Biodiesel Laws and Incentives in North Carolina
The list below contains summaries of all North Carolina laws and incentives related to biodiesel.
State Incentives
Alternative Fuel Tax Exemption
The retail sale, use, storage, and consumption of alternative fuels is exempt from the state retail sales and use tax.
(Reference North Carolina General Statutes 105-164.13 and 105-449.130)
Alternative Fuel Vehicle (AFV), Idle Reduction Technologies, and Diesel Retrofits Funding
The Clean Fuel Advanced Technology (CFAT) project provides grant funding to reduce transportation-related emissions for areas in nonattainment with the National Ambient Air Quality Standards. A project that is adjacent to these areas may also be eligible for funding if the project will reduce emissions in eligible counties. For more information, including current requests for proposals, see the CFAT website.
Point of Contact
Rick Sapienza
Clean Transportation Program Manager
North Carolina Clean Energy Technology Center, North Carolina State University
Phone: (919) 515-2788
resapien@ncsu.edu
Alternative Fuel and Alternative Fuel Vehicle (AFV) Fund
The North Carolina State Energy Office administers the Energy Policy Act (EPAct) Credit Banking and Selling Program, which enables the state to generate funds from the sale of EPAct 1992 credits. The funds that EPAct credit sales generate are deposited into the Alternative Fuel Revolving Fund (Fund) for state agencies to offset the incremental costs of purchasing biodiesel blends of at least 20% (B20) or ethanol blends of at least 85% (E85), developing alternative fueling infrastructure, and purchasing AFVs and hybrid electric vehicles. Funds are distributed to state departments, institutions, and agencies in proportion to the number of EPAct credits generated by each. For the purposes of this program, alternative fuels include 100% biodiesel (B100), biodiesel blends of at least B20, ethanol blends of at least E85, compressed natural gas, propane, and electricity. The Fund also covers additional projects approved by the Energy Policy Council.
Biodiesel Tax Exemption
An individual who produces biodiesel for use in that individual’s private passenger vehicle is exempt from the state motor fuel excise tax. Additionally, biodiesel transferred between fuel processing facilities is exempt from state motor fuel excise tax, if the fuel is owned by the same licensed supplier.
(Reference North Carolina General Statutes 20-4.01 and 105-449.88(9) and Senate Bill 147, 2023)
Bond Exemption for Small Biofuels Suppliers
Fuel blenders or suppliers of ethanol or biodiesel are not required to file a bond with the North Carolina Department of Revenue when the expected motor fuel tax liability is less than $2,000.
(Reference North Carolina General Statutes 105-449.60 and 105-449.72)
Heavy-Duty Vehicle Emissions Reduction Funding
The North Carolina Department of Environmental Quality’s (DEQ) Diesel Bus and Vehicle Programs provide funding for heavy-duty on-road new diesel or alternative fuel vehicles or engine repowers and replacements, as well as off-road repowers and replacements. Both government and non-government entities that own and operate diesel fleets and equipment are eligible for funding. Vehicles and equipment that qualify for replacement or repower include:
- Class 4-8 school buses, shuttle buses, and transit buses;
- Class 4-8 local freight trucks, ferries, forklifts, and freight switchers; and
- Class 8 local freight trucks and port drayage trucks.
This program is funded by North Carolina’s portion of the Volkswagen Environmental Mitigation Trust. For more information, including funding availability, see the DEQ Diesel Bus and Vehicle Programs website.
Laws and Regulations
Alternative Fuel Use and Fuel-Efficient Vehicle Requirements
State-owned vehicle fleets must implement petroleum displacement plans to increase the use of alternative fuels and fuel-efficient vehicles. Reductions may be met by petroleum displaced through the use of biodiesel, ethanol, other alternative fuels, the use of hybrid electric vehicles, other fuel-efficient or low emission vehicles, or additional methods the North Carolina Division of Energy, Mineral and Land Resources approves.
(Reference Session Law 2013-265, Section 19.5(a)))
Alternative Fuel Vehicle (AFV) Acquisition Goal
North Carolina established a goal that at least 75% of new or replacement state government light-duty cars and trucks with a gross vehicle weight rating of 8,500 pounds or less must be AFVs or low emission vehicles.
(Reference North Carolina General Statutes 143-215.107C)
Biodiesel Requirement for School Buses
Every school bus capable of operating on diesel fuel must be capable of operating using blends of at least 20% biodiesel (B20). At least 2% of the total volume of fuel purchased annually by local school districts statewide for use in diesel school buses must be a minimum of B20, to the extent that biodiesel blends are available and compatible with the technology of the vehicles and the equipment used.
(Reference North Carolina General Statutes 115C-240(c),115C-249(a) and 143-58.4)
Biodiesel Warranty Requirement
All new state government diesel vehicles must have a manufacturer’s warranty that allows the use of biodiesel blends of 20% (B20) in the vehicle. This requirement does not apply if the North Carolina Department of Administration determines that there is no vehicle available that is suited for the intended use and that has a manufacturer’s warranty allowing the use of B20.
(Reference North Carolina General Statutes 20-351.11, 136-28.15, 143-58.4 and 143-341)
More Laws and Incentives
To find laws and incentives for other alternative fuels and advanced vehicles, search all laws and incentives.