Michigan Incentives and Laws for Biodiesel
The list below contains summaries of all Michigan incentives and laws related to Biodiesel.
State Incentives
Alternative Fuel and Vehicle Research, Development, and Manufacturing Tax Credits
Qualified taxpayers may claim a non-refundable credit for tax liability attributable to research, development, or manufacturing of qualified alternative fuel vehicles (AFVs) and renewable fuel. For the purpose of this incentive, AFVs include fuel cell, electric, hybrid electric, natural gas, E85, liquefied petroleum gas or propane, and hydrogen vehicles. Renewable fuels include biodiesel blends of at least 20%. The Michigan NextEnergy Authority must certify eligible taxpayers. Additionally, businesses located within the designated Alternative Energy Zone that are engaged in qualified activities may claim a credit for the qualified payroll amount. (Reference Michigan Compiled Laws 207.821-207.827 and 208.1429)
Reduced Biofuels Tax
A tax of $0.12 per gallon is imposed on gasoline containing at least 70% ethanol (E70) and diesel fuel containing at least 5% biodiesel (B5). This is a $0.07 discount compared to the conventional gasoline tax of $0.19 per gallon and a $0.03 discount compared to the conventional diesel tax of $0.15 per gallon. Ethanol is defined as denatured ethanol fuel that is suitable for use in a spark-ignition engine when mixed with gasoline and must meet ASTM D5798 specification. Biodiesel is defined as a fuel composed of mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats and meets ASTM D6571 specification, as approved by the Michigan Department of Agriculture. Funding for this tax reduction is subject to appropriation. (Reference Michigan Compiled Laws 207.1008)
Alternative Fuel Development Property Tax Exemption
A tax exemption may apply to industrial property that is used for, among other purposes, high-technology activities or the creation or synthesis of biodiesel fuel. High-technology activities include those related to advanced vehicle technologies such as electric, hybrid electric, or alternative fuel vehicles and their components. To qualify for the tax exemption, an industrial facility must obtain an exemption certificate for the property from the Michigan State Tax Commission. (Reference Michigan Compiled Laws 207.552 and 207.803)
Alternative Fuel Vehicle (AFV) Tax Exemption
Qualified AFVs are exempt from personal property taxes. The exemption only applies to personal property that is new to Michigan. To be eligible, the vehicle must not have been previously taxed or exempted from taxation under another law. Eligible vehicles must also:
- Be produced by an original equipment manufacturer;
- Meet the Federal Motor Vehicle Safety Standards;
- Meet local emissions standards; and
- Be propelled by natural gas, fuel blends containing at least 85% ethanol), liquefied petroleum gas (LPG, or propane), or fuel blends containing at least 85% methanol), or be a fuel cell vehicle, electric vehicle, or hybrid electric vehicle.
The Michigan NextEnergy Authority must certify the vehicle in order for it to be eligible. The exemption expires on December 31, 2012.
(Michigan Compiled Laws 207.82 and 211.9(i))
Laws and Regulations
Regional Biofuels Promotion Plan
Michigan has joined Indiana, Iowa, Kansas, 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; and
- 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.
Biofuels Blender Requirements
Blenders of ethanol and gasoline and biodiesel and diesel fuels outside of the bulk transfer terminal system must obtain a blender's license and are subject to blender reporting requirements. A licensed supplier who blends ethanol and gasoline or biodiesel and diesel fuels must also obtain a blender's license. (Reference Michigan Compiled Laws 207.1008)
Biodiesel Retail and Storage Requirements
All biodiesel and biodiesel blends sold in Michigan must meet state fuel quality requirements. A refiner, distributor, or retailer cannot transfer or dispense biodiesel or biodiesel blends unless the fuel is visibly free of undissolved water, sediments, and other suspended matter. Additionally, a biodiesel retailer may not sell biodiesel or biodiesel blends drawn from a storage tank that has more than two inches of water or water-alcohol at the bottom. Any retailer of biodiesel or biodiesel blends must obtain a license from the Michigan Department of Agriculture for each operating retail location. (Reference Michigan Compiled Laws 290.642-290.647)
