Minnesota Laws and Incentives

Listed below are the summaries of all current Minnesota laws, incentives, regulations, funding opportunities, and other initiatives related to alternative fuels and vehicles, advanced technologies, or air quality. You can go directly to summaries of:

State Incentives

Cellulosic Ethanol Investment Tax Credit

A tax credit is available for investments in a qualified small business that uses or is involved in the research or development of a proprietary technology related to cellulosic ethanol. The tax credit is equal to 25% of the qualified investment, up to $250,000 annually. The credit is available for an investment of up to $1 million over the life of a qualified small business. Eligible small businesses must receive state certification and meet other requirements, such as being headquartered in Minnesota. The tax credit expires December 31, 2017. (Reference Minnesota Statutes 116J.8737)

Ethanol Fueling Infrastructure Grants

The Minnesota Department of Agriculture offer funding assistance to fuel retailers for the installation of equipment to dispense ethanol fuel blends ranging from E15 through E85. Grant amounts are based on the extent to which the installation meets project priorities. For more information, refer to the Clean Air Choice Minnesota Biofuel Infrastructure Project website. (Reference Minnesota Statutes 41A.12)

Point of Contact
Jon Hunter
Director
American Lung Association in Minnesota
Phone: (651) 268-7601
Fax: (651) 227-5459
jon.hunter@lung.org
http://www.cleanairchoice.org/cities

Biofuel Production Grant Program

The Minnesota Department of Agriculture provides grants to biofuel producers for up to $2.1053 per million British Thermal Unit (MMbtu) for advanced biofuel produced from cellulosic biomass and $1.053 per MMbtu for advanced biofuel produced from sugar- or starch-based crops. Eligible facilities must obtain 80% of their feedstocks from Minnesota; begin production by June 30, 2025; and not produce more than 23,750 MMbtu of biofuel quarterly before July 1, 2015. Additional requirements apply. Payments will not be made for production that occurs after June 30, 2035. For more information, see the Advanced Biofuels Production Incentive Program website. (Reference Minnesota Statutes 41A.16 and 239.051)

Ethanol Production Facility Environmental Assessment Exemption

An ethanol production facility that produces less than 125 million gallons of ethanol annually and is located outside of the seven-county metropolitan area is exempt from preparing an environmental impact statement. In addition, an environmental assessment worksheet is not required for the expansion of an ethanol or biobutanol production facility or for the conversion of an ethanol facility to produce biobutanol. Exceptions may apply. (Reference Minnesota Statutes 41A.09 and 116D.04)

Idle Reduction Technology Loan Program

The Minnesota Pollution Control Agency's Small Business Environmental Assistance Program provides low-interest loans up to $50,000 to qualified small businesses to finance environmental projects such as capital equipment upgrades that meet or exceed environmental regulations, including idle reduction technologies. For more information, see the Small Business Environmental Loan Program website.

Idle Reduction Weight Exemption

A motor vehicle equipped with idle reduction or emissions reduction technology may exceed the maximum gross vehicle weight and axle weight limits by up to 550 pounds to compensate for the additional weight of the technology. The vehicle operator must provide documentation that the qualified equipment is installed on the vehicle. (Reference Minnesota Statutes 169.824)

Natural Gas Vehicle Weight Exemption

A vehicle powered by natural gas may exceed the state's gross vehicle and axle weight limits by the amount of weight calculated as provided under U.S. Code of Federal Regulations Title 23, section 127(s), not to exceed 2,000 pounds. The vehicle operator must provide documentation or demonstrate that the vehicle meets these requirements. (Reference Minnesota Statutes 169.824)

Utility/Private Incentives

Electric Vehicle Supply Equipment (EVSE) Rebate - Dakota Electric Association

Dakota Electric offers a rebate of up to $500 to residential customers toward the installation of a qualified Level 1 or Level 2 EVSE. EVSE must be controlled on an off-peak rate and must be installed within Dakota Electric's service area. For more information, including application requirements, see the Dakota Electric Rebates website.

Plug-In Electric Vehicle (PEV) Charging Rate Reduction - Dakota Electric Association

Dakota Electric members enrolled in the ChargeWise program receive a reduced rate for the electricity used to charge PEVs between specified off-peak hours. Installation of a ChargeWise circuit is required. For more information, visit the Dakota Electric ChargeWise website.

Electric Vehicle Supply Equipment (EVSE) Rebate - Connexus Energy

Connexus Energy offers a $500 rebate to residential customers towards the installation of a qualified Level 2 EVSE. Eligible applicants must enroll in a time-of-use rate. Customers must submit applications by December 31, 2017. For more information, see Conexus Energy's Electric Vehicle page.

Plug-In Electric Vehicle (PEV) Charging Rate Incentive - Connexus Energy

Connexus Energy offers reduced electric rates to residential customers in their service territory who charge PEVs. To participate, customers may contact their own electrician or Connexus Energy's electrician to install the metering equipment. The meter must be permitted and inspected. For more information, see Conexus Energy's Electric Vehicle page.

Laws and Regulations

All-Electric Vehicle (EV) Fee

Effective January 1, 2018, EVs are subject to an additional registration fee of $75. (Reference House File 3, 2017, and Minnesota Statutes 168.013).

Alternative Fuel Resale Regulation

An individual, corporation, or other legal entity that resells compressed natural gas as a vehicular fuel or electricity to recharge a battery that powers an electric vehicle is not defined as a public utility. (Reference Minnesota Statutes 216B.02)

Alternative Fuel Tax

The Minnesota Department of Revenue imposes an excise tax on the first licensed distributor that receives E85 fuel products in the state and on distributors, special fuel dealers, or bulk purchasers of other alternative fuels. E85 is taxed at the pump at a rate of $0.2025 per gallon, pure biodiesel (B100) is taxed at $0.285 per gallon, propane is taxed at $0.2135 per gallon, liquefied natural gas is taxed at $0.171 per gallon, and compressed natural gas is taxed at the rate of $2.50 per thousand cubic feet. Gasoline is taxed at the rate of $0.285 per gallon. Exemptions apply. Fuel excise tax rates are updated July 1 of each year and are posted on the Minnesota Fuel Excise Tax Rates and Fees website. (Reference Minnesota Statutes 296A.07 and 296A.08)

Authorization for Biofuel Incentive

The Agricultural Growth, Research, and Innovation Program may offer grants, loans, or other financial incentives to alternative fuel retailers for the installation of ethanol blender pumps or other rural economic infrastructure activities, or to producers of transportation fuels from cellulosic material or bio-based products. The program will remain in effective through June 30, 2025, with funding subject to legislative appropriation. (Reference Minnesota Statutes 41A.12)

Biodiesel Blend Mandate

During the months of April through September, diesel fuel sold in the state must be at least B10, increasing to 20% biodiesel (B20) on May 1, 2018. Diesel fuel sold during the remainder of the year must contain at least 5% biodiesel (B5).

The Minnesota Department of Agriculture, Department of Commerce, and the Pollution Control Agency, in consultation with the Biodiesel Task Force and other technical experts, must submit annual reports regarding the implementation of minimum biodiesel content requirements, including information about the price and supply of biodiesel fuel.

(Reference Minnesota Statutes 239.75 and 239.77)

Biodiesel Definition

Biodiesel is defined as a renewable, biodegradable, mono alkyl ester combustible liquid fuel that is derived from agricultural plant oils or animal fats and meets ASTM specification D6751-11b for pure biodiesel (B100). A biodiesel blend is a blend of diesel fuel and biodiesel fuel (between 6% and 20%) for on-road and off-road diesel vehicle use. Biodiesel blends must comply with ASTM specification D7467-10. Biodiesel produced from palm oil is not considered biodiesel fuel unless the palm oil is waste oil or grease collected from within the United States or Canada. (Reference Minnesota Statutes 239.761 and 239.77)

Biofuel Blend Mandate

All gasoline sold or offered for sale in Minnesota must contain at least:

  • 10% corn-based ethanol by volume or the maximum percent by volume of corn-based ethanol authorized in a waiver issued by the U.S. Environmental Protection Agency (EPA), whichever is greater; or
  • 10% other biofuel authorized in an EPA waiver by volume, or a biofuel formulation registered by EPA under Title 42 of the U.S. Code of Federal Regulations, section 7545.
Biofuel is defined as renewable fuel with an approved fuel pathway under the Energy Policy Act of 2005, as amended under the Energy Independence and Security Act of 2007.

Any biofuel may be used to meet the standards above, but corn-based ethanol may not comprise more than the following percentages of the total biofuel use in the state by the date specified:

DateMaximum Amount of Corn-Based Ethanol
January 1, 201770%
January 1, 202060%
January 1, 2025No Minimum

(Reference Minnesota Statutes 239.761 and 239.791)

Minnesota Biofuels Replacement Goals

The Minnesota Department of Weights and Measures promotes the replacement of petroleum used in the state with the goal that biofuels will account for at least the specified percentage of all gasoline offered for sale by the dates below:

Calendar YearBiofuel Replacement Schedule
201718%
202025%
202530%

(Reference Minnesota Statutes 239.7911)

E85 Definition

E85 is defined as a blend of ethanol and gasoline that contains no more than 85% ethanol and is produced for use in alternative fuel vehicles. E85 must comply with ASTM specification D5798-11. (Reference Minnesota Statutes 239.761)

Electric Vehicle Supply Equipment (EVSE) Requirements

EVSE installed in Minnesota must: 1) be able to be used by any make, model, or type of plug-in electric vehicle; 2) comply with state safety standards and standards set by the Society of Automotive Engineers; and 3) be capable of bi-directional charging once electrical utilities achieve a cost-effective ability to draw electricity from plug-in electric vehicles connected to the utility grid. These requirements may not apply if the installations require significant upgrades. (Reference Minnesota Statutes 325F.185 and 326B.35)

Ethanol Fuel Blend Dispensing Regulations

Gasoline blended for use in an alternative fuel vehicle (AFV) may contain any percentage of agriculturally derived, denatured ethanol, up to and including 85% (E85). Ethanol and gasoline blended at the point of retail sale in an ethanol-blending fuel dispenser must be clearly labeled "FLEX-FUEL VEHICLES ONLY." If a retailer sells both ethanol blends for use in AFVs as well as ethanol blends for use in standard combustion engines, the ethanol blends for use in a standard combustion engine must be dispensed from dedicated hoses, nozzles, or other equipment, and clearly labeled for use in conventional vehicles. Retailers are not responsible for customers' self-service fueling actions as long as they meet these requirements. (Reference Minnesota Statutes 239.761 and 296A.01)

Medium-Speed Electric Vehicle (EV) Access to Roadways

A medium-speed EV is defined as a four-wheeled motor vehicle powered by electricity that is equipped with a roll cage or a crushproof body design and is capable of achieving a maximum speed of 35 miles per hour (mph) on a paved, level surface. Except with respect to maximum speed, a medium-speed EV must meet or exceed regulations in Title 49 of the U.S. Code of Federal Regulations, section 571.500, and successor requirements. A medium-speed EV may not operate on a roadway with a speed limit greater than 35 mph, except to cross that roadway. A road authority may prohibit or further restrict the operation of medium-speed EVs on any street or highway under the road authority's jurisdiction. (Reference Minnesota Statutes 169.011 and 169.224)

Neighborhood Electric Vehicle (NEV) Access to Roadways

An NEV is an electric vehicle that has three or four wheels and is capable of achieving speeds between 20 miles per hours (mph) and 25 mph on a paved level surface. An NEV must be titled according to state law and may be operated on public streets and highways if it meets all equipment and vehicle safety requirements in Title 49 of the U.S. Code of Federal Regulations, section 571.500, and successor requirements. An NEV may not operate on a roadway with a speed limit greater than 35 mph, except to cross that roadway. A road authority may prohibit or further restrict the operation of NEVs on any street or highway under the road authority's jurisdiction. (Reference House File 3, 2017, and Minnesota Statutes 169.011 and 169.224)

Plug-In Electric Vehicle (PEV) Charging Tariff

Each public utility selling electricity for retail must file a tariff with the Minnesota Public Utilities Commission (PUC) to allow a customer to purchase electricity solely for the purpose of charging a PEV, neighborhood electric vehicle, or medium-speed electric vehicle. The tariff must:

  • Contain either a time-of-day or off-peak electricity rate;
  • Allow the customer to purchase electricity from the utility's current mix of energy supply sources or from entirely renewable energy sources; and
  • Be available to the residential customer class.

The public utility will make the tariff available to customers within 60 days of PUC approval. At any time, the utility may make revisions to the tariff based on changing costs or conditions. Each public utility providing a PEV charging tariff must report quarterly to the PUC on the number of customers who have participated in the tariff, the total amount of electricity sold under the tariff, and any other data the PUC requires.

(Reference Minnesota Statutes 216B.1614)

Plug-In Electric Vehicle and Natural Gas Vehicle (NGV) Initiatives

All solicitation documents that include the purchase of passenger automobiles issued under the jurisdiction of the Minnesota Department of Administration must assert the intention of the state to begin purchasing all-electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), neighborhood electric vehicles, and NGVs. In order for this requirement to apply, vehicles must meet the state's performance specifications and have a total life-cycle cost of ownership less than or comparable to that of gasoline-powered vehicles. An EV is defined as a motor vehicle that can be powered by an electric motor drawing current from rechargeable storage batteries, fuel cells, or other portable sources of electrical current, and meets or exceeds applicable requirements in Title 49 of the U.S. Code of Federal Regulations, section 571, and future regulations. A PHEV is defined as an EV that contains an internal combustion engine and uses a battery-powered electric motor to deliver power to the drive wheels. When connected to the electrical grid via an electrical outlet, the vehicle must be able to recharge its battery. The vehicle must have the ability to travel at least 20 miles powered substantially by electricity. (Reference Minnesota Statutes 16C.138 and 169.011)

State Agency Sustainability Plan and Requirements

State agencies must establish interagency teams to develop and implement sustainability goals that reduce state vehicle petroleum consumption. In addition, each state department or agency must prepare an annual sustainability plan that includes ways to modify vehicle use practices and report annually on progress towards implementing their plan. Each state agency plan must be based on following targets and mandates:

  • When reasonably possible, state agencies must purchase on-road vehicles that use alternative fuels, including biodiesel blends of 20% (B20) or greater, compressed or liquefied natural gas, ethanol blends of 70% (E70) or greater, hydrogen, propane, or electricity, or (with the exception of buses, snowplows, and construction vehicles) have a fuel economy rating that exceeds 30 miles per gallon (mpg) in the city and 35 mpg on the highway;
  • When reasonably possible, state employees must fuel vehicles capable of operating on an alternative fuel with that fuel;
  • State agencies must increase the use of renewable fuels derived from agricultural products or waste products; and
  • State agencies must increase the use of technology for delivering information and services in order to reduce reliance on the state's fleet.
(Reference Executive Order 11-13, 2011, and Minnesota Statutes 16C.135 and 16C.137)

State Agency Vehicle Procurement and Management Requirement

When purchasing a motor vehicle, a state agency must select one that is capable of being powered by cleaner fuels, including electricity and natural gas, if the total life cycle cost of ownership is less than or comparable to that of a gasoline-powered vehicle.

A committee of representatives from the Minnesota Departments of Administration, Agriculture, Commerce, Natural Resources, and Transportation, as well as the Pollution Control Agency, will implement a state fleet reporting and information management system. The committee will submit findings to the governor and appropriate legislative committees on a bi-yearly basis with recommendations for goals, directives, or legislative initiatives to meet these objectives.

(Reference Minnesota Statutes 16C.137 and 16C.138)