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North Carolina E85 Laws and Incentives


State Incentives

Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Grants

Clean Fuel Advanced Technology (CFAT) is a three-year project focused on reducing transportation related emissions in North Carolina's non-attainment and maintenance counties for National Ambient Air Quality Standards. Projects that are adjacent to areas may also be eligible if emissions will be reduced in the eligible counties. The $2 million project is funded by the North Carolina Department of Transportation, State Energy Office, and the Division of Air Quality, and covers three broad areas: education and outreach; project funding; and recognition of exemplary activities. Funding for up to 80% of project costs is available for AFVs, fueling infrastructure, idle reduction technologies, heavy-duty HEVs, heavy-duty buses, and diesel retrofits.

Biofuels Industry Development

The North Carolina Green Business Fund was established to provide grants to private businesses with fewer than 100 employees, nonprofit organizations, local governments, and state agencies to encourage the expansion of small and medium sized businesses to help grow a green economy. One of the fund's priority areas is the development of the biofuels industry in the state. The Department of Commerce may make grants available to maximize development, production, distribution, retail infrastructure, and consumer purchase of biofuels. (Reference House Bill 1473, 2007, and North Carolina General Statutes 143B-437.4)

Alternative Fuel Production Tax Credit

A tax credit is available for the processing of biodiesel, 100% ethanol, or ethanol/gasoline blends consisting of at least 70% ethanol. The credit is equal to 25% of the cost of constructing and equipping the facility and a facility must be placed in service before January 1, 2011. The credit must be taken in seven equal annual installments beginning with the taxable year in which the facility is placed in service.

In lieu of the above credit, a taxpayer that constructs and places into service, in North Carolina, three or more commercial facilities for processing renewable fuel and invests a total amount of at least $400,000,000 in the facilities is allowed a credit equal to 35% of the cost to the taxpayer of constructing and equipping the facilities. To claim the credit, the taxpayer must obtain a written determination from the Secretary of Commerce that the taxpayer is expected to invest at least $400,000,000 in three or more facilities within a five-year period. Facilities must be placed in service before January 1, 2011.

(Reference North Carolina General Statutes 105-129.16D)

Exemption for Small Biofuels Producers

A bond filed with the Secretary of Revenue is not required for fuel blenders or suppliers of ethanol or biodiesel when the expected motor fuel tax liability is less than $2,000. (Reference Senate Bill 540, 2007, and North Carolina General Statutes 105-449.72(a))

Renewable Energy Property Tax Credit

Taxpayers who construct, purchase, or lease renewable energy property, are eligible for a tax credit equal to 35% of the cost of the property. Renewable energy property includes: equipment that uses renewable biomass resources to produce ethanol, methanol, biodiesel, or methane produced via anaerobic biogas, utilizing agricultural and animal waste or garbage; and related devices for converting, conditioning, and storing the liquid fuels and gas produced with the biomass equipment. The credit must be taken in five equal installments beginning with the taxable year in which the property is placed in service. A ceiling of $2,500,000 per installation applies to renewable energy property placed in service for any purpose other than residential. Property must be placed in service before January 1, 2011. (Reference North Carolina General Statutes 105-129.15 and 105-129.16A)

Alternative Fuel Fueling Infrastructure Tax Credit

A tax credit is available for qualified fueling facilities that dispense biodiesel, 100% ethanol, or ethanol/gasoline blends consisting of at least 70% ethanol. The credit is equal to 15% of the cost of construction and installation of the dispensing facility, including pumps, storage tanks, and related equipment, that is directly and exclusively used for dispensing or storing the fuel. The credit must be taken in three equal annual installments beginning with the taxable year in which the facility is placed into service. Facilities must be placed in service before January 1, 2011. (Reference North Carolina General Statutes 105-129.16D)

Alternative Fuel Vehicle (AFV) Grants

Grants from the Department of Environment and Natural Resources Division of Air Quality are available for the incremental cost of purchasing Original Equipment Manufacturer AFVs, vehicle conversions, implementing idle reduction programs, and constructing or installing public alternative fuel fueling facilities. More than $500,000 in funding is available.

Alternative Fuel and Alternative Fuel Vehicle (AFV) Fund

The State Energy Office administers an energy credit banking program which enables the state to generate funds from the sale of Energy Policy Act of 1992 (EPAct) credits. The monies generated by the sale of EPAct credits are deposited into the Alternative Fuel Revolving Fund (Fund), which enables state agencies to offset the incremental costs of alternative fuel, related fueling infrastructure, and purchasing AFVs. Funds are distributed to state departments, institutions, and agencies in proportion to the number of EPAct credits generated by each. For the purposes of this program, the definition of alternative fuel includes biodiesel (minimum of 20% biodiesel or B20), ethanol (minimum of 85% ethanol or E85), compressed natural gas, propane, and electricity, and includes hybrid electric vehicles. The Fund also covers additional projects approved by the Energy Policy Council. (Reference North Carolina General Statutes 143-58.4, 143-58.5, 143-341(8)i, and 136-28.13)

School Bus Emission Reduction Grants

A pilot program will be established within the North Carolina Department of Environment and Natural Resources to provide grants towards the required 20% state funding match for the federal Safe Accountable, Flexible, Efficient Transportation Equity Act — A Legacy for Users (SAFETEA-LU), specifically for diesel school bus retrofits or repowers that reduce particulate matter emissions. Any repowering or replacement of existing diesel engines in school buses must meet the U.S. Environmental Protection Agency 2007 Heavy Duty Highway Diesel Standards. (Reference House Bill 1912, 2007)

State Laws and Regulations

Ethanol Fueling Infrastructure Requirement

Ethanol blends between 10% (E10) and 85% (E85) for use in motor vehicles may be dispensed from equipment that fully complies with all requirements for dispensing E10, provided that the following conditions are met: 1.) The dispensing equipment manufacturer has documented that the equipment is compatible with all ethanol blends; 2.) the manufacturer has initiated the process of applying to an independent testing laboratory to have the equipment listed for use in dispensing ethanol blends; and 3.) the equipment clearly discloses the particular ethanol blend that is being dispensed. (Reference Senate Bill 567, 2007, and North Carolina General Statutes 143-143.6)

Alternative Fuel Use and Fuel Efficient Vehicle Requirements

State-owned vehicle fleets with more than 10 motor vehicles designed for highway use must establish plans to improve the use of alternative fuels and fuel-efficient vehicles. The plans must enable the state-owned fleets to achieve a 20% reduction or displacement of the current petroleum products consumed by January 1, 2010. Reductions may be met by petroleum or oils displaced through the use of biodiesel, ethanol, synthetic oils or lubricants, other alternative fuels, the use of hybrid electric vehicles, other fuel-efficient or low-emission vehicles or additional methods as may be approved by the State Energy Office. (Reference Session Law 2005-276, Section 19.5)

Alternative Fuel Vehicle (AFV) Acquisition Requirements

Since January 1, 2004, it has been the goal of the state that at least 75% of new or replacement light-duty cars and trucks (8,500 pounds or less Gross Vehicle Weight Rating) purchased by the state must be AFVs or low-emission vehicles. (Reference North Carolina General Statutes 143-215.107C)

Alternative Fuel Tax Exemption

The retail sale, use, storage or consumption of alternative fuels is exempt from the state retail sales and use tax. (Reference North Carolina General Statutes 105-164.13)

Biodiesel Tax Exemption

The retail sale, use, storage or consumption of alternative fuels is exempt from the state retail sales and use tax. (Reference North Carolina General Statutes 105-164.13)