Tennessee Biodiesel Laws and Incentives

State Incentives

Biodiesel Infrastructure Grants

The Tennessee State Energy Office, Department of Economic and Community Development, Energy Division offers grants to county governments for the installation of biodiesel infrastructure, including biodiesel tanks, pumps, and card readers, that can be used to provide biodiesel fuel for county/city owned vehicles including school buses, maintenance vehicles, heavy equipment, or any other vehicle currently powered by diesel fuel. Grant funding will be provided for 50% of total project costs, but not more than $12,000 may be awarded per individual grant. Grants are limited to one per county and are available through June 2010.

Provision for Establishing Alternative Fuel Refueling Infrastructure Grants

The Tennessee Department of Transportation (TDOT) is authorized to undertake public-private partnerships with transportation fuel providers, including, but not limited to farmer cooperatives, to install refueling facilities. Refueling facilities include storage tanks and fuel pumps dedicated to dispensing biofuels, including but not limited to ethanol (E85) and biodiesel (B20). TDOT is also authorized to establish a grant program to provide financial assistance to help pay the capital costs of purchasing, preparing, and installing fuel storage tanks and fuel pumps for biofuels at private sector fuel stations. TDOT may also develop and implement a program to encourage all political subdivisions of the state and public colleges and universities to increase the number of vehicles that use alternative fuels. (Reference House Bill 2216, 2007, and Tennessee Code 54-1-136)

Provision for Establishing an Alternative Fuel Research and Development Program

The Department of Agriculture is authorized to develop and implement an alternative fuel research program to stimulate public and private research in conversion technology. This research should address converting Tennessee agricultural products, such as soybeans, switchgrass, and other biomass, into alternative fuels, as well as the production capabilities needed to deliver such alternative fuels to Tennessee consumers. (Reference House Bill 2216, 2007, and Tennessee Code 54-1-136)

Provision for Establishing a Biodiesel Incentive

The Department of Revenue, in consultation with the Department of Economic and Community Development, is authorized to create the Tennessee biodiesel manufacturers' incentive fund, dependent on legislative appropriations. Each eligible manufacturer may receive incentives from the fund for producing up to 10 million gallons of biodiesel annually. Biodiesel is defined as mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats that meet the registration requirements for fuels and fuel additives established by the U.S. Environmental Protection Agency and conform to American Society for Testing and Materials (ASTM) D6751 specifications. (Reference House Bill 1826, 2007, and Tennessee Code 67-3-103 and 67-3-423)

State Laws and Regulations

Biodiesel Blend Retail Restriction

Biodiesel made available for general public use at retail sale locations may not exceed 20% by volume (B20). (Reference Rules of the Tennessee Department of Agriculture 0080-5-12-.02

Alternative Fuel and Fuel-Efficient Vehicle Use Requirements

By January 1, 2008, all state agencies, universities, and community colleges that have more than 10 state-owned vehicles in their fleet are required to develop and implement plans to increase the state's use of alternative fuels and hybrid electric or other fuel-efficient or low-emission vehicles. Specifically, each plan must incorporate a goal to reduce or displace at least 20% of the fleet's consumption of petroleum by January 1, 2010. If the fleet includes vehicles modified for educational, emergency, or public safety purposes or vehicles used for emergency or law enforcement purposes, the entity's plan must provide for a minimum 10% petroleum use reduction. (Reference House Bill 723, 2007)

Energy-Efficient Vehicle Acquisition Requirement

State fleets are encouraged to make every effort to ensure that at least 30% of newly purchased motor vehicles are energy-efficient vehicles. Energy-efficient vehicles are defined as passenger vehicles that are: alternative fuel vehicles as identified by the Energy Policy Act of 1992 (Public Law 102-486) including those using ethanol, biodiesel, or other alternative fuel; a hybrid-electric vehicle; or a conventional gasoline vehicle achieving a fuel economy of at least 25 miles per gallon or greater. Beginning June 30, 2008, the Commissioner of General Services will compile information on motor vehicles owned and leased by the state including a categorization of vehicles by an energy-efficiency rating. (Reference Senate Bill 123, 2007, and Tennessee Code 4-3-11)

Biofuels Committee

The Governor's Interagency Alternative Fuels Working group, supported administratively by the Department of Environment and Conservation, has been established to develop a comprehensive state alternative fuels strategy that will provide a roadmap to make Tennessee a leader in the production, distribution, and use of biofuels. The Working Group is also tasked with developing a comprehensive, statewide public education and outreach campaign to increase public awareness and understanding of alternative fuels, particularly biofuels.
Furthermore, state agencies are required to strive to use ethanol and biodiesel in appropriate state-owned vehicles whenever possible and should support the development of biofuels refueling infrastructure. The Departments of General Services and Transportation are required to develop a program to educate state employees about the use of biofuels and publicize fuel availability as new refueling sites become available. The Department of Transportation must continue efforts to encourage development of publicly accessible biofuel refueling stations across the state.
(Reference Executive Order 33, 2006)

Biofuels Specifications

The Tennessee Department of Agriculture has the authority to inspect and test biofuels under the Kerosene and Motor Fuels Quality Inspection Act of 1989. (Reference Tennessee Code 47-18-1306)