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Indiana Biodiesel Laws and Incentives


State Incentives

Vehicle Research and Development Grants

The Indiana 21st Century Research and Technology Fund is administered by the Indiana Economic Development Corporation and provides grants and loans to support proposals for economic development in areas including alternative fuel technologies and fuel-efficient vehicle production. (Reference Indiana Code 5-28-16-2)

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 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 5-22-15-19)

Biodiesel Production Tax Credit

A biodiesel producer located in Indiana is entitled to a credit of $1.00 per gallon of biodiesel produced. Applications for this incentive must be reviewed and approved by the Indiana Economic Development Corporation (IEDC). The total amount of credits granted to single taxpayer may not exceed $3 million for all taxable years, but may be increased to $5 million with prior approval from the IEDC. This tax credit is contingent upon funding and is currently not available. (Reference Indiana Code 6-3.1-27-8)

Biodiesel Blending Tax Credit

A biodiesel blender located in Indiana is entitled to a credit of $0.02 per gallon of blended biodiesel produced at a facility located in Indiana. Applications for this incentive must be reviewed and approved by the Indiana Economic Development Corporation, and the total amount of credits granted to single taxpayer may not exceed $3 million for all taxable years. This tax credit is contingent upon funding and is currently not available. (Reference Indiana Code 6-3.1-27-9)

Biodiesel Retailer Tax Credit

Through December 31, 2010, a taxpayer that is a fuel retailer and distributes blended biodiesel for retail purposes is entitled to a credit of $0.01 per gallon of blended biodiesel distributed. This tax credit is contingent upon funding and is currently not available. (Reference Indiana Code 6-3.1-27-10)

State Laws and Regulations

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) (PDF 2 MB), which establishes shared goals for the Midwest region, including increased biofuels production and use. Download Adobe Reader. 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 by 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.

Bio-based Products Purchase Requirement

A state governmental body or educational institution must purchase bio-based products whenever possible, provided that bio-based products are available and the purchase is economically feasible. Bio-based products are defined as commercial or industrial products other than food or feed produced from plant or animal sources, including renewable agricultural and forestry materials. (Reference Indiana Code 5-22-5-9)

Biodiesel Blend Fuel Tax Exemption

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

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 6-3.1-27-2 and 6-6-2.5-1.5)

Biofuels Blend Use Requirement

Governmental entities and state educational institutions are required to fuel diesel vehicles with biodiesel blends containing at least 2% biodiesel, fuel gasoline vehicles with ethanol blends of at least 10%, and fuel flexible fuel vehicles with E85 whenever possible. Governmental entities and state education institutions are also required to fuel gasoline vehicles with mid-level ethanol blends between 20% and 73%, unless the use of such blends is prohibited under federal regulations or has not been approved by the vehicle manufacturer. (Reference House Bill 1398, 2009, and Indiana Code 5-22-5-8 and 21-31-9-3)

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 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. Vehicle decals must be purchased annually for all heavy-duty AFVs and for light- and heavy-duty AFVs owned by public or private utilities. 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)