Colorado Laws and Incentives for Natural Gas

The list below contains summaries of all Colorado laws and incentives related to Natural Gas.

State Incentives

Alternative Fuel, Advanced Vehicle, and Idle Reduction Technology Tax Credit

The Colorado Department of Revenue offers the Innovative Motor Vehicle Credit for a vehicle titled and registered in Colorado that uses or is converted to use an alternative fuel, is a hybrid electric vehicle (HEV), is a plug-in hybrid electric vehicle (PHEV), or has its power source replaced with one that uses an alternative fuel. Electric vehicles (EVs) and PHEVs must have a maximum speed of at least 55 miles per hour. Qualified idle reduction technologies are also eligible for the tax credit. Credits for vehicles purchased or converted January 1, 2012, through December 31, 2021, are based on defined vehicle and technology categories as listed below. Credit amounts vary for each category and tax year with percentages applying to incremental cost for alternative fuel vehicle (AFV) purchases and power source replacements and actual cost for conversions and idle reduction technologies.

Category20132014-2018201920202021
1 - Original equipment manufacturer (OEM) light-duty EV or PHEVSee belowSee belowSee belowSee belowSee below
1A - Conversion of a light-duty motor vehicle to a EV or PHEV75%75%56.25%37.5%18.75%
2 - Light-duty diesel-electric hybrid passenger vehicle with a minimum fuel economy of 70 miles per gallon (mpg)25%15%11.25%7.5%3.75%
3 - Light-duty passenger vehicle, light-duty truck, or medium-duty diesel-electric truck conversion that increases original fuel economy by at least 40%35%25%18.75%12.5%6.52%
4 - Dedicated or bi-fuel OEM light-duty passenger vehicle, light-duty truck, or medium-duty truck powered by compressed natural gas (CNG) or liquefied petroleum gas (LPG or propane)10.5%12.25% (2014-2016); 10.5% (2016-2018)7.875%5.25%2.625%
4A - Dedicated or bi-fuel light-duty passenger vehicle, light-duty truck, or medium-duty truck converted to use CNG or propane35%25%18.75%12.5%6.25%
5 - Idle reduction technologies25%25%18.75%12.5%6.25%

Credits for EVs and PHEVs in Category 1 are equal to the actual cost incurred to purchase or lease the vehicle, multiplied by the battery capacity, and divided by 100. That amount must be multiplied by a factor to determine the credit amount, as follows: 1.0 for 2013-2018, 0.75 for 2019, 0.50 for 2020, and 0.25 for 2021.

The credit is capped at $6,000 for the following: OEM or converted AFVs, HEVs, PHEVs, idle reduction technologies, and power source replacements. The credit for PHEV conversions is capped at $7,500 until January 1, 2014, and $6,000 thereafter. A person who claimed a tax credit in previous years for the purchase or lease of Model Year 2004 and newer HEV may claim an additional credit for the conversion of the same vehicle to a PHEV. The purchase of a used vehicle may qualify if the vehicle was not previously registered in Colorado. Credits may not be carried forward and a taxpayer will receive a refund for the excess credit.

Credits for CNG, electric, and plug-in hybrid electric vehicles purchased, leased, or converted during the 2013 tax year may be determined in one of two different ways. For more information, see the Department of Revenue's Income 67 FYI publication.

(Reference House Bill 13-1247, 2013 and Colorado Revised Statutes 39-22-516.5 and 39-22-516.7)

Point of Contact
Kurt Bloomer
Tax Examiner III
Colorado Department of Revenue
Phone: (303) 205-8211 x6871
Fax: (303) 866-3050
kurt.bloomer@state.co.us

Low Emission Vehicle (LEV) Sales Tax Exemption

Vehicles, vehicle power sources, or parts used for converting a vehicle power source to reduce emissions are exempt from state sales tax. This exemption applies to vehicles that are certified to federal LEV standards and have a gross vehicle weight rating of over 10,000 pounds. The vehicle power source includes the engine or motor and associated wiring, fuel lines, engine coolant system, fuel storage containers, and other components. (Reference Colorado Revised Statutes 39-26-719)

Alternative Fuel Vehicle (AFV) Weight Limit Exemption

Gross vehicle weight rating limits for AFVs are 1,000 pounds greater than those for comparable conventional vehicles, as long as the AFVs operate using an alternative fuel or both alternative and conventional fuel, when operating on a highway that is not part of the interstate system. (Reference Colorado Revised Statutes 25-7-106.8 and 42-4-508)

Natural Gas Fueling Station Air Quality Permit Exemption

The Colorado Department of Public Health & Environment, Air Quality Control Commission, has determined that natural gas fueling stations are exempt from the requirement to file Air Pollutant Emission Notices. (Reference Colorado Air Quality Control Commission Regulations Number 3, Part A, Section II.D.1.hhh)

Laws and Regulations

Alternative Fuel and Advanced Vehicle Tax

Excise taxes are imposed on compressed natural gas (CNG), liquefied natural gas (LNG), and liquefied petroleum gas (LPG) effective January 1, 2014, on a per gallon basis as follows:

201420152016201720182019 & Beyond
CNG$0.03$0.06$0.09$0.12$0.15$0.183
LNG$0.03$0.05$0.07$0.08$0.10$0.12
LPG$0.03$0.05$0.07$0.09$0.11$0.135

Beginning January 1, 2014, plug-in electric vehicle (PHEV) owners must pay an annual registration fee of $50. After paying the fee, the vehicle owner must affix the PHEV registration decal to the front windshield of the vehicle. Fees contribute to the Highway Users Tax Fund and the Electric Vehicle Grant Fund.

(Reference House Bill 13-1110, 2013 and Colorado Revised Statutes 39-27-102 and 42-3-304)

Alternative Fuel Resale and Generation Regulations

A corporation or individual that resells alternative fuel supplied by a public utility for use in an alternative fuel vehicle (AFV) is not subject to regulation as a public utility. Additionally, a corporation or individual that owns, controls, operates, or manages a facility that generates electricity exclusively for use in AFV charging or fueling facilities is not subject to regulation as a public utility provided that the electricity is generated on the property where the charging or fueling facilities are located and the electricity is generated from a renewable resource. For the purposes of this definition, alternative fuel is defined as propane, liquefied natural gas, compressed natural gas, or electricity. (Reference Colorado Revised Statutes 40-1-101-104)

Alternative Fuel Vehicle (AFV) Registration

Upon registering a motor vehicle with the Colorado Department of Revenue Division of Motor Vehicles, the vehicle owner must report the type of alternative fuel used to operate the vehicle and whether the vehicle is dedicated to one alternative fuel or uses more than one fuel. The Department of Revenue provides forms for the purpose of registering motor vehicles and must include space for the following fuel types: gasoline, diesel, propane, electricity, natural gas, methanol/M85, ethanol/E85, biodiesel, and other. For more information, please see the Colorado Department of Revenue Division of Motor Vehicles page. (Reference Colorado Revised Statutes 42-3-113)

State Agency Alternative Fuel Use and Vehicle Acquisition Requirement

The Colorado Department of Personnel and Administration (DPA) requires all state-owned diesel vehicles and equipment to be fueled with a fuel blend of 20% biodiesel (B20), subject to the availability of the fuel and so long as the price differential is not greater than $0.10 more per gallon as compared to conventional diesel. Biodiesel is defined as fuel composed of mono-alkyl esters of long chain fatty acids derived from plant or animal matter that meets ASTM specifications and is produced in Colorado.

Additionally, DPA has adopted a policy to increase the use of alternative fuels and establish objectives to increase its use for each succeeding year. DPA must purchase motor vehicles that operate on compressed natural gas (CNG), plug-in hybrid electric vehicles, or vehicles that operate on other alternative fuels, subject to the availability of vehicles and adequate fueling infrastructure and assuming the incremental base or life cycle cost of the vehicle is not more than 10% over the cost of a comparable dedicated conventional vehicle. DPA may adopt a policy to allow some vehicles to be exempt from this requirement.

Beginning in 2013, on or before November 1 of each year, DPA must submit a report to the general assembly outlining vehicle purchases, including alternative fuel and conventional vehicles; alternative fueling infrastructure availability in the state; alternative fuel vehicle (AFV) purchase exemptions; administrative policies in place to facilitate the purchase of AFVs; suggested changes to facilitate the gradual conversion of the motor vehicle fleet to AFVs; and a plan for the necessary infrastructure development.

In addition, each state agency must develop a plan to improve commuting options for its employees. The plans should evaluate opportunities including plug-in electric vehicle charging.

(Reference Senate Bill 13-070, 2013; Executive Order D0012 07, 2007; and Colorado Revised Statutes 24-30-1104)

Point of Contact
Art Hale
Colorado State Fleet Manager
Colorado Department of Personnel and Administration, Division of Central Services
Phone: (303) 866-5531
Fax: (303) 866-5511
art.hale@state.co.us

Alternative Fuel Definition

Alternative fuel is defined as compressed natural gas, propane, ethanol, or any mixture containing 85% or more ethanol (E85) with gasoline or other fuels, electricity, or any other fuels, which may include, but are not limited to, clean diesel and reformulated gasoline, so long as the Colorado Air Quality Control Commission determines that these other fuels result in comparable reductions in carbon monoxide emissions and brown cloud pollutants. Alternative fuel does not include any fuel product that contains or is treated with methyl tertiary butyl ether (MTBE). (Reference Colorado Revised Statutes 25-7-106.8)

Gasoline Gallon Equivalent (GGE) Definition

The term GGE is defined to equate the energy content of any motor fuel, including alternative fuels, to that of a gallon of gasoline. Any dispenser used for the sale of motor fuel in GGEs must display GGEs as the primary display information provided. (Reference Colorado Revised Statutes 8-20-232.5)