Minnesota Incentives and Laws

Listed below are the summaries of all current Minnesota 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 (14)

State Incentives

Cellulosic Ethanol Production Grants

A facility that produces transportation fuels derived from cellulosic material may be eligible for a grant to cover 50% of the cost of research, technical assistance, or production equipment for the facility, up to $500,000. To be eligible, a qualified engineer must certify the technology and fuel source. (Reference Senate File 1016, 2011, and Minnesota Statutes 41A.105)

Cellulosic Ethanol Investment Tax Credit

A tax credit is available for investments in a qualified small business that uses or is involved in the research or development of a proprietary technology related to cellulosic ethanol. The tax credit is equal to 25% of the qualified investment, up to $250,000 annually. The credit is available for an investment of up to $1 million over the life of a qualified small business. Eligible small businesses must receive state certification and meet other requirements, such as being headquartered in Minnesota. The tax credit expires January 1, 2015. (Reference House File 1219, 2011, and Minnesota Statutes 13.4967 and 116J.8737)

E85 Fueling Infrastructure Grants

Funding is available to assist fuel retailers with the installation or conversion of equipment to dispense E85 to the public. A retailer may apply for a grant in the amount of 50% of project costs, up to a maximum of $15,000, if program guidelines are met. Funding is limited and not guaranteed.

Alternative Fuel and Technology Grants

The University of Minnesota's Initiative for Renewable Energy and the Environment offers various types of grants to promote statewide economic development; sustainable, healthy and diverse ecosystems; and national energy security through development of biobased and other renewable resources and processes. Eligible projects include those focused on environmentally sound production of energy, including transportation fuels such as hydrogen and biofuels, from renewable sources; development of energy conservation and efficient energy utilization technologies; energy storage technologies; and analysis of policy options to facilitate adoption of technologies that use or produce low-carbon renewable energy. Funds are available through 2012. (Reference Minnesota Statutes 116C.779)

Idle Reduction Technology Loan Program

The Minnesota Pollution Control Agency's Small Business Environmental Improvement and Auxiliary Power Unit Loan Programs provide low-interest loans up to $50,000 to qualified small businesses to finance environmental projects such as capital equipment upgrades that meet or exceed environmental regulations, including idle reduction technologies.

Idle Reduction Weight Exemption

A motor vehicle equipped with an idle reduction or emissions reduction technology may exceed the maximum gross vehicle weight and axle weight limits by up to 400 pounds to compensate for the additional weight of the technology. The vehicle operator must provide documentation that the qualified equipment is installed on the vehicle. (Reference Minnesota Statutes 169.824)

Ethanol Production Facility Environmental Assessment Exemption

An ethanol production facility producing less than 125 million gallons of ethanol annually that is located outside of the seven-county metropolitan area is exempt from preparing an environmental impact statement. In addition, an environmental assessment worksheet is not required for the expansion of an ethanol or biobutanol production facility, or the conversion of an ethanol facility to produce biobutanol. Exceptions may apply. (Reference Senate File 1115, 2011, and Minnesota Statutes 41A.09, 41A.105, and 116D.04)

Utility/Private Incentives

Natural Gas Infrastructure Technical Assistance - CenterPoint Energy

CenterPoint Energy offers preliminary feasibility studies for natural gas fueling stations, including natural gas availability information.

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 or when certain conditions have been met, 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 higher specified biodiesel blend levels 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. As of May 2012, the B10 mandate implementation has been delayed. (Reference Minnesota Statutes 239.75 and 239.77)

Ethanol Blend Mandate

All gasoline sold or offered for sale in Minnesota must contain at least 10% ethanol (E10), or the maximum percent of denatured ethanol the U.S. Environmental Protection Agency (EPA) allows in all vehicles regardless of model year. Gasoline-ethanol blends must comply with ASTM specification D4814-08b. Effective August 30, 2013, all gasoline sold or offered for sale in the state must contain at least 20% ethanol (E20), unless, by December 31, 2012, ethanol has already replaced 20% of all motor vehicle fuel sold in the state, or EPA has not granted approval for the use of E20 in all vehicles regardless of model year. Certain exemptions apply. (Reference Minnesota Statutes 239.761 and 239.791)

Ethanol Fuel Blend Dispensing Regulations

Gasoline blended for use in an alternative fuel vehicle (AFV) may contain any percentage of agriculturally derived, denatured ethanol, up to and including 85% (E85). Ethanol and gasoline blended at the point of retail sale in an ethanol-blending fuel dispenser must be clearly labeled "FLEX-FUEL VEHICLES ONLY." If a retailer sells both ethanol blends for use in AFVs as well as ethanol blends for use in standard combustion engines, the ethanol blends for use in a standard combustion engine must be dispensed from dedicated hoses, nozzles, or other equipment, and clearly labeled for use in conventional vehicles. Retailers are not responsible for customers' self-service fueling actions as long as these requirements are met. (Reference Minnesota Statutes 239.761 and 296A.01)

State Agency Sustainability Plan and Requirements

State agencies must establish interagency teams to develop and implement sustainability goals that reduce state vehicle petroleum consumption. In addition, each state department or agency must prepare an annual sustainability plan that includes ways to modify vehicle use practices, and report annually on progress towards implementing their plan. Each state agency plan must be based on following targets and mandates:

• Using 2005 as a baseline, the state must achieve a 50% reduction in gasoline used to operate state agency owned on-road vehicles by 2015;
• Using 2005 as a baseline, the state must achieve a 25% reduction in the use of petroleum-based diesel fuel for state owned on-road vehicles by 2015;
• When reasonably possible, state agencies must purchase on-road vehicles that use alternative fuels, including biodiesel blends of 20% (B20) or greater, compressed or liquefied natural gas, ethanol blends of 70% (E70) or greater, hydrogen, propane, or electricity, or (with the exception of buses, snowplows, and construction vehicles) have a fuel economy rating that exceeds 30 miles per gallon (mpg) in the city and 35 mpg on the highway;
• When reasonably possible, state employees must fuel vehicles capable of operating on an alternative fuel with that fuel;
• State agencies must increase the use of renewable fuels derived from agricultural products or waste products; and
• State agencies must increase the use of technology for delivering information and services in order to reduce reliance on the state's fleet.

(Reference Executive Order 11-13, 2011, and Minnesota Statutes 16C.135 and 16C.137)

Biofuels Promotion

The Minnesota Department of Agriculture (Department) must pursue available resources to promote and increase the production and use of biofuels in the state. These efforts should include increasing the availability of E85 fuel dispensers and ethanol blends. The Department outlined the federal, state, and local opportunities under this initiative in their report to the Minnesota Legislature entitled Bioenergy Development. (Reference Senate File 2737, 2010)

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 Minnesota's SmartFleet Committee sets goals for reducing state government consumption of petroleum-based transportation fuels and reports annually on the use of E85 in the state fleet. (Reference Executive Orders 04-10, 2004, and 06-03, 2006)

Biodiesel Definition

Biodiesel is defined as a renewable, biodegradable, mono alkyl ester combustible liquid fuel that is derived from agricultural plant oils or animal fats and meets ASTM specification D6751-08. A biodiesel blend is a blend of diesel fuel and biodiesel fuel (between 6% and 20%) for on-road and off-road diesel vehicle use. Biodiesel blends must comply with ASTM specification D7467-08. Biodiesel produced from palm oil is not considered biodiesel fuel, unless the palm oil is waste oil and grease collected from within the United States or Canada. (Reference Minnesota Statutes 239.761 and 239.77)

Electric Vehicle Supply Equipment (EVSE) Requirements

Without requiring significant upgrades, EVSE installed in Minnesota must: 1) be able to be used by any make, model, or type of plug-in electric vehicle; 2) comply with state safety standards and standards set by the Society of Automotive Engineers; and 3) be capable of bidirectional charging once electrical utilities achieve a cost-effective ability to draw electricity from plug-in electric vehicles connected to the utility grid. (Reference Minnesota Statutes 325F.185 and 326B.35)

Plug-In Electric Vehicle Initiatives

All solicitation documents that include the purchase of passenger automobiles issued under the jurisdiction of the Minnesota Department of Administration must assert the intention of the state to begin purchasing all-electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), and neighborhood electric vehicles (NEVs) as soon as they become commercially available. Vehicles must meet the state's performance specifications and be priced no more than 10% above the price for comparable gasoline-powered vehicles. An EV is defined as a motor vehicle that can be powered by an electric motor drawing current from rechargeable storage batteries, fuel cells, or other portable sources of electrical current, and meets or exceeds applicable requirements in Title 49 of the Code of Federal Regulations, section 571, and future regulations. A PHEV is an EV containing an internal combustion engine that uses a battery-powered electric motor to deliver power to the drive wheels. When connected to the electrical grid via an electrical outlet, the vehicle must be able to recharge its battery. The vehicle must have the ability to travel at least 20 miles powered substantially by electricity. (Reference Minnesota Statutes 16C.138 and 169.011)

Neighborhood Electric Vehicle (NEV) Access to Roadways

A NEV is an electric vehicle that has four wheels and is capable of achieving speeds between 20 miles per hours (mph) and 25 mph on a paved level surface. A NEV must be titled according to state law and may be operated on public streets and highways if it meets all equipment and vehicle safety requirements in Title 49 of the Code of Federal Regulations, section 571.500, and successor requirements. A NEV may not operate on roadways with a speed limit greater than 35 miles per hour, except to cross that roadway. A road authority may prohibit or further restrict the operation of NEVs on any street or highway under the road authority's jurisdiction. (Reference Minnesota Statutes 169.011 and 169.224)

Medium-Speed Electric Vehicle (EV) Access to Roadways

A medium-speed EV is an electrically powered four-wheeled motor vehicle capable of achieving speeds between 25 miles per hours (mph) and 35 mph on a paved, level surface. Except with respect to maximum speed, a medium-speed EV must meet or exceed regulations in Title 49 of the Code of Federal Regulations, section 571.500. A medium-speed EV may not operate on a roadway with a speed limit greater than 35 mph, except to cross that roadway. A road authority may prohibit or further restrict the operation of medium-speed EVs on any street or highway under the road authority's jurisdiction. (Reference Minnesota Statutes 169.011 and 169.224)

Alternative Fuel Tax

The Minnesota Department of Revenue imposes an excise tax on the first licensed distributor that receives E85 fuel products in the state and on distributors, special fuel dealers, or bulk purchasers of other alternative fuels. E85 is taxed at the pump at a rate of $0.1985 per gallon, propane is taxed at $0.2105 per gallon, liquefied natural gas is taxed at $0.168 per gallon, and compressed natural gas is taxed at the rate of $0.2474 per hundred cubic feet. Gasoline is taxed at the rate of $0.28 per gallon. (Reference Minnesota Statutes 296A.07 and 296A.08)

Hydrogen Energy Plan

The Minnesota Department of Commerce (DOC), in coordination with the Department of Administration (DOA) and the Pollution Control Agency, must identify opportunities for demonstrating the use of hydrogen fuel cells within state-owned facilities, vehicle fleets, and operations. DOA must purchase and demonstrate hydrogen, fuel cells, and related technologies in ways that strategically contribute to realizing Minnesota's hydrogen economy goals. Additionally, DOC must report to the legislature every two years with a list of proposed pilot projects that contribute to realizing these goals, including those demonstrating hybrid electric technologies, off-road equipment, and vehicles operating on hydrogen fuel or fuels blended with hydrogen.

DOC may accept federal funds, expend funds, and participate in projects to design, develop, and construct multi-fuel hydrogen fueling stations that eventually link urban centers along key trade corridors across Minnesota, North Dakota, South Dakota, Iowa, and Wisconsin. These stations should accommodate a wide variety of vehicle technologies and fueling platforms, including hybrid electric, flexible fuel, and fuel cell vehicles. They may offer gasoline, diesel, ethanol, biodiesel, and hydrogen, and may simultaneously test the integration of on-site combined heat and power technologies with the existing energy infrastructure.

The state's public research and higher education institutions are encouraged to collaborate to establish a regional energy research and education partnership for the production of renewable energy and products, including hydrogen, fuel cells, and related technologies.

(Reference Minnesota Statutes 216B.811 to 216B.815)

Clean Energy Collaborative

The Governor's Clean Energy Technology Collaborative (Collaborative) was created for experts to discuss issues that impact the development of new clean energy technologies that use Minnesota expertise, Minnesota resources, and benefit Minnesota by reducing greenhouse gas (GHG) emissions. The Collaborative provides the governor with advice and recommendations on matters relating to advances in technology and research to achieve Minnesota's long-term clean energy goals, including reducing GHG emissions by 80% by 2050 and generating 25% of Minnesota energy from renewable energy resources by the year 2025. The Collaborative outlined Minnesota's long-term clean energy goals and guidance on ways to achieve these goals in the Clean Energy Technology Roadmap. (Reference Executive Order 08-04, 2008)