California Natural Gas Laws and Incentives
Utilities/Private Incentives
Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (AFV) Insurance Discount
Farmers Insurance provides a discount of up to 10% on all major insurance coverage for HEV and AFV owners. To qualify, the automobile must be: 1) designed to use a dedicated alternative fuel as defined in the Energy Policy Act of 1992; or 2) an HEV. A complete Vehicle Identification Number is required to validate vehicle eligibility.
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.
High Occupancy Vehicle (HOV) Lane Exemption
Qualified compressed natural gas, hydrogen, electric, and hybrid electric vehicles (HEV) meeting specified California and federal emissions standards may use HOV lanes regardless of the number of occupants in the vehicle. Vehicles must be affixed with a Clean Air Vehicle sticker issued by the California Department of Motor Vehicles, which expire January 1, 2011. A limited number of Clean Air Vehicle stickers are available. Drivers of qualified HEVs registered to an address in the nine-county San Francisco Bay region must also obtain a Bay Area FasTrak account before using HOV lanes. For more information about qualified vehicles, see the California Air Resources Board Carpool Lane Use Stickers Web site. (Reference California Vehicle Code 5205.5 and 21655.9)
Alternative Fuel Vehicle (AFV) and Fueling Infrastructure Grants
The Assembly Bill (AB) 2766 Motor Vehicle Registration Fee Program provides funding for projects that reduce air pollution from on- and off-road vehicles. Eligible projects include purchasing AFVs and developing alternative fueling infrastructure. Contact local air districts for more information about available grant funding and distribution from the AB 2766 Motor Vehicle Registration Fee Program. (Reference Health and Safety Code 44220 (b))
Utilities/Private Incentives
Low-Emission Vehicle Electricity Rate Reduction - PG&E
Pacific Gas & Electric (PG&E) offers a discounted rate for electricity used to charge battery electric vehicles, plug-in hybrid electric vehicles, and natural gas vehicle home fueling appliances.
State Incentives
Lower-Emission School Bus Grants
The Lower-Emission School Bus Program provides grant funding for the replacement of older school buses and for the purchase of air pollution control equipment for in-use buses. Air pollution control devices must be verified by the California Air Resources Board to reduce particulate matter emissions by at least 85% for each retrofitted school bus. Public school districts in California, that own their own buses, are eligible to receive funding. Private school transportation providers that contract with public school districts in California to provide transportation services are also eligible to receive funding for the retrofit of in-use buses. New buses purchased to replace older buses may be fueled by diesel or an alternative fuel, provided that the required emissions standards specified in the current Lower-Emissions School Bus Program Guidelines are met. Commercially available hybrid school buses may be partially eligible for funding. Contact local air districts for more information about grant funding availability and distribution from the Lower-Emission School Bus Program. (Reference California Health and Safety Code 44299.90-44299.91)
Utilities/Private Incentives
Electric Vehicle (EV) and Natural Gas Infrastructure Charging Rate Reduction - SDG&E
San Diego Gas & Electric (SDG&E) offers discounted rates to customers for electricity used to charge EVs or qualified compressed natural gas fueling facilities. SDG&E’s EV Time of Use (TOU) rate is available in three variations, all of which charge customers based on the time of day the energy is consumed. These TOU rates are non-tiered and all SDG&E rates have four main components, notably the Residential Rate Tariff and the Electric Energy Commodity Rates. For more information about the rates and their components, see the SDG&E Electric Tariff Web site.
Natural Gas Vehicle Home Fueling Infrastructure Incentive - South Coast
Residents of the South Coast Air Quality Management District may be eligible for an incentive of up to $2,000 toward the purchase of a qualified natural gas vehicle home fueling appliance.
Low-Emission Taxi Incentives - San Francisco
The San Francisco Taxicab Commission has committed to reduce greenhouse gas emissions from the San Francisco taxi fleet by 20% by 2012, as compared to 1990 emissions levels. Under the Clean Taxi Program, companies may apply for a surcharge of up to $7.50 on any gate fee charged for the use of certain low-emission vehicles. Additionally, grants of up to $2,000 per vehicle may be available from the San Francisco County Transportation Authority toward the purchase of light-duty hybrid electric and compressed natural gas taxis.
Employee Vehicle Purchase Incentives - Riverside
City of Riverside employees are eligible to receive a rebate toward the purchase of qualified natural gas or hybrid electric Advanced Technology Partial Zero Emission Vehicles that are purchased from a City of Riverside automobile dealership. The rebate for a new qualified vehicle is worth up to $2,000, or $1,000 for a qualified used vehicle.
State Incentives
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.
Technology Advancement Funding - South Coast
The South Coast Air Quality Management District's Clean Fuels Program provides funding for research, development, demonstration, and deployment projects that are expected to help accelerate the commercialization of advanced low-emission transportation technologies. Eligible projects have included: power trains and energy storage/conversion devices (e.g., fuel cells and batteries); and implementation of clean fuels (e.g. natural gas, propane, and hydrogen), including their infrastructures. Projects are selected via specific requests for proposals on an as-needed basis or through unsolicited proposals. Approximately $10 million in funding is available annually with expected cost-share from other project partners and stakeholders.
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.
Alternative Fuel and Advanced Vehicle and Infrastructure Incentives - Vacaville
The City of Vacaville provides incentives for the purchase of new qualified battery electric vehicles, dedicated compressed natural gas (CNG) vehicles, plug-in hybrid electric vehicles, and CNG vehicle home fueling appliances.
Clean Vehicle Parking Incentive - Hermosa Beach
Downtown Hermosa Beach offers free metered parking at silver poled meters for vehicles with the California Clean Air Decal and electric vehicles, including GEM vehicles. Vehicles may park free for the maximum time limit designated on the meter.
Clean Vehicle Parking Incentive - San Jose
The City of San Jose has developed a Clean Air Vehicle Parking Program to reduce vehicle emissions, stimulate activity in the downtown, and increase sales of clean air vehicles at San Jose auto dealerships. For eligible vehicles, the program allows free parking at participating municipal off-street parking facilities, on-street meters, and regional park and recreation parking lots. Vehicles must display the Clean Air Vehicle Parking Permit, which is available for a $30 application fee. Only eligible vehicles purchased in San Jose after January 1, 2000, can obtain a permit. Zero Emission Vehicles purchased outside San Jose are also eligible to apply as long as the vehicle is registered in San Jose.
Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Parking Incentive - Santa Monica
The City of Santa Monica offers free meter parking for dedicated electric vehicles displaying the Zero Emission Vehicle decal, and compressed natural gas and HEVs displaying properly affixed California Clean Air Vehicle Decals. Vehicles may park free for the maximum time limit posted on the meter per trip.
State 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)
Compressed Natural Gas (CNG) Tax Exemption for Transit Use
CNG used by local agencies or public transit operators as a motor vehicle fuel in the operation of public transit services is exempt from any applicable fuel taxes. (Reference California Revenue and Taxation Code 7284.2)
Fleet Vehicle Procurement Requirements
When awarding a vehicle procurement contract, every city, county, and special district, including school and community college districts, is authorized to require that 75% of the passenger cars and/or light-duty trucks acquired be energy-efficient vehicles. By definition, this includes hybrid electric vehicles or alternative fuel vehicles that meet California's advanced technology partial zero emission vehicle (AT PZEV) standards. Vehicle procurement contracts are also authorized to evaluate fuel economy and life-cycle factors. (Reference California Public Resources Code 25725-25726)
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)
Mobile Source Emissions Reduction Requirements
Through its Mobile Sources Program, the California Air Resources Board (ARB) has developed programs and policies to reduce emissions. A drayage/port truck rule regulates heavy-duty diesel-fueled vehicles that transport cargo to and from California's ports and intermodal rail facilities. The rule requires that drayage trucks be equipped with engines certified to current California or federal emissions standards. A public transit bus rule regulates public transit fleets and sets emission reduction standards for new urban transit buses. The rule allows transit fleets to choose one of two options in order to meet their emissions reduction requirements: using alternative fuels, including zero-emission buses; or clean diesel, including retrofit devices. A solid waste collection vehicle rule regulates solid waste collection vehicles with a Gross Vehicle Weight Rating of 14,000 pounds or more, operate on diesel fuel, have 1960 through 2006 engine models, and collect waste for a fee. The fleet rule for public agencies and utilities requires fleets to install Best Available Control Technology devices on vehicles or purchase vehicles that run on alternative fuels or use advanced technologies to achieve emissions requirements by specified implementation dates. (Reference California Code of Regulations Title 13, 2021-2027)
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.
Fleet Fuel Use and Vehicle Acquisition Requirements - San Francisco
The City of San Francisco (City) requires that diesel vehicles in the City's municipal fleet operate using biodiesel blends of at least 20% (B20). City departments must also pursue actions to use higher biodiesel blends, up to and including neat biodiesel (B100). Additionally, bi-fuel vehicles owned by the City are not allowed to use petroleum-based fuels while operating within the City and County of San Francisco. All vehicles purchased or leased by City departments must meet or exceed specified emissions standards. (Reference Executive Directive 06-02, 2006, and City and County of San Francisco Environmental Code 406-407)
Public Agency Fleet Emissions Reduction Requirements - South Coast
The South Coast Air Quality Management District (SCAQMD) has the authority to require government fleets and private contractors under contract with public entities to purchase cleaner, alternative fuel vehicles. The rule applies to transit buses, school buses, refuse haulers, and other vehicles, and has set alternative fuel vehicle purchasing requirements for public and commercial fleets that operate in Southern California. The rules are applicable in Los Angeles, San Bernardino, Riverside, and Orange Counties. (Reference SCAQMD Rules 1186.1 and 1191-1196)
