Colorado Incentives and Laws

Listed below are the summaries of all current Colorado 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 (7)
• Utility/Private Incentives (1)
• Laws and Regulations (10)

State Incentives

Alternative Fuel, Advanced Vehicle, and Idle Reduction Equipment Tax Credit

An income tax credit is available from the Colorado Department of Revenue for a motor vehicle titled and registered in Colorado that uses or is converted to use an alternative fuel, is a hybrid electric vehicle (HEV), or has its power source replaced with one that uses an alternative fuel. Qualified idle reduction technologies are also eligible for the tax credit. Credits are based on defined vehicle and technology categories as follows:

The credit is capped at $6,000 for the following: alternative fuel vehicles (AFVs), AFV conversions, HEVs, plug-in hybrid electric vehicles (PHEVs), PHEV conversions, idle reduction technologies, and power source replacements. Beginning in 2012, the cap on PHEV conversions increases to $7,500. Individuals who claimed a tax credit in previous years for the purchase of a Model Year 2004 or newer HEV may be eligible to claim an additional credit for the conversion of the same vehicle to a PHEV. Credits claimed in tax years 2010 and 2011 for Category 3 and Category 4 vehicles that permanently replace vehicles or power sources at least 12 years old are eligible for 1.25 times the percentages displayed above, up to 100%. Credits generated in 2010 or 2011 that exceed the tax due are refundable but cannot be carried forward. Used vehicles may qualify with proof that the prior owners did not claim the tax credit. For additional information, see the Department of Revenue's Income 9 FYI publication.

(Reference House Bill 1018, 2011, and Colorado Revised Statutes 39-22-516)

Electric Vehicle Supply Equipment (EVSE) Grants

The Electric Vehicle Grant Fund provides grants to local governments for the installation of qualified EVSE. Grants are prioritized based on the local government's commitment to energy efficiency. As of July 2011, no funding is available for this program. (Reference Colorado Revised Statutes 24-38.5-103)

Biofuels Research Grants

The Colorado Office of Economic Development administers the Bioscience Discovery Evaluation Grant Program, which provides grants to research institutions for biofuels research projects. Biofuels research is defined as the use of microorganisms, specialized proteins, or thermal processes to develop biofuels and the related processes that make traditional manufacturing of energy cleaner and more efficient. Biofuel is defined as a biologically based fuel product developed from plant matter or other biological material, including renewable agricultural sources. Grant limits, matching funds, and other eligibility requirements apply. (Reference Colorado Revised Statutes 24-48.5-108)

Ethanol Infrastructure Grants

Colorado Corn administers two ethanol fueling infrastructure incentive programs. The Advancing Colorado's Renewable Energy (ACRE) grant program provides up to $15,000 for each qualified E85 fueling station. Projects must meet the application requirements and receive approval from Colorado Corn. Eligible infrastructure must be located in a rural area, as defined by the Colorado Department of Agriculture. As of March 2012, ACRE grant applications are not being accepted.

The Colorado Blender Pump Pilot Program provides up to $5,000 for each qualified station dispensing mid-level ethanol blends. Projects must meet the application requirements and receive approval from Colorado Corn and the Colorado Department of Oil and Public Safety. Funding is available for up to ten stations in the state.

Low Emission Vehicle (LEV) Sales Tax Exemption

Vehicles, vehicle power sources, or parts used for converting a vehicle power source to reduce emissions are exempt from state sales tax. This exemption applies to vehicles, power sources, or parts for vehicles over 10,000 pounds gross vehicle weight rating that are certified to federal LEV standards. The vehicle power source includes the engine or motor and associated wiring, fuel lines, engine coolant system, fuel storage containers, and other components. (Reference Colorado Revised Statutes 39-26-719)

Hybrid Electric Vehicle (HEV) High Occupancy Vehicle (HOV) Lane Exemption

The Colorado Department of Transportation (CDOT) allows HEVs to travel in HOV and high occupancy toll (HOT) lanes. Qualifying vehicles must obtain a permit and display an HOV exemption decal and a toll transponder. As of April 2012, CDOT has reached its quota of 2000 permits and will place new applicants on a waiting list. For more information, visit the CDOT Hybrid Vehicle Use in the HOT/HOV Lanes website. (Reference Colorado Revised Statutes 42-4-1012)

Alternative Fuel Vehicle (AFV) Weight Limit Exemption

Gross vehicle weight rating limits for AFVs are 1,000 pounds greater than those for comparable conventional vehicles, as long as the AFVs operate using an alternative fuel or both alternative and conventional fuel, when operating on a highway that is not part of the interstate system. (Reference Colorado Revised Statutes 25-7-106.8 and 42-4-508)

Utility/Private Incentives

Natural Gas Fuel Rate Reduction and Infrastructure Maintenance - Clean Energy

Clean Energy Fuels offers integrated fueling services to the natural gas vehicle industry that include compressed natural gas fueling station equipment maintenance, competitive fuel pricing for larger fleet customers, and alternative fuel vehicle financing.

Laws and Regulations

Alternative Fuels Tax and Vehicle Decal

Fuel tax exemptions are granted for natural gas and liquefied petroleum gas (propane) vehicle owners. Owners of natural gas and propane vehicles are required to purchase an annual tax decal from the Colorado Department of Revenue or a decal vendor as follows:

All natural gas and propane vehicles must display a current fuel tax decal. Non-profit transit agencies are exempt from the fuel tax.

(Reference Colorado Revised Statutes 39-27-102.5)

Alternative Fuel Resale and Generation Regulations

Effective August 8, 2012, a corporation or individual that resells alternative fuel supplied by a public utility for use in an alternative fuel vehicle (AFV) is not subject to regulation as a public utility. Additionally, a corporation or individual that owns, controls, operates, or manages a facility that generates electricity exclusively for use in AFV charging or fueling facilities is not subject to regulation as a public utility provided that the electricity is generated on the property where the charging or fueling facilities are located and the electricity is generated from a renewable resource. For the purposes of this definition, alternative fuel is defined as propane, liquefied natural gas, compressed natural gas, or electricity. (Reference House Bill 1258, 2012, and Colorado Revised Statutes Chapter 40, Article 1, Sections 101-104)

Alternative Fuel Vehicle (AFV) Registration

Upon registering a motor vehicle with the Colorado Department of Revenue Division of Motor Vehicles, the vehicle owner must report the types of alternative fuel used to operate the vehicle and whether the vehicle is dedicated to one alternative fuel or uses more than one fuel. The Department of Revenue provides forms for the purpose of registering motor vehicles and must include space for the following fuel types: gasoline, diesel, propane, electricity, natural gas, methanol/M85, ethanol/E85, biodiesel, and other. (Reference Colorado Revised Statutes 42-3-113)

Low-Speed Electric Vehicle (EV) Access to Roadways

A low-speed EV is a self-propelled vehicle using electricity as its primary propulsion method, has at least three wheels in contact with the ground, does not use handlebars to steer, displays a vehicle identification number, and meets manufacturer requirements as defined in Title 49 of the Code of Federal Regulations, section 565. A low-speed EV may be operated only on a roadway with a speed limit of 35 miles per hour (mph) or less, but may directly cross a roadway with a speed limit greater than 35 mph. Low-speed EVs may not be sold or offered for sale unless they comply with state vehicle safety requirements.

A Class B low-speed EV is defined as a low-speed EV that is capable of traveling at greater than 25 mph but less than 45 mph. A Class B low-speed EV may be operated only on a roadway with a speed limit of 45 mph or less, but may directly cross a roadway with a speed limit greater than 45 mph. The Colorado Department of Revenue may not register or issue a title for a Class B low-speed EV until after the U.S. Department of Transportation has adopted a federal motor vehicle safety standard for low-speed EVs that authorizes operation at greater than 25 mph but less than 45 mph.

Neither a low-speed EV nor a Class B low-speed EV may be operated on a limited-access highway. (Reference Colorado Revised Statutes 12-6-120, 42-1-102, 42-4-109.5, 42-4-109.6)

Clean Energy Development Authority

The Colorado Clean Energy Development Authority may issue bonds to finance projects that involve the production, transportation, and storage of clean energy. Clean energy is defined as fuels that are produced, and energy that is derived, from sources including but not limited to the following: biodiesel; biomass resources such as biogas, agricultural or animal waste, landfill gas, and anaerobically digested waste biomass; biomass resources that do not include energy generated by use of fossil fuel; fuel cells that do not use fossil fuels; and zero-emissions generation technology, including emission of carbon dioxide, with long-term production potential. (Reference Colorado Revised Statutes 40-9.7-101 through 110)

Truck Emissions Reduction and Fuel Efficiency Grant Program Authorization

The Colorado Governor's Energy Office may administer the Green Truck Grant Program to provide grants to owners of commercial trucks used in interstate commerce to reduce emissions and energy usage. Reimbursements of 25% of overall costs, up to $50,000, may be made to qualified recipients who purchase or install fuel-efficient technologies and emission-control devices the U.S. Environmental Protection Agency's SmartWay Transport Partnership or any successor program approves to reduce fuel consumption and emissions of greenhouse gases and other harmful air pollutants from trucks. Grants may also be awarded to fund the retirement and scrapping of 1989 or older model year trucks. The total of all reimbursements issued may not exceed $500,000 per year. Additional restrictions may apply. As of July 2011, funding has not been allocated for the development of this program. (Reference Colorado Revised Statutes 42-1-301 through 42-1-305)

Promulgation of Renewable Fuel Storage Tank Regulations

The Colorado Division of Oil and Public Safety is responsible for enforcing rules concerning the placement of underground and aboveground storage tanks that contain renewable fuel. These rules must be promulgated so that the process of obtaining a permit for an underground storage tank that contains renewable fuel is more efficient and affordable. For the purpose of this regulation, a renewable fuel is a motor vehicle fuel that is produced from plant or animal products or wastes, as opposed to fossil fuel sources. (Reference Colorado Revised Statutes 8-20.5-202 and 8-20.5-302)

State Agency 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, hybrid electric, or all-electric vehicle, also subject to availability and incremental costs. DPA may adopt a policy to allow some vehicles to be exempt from this requirement.

Lastly, each state agency must develop a plan to improve commuting options for its employees. The plans should evaluate opportunities including plug-in electric vehicle charging.

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

Alternative Fuel Definition

Alternative fuel is defined as compressed natural gas, propane, ethanol, or any mixture containing 85% or more ethanol (E85) with gasoline or other fuels, electricity, or any other fuels, which may include, but are not limited to, clean diesel and reformulated gasoline, so long as the Colorado Air Quality Control Commission determines that these other fuels result in comparable reductions in carbon monoxide emissions and brown cloud pollutants. Alternative fuel does not include any fuel product that contains or is treated with methyl tertiary butyl ether (MTBE). (Reference Colorado Revised Statutes 25-7-106.8)

Gasoline Gallon Equivalent (GGE) Definition

The term GGE is defined to equate the energy content of any motor fuel, including alternative fuels, to that of a gallon of gasoline. Any dispenser used for the sale of motor fuel in GGEs must display GGEs as the primary display information provided. (Reference Colorado Revised Statutes 8-20-232.5)