California Incentives and Laws for Ethanol

The list below contains summaries of all California incentives and laws related to Ethanol.

State Incentives

Alternative Fuel and Vehicle Research and Development Incentives

The Alternative and Renewable Fuel and Vehicle Technology Program, established by Assembly Bill 118 and administered by the California Energy Commission, aims to increase the use of alternative and renewable fuels and innovative technologies. Grants and loans are available for projects that:

• develop and improve alternative and renewable low-carbon fuels;
• optimize alternative and renewable fuels for existing and developing engine technologies;
• produce alternative and renewable low-carbon fuels in California;
• decrease the overall impact of an alternative and renewable fuel's life-cycle carbon footprint and increase sustainability;
• expand fuel infrastructure, fueling stations, and equipment;
• improve light-, medium-, and heavy-duty vehicle technologies;
• retrofit medium- and heavy-duty on-road and non-road vehicle fleets;
• expand infrastructure connected with existing fleets, public transit, and transportation corridors; and
• establish workforce training programs, conduct public education and promotion, and create technology centers.

(Reference California Health and Safety Code 44270-44274.7)

Employer Invested Emission Reduction Funding - South Coast

The South Coast Air Quality Management District (SCAQMD) administers the Air Quality Investment Program (AQIP). The AQIP provides funding to allow employers within SCAQMD's jurisdiction to make annual investments into an administered fund to meet employers' emission reduction targets. The revenues collected are used to fund alternative mobile source emission/trip reduction programs, including alternative fuel vehicle projects, on an on-going basis. Programs such as procurement of low-emission, alternative fuel or zero emission vehicles, and old vehicle scrapping may be considered for funding.

Low Emission Vehicle Incentives and Technical Training - San Joaquin Valley

The REMOVE II Program (Program) is administered by the San Joaquin Valley Air Pollution Control District (APCD) and 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 the Program is to encourage the early introduction of low emission vehicles in the San Joaquin Valley. The Program offers between $1,000 and $3,000 per vehicle and varies according to the emission certification level and size of the vehicle. Vehicles must be powered by alternative fuel, electric, or hybrid electric engines/motors. The Program also includes an Alternative Fuel Vehicle (AFV) Mechanic Training Component that provides incentives for the education of 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

State Transportation Plan

The California Department of Transportation (Caltrans) is required to update the California Transportation Plan (Plan) by December 31, 2015, and every five years thereafter. The Plan must address how the state will achieve maximum feasible emissions reductions, taking into consideration the use of alternative fuels, new vehicle technology, and tailpipe emissions reductions. Caltrans must prepare and submit an interim report to the California Transportation Commission and to the Chairs of the Senate and Assembly committees related to transportation, environmental quality, natural resources, and local government by December 31, 2012. Caltrans must consult and coordinate with related state agencies, air quality management districts, public transit operators, and regional transportation planning agencies. Caltrans must also provide an opportunity for input by the general public. A final draft of the Plan must be submitted to the Legislature and Governor. (Reference Senate Bill 391, 2009, and California Government Code 65071-65073)

Low Carbon Fuel Standard

California's Low Carbon Fuel Standard (LCFS) Program calls for a reduction in the carbon intensity of the state's transportation fuels by a minimum of 10% by 2020. The California Environmental Protection Agency, in coordination with the University of California, the California Energy Commission, and other state agencies, has developed draft regulations. In 2009, the California Air Resources Board approved the LCFS, which establishes standards that fuel producers and importers must meet each year beginning in 2011. Carbon intensity reductions are based on reformulated gasoline mixed with 10%, by volume, corn-derived ethanol, and low-sulfur diesel fuel. The LCFS is expected to be effective by the end of 2009. (Reference Executive Order S-01-07, 2007, and California Health and Safety Code 38500-38599)

Low Emission Vehicle (LEV) Standards

California's LEV II exhaust emission standards apply to Model Year 2004 and subsequent model year passenger cars, light-duty trucks, and medium-duty passenger vehicles meeting specified exhaust standards. The LEV II standards represent the maximum exhaust emissions for LEVs, Ultra Low Emission Vehicles, and Super Ultra Low Emission Vehicles, including flexible fuel, bi-fuel, and dual fuel vehicles when operating on an alternative fuel. New Model Year 2009 and subsequent model year passenger cars, light-duty trucks, and medium-duty passenger vehicles must meet specified fleet average greenhouse gas (GHG) exhaust emissions requirements. Each manufacturer must comply with these fleet average GHG requirements, which are based on a calculation established by the California Air Resources Board. An alternative compliance method exists for bi-fuel, flexible fuel, dual-fuel, and grid-connected hybrid electric vehicles. A manufacturer that achieves a fleet average GHG value that is lower than the fleet average GHG requirement applicable to the 2012 Model Year may receive credits for each model year. (Reference California Code of Regulations Title 13, Section 1961-1961.1)

Alternative Fuel Vehicle Retrofit Regulations

Converting emission-controlled vehicles with retrofit systems to operate on an alternative fuel in lieu of the original gasoline or diesel fuel is prohibited unless the retrofit systems have been evaluated and certified by the California Air Resources Board (ARB). The certification of an alternative fuel retrofit system must be obtained by its manufacturer and is issued by ARB once the manufacturer demonstrates compliance with the emission, warranty, and durability requirements. A manufacturer is defined as a person or company who manufactures or assembles an alternative fuel retrofit system for sale in California; this definition does not include individuals wishing to convert vehicles for personal use. Individuals interested in converting their vehicles to operate on an alternative fuel must ensure that the alternative fuel retrofit systems used for their vehicles have been certified by ARB. For more information, see the ARB Alternative Fuel Retrofit System Web site. (Reference California Code of Regulations Title 13, Section 2030-2031, and California Vehicle Code 27156)

Alternative Fuel Tax

The excise tax imposed on compress natural gas (CNG), liquefied natural gas (LNG), and liquefied petroleum gas (LPG) as vehicle fuels can be paid through an annual flat-fee rate sticker tax based on the following vehicle weights:

Unladen Weight	Fee
All passenger cars and other vehicles 4,000 pounds (lbs.) or less	$36
More than 4,000 lbs. but less than 8,001 lbs.	$72
More than 8,000 lbs. but less than 12,001 lbs.	$120
12,001 lbs. or more	$168

Alternatively, owners and operators may pay an excise tax on CNG of $0.07 per 100 cubic feet measured at standard pressure and temperature, $0.06 per gallon of LNG, and $0.06 per gallon of LPG. The excise tax on ethanol and methanol fuel blends containing up to 15% gasoline or diesel fuel is half of the current tax on gasoline and diesel.

(Reference California Revenue and Taxation Code 8651-8651.8)

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 use by state offices, agencies, and departments. These specifications include minimum vehicle emission standards and encourage the purchase or lease of fuel-efficient and alternatively fueled vehicles. On an annual basis, the DGS must compile information including, but not limited to, the number of alternative fuel 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 owned or leased by the state that are capable of operating on alternative fuel must operate on that fuel unless the alternative fuel is not available. Additionally, the Secretary of State and Consumer Services, in consultation with the DGS and other appropriate state agencies, must develop, implement, and submit to the Legislature and the 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. The 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. Beginning April 1, 2010, and annually thereafter, the DGS must provide progress reports to the California Department of Finance, related legislative 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)

Alternative Fuel and Vehicle Policy Development

The California Energy Commission is required to prepare and provide an Integrated Energy Policy Report (IEPR) to the governor on a biannual basis. The IEPR provides an overview of major energy trends and issues facing the state, including those related to transportation fuels, technologies, and infrastructure. The IEPR also examines potential effects of alternative fuels usage, vehicle efficiency improvements, and shifts in transportation modes on public health and safety, the economy, resources, the environment, and energy security. The primary purpose of the IEPR is to develop energy policies that conserve resources, protect the environment, ensure energy reliability, enhance the state's economy, and protect public health and safety. (Reference California Public Resources Code 25302)

State Biofuels Development Plan

The State of California plans to use biomass resources from agriculture, forestry, and urban wastes to provide transportation fuels and electricity to satisfy California's fuel and energy needs. To increase the use of biomass in fuel production, the state will produce its own biofuels at a minimum of 20% by 2010, 40% by 2020, and 75% by 2050. The California Air Resources Board and the California Energy Commission, in conjunction with other agencies, prepared the Bioenergy Action Plan for California, which recommended: research and development of commercially viable biofuels production and advanced biomass conversion technologies; evaluation of the potential for biofuels to provide a clean, renewable source for hydrogen fuel; and increased acquisition of flexible fuel vehicles to 50% of total new vehicles purchased by state agencies by 2010. (Reference Executive Order S-06-06, 2006)

Alternative Fuel Promotion - San Jose

As part of San Jose's Green Vision (PDF 161 KB), the City of San Jose has committed to several alternative fuel and hybrid electric transportation goals:
1) Increase the use of alternative energy vehicles for airport operations and encourage the use of zero-emission transportation modes to and from the airport.
2) Establish a research center to encourage the development of alternative fuel vehicles for use in mass and private transit.
3) Create local policies to encourage residents and businesses to use zero emission and hybrid electric vehicles.
4) Implement a Green Fleet Policy (PDF 423 KB) to ensure that 100% of public fleet vehicles run on alternative fuels by 2022.