Kansas Incentives and Laws for Biodiesel

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

State Incentives

Alternative Fuel Vehicle (AFV) Tax Credit

An income tax credit is available for 40% of the incremental or conversion cost for qualified AFVs, based on gross vehicle weight rating (GVWR) as outlined in the table below. Qualified AFVs include vehicles that operate on a combustible liquid derived from grain starch, oil seed, animal fat, or other biomass, or produced from a biogas source.

Alternatively, a tax credit of 5% of the cost of the AFV, up to $750, is available for the purchase of an original equipment manufacturer AFV. This credit is allowed only to the first individual to take title of the vehicle. For motor vehicles capable of operating on E85, the individual claiming the credit must provide evidence of purchasing at least 500 gallons of E85 between the time the vehicle was purchased and December 31, of the following calendar year. Excess credits may be carried over for up to three years after the year in which the expenditures were made.

(Reference Kansas Statutes 79-32,201)

Alternative Fueling Infrastructure Tax Credit

An income tax credit is available for 40% of the total cost to install alternative fueling infrastructure after January 1, 2009. Qualified property must be directly related to the delivery of alternative fuel into the fuel tank of a motor vehicle propelled by such fuel. The tax credit may not exceed $100,000 per fueling station. Alternative fuels are defined as combustible liquids derived from grain starch, oil seed, animal fat, or other biomass, or produced from a biogas source. Excess credits may be carried over for up to three years after the year in which the expenditures were made. (Reference Kansas Statutes 79-32,201)

Renewable Fuel Retailer Tax Incentive

A licensed retail motor fuel dealer may receive a quarterly incentive for selling and dispensing renewable fuels, including biodiesel. A qualified motor fuel dealer is eligible for up to $0.065 for every gallon of renewable fuel sold and up to $0.03 for every gallon of biodiesel sold, if the required threshold percentage is met. The threshold percentage for the incentive payment will increase incrementally on an annual basis from 10% for renewable fuel and 2% for biodiesel in 2009 to 25% for each fuel type beginning on January 1, 2024. As of June 2011, this incentive is on hold until further notice. (Reference Kansas Statutes 79-34,171 through 79-34,176)

Biofuel Blending Equipment Tax Exemption

Qualified equipment used for storing and blending petroleum-based fuel and biodiesel, ethanol, or other biofuel is exempt from state property taxes. The exemption begins at the time of installation at a fuel terminal, refinery, or biofuel production plant, and ends 10 taxable years following the year in which the equipment was installed. Equipment used only for denaturing ethyl alcohol is not eligible. (Reference Kansas Statutes 79-232 and 79-32,251)

Biodiesel Production Incentive

A qualified Kansas biodiesel producer is eligible for a production incentive of $0.30 per gallon of biodiesel sold. The incentive is payable from the Kansas Qualified Biodiesel Fuel Producer Incentive Fund. Producers must file for the incentive on a quarterly basis through the Kansas Department of Revenue. (Reference Kansas Statutes 79-34,158)

Laws and Regulations

Biofuels Use Requirement

State-owned diesel-powered vehicles and equipment must use a biodiesel blend that contains at least 2% biodiesel (B2), where available, as long as the price of biodiesel is not more than $0.10 per gallon as compared to the price of diesel fuel. Individuals operating state-owned motor vehicles must purchase fuel blends containing at least 10% ethanol (E10), as long as these fuel blends are not more than $0.10 per gallon as compared to the price per gallon of regular gasoline fuel. (Reference Kansas Statutes 75-3744a)

Regional Biofuels Promotion Plan

Kansas has joined Indiana, Iowa, Michigan, Minnesota, Ohio, South Dakota, and Wisconsin in adopting the Energy Security and Climate Stewardship Platform Plan (Platform), which establishes shared goals for the Midwest region, including increased biofuels production and use. 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 in 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.

Biodiesel and Renewable Fuel Definitions

Biodiesel is defined as a renewable, biodegradable, mono alkyl ester combustible liquid fuel that is derived from vegetable oils or animal fats and meets the specifications adopted by rules and regulations of the Kansas Department of Agriculture pursuant to current law. The specification must meet the ASTM D6751-07 specification for biodiesel fuel (B100) blend stock for distillate fuels, but may be more stringent regarding biodiesel quality and usability. Renewable fuels are defined as combustible liquids derived from grain starch, oil seed, animal fats, or other biomass; or produced from a biogas source, including any non-fossilized, decaying, organic matter capable of powering spark ignition machinery. (Reference Kansas Statutes 79-34,155 and 79-34,170)

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