Virginia Laws and Incentives for Ethanol

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

State Incentives

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)

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)

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)

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)

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)

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

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)

Ethanol Production Equipment Tax Exemption

A county, city, or town may exempt, partially exempt, or set a lower tax rate for qualified equipment used by farmers or farm cooperatives to produce ethanol, provided that the ethanol feedstock consists primarily of farm products. (Reference Virginia Code 58.1-3505)

Laws and Regulations

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 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)

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)


More Laws and Incentives

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