Tennessee Natural Gas Laws and Incentives

State Incentives

Infrastructure Development Program

FastTrack Infrastructure Development Program funds may be used for alternative fueling infrastructure improvements. Funds may be used by private sector businesses to locate or expand fueling infrastructure in the state and to create or retain jobs for Tennesseans. Other restrictions may apply.

State Laws and Regulations

Energy Task Force

The Governor's Task Force on Energy Policy was established to develop a state energy plan to facilitate energy efficiency and the use of alternative and renewable fuels in the state. The energy plan will include the following: a summary of opportunities for the state government to use an energy-efficient approach in purchasing and managing the state vehicle fleet; prospective policies, legislation, and incentives to encourage energy efficiency; possible public-private partnerships to encourage research and development of clean energy technologies; and strategies for expanding the use of alternative and renewable fuels. (Reference Executive Order 54, 2008)

Alternative Fuel and Fuel-Efficient Vehicle Acquisition and Use Requirements

All state agencies, universities, and community colleges that have more than 10 state-owned vehicles in their fleet are required to incorporate alternative fuel, hybrid electric, or other fuel-efficient or low emission vehicles into their fleet in order to reduce or displace at least 20% of the fleet's consumption of petroleum by January 1, 2010. If the fleet includes vehicles modified for educational, emergency, or public safety purposes or vehicles used for emergency or law enforcement purposes, the fleet must provide for a minimum 10% petroleum use reduction.

Further, state fleets are encouraged to make every effort to ensure that at least 30% of newly purchased motor vehicles are energy-efficient vehicles. Energy-efficient vehicles are defined as passenger vehicles that are: alternative fuel vehicles as identified by the Energy Policy Act of 1992 including those using ethanol, biodiesel, or other alternative fuel; hybrid electric vehicles; or conventional gasoline vehicles achieving an average fuel economy of at least 25 miles per gallon. State agencies should strive to use ethanol and biodiesel in appropriate state-owned vehicles whenever possible and should support the development of biofuels fueling infrastructure. The Tennessee Commissioner of General Services is required to compile and maintain information on motor vehicles owned and leased by the state including a categorization of vehicles by an energy-efficiency rating.

(Reference Tennessee Code 4-3-1109, 4-22-101, and 4-22-102, and Executive Order 33, 2006)

Biofuels Strategy and Outreach Campaign

The Governor's Interagency Alternative Fuels Working Group, supported administratively by the Tennessee Department of Environment and Conservation, was established to develop a comprehensive state alternative fuels strategy to make Tennessee a leader in the production, distribution, and use of biofuels. The Working Group developed BioTENN, a comprehensive, statewide public education and outreach campaign to increase public awareness and understanding of alternative fuels, particularly biofuels. (Reference Executive Order 33, 2006)

Compressed Natural Gas (CNG) Tax and Permit

A use tax of $0.13 per gallon is imposed on CNG used for operating motor vehicles on public highways. For the purpose of determining the tax on CNG, a gallon equivalent factor of 5.66 pounds per gallon is used. Government agencies are exempt from this tax. A CNG vehicle user must apply for and obtain a CNG user's permit from the Tennessee Commissioner of Revenue. (Reference Tennessee Code 67-3-1113, and 67-3-1114)

Utilities/Private Incentives

Natural Gas Infrastructure Technical Assistance

Atmos Energy offers preliminary feasibility studies for compressed natural gas fueling stations and will assist with vendor selection on a case-by-case basis.