Illinois Incentives and Laws for Biodiesel

The list below contains summaries of all Illinois incentives and laws related to Biodiesel.

State Incentives

Alternative Fuel Vehicle (AFV) and Alternative Fuel Rebates

The Illinois Alternate Fuels Rebate Program (Program) provides a rebate for 80% of the incremental cost of purchasing an AFV (up to $4,000), 80% of the cost of converting a conventional vehicle or a hybrid electric vehicle to an AFV using a federally certified conversion (up to $4,000), and for the incremental cost of purchasing alternative fuels. Eligible fuels for the program include E85, fuel blends containing at least 20% biodiesel (B20), natural gas, propane, electricity, and hydrogen. A vehicle may receive one rebate in its lifetime. Only AFVs or conversion systems purchased from an Illinois-based company or vendor are eligible, except if the vehicle is a heavy-duty specialty vehicle that is not sold in Illinois, and only hybrid electric vehicles fueled with alternative fuels are eligible. To be eligible for a fuel rebate, the entity or individual must purchase the majority of E85 or biodiesel fuel from Illinois retail stations or fuel suppliers. The E85 fuel rebate is up to $450 per year (depending on vehicle miles traveled) for up to three years for each flexible fuel vehicle that uses E85 at least half the time. The biodiesel fuel rebate (for B20 and higher blends) is for 80% of the incremental cost of the biodiesel fuel, as compared to conventional diesel. The Program is part of the Illinois Green Fleets Program and is open to all Illinois residents, businesses, government units (except federal government), and organizations located in Illinois. (Reference House Bill 6047, 2010, and 415 Illinois Compiled Statutes 120/30)

Biofuels Production Facility Grants

The Renewable Fuels Development Program provides grants for the construction or expansion of biodiesel and ethanol production facilities. Each new facility must have a production capacity of at least five million gallons per year and an existing facility must expand its production capacity by at least five million gallons per year to be eligible for funding. The total amount of the grant awarded may be up to 10% of the total construction costs of the facility or $4 million, whichever is less. (Reference 20 Illinois Compiled Statutes 689/1 through 689/99)

Alternative Fuel Vehicle (AFV) Fleet Incentives

The Illinois Green Fleets Program recognizes and provides additional marketing opportunities for fleets in Illinois that have a significant number of AFVs and use clean, domestically produced fuels.

School Bus Retrofit Reimbursement

The Illinois Department of Education will reimburse any qualifying school district for the cost of converting gasoline buses to more fuel-efficient engines or to engines using alternative fuels. Restrictions may apply. (Reference 105 Illinois Compiled Statutes 5/29-5)

Biodiesel Tax Exemption

Sales and use taxes apply to 80% of the proceeds from the sale of biodiesel fuel blends containing between 1% and 10% biodiesel made between July 1, 2003, and December 31, 2018. If these taxes are ever imposed at a rate of 1.25%, the tax on these biodiesel blends will apply to 100% of the proceeds of sales. These taxes do not apply to the proceeds from the sale of biodiesel blends containing more than 10% biodiesel. The taxes will apply to 100% of the proceeds from biodiesel sales made after December 31, 2018. (Reference Senate Bill 397, 2011, and 35 Illinois Compiled Statutes 120/2-10 and 105/3-10)

Laws and Regulations

Fuel-Efficient Vehicle Acquisition Goals

To help achieve the statewide goal of reducing petroleum use by 20% by July 1, 2012, as compared to 2008 petroleum use, Illinois state agencies must work towards meeting the following goals:

• By July 1, 2015, at least 20% of new passenger vehicles purchased must be hybrid electric vehicles (HEVs) and 5% must be battery electric vehicles (EVs);
• By July 1, 2025, at least 60% of new passenger vehicles purchased must be HEVs and 15% must be EVs;

Agencies that operate medium- and heavy-duty vehicles must implement strategies to reduce fuel consumption through diesel emission control devices, HEV and EVs technologies, alternative fuel use, and fuel-efficient technologies. Agencies must also implement strategies to promote the use of biofuels in state vehicles; reduce the environmental impacts of employee travel; and encourage employees to adopt alternative travel methods, such as carpooling.

(Reference Executive Order 11, 2009)

Alternative Fuel Promotion

The Illinois General Assembly established the Alternate Fuels Commission (Commission) within the Illinois Department of Commerce and Economic Opportunity to identify and recommend strategies to the governor and General Assembly for implementing and promoting the use of alternative fuels and alternative fuel vehicles. The Commission will identify ways to improve stakeholder communication and coordination regarding the research and promotion of alternative fuels. The Commission must issue written reports on their activities and findings on at least an annual basis. (Reference 415 Illinois Compiled Statutes 120/23)

Biofuels Production Promotion

The state legislature supports the federal '25x25' initiative, under which 25% of the total energy the United States consumes in 2025 would be produced from domestic agriculture. (Reference Senate Joint Resolution 42, 2009)

Creation of Green Career Grants Program

The Illinois State Board of Education will establish a grant program to develop two-year pilot programs to assist in the creation and promotion of green career and technical education programs in public secondary schools. Green industries include the production and distribution of biofuels and vehicle retrofits to operate using biofuels. (Reference Illinois Compiled Statutes 5/2-3.151)

Biodiesel Production Tax

A private biodiesel producer that produces less than 5,000 gallons of biodiesel annually is subject to the annual state motor fuel tax. The return and payment of taxes for a given year are due by January 20 of the following year. A private biodiesel producer that produces more than 5,000 gallons of biodiesel annually must file returns and make state motor fuel tax payments on a monthly basis. The return and payment of taxes are due by the 20th day of each calendar month for the preceding calendar month. A private biodiesel fuel producer is defined as a person whose only activities with respect to motor fuel are: 1) the conversion of any biomass materials into biodiesel fuel that is produced exclusively for personal use and not for sale; or 2) the blending of biodiesel fuel resulting in biodiesel blends that are produced exclusively for personal use and not for sale. (Reference 35 Illinois Compiled Statutes 505/2, 505/2a, and 505/2d)

Biodiesel Definition and Specification

Biodiesel is defined as a fuel that is comprised of mono-alkyl esters of long-chain fatty acids derived from vegetable oils or animal fats and that conforms to ASTM standard D6751. All fuel consisting of at least 99% biodiesel (B99) that is sold or offered for sale should conform to ASTM standard D6751. (Reference 815 Illinois Compiled Statutes 370/4)

Biodiesel Blend Use Requirement

The following entities are required to use a biodiesel blend that contains at least 5% biodiesel (B5) when fueling at a bulk central fueling facility: any diesel powered vehicle owned or operated by the state, county or local government, school district, community college, public college or university, or mass transit agency. These entities are required to use B5 where available, unless the vehicle engine is designed or retrofitted to operate on a higher percentage of biodiesel or on ultra low sulfur diesel fuel. Biodiesel is defined as a renewable fuel conforming to ASTM standard D6751 and registered with the U.S. Environmental Protection Agency. (Reference 625 Illinois Compiled Statutes 5/12-705.1, 415 Illinois Compiled Statutes 120/10, and 815 Illinois Compiled Statutes 370/4)

Alternative Fuels Labeling Requirement

Retailers must display ratings on fueling pumps that are consistent with the percentage by volume of the alternative fuel being dispensed. (Reference 815 Illinois Compiled Statutes 370/4.1)

Biofuels Education and Promotion

The Promote Illinois Ethanol and Biodiesel Act requires state agencies, including state-supported universities and colleges, to provide links from their websites to sites containing information on ethanol and biodiesel fuels. The links must connect to Web sites maintained and operated by state agencies and may also include links to private websites. (Reference 505 Illinois Compiled Statutes 150/1)

State Government Energy Initiative

The Green Governments Illinois Act (Act) demonstrates the state's commitment to reduce negative environmental impacts, reduce greenhouse gases, and preserve resources for current and future generations. The Act also aims to strengthen the capacity of local governments and educational institutions to enable a more environmentally sustainable future. The Act established the Green Governments Coordinating Council (Council) to fully integrate cost-effective environmental sustainability measures into the ongoing management systems, long-range planning, and daily operations of state agencies. Initially, the Council will focus on initiatives that include those related to energy efficiency, renewable energy, and alternative fuel vehicles. Local governments and educational institutes are not required to participate in the provisions of the Act. (Reference 20 Illinois Compiled Statutes 3954/1 to 3954/45)

Advanced Vehicle Acquisition and Biodiesel Fuel Use Requirement

All gasoline-powered vehicles purchased with state funds must be flexible fuel vehicles (FFVs) or fuel-efficient hybrid electric vehicles (HEVs). Fuel-efficient HEVs are defined as automobiles or light trucks that use a gasoline or diesel engine and an electric motor to provide power and that gain at least a 20% increase in combined U.S. Environmental Protection Agency city-highway fuel economy over the equivalent or most-similar conventionally-powered model. Furthermore, any vehicle purchased with state funds that is fueled with diesel fuel must be certified by the manufacturer to run on 5% biodiesel (B5) fuel. The Chief Procurement Officer may determine that certain vehicle procurements are exempt from these requirements based on intended use or other reasonable considerations such as health and safety of Illinois citizens. (Reference 30 Illinois Compiled Statutes 500/25-75)

Biofuels Preference for State Vehicle Procurement

In awarding contracts that require vehicle procurement, state agencies may give preference to an otherwise qualified bidder who will fulfill the contract through the use of vehicles powered by ethanol produced from Illinois corn or biodiesel produced from Illinois soybeans. (Reference 30 Illinois Compiled Statutes 500/45-60)