Kentucky Incentives and Laws

Last Updated April 2009

Kentucky is the home of the Commonwealth Clean Cities Partnership (www.kentuckycleanfuels.org). Coordinator contact information is listed in the Points of Contact section.

State Incentives

Biodiesel Production and Blending Tax Credit

Qualified biodiesel producers or blenders are eligible for an income tax credit of $1.00 per gallon of pure biodiesel (B100) produced or $1.00 per gallon of biodiesel used in the blending process; re-blending of blended biodiesel does not qualify. The total amount of credit for all biodiesel producers may not exceed the annual biodiesel tax credit cap of $10 million. Unused credits may not be carried forward and applied to a future tax return. For the purpose of this credit, biodiesel must meet ASTM specification D6751. (Reference Kentucky Revised Statutes 141.422 to 141.424)

Ethanol Production Tax Credit

Qualified ethanol producers are eligible for an income tax credit of $1.00 per gallon of corn- or cellulosic-based ethanol that meets ASTM standard D4806. The total credit amount for all corn and cellulosic ethanol producers is $5 million for each taxable year. Unused credits may not be carried forward and applied to a future tax return. However, unused ethanol credits from one ethanol-based cap, such as corn, may be applied to another ethanol-based cap, such as cellulosic, in the same taxable year. (Reference Kentucky Revised Statutes 141.4244 to 141.4248)

Alternative Fuel Production Tax Incentives

The Kentucky Economic Development and Finance Authority (KEDFA) provides tax incentives to construct, retrofit, or upgrade an alternative fuel production or gasification facility that uses coal or biomass as a feedstock. The incentives may consist of: 1) a refund of up to 100% of the state sales tax paid on the purchase of personal property used to construct the facility; 2) a credit of up to 100% of an approved company's state income tax and limited liability entity tax that is generated by the project; 3) up to 4% of the wage assessment of employees whose jobs were created as a result of the construction, retrofit, upgrade or operation of a qualified facility; and 4) a credit for up to 80% of the coal severance tax paid for coal used as a feedstock. The incentives expire at the time of receipt of the authorized incentives or 25 years from activation of the project, whichever occurs first. Approved companies may recover up to 50% of their capital investment via the authorized tax incentives. The minimum capital investment for incentive eligibility is $25 million for an alternative fuel or gasification facility that uses biomass as the primary feedstock and $100 million for a facility that uses coal as the primary feedstock. (Reference Kentucky Revised Statutes 154.27-010 to 154.27-090)

Point of Contact

Don Goodin
Kentucky Economic Development Finance Authority
Phone (502) 564-4554
Fax (502) 564-7697
don.goodin@ky.gov
http://www.thinkkentucky.com/

Alternative Fuel Research, Development, and Promotion

The Kentucky New Energy Ventures (KNEV) program, established by the Kentucky Alternative Fuel and Renewable Energy Fund Program, provides project funding to companies for research, development, and commercialization of alternative fuels and renewable energy. Specifically, KNEV is designed to: 1) grow Kentucky-based alternative fuel and renewable energy companies to promote commonwealth-wide, innovation-driven economic growth; 2) stimulate private investment in Kentucky-based alternative fuel and renewable energy enterprises; 3) expand the alternative fuel and renewable energy knowledge base, talent force, and industry in Kentucky; 4) develop an alternative fuel and renewable energy resource network to build the technical and business capacity of entrepreneurs through informal and formal strategic support; and 5) build commonwealth-wide awareness of the economic development opportunities offered by Kentucky's alternative fuel and renewable energy industry. (Reference Kentucky Revised Statutes 154.20-410 and 154.20-415)

Alternative Fuel and Vehicle Promotion

The Kentucky Department for Energy Development and Independence (Department) encourages the responsible use of transportation fuels by supporting academic research, public education, and collaborative partnerships involving alternative fuels and alternative fuel vehicles (AFVs). The Department has implemented a number of projects to promote the use of AFVs and establish alternative fuel infrastructure in Kentucky.

Point of Contact

Frank Moore
Kentucky Department for Energy Development and Independence
Phone (502) 564-6743 x342
Fax (502) 564-7406
frank.moore@ky.gov
http://www.energy.ky.gov/dre3/efficiency/transportation.htm

Point of Contact

Jesse Mayes
Transportation Engineering Specialist for Air Quality
Kentucky Transportation Cabinet
Phone (502) 564-7183
Fax (502) 564-2865
jesse.mayes@ky.gov

State Laws and Regulations

Vehicle Acquisition Priorities and Alternative Fuel Use Requirement

The Finance and Administration Cabinet (Cabinet) is required to develop a strategy to replace at least 50% of commonwealth motor fleet light-duty vehicles with energy-efficient vehicles including hybrid electric vehicles, fuel cell vehicles, and alternative fuel vehicles. The Cabinet must also develop a strategy to increase the use of ethanol, biodiesel, and other alternative fuels in commonwealth motor vehicle fleets. The Cabinet must report targeted vehicle and fuel usage amounts annually. (Reference Kentucky Revised Statutes 45A.625)

State Energy Plan Alternative Fuel Requirements

The Governor's Office of Energy Policy oversees the development and implementation of Kentucky's comprehensive energy strategy. Specifically, the Governor's Office of Energy Policy is directed to develop and implement a strategy for the production of alternative transportation fuels and synthetic natural gas from fossil energy resources and biomass resources, including biodiesel and ethanol. The commonwealth energy plan, Intelligent Energy Choices for Kentucky's Future, was developed in 2008 and proposes seven strategies to support a renewable and efficiency portfolio standard, an alternative transportation fuel standard, and fuel production goals. (Reference Kentucky Revised Statutes 152.720 and Intelligent Energy Choices for Kentucky's Future (PDF 2.39 MB)) Download Adobe Reader

Biofuels Use

The Kentucky Transportation Cabinet and the Finance and Administration Cabinet are directed to establish procurement contracts that maximize the market availability of ethanol and biodiesel fuel blends. Additionally, employees using conventional vehicles in the Transportation Cabinet's fleet are directed to use either a 10% blend of ethanol (E10) or a 2% blend of biodiesel (B2) as their primary fueling option, and the Transportation Cabinet is directed to maximize the use of E85 in its flexible fuel vehicle fleet. The Transportation Cabinet is directed to promote clean fuels through employee education, vendor identification, and by holding employees accountable for electing to use clean fuels in commonwealth vehicles. (PDF 108 KB)) Download Adobe Reader

Natural Gas Deregulation

The rates, terms, and conditions of service for the sale of natural gas to a compressed natural gas fueling station, retailer, or to any end-user for use as a motor vehicle fuel are exempt from regulation by the Kentucky Public Service Commission. (Reference Kentucky Revised Statutes 278.508)

Liquefied Petroleum Gas (LPG) Excise Tax Exemption

LPG is exempt from the state excise tax when it is used to operate motor vehicles on public highways, given that those vehicles are equipped with carburetion systems approved by the Kentucky Natural Resources and Environmental Protection Cabinet. (Reference Kentucky Revised Statutes 234.321)

Low-Speed Electric Vehicle Access to Roadways

The Secretary of the Kentucky Transportation Cabinet was directed to develop and implement standards authorizing the use of low-speed electric vehicles on Kentucky's highways. As a result, an alternative electric vehicle, including one with three wheels and an enclosed compartment or cab, is considered a motor vehicle and must be titled and registered as such. An alternative electric vehicle must meet safety standards specified in Title 49 of the Code of Federal Regulations, section 571.500. An alternative electric vehicle may operate on roads with posted speed limits of up to 45 mph, provided the vehicle has not been modified to increase its speed above the original standard manufactured limit. Golf cars and all-terrain vehicles are not considered alternative electric vehicles. (Reference House Bill 21, 2009, Executive Order 2008-824 (PDF 146KB), 2008, Kentucky Transportation Cabinet Administrative Order, and Kentucky Revised Statutes 186.400 to 186.640) Download Adobe Reader

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.

Point of Contact

Walter C. Miller
Energy Services Consultant
Atmos Energy
Phone (817) 303-2903
Fax (817) 303-2929
walter.c.miller@atmosenergy.com

Points of Contact:

NAME/EMAIL/TITLE	AGENCY	PHONE/FAX
Melissa Howell Clean Cities Coordinator	Commonwealth Clean Cities Partnership	Phone:(502) 452-9152 Fax:(502) 452-9152
Steven Richardson Project Manager	U.S. Department of Energy, National Energy Technology Laboratory	Phone:(304) 285-4185 Fax:(304) 285-4777
Frank Moore	Kentucky Department for Energy Development and Independence	Phone:(502) 564-6743 x342 Fax:(502) 564-7406
Jesse Mayes Transportation Engineering Specialist for Air Quality	Kentucky Transportation Cabinet	Phone:(502) 564-7183 Fax:(502) 564-2865
Don Goodin	Kentucky Economic Development Finance Authority	Phone:(502) 564-4554 Fax:(502) 564-7697
John T. (Tom) Underwood Executive Director	Kentucky Propane Education and Research Council	Phone:(502) 223-5322 Fax:(502) 223-4937
Lynn Soporowski Transportation Engineer Branch Manager	Kentucky Transportation Cabinet	Phone:(502) 564-7183 Fax:(502) 564-2865
Walter C. Miller Energy Services Consultant	Atmos Energy	Phone:(817) 303-2903 Fax:(817) 303-2929
Dale Aspy Environmental Engineer, Region 4	U.S. Environmental Protection Agency	Phone:(404) 562-9041 Fax:(404) 562-9019