North Dakota Biodiesel Laws and Incentives
State Incentives
Biofuels Infrastructure Grants
Cost-share grants of up to $5,000 per fueling pump are available to motor fuel retailers who install qualified biofuel blender pumps and associated equipment at retail locations. A qualified ethanol retail blender pump must meet the following criteria: 1) dispense a blend of gasoline and ethanol in the ratio selected by the purchaser; 2) is manufactured to an industry standard and carries a warranty for compatibility with dispenser components and storage and piping systems; 3) has at least four hoses and dispenses either a blend of 10% ethanol or the minimum blend percentage approved for all vehicles by the U.S. Environmental Protection Agency, a blend of at least 20% ethanol, and E85; and 4) complies with all alternative fuel, biofuel, and flexible fuel requirements established by law. A qualified biodiesel retail blender pump must dispense varying blends of biodiesel and diesel fuels in the ratio selected by the purchaser, and comply with all alternative fuel, biofuel, and flexible fuel requirements established by law. This incentive is effective through November 30, 2010. (Reference Senate Bill 2228, 2009, and North Dakota Century Code 17-80)
Biofuels Loan Program
The Biofuels Partnership in Assisting Community Expansion ((PACE) Loan Program provides an interest buy down of 5% below the note rate to the following: biodiesel and ethanol production facilities; livestock operations feeding byproducts produced at a biodiesel or ethanol facility; and grain handling facilities which provide storage of grain used in biofuels production. Qualified ethanol and biodiesel production facilities must be located in North Dakota and ownership must consist of agricultural producers holding at least 10% of the ownership interest in the facility or residents of the state owning at least 50% of the facility. A biodiesel production facility may receive up to $500,000 of interest buy down and must produce biodegradable, combustible, liquid fuel that is derived from vegetable oil or animal fat and is suitable for blending with diesel fuel for use in internal combustion diesel engines. An ethanol production facility may receive up to $500,000 of interest buy down and must produce agriculturally-derived denatured ethanol that is suitable for blending with a petroleum product for use in internal combustion engines. Loan terms vary based on the project type, and recipients of Biofuels PACE loans are not eligible for regular PACE loans. (Reference North Dakota Century Code 17-03)
Biodiesel Blender Tax Credit
A licensed fuel supplier who blends biodiesel into diesel fuel is entitled to an income tax credit in the amount of $0.05 per gallon of biodiesel blended fuel comprised of at least 5% biodiesel. The biodiesel fuel must meet ASTM specifications. The tax credit may not exceed the taxpayer's liability for the taxable year and each year's unused credit amount may be carried forward for up to five taxable years. (Reference North Dakota Century Code 57-38-01.22)
Biodiesel Sales Equipment Tax Credit
A corporate income tax credit is available in the amount of 10% per year, for up to five years, of a qualified retailer's direct costs incurred to adapt or add equipment to a facility that enables a facility to sell diesel fuel containing at least 2% biodiesel by volume. Eligible direct costs must have been incurred after December 31, 2004, and a taxpayer is limited to $50,000 in the cumulative amount of credits for all taxable years. The biodiesel fuel must meet ASTM specifications. (Reference North Dakota Century Code 57-38-01.23)
Biodiesel Production and Blending Equipment Tax Credit
A corporate income tax credit is available in the amount of 10% per year, for up to five years, of a qualified producer or blender's direct costs incurred to add equipment to retrofit an existing facility or construct a new facility in the state for the purpose of producing or blending diesel fuel containing at least 2% biodiesel by volume. Eligible direct costs must have been incurred after December 31, 2002, and a taxpayer is limited to $250,000 in the cumulative amount of credits for all taxable years. The biodiesel fuel must meet ASTM specifications. (Reference North Dakota Century Code 57-38-30.6)
State Laws and Regulations
Authorization to Provide Advanced Biofuel Incentives
The North Dakota Industrial Commission is authorized to provide incentives to support research and development projects and obtain matching grants for projects involving advanced and sugar-based biofuel. Advanced biofuel is defined as fuel derived from renewable biomass and includes biofuel derived from cellulose, hemicellulose, or lignin; biofuel derived from sugar and starch other than ethanol derived from corn kernel starch; biofuel derived from waste material, including crop residue, other vegetative waste material, animal waste, food waste, and yard waste; diesel-equivalent fuel derived from renewable biomass, including vegetable oil and animal fat; biogas, including landfill gas and sewage waste treatment gas, produced through the conversion of organic matter from renewable biomass; butanol or other alcohols produced through the conversion of organic matter from renewable biomass; and other fuel derived from cellulosic biomass. (Reference Senate Bill 2129, 2009, and North Dakota Century Code 17-08)
Alternative Fuel Labeling Requirement
Alternative fuels must be labeled at the retail dispensing unit with the price, name, and main components of the alternative fuel or alternative fuel blend. The labeling must follow established labeling specifications for petroleum-based fuels. A producer of alternative fuels may provide a label promoting the benefits of the alternative fuel if the label meets the requirements specified. Alternative fuel is defined as a fuel used in an engine or vehicle other than a petroleum-based fuel. Alcohol fuel blends containing at least 1% of alcohol by volume must also be clearly labeled at the dispenser and on any price advertisements. (Reference North Dakota Century Code 19-10-03.1 and 19-10-03.3)
Alternative Fuel Tax Rates
A special excise tax rate of 2% is imposed on the sale of liquefied petroleum gas and a tax of $0.04 per gallon is imposed on all sales special fuels, including compressed natural gas. (Reference North Dakota Century Code 57-43.2-02 and 57-43.2-03)
Biodiesel Equipment Tax Exemption
Equipment sold to a facility that enables the facility to sell diesel fuel containing at least 2% biodiesel is exempt from sales tax. The biodiesel fuel must meet ASTM specifications. (Reference North Dakota Century Code 57-39.2-04)
Renewable Fuels Promotion
Recognizing that biofuels such as ethanol and biodiesel will be an important part of the state's energy economy and advanced research in biofuels production from biomass will be critical to the long-term viability of biofuels, the North Dakota Legislature adopts the goal that 25% of the nation's energy consumption will come from renewable sources by the year 2025. (Reference North Dakota Century Code 17-01-01)
