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Alabama Incentives and Laws

Listed below are the summaries of all current Alabama incentives, laws, regulations, funding opportunities, and other initiatives related to alternative fuels and vehicles, advanced technologies, or air quality. You can go directly to summaries of:

• State Incentives (3)
• Utility/Private Incentives (1)
• Laws and Regulations (6)

State Incentives

Biodiesel Grants

The Alabama Department of Economic and Community Affairs (ADECA) Energy Division developed the Alabama Biodiesel Incentive Program to increase the availability and use of biodiesel blends in school buses and state fleet vehicles. Grants are available for up to $2,500 of the cost of cleaning existing fuel tanks to store biodiesel blends of 20% (B20) for use in public school, state college and university, and local government fleets. Successful applicants must provide B20 for a minimum of three years. Grantees must also provide information to ADECA Energy Division about the number of gallons of B20 dispensed and used to fuel fleet vehicles during this time period.

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. Companies may claim this credit against the state income tax or the financial institution excise tax liability that 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)

Idle Reduction Weight Exemption

Any motor vehicle equipped with an auxiliary power unit (APU) or other idle reduction technology may exceed the gross, axle, tandem, or bridge formula weight limit by up to 400 pounds. To be eligible for the weight exemption, the vehicle operator must be able to provide written proof or certification of the weight of the APU and demonstrate or certify that the idle reduction technology is fully functional at all times. (Reference Code of Alabama 32-9-20)

Utility/Private Incentives

Electric Vehicle (EV) Charging Rate Incentive - Alabama Power

Alabama Power offers a Business Electric Vehicle Time-of-Use (BEVT) rate for electricity purchased to charge EVs used for non-residential purposes. The electricity used for vehicle charging is metered separately from all other electricity use.

Laws and Regulations

Alternative Fuel Tax

The state road tax for vehicles that operate on liquefied petroleum gas (LPG or propane) or natural gas is paid through the purchase of an annual flat fee sticker, and the amount is based on the vehicle's gross vehicle weight rating. Each person owning and/or operating a vehicle that operates on LPG or natural gas must obtain an annual decal from the Alabama LPG Board. The decal must be affixed to the vehicle according to LPG Board specification as proof that the flat fee has been paid. The issuance fee is $5 plus the decal fee. Vehicle owners must apply for a decal within 10 days of converting a vehicle to operate on LPG or natural gas or a 20% penalty will be applied to the decal fee. Out-of-state alternative fuel vehicle operators that purchase LPG or natural gas within the state must pay the current Alabama motor fuel tax. The LPG or natural gas dealer or supplier must remit these funds to the LPG Board before the 20th of the month following the date of sale. (Reference Code of Alabama 40-17-160 through 40-17-165)

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 includes fuel economy and lifecycle costing. State fleet managers must 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 using 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. The legislature urges public school systems to use blends of 20% biodiesel (B20) in all diesel-powered school buses and encourages state entities to use biodiesel blends of at least 5% (B5) in diesel-powered motor vehicles. (Reference Senate Joint Resolution 14 and 15, 2009)

Interagency Alternative Fuels Working Group

The Alabama Legislature urges the Alabama Department of Finance to invite all state agencies, commissions, boards, counties, and municipalities to join an interagency Alternative Fuels Working Group to promote education, research and development, production, and consumption of alternative fuels. (Reference Senate Joint Resolution 16, 2009)

Alternative Fuels Promotion and Information

The Center for Alternative Fuels (Center) promotes alternative fuels as viable energy sources in the state. The Center must assess the current status and development of sources of alternative fuels, ensuring that all alternative fuels sold in the state meet ASTM standards, and act as an information center for alternative fuels and a clearinghouse for available federal grant funding for alternative fuel development. The Center may administer a grant program using income tax check-off program funds from the Alabama Alternative Fuels and Research Development Fund. (Reference Code of Alabama 2-2-90 and 2-2-91)

Biofuels Research and Development Support

The Alabama Department of Economic and Community Affairs administers the Alabama Research Alliance (ARA), which facilitates scientific research and development, including agricultural research and development activities related to biofuels. The ARA may use received income to support research and development activities. (Reference Executive Order 37, 2007)