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Michigan E85 Laws and Incentives


State Incentives

Alternative Fueling Infrastructure Tax Credit

The Michigan Department of Energy, Labor and Economic Growth (DELEG) offers an income tax credit for station owners who convert existing fuel delivery systems or install new systems to provide E85 or biodiesel blends of at least 5% to the public. The tax credit is for 30% of the eligible costs of an installed or converted fuel delivery system with a maximum tax credit of $20,000 per applicant. To qualify for the tax credit, a station owner must apply for a certificate of eligibility from the DELEG. Each installation will be inspected to ensure all work has been completed and E85 and/or biodiesel are being dispensed to the public. Any federal and state grants and incentives received by the station owner will be subtracted from the cost of the work before computing the amount of the tax credit. However, federal tax credits do not need to be subtracted when determining the tax credit amount. The tax credits are available for work completed between January 1, 2009, and December 31, 2012. (Reference Michigan Compiled Laws 208.1460)

Biofuel Signage Rebate Program

The Michigan Energy Office provides rebates to enable retail service stations located near interstate highways to advertise the availability of E85 or biodiesel blends (B20) on highway exit signs. Retail stations offering these fuel types and participating in the Michigan Department of Transportation Logo Sign Program are eligible for rebates of up to $1,500 to help cover up to 50% of the costs to design, install, and pay the first year's annual fee for signage. For more information, see the Biofuel Signage Rebate Program Application Form (PDF 70 KB). Download Adobe Reader

E85 Fueling Infrastructure Grant Program

The E85 Infrastructure Conversion Project provides funding to retail and public fleet fueling locations to purchase and install materials and equipment compatible with E85, to clean tanks, and to purchase dispensing equipment and on-site signage advertising E85. Funding of up to $5,000 per facility, not exceeding 50% of E85 conversion costs, is available through the Clean Energy Coalition. For more information, see the Clean Energy Coalition Web site.

Alternative Fuel and Vehicle Research, Development, and Manufacturing Tax Credits

Effective January 1, 2008, taxpayers certified by the Michigan NextEnergy Authority (MNEA) may claim a nonrefundable 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, and hydrogen vehicles. Renewable fuels include biodiesel blends of at least 20%. Additionally, businesses located within the designated Alternative Energy Zone that are engaged in qualified activities may claim a credit for the taxpayer's qualified payroll amount. (Reference Michigan Compiled Laws 207.821-207.827 and 208.1429)

Alternative Fueling Infrastructure Grants

The Michigan Strategic Fund (MSF) has created a matching grant program to provide incentives to owners and operators of service stations to convert existing, and install new, fuel delivery systems designed to provide E85 and biodiesel blends. Grants may not exceed 75% of the costs to convert existing fueling infrastructure, up to $3,000 per facility. Grants may not exceed 50% of the construction costs to install new fueling infrastructure, up to $12,000 per facility for E85 and $4,000 per facility for biodiesel blends. Other funding limitations may apply. For the purpose of this grant program, biodiesel must meet the ASTM D6751 specification and be approved by the Michigan Department of Agriculture. E85 is defined as a fuel blend containing between 70% and 85% denatured ethanol and meets ASTM D5798 specifications. (Reference Michigan Compiled Laws 125.2078)

Reduced Biofuels Tax

A tax of $0.12 per gallon is imposed on gasoline containing at least 70% ethanol and diesel fuel containing at least 5% biodiesel. 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 fuel ethanol 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 currently unavailable. (Reference Michigan Compiled Laws 207.1008)

Alternative Fuel Development Property Tax Exemption

A tax exemption may apply to industrial property which 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, or alternative fuel vehicles and their components. In order to qualify for the tax exemptions, an industrial facility must obtain an exemption certificate for the property from the State Tax Commission. (Reference Michigan Compiled Laws 207.552 and 207.803)

State Laws and Regulations

Advanced Vehicle Acquisition and Alternative Fuel Use Requirement

The Department of Management and Budget (DMB) is required to continue to comply with the requirements of the federal Energy Policy Act of 1992. The DMB must include hybrid electric vehicles within the state's fleet if the vehicles are determined to be cost effective and capable of meeting the state's transportation needs. In addition, as the state's public alternative fuel fueling infrastructure continues to develop, the state's alternative fuel vehicle fleet is required to fuel with alternative fuels to the extent possible. The DMB will develop rules to encourage or require the use of diesel fuel with the highest percentage of biodiesel content available for diesel-powered vehicles in the state fleet. (Reference Executive Directive 22, 2007)

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) (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. The state transportation, agriculture, and regulatory officials were required to report their corridor implementation plans to the Midwest Governors Association by April 1, 2008.

Renewable Fuels Commission

Renewable Fuels CommissionThe Renewable Fuels Commission was established within the Michigan Department of Agriculture to investigate and recommend strategies that the governor and the legislature may implement to promote the use of alternative fuels and alternative fuel vehicles (AFVs). The Commission will also identify mechanisms that promote alternative fuel research and effective communication and coordination of efforts between state and local governments, private industry, and institutes of higher education. The commission may also review any state regulation that may hinder the use, research, and development of alternative fuels and AFVs, and recommend changes to the governor. In June 2007, the Commission submitted a report on its investigation and recommendations to the legislature and the governor (PDF 453 KB) Download Adobe Reader. The Commission must issue follow-up reports at least annually through January 1, 2010. (Reference Michigan Compiled Laws 290.581-290.586)

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)

Utilities/Private Incentives

Alternative Energy Technology Promotion

NextEnergy is an organization with a comprehensive set of actions and incentives designed to help position Michigan as the world's leading center for alternative energy technology, research and development, education, and manufacturing. NextEnergy programs support technologies for both mobile and stationary applications using renewable and distributed energy solutions. NextEnergy offers several incentives for companies that develop or utilize alternative energy applications.