $7,500 for an owner or operator of a motor fuel outlet. The credit can be claimed in the two tax years 

before the year in which the business or individual begins blending biodiesel for fuel or sale. (Reference Montana Code

Annotated 15-32-703) 

Biodiesel Production Facility Tax Credit 

Businesses and individuals are eligible for a tax credit of up to 15% of the cost of constructing and equipping a facility to 

be used for biodiesel or bio-lubricant production. The producer must claim the credit in the tax year in which the facility 

begins production, and the facility must be in operation before January 1, 2015. Additionally, a tax credit is available for 

property used primarily to crush oilseed crops for purposes of biodiesel production. (Reference Montana Code Annotated

15-32-701 and 15-32-702) 

Biodiesel Tax Refund 

A licensed distributor who pays the special fuel tax on biodiesel may claim a refund equal to $0.02 per gallon of biodiesel 

sold during the previous quarter if the biodiesel is produced entirely from biodiesel components made in Montana. The 

owner or operator of a retail motor fuel outlet may claim a refund equal to $0.01 per gallon of biodiesel purchased from a 

licensed distributor if the biodiesel is created entirely from biodiesel components produced in Montana. (Reference 

Montana Code Annotated 15-70-369) 

Alternative Fuel Vehicle (AFV) Conversion Tax Credit 

Businesses or individuals are eligible for an income tax credit for up to 50% of the equipment and labor costs for 

converting vehicles to operate using alternative fuels. Qualified alternative fuels are compressed and liquefied natural 

gas, liquefied petroleum gas (propane), hydrogen, electricity, and fuel containing at least 85% ethanol or methanol. The 

maximum credit is $500 for the conversion of vehicles with a gross vehicle weight rating (GVWR) of 10,000 pounds (lbs.) 

or less, and $1,000 for vehicles with a GVWR of more than 10,000 lbs. The credit is only available during the year that 

the business or entity converts the vehicle. An alternative fuel seller may not receive a credit for converting its own 

vehicles to operate on the alternative fuel they sell. (Reference Montana Code Annotated 15-30-164) 

Renewable Energy Property Tax Incentive 

Property tax rate abatements are available for facilities that manufacture, research, or develop products related to 

biodiesel, biomass, biogas, coal-to-liquid fuels, ethanol, pipelines carrying "clean" products, renewable energy 

manufacturing plants, and research and development equipment for renewable energy. These incentives are available 

during facility construction and for the first 15 years after the facility begins operation or the related equipment is 

purchased. The total time of the qualifying period may not exceed 19 years. (Reference Montana Code Annotated 15-24-

3111) 

Montana

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Biodiesel Tax Exemption 

Biodiesel producers that produce biodiesel from waste vegetable oil feedstock after June 30, 2009, are exempt from the 

state special fuel tax. (Reference Montana Code Annotated 15-70-301 and 15-70-320) 

Last Updated June 2010

State Incentives 

Biodiesel Production Investment Tax Credit 

Investors in Nebraska biodiesel production facilities are eligible to receive a tax credit of up to 30% of the amount 

invested in the facility between January 1, 2008, and January 1, 2015, not to exceed $250,000. The credit is only 

available for facilities that produce B100, perform all processing in Nebraska, and are at least 51% owned by Nebraska 

individuals or entities. The state may reclaim the tax credit if the biodiesel production facility remains in operation for 

less than three years. B100 is defined as pure biodiesel containing mono-alkyl esters of long chain fatty acids derived 

from vegetable oils or animal fats that meets ASTM standard D6751. (Reference Nebraska Statutes 77-27,236) 

Laws and Regulations 

Alternative Fuel Use 

All state employees operating flexible fuel or diesel vehicles as part of the state fleet must use E85 or biodiesel blends 

whenever reasonably available. Additionally, the Nebraska Transportation Services Bureau and Nebraska Department of 

Roads must take steps to increase access to E85 and blends of 2% biodiesel (B2) for state vehicle operators. (Reference 

Executive Order 05-03, 2005) 

Laws and Regulations 

Alternative Fuel Use in County School Districts 

Transportation equipment purchased with county school district general funds and used for transporting pupils must fall 

into one of the following categories: 1) motor vehicles that use biodiesel, compressed natural gas, or similar fuels that 

reduce emissions; 2) equipment to retrofit motor vehicles to use these fuels; or 3) equipment for the transportation, 

storage, or dispensing of these fuels. (Reference Nevada Revised Statutes 387.335) 

Alternative Fuel Vehicle (AFV) Acquisition Requirement 

Fleets containing 50 or more vehicles that are owned, leased, or operated by the state, a state agency, or a political 

subdivision of the state in a county with a population of 100,000 or more must acquire AFVs or U.S. Environmental 

Protection Agency certified Ultra Low Emission Vehicles (ULEVs). Covered fleets are required to purchase either AFVs or 

certified ULEVs for 90% of new vehicles obtained. A fleet may meet the acquisition requirements by converting existing 

or newly acquired vehicles to operate on alternative fuels. An AFV acquired in compliance with this mandate must 

operate solely on the alternative fuel except when operating in an area where the appropriate alternative fuel is 

unavailable. Fleets with buses or heavy-duty vehicles are included. (Reference Nevada Administrative Code 486A.010-

486A.250, and Nevada Revised Statutes 486A.010-486A.180) 

Last Updated October 2010

Laws and Regulations 

Biodiesel Blend Purchase Requirement 

Diesel fuel the New Hampshire Department of Transportation (Department) purchases under the Motor Fuel Inventory 

Fund must contain at least 5% biodiesel (B5), unless the fuel is unavailable or more expensive than 100% petroleum 

diesel, in which case the purchase will be at the Department¿¿¿s discretion. The Department is encouraged to purchase 

diesel fuel containing up to 20% biodiesel (B20) when the fuel is acceptable for use. The Department can sell the fuel to 

all state departments and institutions, political subdivisions of the state, and eligible nonprofit corporations under 

contract with the Department to transport the general public, and federal government agencies. (Reference New 

Hampshire Revised Statutes 228:24-a) 

Idle Reduction and Fuel-Efficient, Low Emission Vehicle Acquisition Requirements 

New Hampshire state agencies and departments are required to implement a Clean Fleets Program in accordance with 

Nebraska

Nevada

New Hampshire

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the recommendations of the Energy Efficiency in State Government Steering Committee, including but not limited to the 

following components:

a. An anti-idling policy; 

b. A highway fuel economy rating of at least 27.5 miles per gallon (mpg) for all new passenger and light-duty vehicles 

and at least 20 mpg for all new light-duty trucks except for emergency and law enforcement vehicles; 

c. All new passenger and light-duty vehicles be certified as low emission vehicles in accordance with the 

recommendations of the Energy Efficiency in State Government Steering Committee; 

d. A policy ensuring that the appropriate vehicle is selected for the intended use of the vehicle; 

e. All vehicle purchases be in compliance with the Energy Policy Act of 1992 (EPAct) if applicable; 

f. A waiver procedure for requesting vehicles not on the approved New Hampshire Department of Administrative 

Services vehicle list; 

g. Additional measures to promote fuel conservation. 

(Reference Executive Order 2005-4) 

Laws and Regulations 

Low Emission or Alternative Fuel Bus Acquisition Requirement 

All buses the New Jersey Transit Corporation (NJTC) purchases must be: 1) equipped with improved pollution controls 

that reduce particulate emissions; or 2) powered by a fuel other than conventional diesel. Qualifying vehicles include 

compressed natural gas vehicles, hybrid electric vehicles, fuel cell vehicles, vehicles operating on biodiesel or ultra low 

sulfur fuel, or vehicles operating on any other bus fuel the U.S. Environmental Protection Agency approves. If the NJTC is 

unable to meet the bus purchase requirement, it must submit an explanatory report to the New Jersey Senate and 

General Assembly. Following the submission of this report, the state legislature may grant an exemption. (Reference New 

Jersey Statutes 27:1B-22) 

State Incentives 

Biodiesel Blending Tax Credit 

A tax credit against the state corporate income tax liability is available for each gallon of diesel fuel blended with a 

minimum 2% biodiesel (B2). The credit is available until December 31, 2012, and will be phased out as follows: $0.03 

per gallon from January 1, 2007, to December 31, 2010; $0.02 per gallon from January 1, 2011, to December 31, 2011; 

and $0.01 per gallon from January 1, 2012, to December 31, 2012.

A biodiesel blending facility tax credit is also available for up to 30% of the cost of purchasing equipment and for up to 

30% of the cost of installing the equipment. The blending facility tax credit is limited to $50,000 per facility. 

(Reference New Mexico Statutes 7-2A-23 and 7-9-79.2) 

Biofuels Tax Deduction 

The cost associated with purchasing biomass materials used for processing into biofuels, biopower, or biobased products 

may be deducted in computing the compensating tax due under the Gross Receipts and Compensating Tax Act. Biofuels 

include biomass converted to liquid or gaseous fuels such as ethanol, methanol, methane, and hydrogen. (Reference New 

Mexico Statutes 7-9-98) 

Laws and Regulations 

Biodiesel Blend Mandate 

After July 1, 2010, all diesel fuel sold to state agencies, political subdivisions of the state, and public schools for use in 

operating on-road motor vehicles must contain at least 5% biodiesel (B5). After July 1, 2012, all diesel fuel sold to 

consumers for use in on-road motor vehicles must contain at least B5. The New Mexico Department of Agriculture and 

Secretary of the Energy, Minerals, and Natural Resources Department may suspend these requirements for up to six 

months if there are insufficient amounts of biodiesel available or if the price of biodiesel significantly exceeds the price of

diesel fuel for at least two months. (Reference New Mexico Statutes 57-19-28 and 57-19-29) 

State Agency Energy Plan 

To conserve energy and promote renewable energy development, all state agency fleets must reduce their transportation 

energy consumption by 20%, based on 2005 levels, by 2015. The New Mexico General Services Department (GSD) is 

directed to convene a Fleet Improvement & Acquisition Team (FIAT) to develop strategies to meet this goal. FIAT must 

also develop procedures for each agency, approve all vehicle purchases, and review each agency's vehicle fuel usage. 

The GSD must also continue to pursue increased use of renewable fuels by state agency fleets; using renewable fuels 

does not count towards the energy reduction goal. (Reference Executive Order 09-047, 2009 , and Executive Order 07-

New Jersey

New Mexico

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053, 2007) 

Biofuels Use Requirement 

By 2010, all public schools (K-12) and institutions of higher education are required to take action toward obtaining 15% 

of their total transportation fuel requirements from renewable fuels such as ethanol and biodiesel. (Reference Executive 

Order 09-047, 2009 , and Executive Order 05-049, 2005) 

Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Acquisition Requirements 

A minimum of 75% of state educational institution fleet vehicles purchased must be HEVs or bi-fuel or dedicated AFVs, 

which includes plug-in electric vehicles. Vehicles must meet or exceed the corporate average fuel economy standards 

issued by the National Highway Transportation Safety Administration of the U.S. Department of Transportation. Certified 

law enforcement pursuit vehicles and emergency vehicles are exempt from this requirement. (Reference New Mexico 

Statutes 13-1B-3 and Executive Order 09-047, 2009 ) 

Alternative Fuel Vehicle (AFV) Acquisition Loans 

Up to $5 million is authorized for a revolving loan fund for AFV acquisitions by state agencies, political subdivisions, and 

educational institutions. The maximum amount of a loan per vehicle must not exceed the actual cost of acquiring the 

vehicle or $3,000, whichever is less. Projected fuel cost savings from using the AFV is considered when the loan 

repayment schedule is developed. (Reference New Mexico Statutes 13-1B) 

Alternative Fuels Tax 

The excise tax imposed on an alternative fuel distributed in New Mexico is $0.12 per gallon. Alternative fuels subject to 

the excise tax include liquefied petroleum gas, compressed natural gas, and liquefied natural gas. Alternative fuel 

purchased for distribution is not subject to the alternative fuel excise tax at the time of purchase or acquisition, but the 

tax is due on any alternative fuel at the time it is dispensed or delivered into the tank of a motor vehicle. Owners of 

alternative fuel vehicles with a Gross Vehicle Weight Rating (GVWR) not exceeding 54,000 pounds (lbs.) may pay an 

annual tax in lieu of the per gallon tax, according to the following schedule:

Alternative fuel distributed by or used for U.S. government, state government, or an Indian nation, tribe or pueblo 

purposes, is exempt from the excise tax. Alternative fuel distributors must be licensed by the state. (Reference New 

Mexico Statutes 7-16B) 

GVWR Annual Tax

0 to 6,000 lbs. $60

6,001 to 16,000 lbs. $100

16,001 to 26,000 lbs. $300

26,001 to 40,000 lbs. $700

40,001 to 54,000 lbs. $1,100

Alternative Fuel Vehicle (AFV) Acquisition Requirements - Albuquerque, NM 

All motor vehicles purchased by the City of Albuquerque must be dedicated, flexible fuel, or dual-fuel AFVs. Alternative 

fuels are defined as fuels other than gasoline and 100% petroleum diesel and may include ethanol, biodiesel, natural gas, 

electricity, propane, or other alternative fuels approved by the city's Chief Administrative Officer. For more information, 

see the City of Albuquerque Alternative Fuel Web site. 

State Incentives 

Biofuel Production Tax Credit 

Biofuel producers in New York State are eligible for a state tax credit of $0.15 per gallon of biodiesel (B100) or ethanol 

produced after the production facility has produced, and made available for sale, 40,000 gallons of biofuel per year. The 

maximum credit available is $2.5 million per taxpayer per taxable year for no more than four consecutive taxable years 

per production facility. If the taxpayer is in a partnership or is a shareholder of a New York S corporation, the maximum 

credit amount is applied at the entity level, so the aggregate credit allowed to all partners or shareholders may not 

exceed $2.5 million. Additional requirements may apply. This credit expires December 31, 2011. (Reference Assembly Bill

9710-D, 2010, and New York Tax Law 28*2 and 187-c) 

Laws and Regulations 

Alternative Fuel Vehicle (AFV) Acquisition Requirements 

All new light-duty vehicles that state agencies and other affected entities procure must be AFVs, with the exception of 

designated specialty, police, or emergency vehicles. Hybrid electric vehicles qualify under these requirements. State 

agencies and other affected entities that operate medium- and heavy-duty vehicles must implement strategies to reduce 

petroleum consumption and emissions by using alternative fuels and improving vehicle fleet fuel efficiency. State 

agencies and other affected entities may substitute the use of 450 gallons of B100 for the acquisition of one AFV. 

Alternatively, using 2,250 gallons of biodiesel blends of 20% (B20) or 9,000 gallons of biodiesel blends of 5% (B5) may 

New York

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also be substituted in place of purchasing one AFV. No more than 50% of a given state agency fleet's AFV purchase 

requirement may be met by substituting B100, B20, or B5. (Reference Executive Order 9, 2008, Executive Order 142, 

2005 (PDF 238KB ), and (Executive Order 111, 2001) Download Adobe Reader

Last Updated October 2010

State Incentives 

Renewable Fuel Production Facility Tax Credit 

A taxpayer that constructs and places into service three or more commercial facilities for processing biodiesel, ethanol, or 

ethanol/gasoline blends consisting of at least 70% ethanol (E70) in North Carolina and invests at least $400 million in 

total in the facilities is eligible for a credit equal to 35% of the cost of constructing and equipping the facilities. To claim 

the credit, the taxpayer must obtain a written determination from the North Carolina Department of Commerce that the 

taxpayer is expected to invest at least $400 million in three or more facilities within a five-year period. The credit applies 

to qualified facilities placed into service before January 1, 2013. (Reference North Carolina General Statutes 105-

129.16D) 

Renewable Energy Property Tax Credit 

Taxpayers who construct, purchase, or lease renewable energy property are eligible for a tax credit equal to 35% of the 

cost of the property. Renewable energy property includes equipment that uses renewable biomass resources to produce 

ethanol, methanol, biodiesel, or methane produced from anaerobic biogas, using agricultural and animal waste or 

garbage; and related devices for converting, conditioning, and storing the liquid fuels and gas produced with the biomass 

equipment. The taxpayer must take the credit in five equal installments beginning with the taxable year in which the 

property is placed in service. There is a maximum funding amount of $2.5 million per installation, which applies to 

renewable energy property placed in service for any purpose other than residential. Property must be placed in service 

before January 1, 2016. (Reference North Carolina General Statutes 105-129.15 and 105-129.16A) 

Alternative Fuel Tax Exemption 

The retail sale, use, storage or consumption of alternative fuels is exempt from the state retail sales and use tax. 

(Reference North Carolina General Statutes 105-164.13(11)) 

Biodiesel Tax Exemption 

An individual that produces biodiesel for use in that individual's private passenger vehicle is exempt from the state motor 

fuel excise tax. (Reference North Carolina General Statutes 105-449.88(9)) 

Laws and Regulations 

Biodiesel Requirement for School Buses 

Every school bus that is capable of operating on diesel fuel must be capable of operating using biodiesel blends of at least 

20% (B20). At least 2% of the total volume of fuel purchased annually by local school districts statewide for use in diesel 

school buses must be a minimum of B20, to the extent that biodiesel blends are available and compatible with the 

technology of the vehicles and the equipment used. (Reference North Carolina General Statutes 115C-240(c) and 115C249(a)) 

Alternative Fuel Vehicle (AFV) Acquisition Requirements 

At least 75% of new or replacement state government light-duty cars and trucks with a gross vehicle weight rating of 

8,500 pounds or less must be AFVs or low emission vehicles. (Reference North Carolina General Statutes 143-215.107C) 

State Incentives 

Biodiesel Blender Tax Credit 

A licensed fuel supplier who blends biodiesel with diesel fuel is entitled to an income tax credit of $0.05 per gallon of fuel 

containing at least 5% biodiesel (B5). The biodiesel fuel must meet ASTM specifications. The tax credit may not exceed 

the taxpayer's liability for the taxable year and each year's unused credit amount may be carried forward for up to five 

taxable years. (Reference North Dakota Century Code 57-38-01.22) 

Biodiesel Sales Equipment Tax Credit 

A corporate income tax credit is available in the amount of 10% per year, for up to five years, of a qualified retailer's 

direct costs incurred to adapt or add equipment to a facility that enables a facility to sell diesel fuel containing at least 

North Carolina

North Dakota

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2% biodiesel (B2). Eligible direct costs must have been incurred after December 31, 2004, and a retailer is limited to 

$50,000 in the cumulative amount of credits for all taxable years. The biodiesel fuel must meet ASTM specifications. 

(Reference North Dakota Century Code 57-38-01.23) 

Biodiesel Production and Blending Equipment Tax Credit 

A corporate income tax credit is available in the amount of 10% per year, for up to five years, of a qualified producer or 

blender's direct costs incurred to add equipment to retrofit an existing facility or construct a new facility in the state for 

the purpose of producing or blending diesel fuel containing at least 2% biodiesel (B2). Eligible direct costs must have 

been incurred after December 31, 2002, and a taxpayer is limited to $250,000 in the cumulative amount of credits for all 

taxable years. The biodiesel fuel must meet ASTM specifications. (Reference North Dakota Century Code 57-38-30.6) 

Biodiesel Equipment Tax Exemption 

Equipment sold to a facility that enables the facility to sell diesel fuel containing at least 2% biodiesel (B2) is exempt 

from sales tax. The biodiesel fuel must meet ASTM specifications. (Reference North Dakota Century Code 57-39.2-04) 

Agriculturally-Based Fuel Production Wage and Salary Tax Credit 

New ethanol, biodiesel, and biogas producers may be eligible for an income tax credit equal to a percentage of wages and 

salaries paid each year. A corporation involved in processing an agricultural product, including ethanol, biodiesel, and 

biogas feedstocks, may claim an income tax credit equal to 1% of wages and salaries paid during the tax year for each of 

the first three years of operation and 0.5% of wages and salaries paid during the tax year for the fourth and fifth years. 

Only corporations doing business in North Dakota for the first time are eligible. A corporation created from the 

reorganization or acquisition of an existing business does not qualify, nor does a business that receives a property or 

income tax exemption under North Dakota Century Code 40-57.1. (Reference North Dakota Century Code 57-38-30.1) 

Laws and Regulations 

Alternative Fuel Tax Rates 

A special excise tax rate of 2% is imposed on the sale of liquefied petroleum gas (propane) and a tax of $0.04 per gallon 

is imposed on all sales special fuels, including compressed natural gas. (Reference North Dakota Century Code 57-43.2-

02 and 57-43.2-03) 

State Incentives 

Biofuels Retail Tax Credit 

Retailers of E85 or fuel blends containing at least 20% biodiesel (B20) may receive a tax credit of $0.15 per gallon of E85 

or biodiesel blend sold in 2010, and $0.13 per gallon of E85 or biodiesel blends sold in 2011. Tax credits are also 

available to retailers of biodiesel blends for fuel sold in 2010 and 2011 as follows:

z $0.075 per gallon for blends of at least 10% biodiesel (B10) but less than B20; and 

z $0.0375 per gallon for blends of at least 6% (B6) but less than B10. 

The retailer must sell the biofuel using a metered pump at a fueling station to be eligible for the credit. (Reference 

Senate Bill 131, 2010, and Ohio Revised Code 5747.02, 5747.77, and 5747.98) 

Laws and Regulations 

Alternative Fuel Vehicle (AFV) Acquisition and Fuel Use Requirements 

All new motor vehicles state agencies acquired, excluding law enforcement vehicles, must be capable of using alternative 

fuels and must use that alternative fuel if it is reasonably available and priced. Alternative fuel is defined as E85, fuel 

blends containing at least 20% biodiesel (B20), natural gas, propane, hydrogen, electricity, or any other fuel that the 

U.S. Department of Energy has determined is substantially not petroleum and would yield substantial energy use and 

environmental benefits. State flexible fuel vehicles must use at least 80,000 gallons of E85 per year by January 1, 2011, 

increasing by 5,000 gallons each year. Vehicles that operate on diesel fuel must use at least 1.4 million gallons of 

biodiesel per year by January 1, 2011, increasing by 100,000 gallons each year. Credits for vehicle acquisition will be 

issued in accordance with the Energy Policy Act of 1992. Any additional credits that an agency earns above their 

requirements may be sold, with proceeds going to the Ohio Biodiesel Revolving Fund to pay for the incremental cost of 

biodiesel for use in vehicles the state owns or leases. (Reference Ohio Revised Code 125.831-125.836 and Executive 

Order 2007-02) 

Last Updated July 2010

Ohio

Oklahoma

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State Incentives 

Biodiesel Production Tax Credit 

For tax years beginning before January 1, 2013, a biodiesel production facility is allowed a tax credit of $0.20 per gallon 

of biodiesel produced for up to 60 months, beginning with the first month for which the facility is eligible for the credit. 

An eligible biodiesel facility must have produced at least 25% of its original design capacity on or before December 31, 

2008, and must maintain a production rate of at least 25% of its original design capacity for at least six months after the 

first month for which it is eligible to receive the credit. Producers are also eligible for an expansion credit of $0.20 per 

gallon of biodiesel produced in excess of the original design capacity that results from expansion of the facility before 

December 31, 2008. This expansion tax credit can be used for up to 60 months beginning with the first month for which 

production from the expanded facility is eligible and ending before January 1, 2013.

Beginning January 1, 2013, a new or expanded biodiesel facility may receive a credit of $0.075 per gallon of biodiesel for 

new production for up to 36 consecutive months. To be eligible for this credit, the facility must not have received credits 

before January 1, 2013, or must have expanded the capacity by at least two million gallons, and must have begun 

operation after January 1, 2013. If the credit allowed exceeds the amount of income taxes due, the excess amount may 

be carried forward as a credit against subsequent income tax liability for up to five years. Additional restrictions apply. 

Due to a moratorium on certain state tax incentives, producers may not claim this tax credit for biodiesel produced 

between July 1, 2010, and June 30, 2012. (Reference Senate Bill 1267, 2010, and Oklahoma Statutes 68-2357.67) 

Biofuels Tax Exemption 

An individual that produces biodiesel or other biofuels from feedstocks grown on their property and uses that fuel in a 

vehicle they own is exempt from the state motor fuel excise tax. (Reference Oklahoma Statutes 68-500.4 and 68-

500.10) 

Laws and Regulations 

Alternative Fuel Vehicle (AFV) Acquisition Requirements 

Under the Alternative Fuels Conversion Act (Act), all school and government fleets may convert their vehicles to operate 

on an alternative fuel, and all school districts should consider only purchasing school vehicles which have the capability 

to operate on an alternative fuel. The Act also requires all school and government vehicles capable of operating on an 

alternative fuel to use the fuel whenever a fueling station is located within a five-mile radius of the respective 

department or district and the price of the alternative fuel is cost competitive. If school and government vehicles must be 

fueled outside the five-mile radius and no fueling station is reasonably available, the school and government vehicles are 

exempt from this requirement. (Reference Oklahoma Statutes 74-130.3) 

State Incentives 

Biofuels Use Tax Credit 

Oregon residents are eligible for an income tax credit of $0.50 per gallon of gasoline blended with 85% ethanol (E85) or 

biodiesel blends of at least 99% (B99) purchased for use in an alternative fuel vehicle (AFV), up to $200 per tax year for 

each AFV that is registered in Oregon and owned or leased by the resident. For the purpose of this tax credit, an AFV is a 

motor vehicle that can operate using E85 or B99. This incentive is applicable until January 1, 2013. (Reference Oregon 

Revised Statutes 315.465) 

Alternative Fuel Vehicle (AFV) and Fueling Infrastructure Tax Credit for Businesses 

Business owners and others may be eligible for a tax credit of 50% of eligible costs for qualified alternative fuel 

infrastructure projects through the Business Energy Tax Credit. Fueling infrastructure for fuels such as propane and 

natural gas may qualify for a tax credit of 35% of eligible costs. A tax credit of 35% of eligible costs is also available for 

other qualified AFV projects. The credit is filed over five years. Unused credits from a given year can be carried forward 

up to eight years. For projects with eligible costs of $20,000 or less, the tax credit may be taken in one year.

An eligible applicant (a project owner) must meet the following requirements: 

z Be a trade, business, or rental property owner with a business site in Oregon or be an Oregon non-profit 

organization, tribe, or public entity that partners with an Oregon business or resident; 

z Own or be the contract buyer of the project; and 

z Use the equipment or lease it to another person or business in Oregon. 

Non-profit organizations and public entities that do not have an Oregon tax liability may receive the credit for an eligible 

project but must "pass-through" or transfer their project eligibility to a pass-through partner in exchange for a lump-sum 

cash payment. The Oregon Department of Energy determines the rate that is used to calculate the cash payment. The 

pass-through option is also available to a project owner with an Oregon tax liability who chooses to transfer their tax 

credit.

(Reference Oregon Revised Statutes 469.185-469.225 and 469.878) 

Alternative Fuel Production Tax Credit 

Business owners and others may be eligible for a tax credit of 50% of eligible costs related to alternative fuel production 

Oregon

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through the Business Energy Tax Credit. Qualified fuels include electricity, ethanol, and biodiesel from renewable sources. 

Eligible costs are those directly related to the project, including equipment cost, engineering and design fees, materials, 

supplies, and installation costs.

An eligible applicant (a project owner) must meet the following requirements: 

z Be a trade, business, or rental property owner with a business site in Oregon or be an Oregon non-profit 

organization, tribe, or public entity that partners with an Oregon business or resident; 

z Own or be the contract buyer of the project; and 

z Use the equipment or lease it to another person or business in Oregon. 

Non-profit organizations and public entities that do not have an Oregon tax liability may receive the credit for an eligible 

project but must "pass-through" or transfer their project eligibility to a pass-through partner in exchange for a lump-sum 

cash payment. The Oregon Department of Energy determines the rate that is used to calculate the cash payment. The 

pass-through option is also available to a project owner with an Oregon tax liability who chooses to transfer their tax 

credit.

(Reference Oregon Revised Statutes 469.185-469.225) 

Biofuels Production Property Tax Exemption 

Property used to produce biofuels may be eligible for a property tax exemption if it is located in a designated Renewable 

Energy Development Zone. The Oregon Economic and Community Development Department must receive and approve 

an application from a qualified rural area to designate the area as a Rural Renewable Energy Development Zone. 

(Reference Oregon Revised Statutes 285C.350 and 285C.353) 

Laws and Regulations 

Renewable Fuels Mandate 

All gasoline sold in the state must be blended with 10% ethanol (E10). Gasoline with an octane rating of 91 or above is 

exempt from this mandate, as is gasoline sold for use in certain nonroad applications. Gasoline containing at least 9.2% 

agriculturally derived ethanol that meets the standards for ethanol the Oregon Department of Agriculture adopts complies 

with the mandate. For the purpose of the mandate, the ethanol must meet ASTM specification D4806. The governor may 

suspend the renewable fuels mandate for ethanol if the Oregon Department of Energy finds that a sufficient amount of 

ethanol is not available.

All diesel fuel sold in the state must be blended with at least 2% biodiesel (B2). The biodiesel blending requirement 

increases to 5% when the production capacity of biodiesel from state sources reaches a level of at least 15 million gallons 

on an annualized basis. For the purpose of this mandate, biodiesel is defined as a motor vehicle fuel derived from 

vegetable oil, animal fat, or other non-petroleum resources, that is designated as B100 and complies with ASTM 

specification D6751. Diesel fuel blends sold between October 1 and February 28 may contain additives to prevent 

congealing or gelling. Beginning January 2, 2012, renewable diesel will qualify as a substitute for biodiesel in the blending 

requirement. 

(Reference House Bill 3693, 2010, and Oregon Revised Statutes 646.913-646.923) 

Alternative Fuel Vehicle (AFV) Acquisition, Fuel Use, and Emissions Reductions Requirements 

All state agencies and transit districts must purchase AFVs and use alternative fuels to operate those vehicles to the 

maximum extent possible, except when it is not economically or logistically possible to purchase or fuel an AFV. Each 

state agency must develop and report a greenhouse gas reduction baseline and determine annual reduction targets. 

Reports to the Oregon Department of Administrative Services must include the volume of ethanol and biodiesel used by 

state agency fleets, as well as any cost savings attributable to driving more fuel-efficient vehicles and using alternative 

fuels. (Reference Oregon Revised Statutes 283.327 and 267.030, and Executive Order 06-02, 2006) 

Renewable Fuels Mandate - Portland, OR 

All gasoline sold within the Portland city limits must contain a minimum of 10% ethanol (E10), and diesel fuel must 

contain a minimum of 5% biodiesel (B5) and must meet ASTM D6751 standards. The diesel blend requirement will 

increase to 10% biodiesel (B10) on July 1, 2010. Fuel vendors must place signage denoting the type of biofuels mixture 

available for sale. A retailer who offers a biodiesel blend of 20% (B20) or greater is exempt from the requirement and is 

allowed to provide for sale, on the same site or a contiguous site, diesel fuel that does not contain biodiesel. For more 

information, see the City of Portland Development Services Biofuels Portland Web site. 

Last Updated October 2010

State Incentives 

Alternative Fuel Production Tax Credits 

The Alternative Energy Production Tax Credit Program provides a credit of 15% of the net cost of projects related to the 

production of alternative fuels, as well as the research and development of technology to provide alternative fuels, for up 

to $1 million per taxpayer. An eligible applicant must develop or construct an alternative energy production project 

located in Pennsylvania that has a minimum useful life of four years. Funding is contingent upon annual legislative 

Pennsylvania

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appropriations. As of October 2010, the program is closed but may reopen in the future. (Reference Title 73 Pennsylvania 

Statutes, Chapter 18G, Section 1649.701-1649.711) 

Alternative Fuel Vehicle (AFV), Hybrid Electric Vehicle (HEV), and Fueling Infrastructure Funding 

The Alternative Fuels Incentive Grant (AFIG) Program provides various financial assistance programs, information on 

alternative fuels, AFVs, HEVs, plug-in hybrid electric vehicles, and anti-idling technologies that use alternatives to diesel 

fuel for heavy-duty trucks, and advanced vehicle technology research, development, and demonstration. Projects that 

result in product commercialization and the expansion of Pennsylvania companies are favored in the selection process. 

(Reference Title 73 Pennsylvania Statutes, Chapter 18E, Section 1647.3) 

Point of Contact

Carmen La Rosa 

Alternative Fuels Incentive Grant Program Manager 

Pennsylvania Department of Environmental Protection, Office of Energy and Technology Deployment 

Phone: (717) 783-9242 

Fax: (717) 783-2703 

clarosa@state.pa.us

Biodiesel Production Refund 

Biodiesel producers with a production capacity of at least 25,000 gallons may apply for a $0.75 per gallon refund for 

biodiesel produced for commercial purposes, through June 30, 2011. Individual producers may not receive more than 

$1.9 million in incentives in any one fiscal year. The biodiesel must meet ASTM D6751, D75, or D3699 standards. 

(Reference Title 73 Pennsylvania Statutes, Chapter 18E, Section 1647.3.1) 

Laws and Regulations 

Renewable Fuels Mandate 

Within one year following in-state production of 350 million gallons of cellulosic ethanol, all gasoline sold in Pennsylvania 

must contain at least 10% cellulosic ethanol. All diesel fuel sold in Pennsylvania must contain at least 2% biodiesel (B2) 

one year after in-state production of biodiesel reaches 40 million gallons. The mandated biodiesel blend level will continue 

to increase according to the following schedule:

z 5% biodiesel (B5) one year after in-state production of biodiesel reaches 100 million gallons; 

z 10% biodiesel (B10) one year after in-state production of biodiesel reaches 200 million gallons;and 

z 20% biodiesel (B20) one year after in-state production of biodiesel reaches 400 million gallons. 

All biodiesel retailers in Pennsylvania must register with the Pennsylvania Department of Agriculture each year. 

(Reference Senate Bill 901, 2010, and Title 73 Pennsylvania Statutes, Chapter 18H, Sections 1650.3 and 1650.4) 

Alternative Fuels Tax 

A tax is imposed on alternative fuels used to propel vehicles of any kind on public highways. The tax rate is determined 

on a gasoline gallon equivalent basis. The tax rates are posted in the Pennsylvania Bulletin. (Reference Title 75 

Pennsylvania Statutes, Chapter 90, Section 9004) 

State Incentives 

Biodiesel Tax Exemption 

Biodiesel is exempt from the $0.30 per gallon state motor fuel tax. Biodiesel may be blended with other fuel for use in 

motor vehicles, but only the biodiesel portion of the blended fuel is tax exempt. Biodiesel is defined as fuel derived from 

vegetable oils or animal fats that conforms to ASTM D6751 specifications for use in diesel engines and results in 

employment at a manufacturing facility for biodiesel fuel. (Reference Rhode Island General Laws 31-36-1) 

Laws and Regulations 

Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Acquisition Requirements 

To reduce fuel consumption and pollution emissions, and purchase vehicles that provide the best value on a lifecycle cost 

basis, the state is required to take the following actions:

1. At least 75% of state motor vehicle acquisitions must be AFVs, and the remaining 25% must be HEVs to the 

greatest extent possible; 

2. All new light-duty trucks in the state fleet must achieve a minimum city fuel economy of 19 miles per gallon (mpg) 

and achieve at least a Low Emission Vehicle certification, and all new passenger vehicles in the state fleet must 

achieve a minimum city fuel economy of 23 mpg; 

3. All state agencies must purchase the most economical, fuel-efficient, and lowest emissions vehicles appropriate to 

meet any needed requirements and discourage the purchase of sport utility vehicles; 

4. All state agencies must purchase low rolling resistance tires with superior tread life for state vehicles when 

Rhode Island

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possible; and 

5. All state vehicles must be maintained according to manufacturer specifications, including specified tire pressures 

and ratings. 

The state is also required to prepare an annual report to the governor on compliance with these goals. (Reference 

Executive Order 05-13, 2005) 

Last Updated August 2010

State Incentives 

Biofuels Retail Incentive 

Ethanol retailers selling fuel blends of at least 70% ethanol (E70) are eligible for a $0.05 incentive for each gallon of 

ethanol blended fuel sold, provided that the fuel is subject to the South Carolina motor fuel user fee. Additionally, 

biodiesel retailers are eligible for a $0.25 incentive for each gallon of biodiesel (B100) sold as pure biodiesel or as part of

a biodiesel blend, provided that the blend contains at least 2% biodiesel (B2). These incentives apply only to fuel sold 

before July 1, 2012. Biodiesel fuel is defined as a fuel for motor vehicle diesel engines comprised of vegetable oils or 

animal fats and meeting ASTM specifications D6751 or D975. (Reference South Carolina Code of Laws 12-63-20) 

Biofuels Production Tax Credit 

Qualified corn-based ethanol and soy-based biodiesel producers are eligible for an income tax credit of $0.20 per gallon 

of fuel produced through 2016. Producers using feedstocks other than corn or soy oil are eligible for $0.30 per gallon tax 

credit. An eligible production facility must be operating at a production rate of at least 25% of its name plate design 

capacity and must maintain that production rate for at least six months, before denaturing, on or before December 31, 

2011. The credit is allowed for up to 60 months beginning with the first month for which the facility is eligible to receive 

the credit and ending before December 31, 2016. Beginning January 1, 2017, the credit changes to $0.075 per gallon of 

fuel produced. The credit may be carried forward for ten years. Additional restrictions apply. (Reference South Carolina 

Code of Laws 12-6-3600) 

Biofuels Research and Development Tax Credit 

For taxable years through 2011, an income tax credit is available for qualified research and development expenditures, 

which include developing feedstocks and production processes for cellulosic ethanol, and algae-derived and waste greasederived biodiesel. Qualified expenditures involving cellulosic ethanol and algae-derived diesel are eligible for a 25% 

credit, and qualified expenditures involving waste grease-derived biodiesel are eligible for a 10% credit. Cellulosic ethanol 

is defined as fuel from ligno-cellulosic materials, including wood chips, corn stover, and switchgrass. (Reference House

Bill 4478, 2010, and South Carolina Code of Laws 12-6-3631 

Biofuels Distribution Infrastructure Tax Credit 

A taxpayer that purchases, constructs, or installs, and places into service a qualified commercial facility for distributing or

dispensing of biofuels is eligible for an income tax credit of up to 25% of the purchase, construction, and installation 

costs. Eligible property includes pumps, storage tanks, and related equipment used exclusively for distribution, 

dispensing, and storing biofuels. A qualified facility must clearly label the equipment used to store or dispense the fuel as 

being associated with the biofuel. The credit must be taken in three equal annual installments beginning with the taxable 

year in which the facility is placed into service. Qualifying fuels include blends containing at least 70% ethanol (E70) 

dispensed at the retail level for use in motor vehicles, and pure ethanol or biodiesel fuel dispensed by a distributor or 

facility that blends these non-petroleum liquids with gasoline fuel or diesel fuel for use in motor vehicles. (Reference 

South Carolina Code of Laws 12-6-3610) 

Biofuels Production Facility Tax Credit 

A taxpayer that constructs and places into service a commercial facility for the production of biofuel is eligible for a tax 

credit of up to 25% of the cost of constructing or renovating a building and equipping the facility. Production of biofuel 

includes intermediate steps such as milling, crushing, and handling feedstock and the distillation and manufacturing of 

the final product. The entire credit must be taken in seven equal annual installments beginning with the taxable year in 

which the facility is placed in service. Qualifying fuels include liquid non-petroleum based fuel that can be placed in motor 

vehicle fuel tanks and used to operate on-road vehicles, including all forms of fuel commonly or commercially known or 

sold as biodiesel and ethanol. (Reference South Carolina Code of Laws 12-6-3610) 

Laws and Regulations 

State Agency Biodiesel Blend Mandate 

All state-owned diesel fueling facilities must provide fuel containing at least 5% biodiesel (B5) at all diesel pumps. 

(Reference South Carolina Code of Laws 12-63-30) 

State Agency Preference for Alternative Fuel and Advanced Vehicles 

State agencies purchasing motor vehicles must give preference to hybrid, plug-in hybrid, biodiesel, hydrogen, fuel cell, or 

flexible fuel vehicles when the performance, quality, and anticipated lifecycle costs are comparable to other available 

South Carolina

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motor vehicles. (Reference South Carolina Code of Laws 1-11-310) 

State Agency Alternative Fuel Use Requirement 

Whenever practical and economically feasible, all state agencies operating alternative fuel vehicles must use alternative 

fuels in those vehicles. Private businesses are encouraged to increase the use of alternative fuels in the state. (Reference 

Executive Order 2001-35) 

Biodiesel Use in School Buses 

The South Carolina Department of Education must fuel state school bus fleets with biodiesel when feasible. (Reference 

South Carolina Code of Laws 59-67-585) 

Alternative Fuel Tax 

Alternative fuels and blended fuels are exempt from the state sales and use tax. These fuels are, however, subject to a 

state fuels user fee of $0.16 per gallon. Alternative fuels include liquefied petroleum gas (propane) and compressed 

natural gas. Blended fuels are defined as mixtures composed of gasoline or diesel fuel and another liquid, other than 

products such as carburetor detergent or oxidation inhibitor, that can be used as a fuel to operate a highway vehicle. 

(Reference South Carolina Code of Laws 12-28-110, 12-28-310, and 12-36-2120(15)) 

Last Updated March 2010

State Incentives 

Biodiesel Blend Tax Credit 

Licensed biodiesel blenders are eligible for a tax credit for special fuel blended with biodiesel to create a biodiesel blend. 

The tax credit is granted on a per gallon basis, in the amount that the rate for special fuel exceeds the rate for the 

biodiesel blend. The purpose of the credit is to offset any tax liability resulting from the blending of previously untaxed 

biodiesel. (Reference South Dakota Statutes 10-47B-121.1) 

Tax Refund for Methanol Used in Biodiesel Production 

A licensed biodiesel producer may apply for and obtain a tax refund for state fuel taxes paid on methanol used to produce 

biodiesel. (Reference South Dakota Statutes 10-47B-120.1) 

Laws and Regulations 

Biodiesel Fuel Use 

The South Dakota Department of Transportation and state employees using state diesel vehicles are directed to stock 

and use a minimum of 2% biodiesel blended fuel which meets or exceeds the most current ASTM specification D6751, 

whenever it is available and financially prudent to do so. (Reference Executive Order 2006-01) 

Biodiesel Tax 

Biodiesel and biodiesel blends are taxed at the motor fuel excise tax rate of $0.22 per gallon. Beginning the fiscal quarter 

after which a biodiesel production facility in the state reaches a name plate capacity of at least 20 million gallons per year 

and fully produces at least 10 million gallons of biodiesel within one year, the tax on biodiesel and biodiesel blends is 

reduced to $0.20 per gallon. Biodiesel is defined as a fuel comprised of mono-alkyl esters of long chain fatty acids 

derived from vegetable oils or animal fats, designated B100, and meeting the requirements of ASTM specification D6751 

as of January 1, 2008. Biodiesel must also be registered with the U.S. Environmental Protection Agency as a fuel and fuel 

additive. Biodiesel blends are defined as blended special fuel containing a minimum of 5% biodiesel by volume. 

(Reference South Dakota Statutes 10-47B-3 through 10-47B-10) 

Last Updated July 2010

State Incentives 

Biodiesel Production Incentive 

The Tennessee Department of Revenue administers the biodiesel manufacturers' incentive fund, which provides 

Tennessee biodiesel producers with payments for biodiesel fuel produced and sold to Tennessee distributors. Each 

manufacturer is eligible to receive incentives for up to 10 million gallons of biodiesel produced annually. This incentive is 

available through June 30, 2013, and funding must be appropriated each year. (Reference Tennessee Code 67-3-103 and 

67-3-423) 

South Dakota

Tennessee

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Laws and Regulations 

Alternative Fuel and Fuel-Efficient Vehicle Acquisition and Use Requirements 

The Tennessee Department of General Services must ensure that at least 25% of newly purchased passenger motor 

vehicles procured for use in areas designated as ozone nonattainment areas are hybrid electric vehicles (HEVs), provided 

that such vehicles are available at the time of procurement. If HEVs are not available, conventional gasoline vehicles 

achieving an average fuel economy of at least 25 miles per gallon (mpg) may satisfy the requirement. In areas not 

designated as ozone nonattainment areas, at least 25% of newly purchased passenger motor vehicles must be either 

HEVs or conventional gasoline vehicles achieving an average fuel economy of at least 25 mpg. 

State fleets must make every effort to achieve the goal that 100% of newly purchased motor vehicles are energyefficient vehicles. Energy-efficient vehicles are defined as passenger vehicles that are alternative fuel vehicles using 

alternative fuels, as defined by the Energy Policy Act of 1992; HEVs; conventional gasoline vehicles achieving an average 

fuel economy of at least 25 mpg; or vehicles powered by ultra low sulfur diesel achieving an average fuel economy of at 

least 30 mpg. Additionally, state agencies should strive to use ethanol and biodiesel in appropriate state-owned vehicles 

whenever possible and should support the development of biofuels fueling infrastructure. 

(Reference Tennessee Code 4-3-1109 and Executive Order 33, 2006) 

State Incentives 

Ethanol and Biodiesel Blend Tax Exemption 

The biodiesel or ethanol portion of blended fuel containing taxable diesel is exempt from the diesel fuel tax. The biodiesel 

or ethanol fuel blend must be clearly identified on the retail pump, storage tank, and sales invoice in order to be eligible 

for the exemption. (Reference Texas Statutes, Tax Code 162.204) 

Laws and Regulations 

Alternative Fuel Use and Vehicle Acquisition Requirements 

State fleets with more than 15 vehicles, excluding emergency and law enforcement vehicles, may not purchase or lease a 

motor vehicle unless the vehicle uses compressed natural gas, liquefied natural gas, propane, ethanol or fuel blends of at 

least 85% ethanol (E85), methanol or fuel blends of at least 85% methanol (M85), biodiesel or fuel blends of at least 

20% biodiesel (B20), or electricity including plug-in hybrid electric vehicles. Waivers may be granted for fleets under the 

following circumstances: 1) the fleet will operate primarily in areas where neither the state agency or a supplier can 

reasonably be expected to establish adequate fueling for these fuels, or 2) the agency is unable to obtain equipment or 

fueling facilities necessary to operate alternative fuel vehicles at a cost that is no greater than the net costs of using 

conventional fuels.

By September 30, 2010, covered state agency fleets must consist of at least 50% of vehicles that are able to operate on 

alternative fuels and use these fuels at least 80% of the time the vehicles are driven. Covered state agencies may meet 

these requirements through the purchase of new vehicles or the conversion of existing vehicles. State agencies that 

purchase passenger vehicles or other ground transportation vehicles for general use must ensure that at least 25% of the 

vehicles purchased during any state fiscal biennium, other than exempted vehicles, meet or exceed federal Tier II, Bin 3 

emissions standards. 

(Reference Texas Statutes, Government Code 2158.004-2158.009) 

Laws and Regulations 

Provision for Establishment of Alternative Fuel Use Mandate 

The Utah Air Quality Board may mandate fleet vehicles to use clean fuels, if such a mandate is necessary to meet 

national air quality standards. (Reference Utah Code 19-2-105.3) 

Last Updated July 2010

State Incentives 

Texas

Utah

Vermont

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Alternative Fuel and Advanced Vehicle Research and Development Tax Credit 

Vermont businesses that qualify as a high-tech business involved exclusively in the design, development, and 

manufacture of alternative fuel vehicles, hybrid electric vehicles, electric vehicles, or energy technology involving fuel 

sources other than fossil fuels are eligible for up to three of the following tax credits: 1) payroll income tax credit; 2) 

qualified research and development income tax credit; 3) export tax incentive; 4) small business investment tax credit; 

and 5) high-tech growth tax credit. Certain limits and restrictions apply. (Reference Vermont Statutes Title 32, Chapter 

151, Section 5930a, c, f, g, and k) 

Laws and Regulations 

Alternative Fuel Vehicle (AFV) Acquisition Requirements 

The Commissioner of the Vermont Department of Buildings and General Services must consider AFVs when purchasing 

vehicles for state use, providing the alternative fuel is suitable for the vehicle's operation, is available in the region where 

the vehicle will be used, and is competitively priced with conventional fuels. (Reference Vermont Statutes Title 29, 

Chapter 49, Section 903) 

State Agency Energy Plan Transportation Requirements 

The Vermont Agency of Administration developed, and is responsible for overseeing the implementation of, the State 

Agency Energy Plan (Plan). The Agency of Administration must modify the Plan as necessary and readopt it on or before 

January 15 of each fifth year. As specified in the 2010 Plan (PDF 705 KB ), the Vermont Agency of Transportation must 

continue to use 5% biodiesel (B5) in its fleet of heavy-duty vehicles. Download Adobe Reader. The Vermont Department 

of Buildings and General Services must continue to use hybrid electric vehicles and Partial Zero Emission Vehicles in its 

fleet, while adjusting purchases based on annual fleet selection monitoring and available vehicle technology. All state 

agencies must investigate the use of additional alternative fuel and advanced technology vehicles, as well as the 

necessary fueling infrastructure, such as incorporating electric vehicle supply equipment at appropriate state facilities. 

Additionally, the Climate Neutral Working Group must expand education and tracking related to anti-idling campaigns for 

state fleet vehicles and private sector vehicles operating on state owned property, and conduct a survey to determine the 

level of government employee participating in carpooling, vanpooling, and other commuting options. (Reference Vermont

Statutes Title 3, Chapter 45, Section 2291) 

State Incentives 

Biodiesel Production Tax Credit 

Qualified biodiesel and green diesel fuel producers are eligible for a tax credit of $0.01 per gallon of biodiesel or green 

diesel fuels produced. This credit is available for producers who generate up to two million gallons of biodiesel or green 

diesel fuel per year. The annual credit may not exceed $5,000, and producers are only eligible for the credit for the first 

three years of production. Qualified producers must be certified by the Virginia Department of Mines, Minerals and 

Energy. (Reference Virginia Code 58.1-439.12:02) 

Green Jobs Tax Credit 

Beginning January 1, 2010, qualified employers are eligible for a $500 tax credit for each new green job created that 

offers a salary of at least $50,000, for up to 350 jobs per employer. The credit is allowed for the first five years that the 

job is continuously filled. For the purposes of this tax credit, a green job is defined as employment in industries relating 

to the field of renewable or alternative energies, including hydrogen and fuel cell technology, landfill gas, and biofuels. 

The tax credit expires on January 1, 2015. (Reference House Bill 803, 2010, Senate Bill 623, 2010, and Virginia Code

58.1-439.12:03) 

Laws and Regulations 

Alternative Fuel Use and Fuel-Efficient Vehicle Acquisition Requirements 

All agencies and institutions must maximize biodiesel and ethanol use in commonwealth fleet vehicles except where the 

use of biodiesel will void warranties or incur unreasonable additional costs to the agencies. The Virginia Department of 

General Services (DGS) must make E85 and B20 available for agency use at specified sites selected based on the 

locations of commonwealth-owned flexible fuel and diesel vehicles. Agencies and institutions that independently purchase 

fuel must use E85 and B20 fueling sites to the maximum extent reasonably possible; vehicles used for law enforcement 

and emergency response are exempt from these requirements. Additionally, DGS policies and procedures must include 

requirements for the purchase of fuel-efficient, low-emissions commonwealth-owned vehicles, as well as procedures for 

leasing vehicles requirements that give a preference to compact, fuel-efficient, and low-emissions vehicles. (Reference 

Executive Order 82, 2009) 

Biodiesel and Green Diesel Fuel Use Requirement 

The Virginia Department of General Services must establish conditions under which commonwealth public bodies may 

procure diesel fuel containing at least 2% biodiesel fuel or green diesel fuel for use in on-road vehicles. These conditions 

must take into consideration the availability of the fuel and cost of biodiesel compared to diesel fuel. (Reference Senate

Bill 272, 2010, and Virginia Code 2.2-1111) 

Virginia

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State Incentives 

Biofuels Distribution Tax Exemption 

Fuel delivery vehicles, machinery, equipment, and related services that are used for the retail sale or distribution of 

biodiesel blends or E85 motor fuel are exempt from state retail fuel sales and use taxes until July 1, 2015. (Reference 

Revised Code of Washington 82.08.955 and 82.12.955) 

Biofuels Tax Deduction 

A tax deduction is available for the sale or distribution of biodiesel or E85 motor fuel. This deduction is available until July 

1, 2015. (Reference Revised Code of Washington 82.04.4334) 

Biofuels Production Tax Exemption 

Qualifying buildings, equipment, and land used in the manufacturing of alcohol fuel, biodiesel, or biodiesel feedstocks are 

exempt from state and local property and leasehold excise taxes for a period of six years from the date the facility or 

addition to the existing facility becomes operational. This incentive expires after December 31, 2015. (Reference Senate 

Bill 6712, 2010, and Revised Code of Washington 82.29A.135 and 84.36.635) 

Biodiesel Feedstock Tax Exemption 

Waste vegetable oil, specifically cooking oil gathered from restaurants or commercial food processors, used by an 

individual to produce biodiesel for personal use is exempt from state sales and use taxes. (Reference Revised Code of

Washington 82.08.0205 and 82.12.0205) 

Laws and Regulations 

Renewable Fuel Standard 

At least 2% of all diesel fuel sold in Washington must be biodiesel or renewable diesel. This requirement will increase to 

5% 180 days after the Washington Department of Agriculture determines that in-state feedstocks and oil-seed crushing 

capacity can meet a 3% requirement. Renewable diesel is defined as a diesel fuel substitute produced from nonpetroleum renewable sources, including vegetable oils and animal fats, meets the federal registration requirements for 

fuels and fuel additives and ASTM specification D975.

Additionally, at least 2% of the total gasoline sold in the state must be denatured ethanol. The ethanol requirement may 

be increased if the Department of Ecology determines that this increase would not jeopardize continued attainment of 

federal Clean Air Act standards and the Department of Agriculture determines that the state can economically support the 

production of higher ethanol blends. 

All state agencies with jurisdiction over renewable fuel infrastructure, specifically storage, blending, and dispensing 

equipment, are required to expedite related application and permitting processes. The governor may suspend these 

requirements by Executive Order if the standard is temporarily technically or economically infeasible, or poses a 

significant risk to public safety. 

(Reference Revised Code of Washington 19.112.010 and 19.112.110-19.112.180) 

Biodiesel Use Requirement 

At least 20% of all diesel fuel used by state agency vehicles must be biodiesel. The Washington Department of General 

Administration must assist state agencies by coordinating the purchase and delivery of biodiesel if requested by a state 

agency, using long-term contracts if necessary, to secure a sufficient and stable supply of biodiesel. For state agencies 

complying with the U.S. Environmental Protection Agency's ultra-low sulfur diesel (ULSD) mandate, at least 2% biodiesel 

must be used as an additive to ULSD for lubricity, provided that the use of a lubricity additive is appropriate and that 

performance and cost are comparable with other available lubricity additives. (Reference Revised Code of Washington

43.19.642 and 43.19.646) 

Alternative Fuel Use Requirement 

Effective June 1, 2015, all state and local government agencies must use 100% biofuels or electricity to operate all 

publicly owned vehicles. To phase in this requirement, all state agencies must achieve 40% biofuel or electricity use by 

June 1, 2013. To allow the motor vehicle fuel needs of state and local government to be satisfied by Washingtonproduced biofuels, the Washington Department of General Administration and local governments may contract in advance 

and execute contracts with public or private producers and suppliers for the purchase of appropriate biofuels. (Reference 

Revised Code of Washington 43.19.647-43.19.648) 

Clean Fuel Vehicle Purchasing Requirement 

At least 30% of all new vehicles purchased through a state contract must be clean fuel vehicles, as defined by the 

Washington

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Washington Department of Ecology; this percentage will increase at the rate of 5% each year. Dedicated clean fuel 

vehicles are preferred. In the event that dedicated clean fuel vehicles are not available or would not meet operation 

requirements, conventionally powered vehicles may be converted to operate on clean fuel or dual-fuel use. (Reference 

Revised Code of Washington 43.19.637) 

Climate Change Mitigation Initiative - King County, WA 

As directed by local Executive Orders and the King County Acting Locally Initiative, King County departments are required 

to increase their use of "green" power and biodiesel. At least 50% of King County's total energy use must be generated 

from renewable energy sources by 2012 for non-transit uses and 2020 for transit uses. Additionally, the amount of 

biodiesel blends used in the county's vehicles must be increased from the current use of 5% biodiesel (B5) to 20% 

biodiesel (B20) such that the county uses 2.5 million gallons of biofuels annually. For more information, see the King 

County Executive Press Release. 

State Incentives 

Alternative Fuel School Bus Incentive 

Any county that uses an acceptable alternative fuel, including compressed natural gas, for the operation of all or any 

portion of its school bus system is eligible for an additional 10% reimbursement from the West Virginia Department of 

Education to help offset the county's transportation cost for maintenance, operation, and related costs incurred from 

using the alternatively fueled school buses. A county qualifying for this allowance for alternative fuel use must submit a 

plan that includes the future use of the alternatively fueled school buses to the Department of Education. (Reference 

West Virginia Code 18-9A-7) 

Point of Contact

Benjamin Shew 

Executive Director 

West Virginia Department of Education, Office of School Transportation 

Phone: (304) 558-2711 

Fax: (304) 558-6268 

bshew@access.k12.wv.us

http://wvde.state.wv.us/

Laws and Regulations 

Provision for Establishment of Alternative Fuel Vehicle (AFV) Acquisition Requirements 

The Department of Administration may require that up to 75% of a state agency's fleet consist of AFVs. To meet these 

requirements, AFVs may be purchased or leased, or existing vehicles may be converted to operate using alternative 

fuels. This requirement may be waived if an agency's vehicles are operating in an area where the agency cannot 

reasonably establish a central alternative fueling station or the lifetime cost of the vehicle or fueling infrastructure is 

higher as compared to conventional vehicles or fuels. In addition, this requirement does not apply to law enforcement, 

emergency, public transit authority, state rail authority, and non-road vehicles or school buses. (Reference West Virginia 

Code 5A-2A-1 and 5A-2A-2) 

State Incentives 

Renewable Fuel InfrastructureTax Credit 

A tax credit is available for 25% of the cost to install or retrofit fueling stations in Wisconsin that dispense motor vehicle 

fuel blends of at least 85% ethanol or at least 20% biodiesel fuel, or that mix fuels from separate storage tanks and allow 

the user to select the percentage of renewable fuel. The maximum credit amount is $5,000 per taxable year for each 

fueling station that has installed or retrofitted a pump. Motor vehicle fuel means gasoline or diesel fuel. The credit must 

be claimed within four years of the tax return. The credit expires December 31, 2017. (Reference Senate Bill 279, 2010, 

and Wisconsin Statutes 71.07 (5j), 71.21(4), 71.26(2)(a), 71.34(1)(g), 71.45(2)(a)10, 77.92(4), 71.28(5j), 71.30(3)

(ed), 71.47(5j), and 71.49(1)(ds)) 

Laws and Regulations 

Alternative Fuel Vehicle (AFV) Acquisition and Alternative Fuel Use Requirements 

The Wisconsin Department of Administration (DOA) requires that all state-owned or state-leased motor vehicles are 

hybrid electric vehicles or operate on gasohol (a motor fuel containing at least 10% alcohol and found to improve air 

quality as compared to conventional gasoline or petroleum-based diesel fuel) or alternative fuels whenever feasible. The 

DOA must place a list of gasohol and alternative fueling stations locations in each state-owned or state-leased motor 

vehicle, and make reasonable efforts to make the list available to state employees who are likely to drive these vehicles. 

The DOA also encourages officers and state employees who use personal motor vehicles on state business and Wisconsin 

West Virginia

Wisconsin

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residents to use gasohol and alternative fuels. The DOA must report back to the standing committee on the distribution of 

gasohol and alternative fuels and the usage of hybrid electric or vehicles that operate on gasohol or alternative fuels by 

April 30 each year. (Reference Senate Bill 279, 2010, and Wisconsin Statutes 16.045; and Executive Order 141, 2006) 

Alternative Fuel Use and Promotion Plan 

The Wisconsin Office of Energy Independence (OEI) must adopt and implement a plan to facilitate alternative fuel use in 

flexible fuel vehicles (FFVs) and other vehicles the state owns. The plan must ensure that all state-owned FFVs and other 

alternative fuel vehicles are identifiable, all state employees driving FFVs and other vehicles powered by an alternative 

fuel other than gasohol are made aware of the alternative fueling stations in the vicinity of their travel routes, and all 

state employees strive to use alternative fuels when operating state FFVs and diesel-powered vehicles. (Reference Senate 

Bill 279, 2010, and Wisconsin Statutes 16.045; and Executive Order 141, 2006) 

Petroleum Reduction Requirements 

The Wisconsin Department of Administration's fleet management policy requires all state agencies to collectively reduce 

gasoline use by at least 20% by 2010 and 50% by 2015 in state-owned vehicles as compared to the total amount used in 

2006. In addition, state agencies must reduce petroleum-based diesel fuel use by 10% by 2010 and 25% by 2015. 

(Reference Senate Bill 279, 2010, and Wisconsin Statutes 16.045; and Executive Order 141, 2006) 

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