Colorado Natural Gas Laws and Incentives

State Incentives

Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Tax Credit

An income tax credit is available from the Colorado Department of Revenue for the incremental cost of purchasing an AFV or for the conversion of a vehicle to operate using an alternative fuel. HEVs also qualify for this incentive. This credit is only available in the year during which the vehicle was purchased or converted, and a vehicle may only qualify for this credit one time. For an AFV purchase or conversion that permanently replaces a motor vehicle or power source that is ten or more years old , the percentage specified in the table below is doubled, up to a maximum of 100% of the incremental or conversion cost. To the extent the allowable credit exceeds the person's tax liability for that year the excess may be carried forward for up to five years. Lessees or lessors of qualifying vehicles are also eligible for the credit. The value of the credit is based on the EPA emissions classification of the vehicle as follows:

Tax credits for Model Year 2007 HEVs and AFVs are as follows:

For vehicle eligibility updates and historical credit information, see the Colorado Department of Revenue's Alternative Fuel Income Tax Credit Web site.Neighborhood electric vehicles do not qualify for the AFV credit since they cannot be operated on Colorado highways.

(Reference Colorado Revised Statutes 39-22-516)

Alternative Fuel Infrastructure Tax Credit

For tax years beginning prior to January 1, 2011, the Colorado Department of Revenue offers an income tax credit for the cost of construction, reconstruction, or acquisition of an alternative fuel fueling facility that is directly attributable to the storage, compression, charging, or dispensing of alternative fuels to motor vehicles. The credit value is as follows:

For an alternative fuel refueling facility that will be generally accessible for use by the public, in addition to the person claiming the credit, the percentages specified above will be multiplied by 1.25. For an alternative fuel refueling facility that dispenses an alternative fuel derived from a renewable energy source, the credit percentages specified above will be multiplied by 1.25 and requires certification that at least 70% of the alternative fuel dispensed annually is derived from a renewable energy source for a period of 10 years. The credit has a maximum value of $400,000 in any consecutive five-year period for each refueling facility. For more information about this credit, see the Colorado Department of Revenue's Alternative Fuel Income Tax Credits Web site.

(Reference Colorado Revised Statutes 39-22-516)

Alternative Fuel Vehicle (AFV) Rebate

A rebate is available from the Colorado Department of Revenue for the purchase of an AFV or for the conversion of a vehicle to operate using an alternative fuel. Vehicles must be owned by the State of Colorado, a political subdivision of the state, or a tax-exempt organization, and be used in connection with the official activities of the entity. HEVs also qualify for this incentive. The rebate is a percentage of the incremental cost if used toward purchasing a new AFV, or is a percentage of the conversion cost if used towards the cost of converting a vehicle to operate using an alternative fuel. For an AFV purchase or conversion that permanently replaces a motor vehicle or power source that is ten or more years old, the percentage specified in the table below is doubled, up to a maximum of 100% of the incremental or conversion cost. Each qualified entity is limited to $350,000 per state fiscal year in total rebates paid. The rebate value is as follows:

For more information about this rebate, see the Colorado Department of Revenue's Alternative Fuel Income Tax Credits Web site.

(Reference Colorado Revised Statutes 39-33-101 through 39-33-106)

State Laws and Regulations

Alternative Fuel Definition

Alternative fuel is defined as compressed natural gas, propane, ethanol, or any mixture of ethanol containing 85% or more ethanol by volume 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 these other fuels make comparable reductions in carbon monoxide emissions and brown cloud pollutants as determined by the air quality control commission. (Reference Colorado Revised Statutes 25-7-106.8 (1)(a))

Alternative Fuel Vehicle (AFV) Registration

Upon the registration of a motor vehicle with the state Department of Revenue, Division of Motor Vehicles, the vehicle owner must report the types of alternative fuel used to operate the vehicle and whether the vehicle is dual-fueled or dedicated to one alternative fuel. Forms provided by the Department of Revenue for the purpose of registering motor vehicles must include space for the following fuel types: gasoline, diesel, propane, electricity, natural gas, methanol or M85, ethanol or E85, biodiesel, and other. (Reference Colorado Revised Statutes 42-3-113)

Alternative Fuel Vehicle (AFV) Weight Limit Exemption

Gross vehicle weight rating limits for AFVs are 1,000 pounds greater than corresponding conventional vehicles when the AFVs are operated on a highway that is not on the interstate system. (Reference Colorado Revised Statutes 42-4-508)

Gasoline Gallon Equivalent Definition

The term gasoline gallon equivalent 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 gasoline gallon equivalents shall display gasoline gallon equivalents as the primary display information provided. (Reference Colorado Revised Statutes 8-20-232.5)

Alternative Fuels Tax and Vehicle Decal

Fuel tax exemptions are granted for compressed natural gas (CNG) and liquefied petroleum gas (LPG) vehicle owners. Owners of CNG and LPG fueled vehicles are required to purchase an annual tax decal for $70, $100, or $125, depending on the vehicle's gross vehicle weight rating. All CNG and LPG vehicles must display a current fuel tax decal. Non-profit transit agencies are exempt from the fuel tax. (Reference Colorado Revised Statutes 39-27-102.5)

Utilities/Private Incentives

Natural Gas Fuel Rate Reduction and Infrastructure Maintenance

Clean Energy Fuels offers services for the natural gas vehicle industry that include compressed natural gas (CNG) fueling station equipment maintenance, competitive fuel pricing for larger fleet customers, and alternative fuel vehicle financing. Clean Energy also operates public CNG fueling stations in Colorado.

Natural Gas Infrastructure Technical Assistance

Atmos Energy offers preliminary feasibility studies for compressed natural gas fueling stations and vendor selection on a case-by-case basis.