South Carolina Incentives and Laws

Last Updated September 2007

South Carolina is the home of the Palmetto State Clean Fuels Coalition (www.palmettocleanfuels.org). Coordinator contact information is listed in the Points of Contact section.

State Incentives

Biofuels Retail Incentive

Beginning July 1, 2009, a $0.05 incentive payment is available to E85 retailers for each gallon of E85 fuel sold, provided that the E85 fuel is subject to the South Carolina motor fuel tax. Additionally, a $0.25 incentive payment is available to biodiesel retailers for each gallon of pure biodiesel (B100) sold, provided that the resulting blends contain at least 2% biodiesel (B2). These incentives apply only to fuel sold before July 1, 2012. Biodiesel fuel is defined as a fuel for motor vehicle diesel engines comprised of vegetable oils or animal fats and meeting the specifications of American Society of Testing and Materials (ASTM) D 5761. (Reference Senate Bill 243, 2007, and South Carolina Code of Laws 12-63-20)

Alternative Fuel Vehicle (AFV) Sales Tax Rebate

Beginning July 1, 2008, a $300 sales tax rebate may be applied to in-state purchases of the following: flexible fuel vehicles (FFVs) capable of operating on E85 motor fuel; hydrogen fuel cell vehicles; electric vehicles, hybrid electric vehicles; plug-in hybrid electric vehicles (PHEVs); and vehicles with a U.S. Environmental Protection Agency city fuel economy rating of at least 30 miles per gallon. Additionally, a sales tax rebate up to $500 has been established for the purchase of equipment that results in the conversion of a conventional hybrid electric vehicle to a PHEV, or for equipment to convert a conventional vehicle to operate on propane, compressed natural gas, liquefied natural gas, hydrogen, or E85. These rebates only apply to vehicles and equipment purchased prior to July 1, 2013. (Reference Senate Bill 243, 2007, and South Carolina Code of Laws 12-63-20)

Plug-In Hybrid Electric Vehicle (PHEV) Tax Credit

For taxable years beginning after 2007 and before 2011, an income tax credit of $2,000 is available for the in-state purchase or lease of a PHEV. For the purpose of this incentive, a PHEV is a vehicle that shares the same benefits as an internal combustion and electric engine with an all-electric range of not less than nine miles. (Reference Senate Bill 243, 2007, and South Carolina Code of Laws 12-63-20)

Alternative Fuel Vehicle (AFV) Tax Credit

A state income tax credit equal to 20% of the federal fuel cell, advanced lean burn, HEV, and AFV credits is available to South Carolina resident taxpayers who are eligible for and claim the federal credits. If the amount of the credit exceeds the taxpayer's liability for the applicable tax year, any unused credit may be carried forward and claimed in the five succeeding taxable years. The state tax credit is calculated without regard to the phase out period limits of Internal Revenue Code Section 30(B)(f). (Reference South Carolina Code of Laws 12-6-3377)

Biofuels Production Tax Credit

A tax credit is available to qualified ethanol and biodiesel producers for taxable years beginning after 2006 and before 2014. Corn-based ethanol and soy-based biodiesel producers are eligible for a tax credit of $0.20 per gallon of fuel produced. Producers using feedstocks other than corn or soy oil are eligible for $0.30 per gallon tax credit. An eligible production facility must be operating at a production rate of at least 25% of its name plate design capacity, before denaturing, on or before December 31, 2009. The credit is allowed for 60 months beginning with the first month for which the facility is eligible to receive the credit and ending not later than December 31, 2014. The credit may only be claimed if the facility maintains an average production rate of at least 25% of its name plate design capacity for at least six months after the first month for which it is eligible to receive the credit. (Reference Senate Bill 243, 2007, and South Carolina Code of Laws 12-6-3600)

Biofuels Research and Development Tax Credit

For taxable years after 2007 and before 2012, an income tax credit is available for up to 25% of qualified research and development expenditures, which include developing feedstocks and production processes for cellulosic ethanol and algae-derived biodiesel. Cellulosic ethanol is defined as fuel from ligno-cellulosic materials, including wood chips, corn stover, and switchgrass. (Reference Senate Bill 243, 2007, and South Carolina Code of Laws 12-6-3631

Biofuels Distribution Infrastructure Tax Credit

Effective January 1, 2008, taxpayer that constructs, installs, and places into service a qualified commercial facility for distribution or dispensing of renewable fuels in the state is eligible for a tax credit of up to 25% of the construction and installation costs. Eligible property includes pumps, storage tanks, and related equipment used exclusively for distribution, dispensing, and storing renewable fuel. A qualified facility must clearly label the equipment used to store or dispense the fuel as associated with renewable fuel. The credit must be taken in three equal annual installments beginning with the taxable year in which the facility is placed into service. Renewable fuel is defined as ethanol fuel blends of 70% or greater (E70) dispensed at the retail level for use in motor vehicles, and pure ethanol or biodiesel fuel dispensed by a distributor or facility that blends these non-petroleum liquids with gasoline fuel or diesel fuel for use in motor vehicles. (Reference Senate Bill 243, 2007, and South Carolina Code of Laws 12-63-3610)

Biofuels Production Facility Tax Credit

Effective January 1, 2008, a taxpayer that constructs and places into service a commercial facility for the production of renewable fuel is eligible for a tax credit of up to 25% of the cost of constructing or renovating a building and equipping the facility. Production of renewable fuel includes intermediate steps such as milling, crushing, and handling feedstock and the distillation and manufacturing of the final product. The entire credit must be taken in seven equal annual installments beginning with the taxable year in which the facility is placed in service. Renewable fuel is defined as liquid non-petroleum based fuel that can be placed in motor vehicle fuel tanks and used to operate on-road vehicle, including all forms of fuel commonly or commercially known or sold as biodiesel and ethanol. (Reference Senate Bill 243, 2007, and South Carolina Code of Laws 12-63-3610)

State Laws and Regulations

Biodiesel Blend Infrastructure Mandate

No later than January 1, 2008, all state-owned diesel refueling facilities must provide fuel containing at least 5% biodiesel (B5) in all diesel pumps. (Reference Senate Bill 243, 2007, and South Carolina Code of Laws 12-63-30)

Provision for Establishing Hydrogen Infrastructure Development Grants

The South Carolina Hydrogen Infrastructure Development Fund is created to fund grants administered by the South Carolina Research Authority to promote the development and deployment of hydrogen production, storage, distribution, and dispensing infrastructure and related products and services that enable the growth of hydrogen and fuel cell technologies in the state. (Reference Senate Bill 243, 2007, and South Carolina Code of Laws 11-46)

Hydrogen and Fuel Cell Tax Exemption

Effective October 1, 2007, the following are exempt from state sales tax: 1) any device, equipment, or machinery operated by hydrogen or fuel cells; 2) any device, equipment, or machinery used to generate, produce, or distribute hydrogen and designated specifically for hydrogen or fuel cell applications; and 3) any device, equipment, or machinery used predominantly for the manufacturing of, or research and development involving hydrogen or fuel cell technologies. (Reference Senate Bill 243, 2007, and South Carolina Code of Laws 12-63-2120)

Biodiesel Use in School Buses

The South Carolina Department of Education is required to fuel the state school bus fleet with biodiesel when feasible. (Reference House Bill 3161, 2007, and South Carolina Code of Laws 59-67)

Low-Speed Vehicle Access to Roadways

A low-speed vehicle is defined as a four-wheeled motor vehicle, other than an all terrain vehicle, capable of reaching speeds greater than 20 miles per hour (mph) but not more than 25 mph. A low-speed vehicle may operate only on secondary highways with a posted speed limit of 35 miles per hour or less. A low-speed vehicle must be registered and licensed in the same fashion as a passenger vehicle and is subject to the same insurance requirements applicable to other motor vehicles. Homemade low-speed vehicles, retrofitted golf carts, or any other similar vehicles do not qualify as low-speed vehicles. (Reference South Carolina Code of Laws 56-1-10, 56-2-100 to 56-2-130, and 56-5-820)

Alternative Fuel Use Requirement

Whenever practical and economically feasible, all state agencies operating alternative fuel vehicles are required to use alternative fuels in those vehicles. Private businesses are encouraged to increase the use of alternative fuels in the state. (Reference Executive Order 2001-35)

Liquefied Petroleum Gas (LPG) Board

The state LPG Board's powers and duties include ensuring that the laws of South Carolina affecting LPG are executed faithfully, instituting proceedings for violations of laws relevant to LPG, and declaring and enforcing regulations relating to LPG and LPG equipment. (Reference South Carolina Code of Laws 40-82)

Alternative Fuel Tax

All fuels, including alternative fuels and alternative fuel blends are exempt from the state sales and use tax. However, all fuels are subject to a state fuels tax. Alternative fuels include liquefied petroleum gas and compressed natural gas. Blended fuels are defined as mixtures composed of gasoline or diesel fuel and another liquid, other than products such as carburetor detergent or oxidation inhibitor, which can be used as a fuel to operate a highway vehicle. (Reference South Carolina Code of Laws 12-28-110 and 12-36-2120)

Utilities/Private Incentives

There are currently no known utility or private incentives offered in South Carolina.

Points of Contact:

NAME/EMAIL	AGENCY	TITLE	PHONE/FAX
Erica Hartwig ehartwig@energy.sc.gov	Palmetto State Clean Fuels Coalition	Clean Cities Coordinator	Phone: (803) 737-7951 Fax: (803) 737-9846
Steven Richardson steven.richardson@netl.doe.gov	U.S. Department of Energy, National Energy Technology Laboratory	Project Manager	Phone: (304) 285-4185 Fax: (304) 285-4638
Dale Aspy aspy.dale@epa.gov	U.S. Environmental Protection Agency	Environmental Engineer, Region 4 Air Planning Branch	Phone: (404) 562-9041 Fax: (404) 562-9019
Wes Allen wes.allen@gsa.gov	U.S. General Services Administration	Transportation Specialist, Southeast Region	Phone: (404) 608-2217 Fax: (404) 608-2222