Virginia Laws and Incentives for Biodiesel

The list below contains summaries of all Virginia laws and incentives related to Biodiesel.

State Incentives

Agriculture and Forestry Biofuel Production Grants

The Agriculture and Forestry Industries Development Fund provides grants to promote and develop the agriculture and forestry industry in Virginia and create or expand value-added facilities, including qualified biofuel production facilities. Individual grants may not exceed $250,000 or 25% of qualified capital expenditures and are awarded at the governor's discretion. The grants are awarded to local governments and other Virginia political subdivisions working with qualified businesses. Terms and conditions apply, including the use of a minimum percentage of Virginia grown products, matching funds, and performance requirements. For more information, see the Virginia Department of Agriculture and Consumer Services website. (Reference Virginia Code 3.2-304)

Biofuel Feedstock Registration Exemption

Individuals that transport waste kitchen grease for conversion to biofuel are exempt from both the Virginia Department of Health registration and the associated annual application fee. This exemption only applies if the individual transports the waste kitchen grease in a container with a capacity of less than 275 gallons and possesses no more than 1,320 gallons of waste kitchen grease, biofuel feedstock derived from kitchen grease, or biofuel at any one time, excluding biofuel contained in vehicle fuel tanks. Other restrictions apply. For more information, see the Virginia Department of Agriculture and Consumer Services website. (Reference Virginia Code 3.2-5508 through 3.2-5516)

Clean Energy Manufacturing Grants

The Clean Energy Manufacturing Incentive Grant Program provides financial incentives to clean energy manufacturers, including biofuel producers. A producer is eligible for grant if it commences or expands operations in Virginia on or after July 1, 2011. Producers must make a capital investment greater than $50 million and create at least 200 full-time jobs that pay at least the prevailing wage. For more information, see the Virginia Department of Mines, Minerals and Energy website.

Alternative Fuel Tax Exemption

Alternative fuel is exempt from taxes if it is sold to a government entity for its exclusive use, sold to a non-profit charitable organization for the purpose of providing charitable services for low-income medical patients, or produced by an agricultural operator and used exclusively for farm use or vehicles of that operator. (Reference Virginia Code 58.1-2250)

Government Alternative Fuel Vehicle (AFV) Incentive

The Virginia Department of Mines, Minerals and Energy, in collaboration with the Virginia Department of Transportation, offers up to $10,000 to state agencies and local governments for the incremental cost of new or converted AFVs. To be eligible, vehicles must comply with Buy America provisions or qualify for a waiver from the Federal Highway Administration, and must be garaged in areas of air quality nonattainment, as recognized by the federal Congestion Mitigation and Air Quality Improvement (CMAQ) program. For more information, see the Virginia CMAQ Incentive Program website.

Point of Contact
Robin Jones
Virginia Department of Mines, Minerals, and Energy
Phone: 804-692-3224

Clean Transportation Technology Investment Funding

The Commonwealth Energy Fund (CEF), administered through the Center for Innovative Technology, provides early-stage investment funds for Virginia-based technology, life science, and clean technology companies. Eligible clean transportation technologies may include vehicles, components, batteries, and fuel cells, in addition to biofuels. For more information, see the CEF website.

Alternative Fuel Vehicle and Fueling Infrastructure Loans

The Virginia Board of Education may use funding from the Literary Fund to provide loans to school boards that convert school buses to operate on alternative fuels or construct alternative fueling stations. (Reference Virginia Code 22.1-146)

Green Jobs Tax Credit

Qualified employers are eligible for a $500 tax credit for each new green job created that offers a salary of at least $50,000, for up to 350 jobs per employer. The credit is allowed for the first five years that the job is continuously filled. For the purposes of this tax credit, a green job is defined as employment in industries relating to renewable or alternative energy, including hydrogen and fuel cell technology, landfill gas, and biofuels. The tax credit expires on January 1, 2018. For more information, see the Virginia Department of Taxation website. (Reference Virginia Code 58.1-439.12:05)

Biofuels Production Grants

The Biofuels Production Incentive Grant Program provides grants to producers of neat advanced biofuels, which include fuels derived from any cellulose, hemicellulose, or lignin from renewable biomass or algae, and producers of neat biofuels, which include biofuels derived from cereal grains. The grant for neat advanced biofuels or neat biofuels produced in the Commonwealth is $0.025 per gallon for 2016 through June 30, 2017.

To qualify, a producer must have begun selling neat biofuels on or after January 1, 2014. A qualified producer must produce a minimum of one million gallons of biofuels annually in the Commonwealth with feedstock originating in the United States. The Virginia Department of Mines, Minerals and Energy may not approve more than $1.5 million in grants for each fiscal year. This program is repealed effective July 1, 2017. Additional regulations apply. Funding is not currently available for this incentive (verified March 2017).

(Reference Virginia Code 45.1-393 and 45.1-394)

Biodiesel Production Tax Credit

Qualified biodiesel and green diesel producers are eligible for a tax credit of $0.01 per gallon of biodiesel or green diesel fuels produced. This credit is available for producers who generate up to two million gallons of biodiesel or green diesel fuel per year. The annual credit may not exceed $5,000, and producers are only eligible for the credit for the first three years of production. The Virginia Department of Mines, Minerals and Energy must certify qualified producers. For more information, see the Virginia Department of Taxation website. (Reference Virginia Code 58.1-439.12:02)

Laws and Regulations

Alternative Fuel Vehicle (AFV) Signs for School Buses

The Virginia Board of Education may provide for the display of signs or other markings on school buses using alternative fuels to identify the vehicle as an AFV and indicate the type of alternative fuel used. (Reference Virginia Code 46.2-1089.1)

Alternative Fuel and Vehicle Tax

Alternative fuels used to operate on-road vehicles are taxed at a rate of $0.162 per gasoline gallon equivalent (GGE). Alternative fuels are taxed at the same rate as gasoline and gasohol (5.1% of the statewide average wholesale price of a gallon of self-serve unleaded regular gasoline). Refer to the Virginia Department of Motor Vehicles (DMV) Fuels Tax Rates and Alternative Fuels Conversion website for fuel-specific GGE calculations. All-electric vehicles (EVs) registered in Virginia are subject to a $64.00 annual license tax at time of registration. For more information, see the Virginia DMV Electric Vehicles website. (Reference Virginia Code 58.1-2217 and 58.1-2249)

Alternative Fuel License

Alternative fuel providers, bulk users, and retailers, or any person who fuels an alternative fuel vehicle from a private source that does not pay the alternative fuels tax must obtain an alternative fuel license from the Virginia Department of Motor Vehicles (DMV). For more information, see the DMV Fuels Tax Licensing website. (Reference Virginia Code 58.1-2244)

State Energy Plan

The Virginia Energy Plan (Plan) assesses the commonwealth's primary energy sources and recommends actions to meet the following goals: make Virginia the energy capital of the East Coast by expanding traditional and alternative energy production, jobs, and investment, and increasing energy conservation and efficiency; expand public education about Virginia's energy production and consumption, its effect on the economy, and methods to increase energy efficiency; assess the impact of federal clean air standards; and maximize investment in clean energy research and development. The Plan includes policies to promote alternative fuel and efficient vehicle use, encourage efficient driving techniques, and reduce vehicle miles traveled. For more information, see the Virginia Energy Plan website. (Reference Virginia Code 67-101, 67-102, 67-500, 67-501, 67-800, 67-801)

Biodiesel and Green Diesel Fuel Use Requirement

Commonwealth agencies and institutions must procure only diesel fuel containing at least 2% biodiesel (B2) or green diesel fuel for use in on-road diesel internal combustion engines; this requirement does not apply if supply is not readily available or the cost of the fuel exceeds the cost of conventional diesel by 5% or more. The Virginia Department of General Services must establish conditions under which commonwealth agencies and institutions may procure these blended fuels, taking into consideration the availability of the fuel and cost of biodiesel compared to diesel fuel. (Reference Executive Order 19, 2010, and Virginia Code 45.1-394)

Alternative Fuel Vehicle (AFV) Conversion Fund

The AFV Conversion Fund (Fund) was created to assist commonwealth agencies, local government, and local school divisions with the incremental cost of commonwealth and local government owned AFVs, both original equipment manufacturer vehicles and aftermarket conversions. Funding may be used in conjunction with or as matching funds for any eligible federal grants for the same purpose. The Virginia Department of General Services and the Department of Mines, Minerals and Energy established guidelines for contributions and reimbursements from the Fund for the purchase or conversion of commonwealth-owned vehicles. The Fund will include appropriations from the Virginia General Assembly as well as donations, grants, in-kind contributions, and other funding. For more information, see the Virginia Department of General Services website. (Reference Virginia Code 2.2-1176.1)

Biofuels and Green Diesel Definitions

Advanced biofuels are defined as fuels derived from any cellulose, hemicellulose, or lignin from renewable biomass or algae. Biofuels are defined as neat biodiesel, green diesel, or ethanol fuels that are not blended with a conventional fuel such as gasoline or diesel. Biodiesel is defined as a fuel composed of mono-alkyl esters of long-chain fatty acids derived from vegetable oils or animal fats that is designated B100 and meets the requirements of ASTM D6751. Green diesel is a fuel produced from non-fossil renewable resources, including agricultural or silvicultural plants; animal fats; residue and waste generated from the production, processing, and marketing of agricultural products, silvicultural products; and other renewable resources; that meets applicable ASTM specifications. Ethanol is defined as denatured alcohol fuel that is derived from agricultural products or other renewable resources and meets applicable ASTM standards. (Reference Virginia Code 45.1-394 and 58.1-439.12:02)


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