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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 and city owned vehicles, including school buses, maintenance vehicles, heavy equipment, and other vehicles powered by diesel fuel. Grant funding is available for up to 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.

Biofuels Fueling Infrastructure Grants

The Tennessee Department of Transportation (TDOT) engages in public-private partnerships with transportation fuel providers, including, but not limited to farmer cooperatives, to install fueling facilities. Fueling facilities include storage tanks and fuel pumps dedicated to dispensing biofuels, including ethanol (E85) and biodiesel (B20). TDOT administers the Biofuel Green Island Corridor Grant Project, 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. (Reference Tennessee Code 54-1-136 and Executive Order 33, 2006)

Alternative Fuel Innovations Grant

The Tennessee Department of Environment and Conservation administers a grant program to support the use of alternative fuels by local governments and public universities. Eligible projects include covering the incremental fuel costs, engine maintenance, conversion or installation of infrastructure, and promotional materials.

Agricultural Feedstock Processing Demonstration Loan Program

The Tennessee Department of Economic and Community Development will disperse loans of up to $500,000 for projects that increase Tennessee farm income and production of alternative fuel feedstock. Eligible facilities include those that process more than 200,000 bushels each year.

Biodiesel Production Incentive

The Tennessee biodiesel manufacturers' incentive fund provides $0.20 per gallon of biodiesel fuel produced and sold to Tennessee companies. Each manufacturer is eligible to receive incentives 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 ASTM specification D6751. (Reference Tennessee Code 67-3-103 and 67-3-423)

Infrastructure Development Program

FastTrack Infrastructure Development Program funds may be used for alternative fueling infrastructure improvements. Funds may be used in situations where there is a commitment by certain private sector businesses to locate or expand in the state and to create or retain jobs for Tennesseans.

State Laws and Regulations

Energy Task Force

The Governor’s Task Force on Energy Policy was established to develop a state energy plan to facilitate energy efficiency and the use of alternative and renewable fuels in the state. The energy plan will include the following: a summary of opportunities for the state government to use an energy-efficient approach in purchasing and managing the state vehicle fleet; prospective policies, legislation, and incentives to encourage energy efficiency; possible public-private partnerships to encourage research and development of clean energy technologies; and strategies for expanding the use of alternative and renewable fuels. (Reference Executive Order 54, 2008)

Biofuels Production Promotion

The state legislature supports the federal 25 by 25 Initiative, under which 25% of the total energy consumed in the U.S. by 2025 would be produced by domestic agriculture. (Reference Senate Joint Resolution 728, 2008)

Biodiesel Blend Retail Restriction

Biodiesel blend stock must be at least 99% biodiesel (no more than 1% diesel fuel) and meet ASTM specification D6751. Biodiesel blends must meet ASTM specification D975. 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-.01 and 0080-5-12-.02)

Alternative Fuel and Fuel-Efficient Vehicle Use Requirements

All state agencies, universities, and community colleges that have more than 10 state-owned vehicles in their fleet are required to incorporate alternative fuel, hybrid electric, or other fuel-efficient or low-emission vehicles in order 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 fleet must provide for a minimum 10% petroleum use reduction. (Reference Tennessee Code 4-22-101)

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 an average 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 Tennessee Code 4-3-1109)

Provision for Establishing an Alternative Fuel Research and Development Program

The Tennessee Department of Agriculture is authorized to develop and implement an alternative fuel research program to stimulate public and private research in fuel-related 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 Tennessee Code 54-1-136)

Biofuels Strategy and Outreach Campaign

The Governor's Interagency Alternative Fuels Working group, supported administratively by the Tennessee Department of Environment and Conservation, was established to develop a comprehensive state alternative fuels strategy to make Tennessee a leader in the production, distribution, and use of biofuels. The Working Group developed BioTENN, a comprehensive, statewide public education and outreach campaign to increase public awareness and understanding of alternative fuels, particularly biofuels. Furthermore, state agencies should strive to use ethanol and biodiesel in appropriate state-owned vehicles whenever possible and should support the development of biofuels fueling infrastructure. (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)