Michigan Incentives and Laws

Last Updated November 2008

Michigan is the home of the Ann Arbor (www.aacleancities.org), Detroit Area (www.nextenergy.org/services/collaborativeprograms/wg_cleancities.aspx), and Greater Lansing Area (www.michigancleancities.org) Clean Cities Coalitions. Coordinator contact information is listed in the Points of Contact section.

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)

Point of Contact

Tim Shireman
Department of Labor and Economic Growth
Michigan Energy Office
Phone (517) 241-6281
Fax (517) 241-6229
shiremant@michigan.gov
http://www.michigan.gov/dleg

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.

Hybrid Electric Vehicle Research and Development Tax Credit

For tax years beginning on or after January 1, 2008, and ending before January 1, 2016, a taxpayer engaged in research and development of a qualified hybrid system that has the primary purpose of propelling a motor vehicle may claim a tax credit under the Michigan Business Tax. This tax credit is equal to 3.9% of all wages, salaries, fees, bonuses, commissions, or other payments made in the taxable year on behalf of or for the benefit of employees for services performed in a qualified facility. The maximum amount of credit allowed for any one taxpayer is $2 million per tax year. (Reference Michigan Compiled Laws 208.1101-208.1601)

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)

Alternative Fuel Vehicle (AFV) Emissions Inspection Exemption

Dedicated AFVs powered by compressed natural gas, propane, electricity, or any other source as defined by rule promulgated by the Michigan Department of Transportation are exempt from emissions inspection requirements. (Reference Michigan Compiled Laws 324.6311 and 324.6512)

State Laws and Regulations

Hybrid Transit Vehicle Promotion

In an effort to promote best practices for public transportation services in Michigan, the Michigan Department of Transportation is directed to coordinate with the Michigan Economic Development Corporation to promote the transition of transit bus fleets to hybrid vehicles with improved fuel economy. (Reference House Bill 5808, 2008)

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)

Biodiesel Retail and Storage Requirements

All biodiesel and biodiesel blends sold in the state must meet state fuel quality requirements. A refiner, distributor, or retailer cannot transfer or dispense biodiesel or biodiesel blends unless the fuel is visibly free of undissolved water, sediments, and other suspended matter. Additionally, a biodiesel retailer is prohibited from selling biodiesel or biodiesel blends drawn from a storage tank that has more than two inches of water or water-alcohol at the bottom. Any retailer of biodiesel or biodiesel blends must obtain a license from the Michigan Department of Agriculture for each operating retail location. (Reference Michigan Compiled Laws 290.642-290.647)

Hydrogen Production and Retail Requirements

All hydrogen fuel produced and sold in the state must meet state fuel quality requirements. Any retailer offering hydrogen fuel for sale in the state must register with, and obtain approval from, the Michigan Department of Agriculture (MDA). A hydrogen retailer must also obtain a license from the MDA for each operating retail outlet. (Reference Michigan Compiled Laws 290.642-290.647)

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.

Point of Contact

Pamela Hurtt
Clean Cities Coordinator
Detroit Area Clean Cities Coalition/NextEnergy
Phone (313) 833-0100 x270
Fax (313) 833-0101
pamelah@nextenergy.org
http://www.nextenergy.org/services/collaborativeprograms/wg_cleancities.aspx

Points of Contact:

NAME/EMAIL/TITLE	AGENCY	PHONE/FAX
Sean Reed Clean Cities Coordinator/Executive Director	Ann Arbor Clean Cities Coalition/Clean Energy Coalition	Phone:(888) 818-0987 Fax:(734) 418-1681
Pamela Hurtt Clean Cities Coordinator	Detroit Area Clean Cities Coalition/NextEnergy	Phone:(313) 833-0100 x270 Fax:(313) 833-0101
Maggie Striz Calnin Program Coordinator	Greater Lansing Area Clean Cities Coalition	Phone:(517) 925-8649 x3 Fax:(517) 659-5999
Lisa Locke Coordinator	West Michigan Clean Cities Coalition (Not Yet Designated)	Phone:(616) 301-1059 Fax:(616) 301-1135
Brad Beauchamp Project Manager	U.S. Department of Energy, National Energy Technology Laboratory	Phone:(412) 386-7322 Fax:
Tim Shireman Department of Labor and Economic Growth	Michigan Energy Office	Phone:(517) 241-6281 Fax:(517) 241-6229
Pete Porciello Air Quality Specialist	Michigan Department of Transportation	Phone:(517) 335-2603 Fax:(517) 373-9255
Robert Rusch Environmental Quality Specialist, Strategic Development Unit	Michigan Department of Environmental Quality	Phone:(517) 373-7041 Fax:(517) 241-7499
Teresa Walker Senior Environmental Quality Analyst, Emissions Trading Programs	Michigan Department of Environmental Quality	Phone:(517) 335-2247 Fax:(517) 241-7499
Jody Pollok-Newsom Executive Director	Corn Marketing Program of Michigan & Michigan Corn Growers Association	Phone:(517) 668-2676 Fax:(517) 668-2670
Scott Benson Transportation Specialist, Great Lakes Region	U.S. General Services Administration	Phone:(312) 886-8682 Fax:(312) 886-0989