Iowa Natural Gas Laws and Incentives

State Incentives

Alternative Fuel Vehicle (AFV) Grants

The Iowa Department of Natural Resources conducts marketing and education outreach to encourage the use of alternative fuels and, contingent upon funding, also awards demonstration grants to persons who purchase vehicles that operate on alternative fuels, including but not limited to, high ethanol content blends, compressed natural gas, electricity, solar energy, or hydrogen. (Reference Iowa Code 214A.19)

Alternative Fuel Loan Program

Iowa's Alternate Energy Revolving Loan Program (AERLP) for alternative energy projects is administered by the Iowa Energy Center. Through a participation agreement with the project lender, the program provides up to half the cost of biomass or alternative fuels related fuel production projects, up to a maximum of $250,000 per facility. The AERLP funds are provided at 0% interest with the lender's funds bearing market interest. Fuel production facilities must be located in Iowa. (Reference Iowa Code 476.46)

Alternative Fuel Production Loans

The Value-Added Agricultural Products and Processes Financial Assistance Program offers a combination of forgivable and traditional low-interest loans for business projects involving the production of biomass or alternative fuels. The mixture of forgivable and low-interest loans varies according to the size of the award. Research and development projects are not eligible for this program.

Alternative Fuel Production Tax Credits

The Enterprise Zone Program and the High Quality Job Creation Program offer state tax incentives to business projects for the production of biomass or alternative fuels. Depending on the program, incentives may include: an investment tax credit equal to a percentage of the qualifying investment, amortized over five years; a refund of state sales, service, or use taxes paid to contractors or subcontractors during construction; a doubling of the state's refundable research activities credit; additional funding for training new employees, and; a local property tax exemption of up to 100% of the value added to the property.

State Laws and Regulations

Alternative Fuel Vehicle (AFV) Acquisition Requirements

At least 10% of new light-duty vehicles purchased by institutions under the control of the state fleet administrator, Iowa Department of Transportation administrator, board of directors of community colleges, state board of regents, commission for the blind, and department of corrections must be capable of using alternative fuels. Vehicles and trucks purchased and directly used for law enforcement, off-road maintenance work, or to pull loaded trailers are exempt from this requirement. (Reference Iowa Code 216B.3, 260C.19A, 262.25A, 307.21 and 904.312A)

Alternative Fuel Vehicle (AFV) Conversion

When a motor vehicle is modified to use a different fuel type or to use more than one fuel type, the person in whose name the vehicle is registered must notify the county treasurer of the new fuel type or alternative fuel types within 30 days. If the vehicle uses, or may use a special fuel, the county treasurer shall issue a special fuel identification sticker. (Reference Iowa Code 321.41)