Indiana Incentives and Laws

Listed below are the summaries of all current Indiana 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 (12)
• Utility/Private Incentives (3)
• Laws and Regulations (14)

State Incentives

Alternative Fueling Station Grant Program

The Alternative Fueling Station Grant Program provides grants of up to $20,000 for installing new alternative fueling stations or converting existing fueling stations to dispense alternative fuels. Eligible alternative fuels include liquefied petroleum gas (propane) and compressed natural gas. The Indiana Office of Energy Development must review and approve applications for the grant program, and the grant funding awarded for all fiscal years may not exceed $1 million. As of March 2011, no funds have been appropriated for this incentive. (Reference Indiana Code 4-4-32.2)

Alternative Fuel Vehicle (AFV) Grant Program

The Alternative Fuel Vehicle Grant Program offers grants to counties, cities, towns, townships, or school corporations to purchase original equipment manufacturer (OEM) AFVs and for the cost of AFV conversions. Qualified entities may receive $2,000 for each OEM AFV purchased, and up to $2,000 for each AFV conversion. Eligible AFVs include dedicated and bi-fuel liquefied petroleum gas (propane) and compressed natural gas vehicles. The Indiana Office of Energy Development must review and approve applications for the grant program, and the grant funding awarded for all fiscal years may not exceed $1 million. As of March 2011, no funds have been appropriated for this incentive. (Reference Indiana Code 4-4-32.3)

Alternative Fuel Vehicle (AFV) Manufacturer Tax Credit

The Indiana Economic Development Corporation (IEDC) may award tax credits under the Hoosier AFV Manufacturer Tax Credit to foster job creation, reduce dependence on imported energy sources, and reduce air pollution resulting from the manufacture or assembly of light-duty AFVs in Indiana. AFV manufacturers are eligible for tax credits of up to 15% of qualified investments, which include expenditures in the state that are reasonable and necessary for the manufacture or assembly of AFVs. To be eligible, the manufacturer must compensate its employees at least 150% of the state's hourly minimum wage and agree to maintain operations for at least 10 years. Additional restrictions apply. For the purpose of this incentive, AFVs are defined as vehicles designed to operate on E85, biodiesel, ultra low sulfur diesel fuel, natural gas, liquefied petroleum gas (propane), hydrogen, methanol, coal-derived liquid fuels, non-alcohol fuels derived from biological material, P-Series fuels, or electricity. IEDC must review and approved applications for this incentive. The credit applies to taxable years beginning after December 31, 2006, and before December 31, 2012. Unused credits may be carried forward for up to nine consecutive taxable years. (Reference Indiana Code 6-3.1-31.9)

Vehicle Research and Development Grants

The Indiana Economic Development Corporation administers the Indiana 21st Century Research and Technology Fund, which provides grants and loans to support proposals for economic development in high technology industry clusters. Incentives are available for qualified alternative fuel technologies and fuel-efficient vehicle production. (Reference Indiana Code 5-28-16-2)

Ethanol Production Tax Credit

An ethanol producer located in Indiana is entitled to a credit of $0.125 per gallon of ethanol produced, including cellulosic ethanol. The Indiana Economic Development Corporation must review and approve applications for this credit. The credit granted to a single taxpayer may not exceed the following amounts for all taxable years:

Tax Credit	Annual Production
$2 million	More than 40 million and less than 60 million gallons of grain ethanol
$3 million	At least 60 million gallons of grain ethanol
$20 million	At least 20 million gallons of cellulosic ethanol

Any unused credit may be carried forward for the following taxable years. As of March 2011, no funds have been appropriated for this incentive.

(Reference Indiana Code 6-3.1-28)

E85 Fuel Retailer Tax Credit

An E85 retailer may deduct $0.18 from the required state gross retail tax for every gallon of E85 sold before July 1, 2020. Reimbursement is contingent upon available funding from the Retail Merchant E85 Deduction Reimbursement Fund (Fund), which the Indiana State Budget Agency maintains. On July 1 of each year, the Indiana Corn Marketing Council (Council) will ensure that the Fund totals at least $500,000. As necessary, the Council will transfer the difference into the Fund. (Reference Indiana Code 6-2.5-7-5, 6-6-1.1-103, 15-15-12-30.5, and 15-15-12-32.5)

E85 Fuel Use Incentive

A political subdivision that purchases E85 for use in flexible fuel vehicles (FFVs) may be entitled to a monthly E85 incentive payment of $33.33 for each FFV that has been owned by the political subdivision for less than five years. To be eligible, 75% of the political subdivision's fuel purchases in the preceding month must be E85 for use in FFVs. A political subdivision is defined as a municipal corporation or special taxing district. This incentive expires January 1, 2015. (Reference Indiana Code 6-6-1.1-103, 8-14-2-8, and 36-1-2-13)

Biodiesel Production Tax Credit

A biodiesel producer located in Indiana may receive 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 IEDC may grant a single taxpayer no more than $3 million total for all taxable years; this maximum incentive may be increased to $5 million with prior approval from IEDC. As of March 2011, 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 may receive 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 IEDC may grant a single taxpayer no more than $3 million total for all taxable years. As of March 2011, no funds have been appropriated for this incentive. (Reference Indiana Code 6-3.1-27-9)

Biodiesel Price Preference

A governmental body, state educational institution, or instrumentality of the state that performs essential governmental functions on a statewide or local basis is entitled to a 10% price preference for the purchase of fuels containing at least 20% biodiesel (B20) by volume or fuels that are primarily ester-derived (other than alcohol) made from biological materials, such as oilseeds and animal fats, for use in operating compression and ignition engines. (Reference Indiana Code 5-22-15-1, 5-22-15-7, and 5-22-15-19)

Biodiesel Blend Tax Exemption

Biodiesel blends of at least 20% (B20) that are used for personal, noncommercial use by the individual that produced the biodiesel portion of the fuel are exempt from the $0.16 per gallon license tax. The maximum 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 6-6-2.5-1.5, 6-6-2.5-28, and 6-6-2.5-30.5)

Idle Reduction Weight Exemption

A heavy-duty vehicle equipped with an auxiliary power unit may exceed the state's gross vehicle weight limit by up to 400 pounds to compensate for the additional weight of the idle reduction technology. A heavy-duty vehicle is defined as having a gross vehicle weight rating of more than 8,500 pounds.(Reference Indiana Code 9-20-4-1)

Utility/Private Incentives

Natural Gas Vehicle (NGV) Rebate

Citizens Gas & Coke Utility (Citizens) offers rebates for qualified compressed natural gas (CNG) vehicle conversions or for the purchase of an original equipment manufacturer dedicated or bi-fuel CNG vehicles. Used NGVs may also qualify. Rebates are available to fleet operators on a case-by-case basis. Citizens will examine each project on the merits of providing the rebate based on hours of operation or miles driven, per vehicle, per year.

Electric Vehicle Supply Equipment (EVSE) Incentive - Duke Energy

As part of Indiana's Project Plug-IN initiative, Duke Energy is conducting a two-year pilot program that provides qualified residential and commercial customers with Level 2. Duke Energy will install the EVSE at the home (covering up to $1,000 in installation costs) or business (covering up to $1,500 in installation costs) and service the equipment for the duration of the pilot. Duke Energy will remotely access the EVSE to collect information in an effort to better understand charging habits and the impact on the power grid. At the end of the pilot, participants will be able to keep the EVSE at no additional cost. For more information, see the Duke Energy Project Plug-IN website.

Plug-In Electric Vehicle Charging Rates and Infrastructure Incentive - Indianapolis Power & Light

The Indianapolis Power & Light Company (IPL) offers special plug-in electric vehicle charging rates, including year-round time-of-use based options, for residential and fleet customers who own a licensed electric or plug-in electric vehicle. IPL will provide Level 2 electric vehicle supply equipment (EVSE) and the associated metering equipment for the first 150 eligible customers to take advantage of the special rate. IPL will also cover the cost of a standard installation of the equipment. Restrictions apply.

Indianapolis residents and visitors may also use public EVSE by paying a flat fee of $2.50 per charging session.

Laws and Regulations

Clean Vehicle Acquisition Requirements

Each state entity must purchase or lease a clean energy vehicle, unless the Indiana Department of Administration determines that the purchase or lease of the vehicle is inappropriate for its intended use, or the purchase or lease would cost 10% more than a comparable non-clean energy vehicle. Additional exemptions apply. A clean energy vehicle is defined as a vehicle that operates on one or more of the following energy sources: a rechargeable energy storage system; hydrogen; compressed natural gas (CNG); or liquefied natural gas (LNG). (Reference Indiana Code 5-22-5-8.5)

Support for Use of Higher Ethanol Blends

The Indiana House supports education related to the use of higher ethanol blends in non-flexible fuel vehicles, citing studies that show environmental and economic benefits of using higher ethanol blends. The House also encourages the U.S. Environmental Protection Agency to authorize the use of higher ethanol blends in non-flexible fuel vehicles. (Reference House Resolution 77, 2009)

Regional Biofuels Promotion Plan

Indiana has joined Iowa, Kansas, Michigan, Minnesota, Ohio, South Dakota, and Wisconsin in adopting the Energy Security and Climate Stewardship Platform Plan (Platform) which establishes shared goals for the Midwest region, including increased biofuels production and use. Specifically, the Platform sets the following goals:

• Produce commercially available cellulosic ethanol and other low carbon fuels in the region by 2012;
• Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025;
• Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025;
• By 2025, at least 50% of all transportation fuels consumed in the Midwest will be from regionally produced biofuels and other low carbon transportation fuels.

The Platform also establishes a regional biofuels corridor program. The program directs state transportation, agriculture, and regulatory officials to develop a system of coordinated signage across the region for biofuels and advanced transportation fuels and to collaborate to create regional E85 corridors. The program requires standardized fuel product coding at fueling stations as well as increased education for retailers about converting existing fueling infrastructure to dispense E85.

Immunity for Misuse of E85

E85 sellers, suppliers, distributors, manufacturers, and refiners are immune from civil liability for personal injury of property damage resulting from a person fueling any vehicle with E85 that is not a flexible fuel vehicle. This includes any vehicle equipped to operate when fueled entirely with E85. This immunity does not apply if an E85 seller, supplier, distributor, manufacturer, or refiner does not display all E85 warning signs federal or state laws require. (Reference Indiana Code 34-30-24)

E85 Promotion and Education

The Indiana Department of Agriculture must work with automobile manufacturers to improve auto dealer and consumer awareness and labeling of E85 fuel, and must coordinate with the appropriate companies to include E85 fueling stations in updates of global positioning navigation software. (Reference Indiana Code 15-11-2-4)

E85 Retail Sales Reporting

A retailer who dispenses E85 must report to the Indiana Department of State Revenue the total number of gallons of E85 sold from a metered pump. (Reference Indiana Code 6-2.5-6 and 6-2.5-7-5)

E85 Definition

E85 is a fuel blend nominally consisting of 85% ethanol and 15% gasoline by volume that meets ASTM specification D5798. (Reference Indiana Code 6-6-1.1-103)

E85 Use

As part of the Indiana Greening the Government Initiative, all fleet vehicles based in Indianapolis that are capable of using E85 must operate using E85 fuel whenever possible. Use of other biobased fuels and oils is also encouraged. (Reference Executive Order 05-21, 2005)

Biodiesel Definition

Biodiesel is defined as a renewable, biodegradable fuel derived from agricultural plant oils or animal fats that meet ASTM specification D6751. Blended biodiesel is a blend of biodiesel with petroleum diesel fuel so that the volume percentage of biodiesel in the blend is at least 2%. (Reference Indiana Code 6-3.1-27-1, 6-3.1-27-2, and 6-6-2.5-1.5)

Biofuels Blend Use Requirement

Whenever possible, governmental entities and state educational institutions must fuel diesel vehicles with biodiesel blends containing at least 2% biodiesel (B2), 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. Additional exemptions apply. (Reference Indiana Code 5-22-5-8 and 21-31-9-3)

Low-Speed Vehicle Access to Roadways

A low-speed vehicle is defined as a four-wheeled electric vehicle capable of achieving a speed of up to 35 miles per hour (mph) and meets the standards in Title 49 of the Code of Federal Regulations, section 571.500. An individual may not operate a low-speed vehicle on a highway that has a posted speed limit greater than 35 mph. (Reference Indiana Code 9-21-5-8.5 and 9-13-2-94.5)

Certified Technology Park Designation

The Indiana Economic Development Corporation may designate an area as a certified technology park if certain criteria are met, including a commitment from at least one business engaged in a high technology activity that creates a significant number of jobs. The establishment of high technology activities and public facilities within a technology park serves a public purpose and benefits the public's general welfare by encouraging investment, job creation and retention, and economic growth and diversity. High technology activities include advanced vehicles technology, which is any technology that involves electric vehicles, hybrid electric vehicles, or alternative fuel vehicles, or components used in the construction of these vehicles. (Reference Indiana Code 36-7-32)

Alternative Fuel Vehicle (AFV) Decals

An individual may place alternative fuel into the fuel tank of a motor vehicle only if the vehicle has a valid alternative fuel decal affixed to the front windshield or the individual has submitted an application for a decal within the last 30 days. All heavy-duty AFVs and light-duty AFVs that public or private utilities own require vehicle decals. The cost of the decal varies according to vehicle type and the gross vehicle weight rating. The annual fee may be prorated if the vehicle is newly purchased, registered in Indiana, or converted to operate using an alternative fuel. (Reference Indiana Code 6-6-2.1-203 through 6-6-2.1-206)

Natural Gas Vehicle (NGV) Safety Requirement

An individual may not operate an NGV on a highway outside the corporate limits of a municipality from a half hour after sunset to a half hour before sunrise unless the vehicle carries at least three red electric lanterns or three portable red emergency reflectors. NGVs are prohibited from carrying a flare, fuse, or signal produced by flame. (Reference Indiana Code 9-19-5-6)