North Carolina Incentives and Laws for Biodiesel

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

State Incentives

Biofuels Industry Development Grants

The North Carolina Green Business Fund (Fund) provides grants to private businesses with fewer than 100 employees, nonprofit organizations, local governments, and state agencies to encourage the expansion of small and medium sized businesses and to help grow a green economy. One of the Fund's priority areas is the development of the biofuels industry in the state. The North Carolina Department of Commerce may make grants available to maximize development, production, distribution, retail infrastructure, and consumer purchase of biofuels, including grants to enhance biofuels workforce development. (Reference North Carolina General Statutes 143B-437.4)

Renewable Fuel Production Facility Tax Credit

A taxpayer that constructs and places into service three or more commercial facilities for processing biodiesel, ethanol, or ethanol/gasoline blends consisting of at least 70% ethanol (E70) in North Carolina and invests at least $400 million in total in the facilities is eligible for a credit equal to 35% of the cost of constructing and equipping the facilities. To claim the credit, the taxpayer must obtain a written determination from the North Carolina Department of Commerce that the taxpayer is expected to invest at least $400 million in three or more facilities within a five-year period. The credit applies to qualified facilities placed into service before January 1, 2013. (Reference North Carolina General Statutes 105-129.16D)

Renewable Energy Property Tax Credit

Taxpayers who construct, purchase, or lease renewable energy property are eligible for a tax credit equal to 35% of the cost of the property. Renewable energy property includes equipment that uses renewable biomass resources to produce ethanol, methanol, biodiesel, or methane produced from anaerobic biogas, using agricultural and animal waste or garbage; and related devices for converting, conditioning, and storing the liquid fuels and gas produced with the biomass equipment. The taxpayer must take the credit in five equal installments beginning with the taxable year in which the property is placed into service. There is a maximum credit amount of $2.5 million per installation, which applies to renewable energy property placed in service for any purpose other than residential. Property must be placed into service before January 1, 2016. (Reference North Carolina General Statutes 105-129.15 and 105-129.16A)

Biofuels Commercialization Grants

The Biofuels Center of North Carolina (Center) is a private, nonprofit corporation the Legislature funds to implement the goal that by 2017, 10% of liquid fuels sold in North Carolina will come from biofuels grown and produced within the state. The Center awards funds to academic institutions, economic development organizations, nonprofit corporations, and other entities through an annual competitive awards process. Grants and contracts are designed to identify and bridge gaps in knowledge and information, speed up the development of technology, and create a seamless continuum between agriculture and transportation fuels.

Alternative Fuel and Idle Reduction Grants

Diesel Emission Reduction Grants are available from the North Carolina Department of Environment and Natural Resources Division of Air Quality for the incremental cost of purchasing original equipment manufacturer alternative fuel vehicles, vehicle conversions, implementing idle reduction programs, and constructing or installing public alternative fueling facilities. As of September 2011, funding availability for the 2012 grant cycle is unknown.

Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Support

The Clean Fuel Advanced Technology project focuses on reducing transportation related emissions in non-attainment and maintenance counties for National Ambient Air Quality Standards. Projects that are adjacent to areas may also be eligible if the project will reduce emissions in eligible counties. The North Carolina Department of Transportation funds the CFAT project, which covers three broad areas: education and outreach; project funding; and recognition of exemplary activities. As of September 2011, funding is not available. Future financial support is anticipated to be available in 2013 for AFVs, fueling infrastructure, idle reduction technologies, heavy-duty HEVs, heavy-duty buses, and diesel retrofits.

Alternative Fuel and Alternative Fuel Vehicle (AFV) Fund

The North Carolina State Energy Office administers the Energy Policy Act (EPAct) Credit Banking and Selling Program, which enables the state to generate funds from the sale of EPAct 1992 credits. The funds EPAct credit sales generate are deposited into the Alternative Fuel Revolving Fund (Fund) for state agencies to offset the incremental costs of purchasing biodiesel blends of at least 20% (B20) or ethanol blends of at least 85% (E85), developing alternative fueling infrastructure, and purchasing AFVs and hybrid electric vehicles. Funds are distributed to state departments, institutions, and agencies in proportion to the number of EPAct credits generated by each. For the purposes of this program, the definition of alternative fuel includes 100% biodiesel (B100), biodiesel blends of at least B20, ethanol blends of at least E85, compressed natural gas, propane, and electricity. The Fund also covers additional projects approved by the Energy Policy Council. (Reference North Carolina General Statutes 143-58.4, 143-58.5, 143-341(8)i, and 136-28.13)

Alternative Fuel Tax Exemption

The retail sale, use, storage, and consumption of alternative fuels is exempt from the state retail sales and use tax. (Reference North Carolina General Statutes 105-164.13(11))

Biodiesel Tax Exemption

An individual who produces biodiesel for use in that individual's private passenger vehicle is exempt from the state motor fuel excise tax. (Reference North Carolina General Statutes 105-449.88(9))

Bond Exemption for Small Biofuels Suppliers

Fuel blenders or suppliers of ethanol or biodiesel are not required to file a bond with the North Carolina Department of Revenue when the expected motor fuel tax liability is less than $2,000. (Reference North Carolina General Statutes 105-449.72(a))

Utility/Private Incentives

Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Loans

The State Employees' Credit Union and the Local Government Federal Credit Union offer green vehicle loans to purchase qualified new and used fuel-efficient vehicles. Vehicles with a combined fuel economy rating of at least 28 miles per gallon, according to revised fuel economy ratings posted on www.fueleconomy.gov, qualify. The loan interest rates are 0.5% lower than traditional new or used vehicle loan rates.

Laws and Regulations

Biodiesel Warranty Requirement

All new state government diesel vehicles must have a manufacturer's warranty that allows the use of biodiesel blends of 20% (B20) in the vehicle. This requirement does not apply if the North Carolina Department of Administration determines that there is no vehicle available that is suited for the intended use and that has a manufacturer's warranty allowing the use of B20. (Reference North Carolina General Statutes 20-351.11, 136-28.15, and 143-341(8)(i))

Biodiesel Requirement for School Buses

Every school bus that is capable of operating on diesel fuel must be capable of operating using blends of at least 20% biodiesel (B20). At least 2% of the total volume of fuel purchased annually by local school districts statewide for use in diesel school buses must be a minimum of B20, to the extent that biodiesel blends are available and compatible with the technology of the vehicles and the equipment used. (Reference North Carolina General Statutes 115C-240(c) and 115C-249(a))

Alternative Fuel Vehicle (AFV) Acquisition Requirements

At least 75% of new or replacement state government light-duty cars and trucks with a gross vehicle weight rating of 8,500 pounds or less must be AFVs or low emission vehicles. (Reference North Carolina General Statutes 143-215.107C)

Printable Version