Michigan Incentives and Laws

Last Updated October 2006

State Incentives

Hybrid Electric Vehicle Research and Development Tax Credit

For tax years beginning on or after January 1, 2006, a taxpayer engaged in research and development of a qualified two-mode hybrid system, the primary purpose of which is the propulsion of a motor vehicle, may claim a tax credit equal to 3.9% of all wages, salaries, fees, bonuses, commissions, or other payments made in the taxable year on behalf of or for the benefit of employees for services performed in a qualified facility. The maximum amount of credit allowed for any one taxpayer is $3 million in a single tax year. This tax credit is repealed effective for tax years that begin after December 31, 2007. (Reference House Bill 4971, 2006, and Michigan Compiled Laws 208.32)

Reduced Biofuels Tax

A tax of $0.12 per gallon is imposed on gasoline containing at least 70% ethanol and diesel fuel containing at least 5% biodiesel (B5). Ethanol is defined as denatured fuel ethanol that is suitable for use in a spark-ignition engine when mixed with gasoline as long as the mixture meets the American Society for Testing and Materials (ASTM) D-5798 specifications. Biodiesel is defined as a fuel composed of mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats and, in accordance with standards specified by the designated B100 fuel and meeting ASTM D-6571 specification, as approved by the Michigan Department of Agriculture. (Reference Senate Bill 1074, 2006, and Michigan Compiled Laws 207.1008)

Alternative Fuel Development Property Tax Exemption

A tax exemption may apply to industrial property which is used for, among other purposes, high-technology activities or the creation or synthesis of biodiesel fuel. High-technology activities include those related to advanced vehicle technologies such as electric, hybrid, or alternative fuel vehicles and their components. In order to qualify for the tax exemptions, an industrial facility must obtain an exemption certificate for the property from the State Tax Commission. (Reference Michigan Compiled Laws 207.552 and 207.803)

Alternative Fuel Vehicle (AFV) Emissions Inspection Exemption

Dedicated AFVs powered by compressed natural gas, propane, electricity, or any other source as defined by rule promulgated by the Michigan Department of Transportation are exempt from emissions inspection requirements. (Reference Michigan Compiled Laws 324.6311 and 324.6512)

State Laws and Regulations

Alternative Fuel Refueling Station Grants

The Michigan Strategic Fund is directed to create and administer a refueling station matching grant program to provide incentives to owners and operators of service stations to convert existing, and install new, fuel delivery systems designed to provide E85 and biodiesel blends. Grants will not exceed 75% of the costs to convert existing refueling infrastructure, up to $3,000 per facility. Grants will not exceed 50% of the new construction costs to install new refueling infrastructure, up to $12,000 per facility for E85 and $4,000 per facility for biodiesel blends. Other funding limitations may apply. For the purpose of this grant program, biodiesel must meet American Society for Testing and Materials (ASTM) D-6751 specification and be approved by the Michigan Department of Agriculture. E85 is a fuel blend containing between 70% and 85% denatured ethanol that meets ASTM D-5798 specifications. (Reference House Bill 5754, 2006, and Michigan Compiled Laws 125.2078)

Renewable Fuels Commission

The Renewable Fuels Commission is established within the Michigan Department of Agriculture to investigate and recommend strategies that the governor and the legislature may implement to promote the use of alternative fuels and alternative fuel vehicles (AFV). The Commission will also identify mechanisms that promote alternative fuel research and effective communication and coordination of efforts between state and local governments, private industry, and institutes of higher education. The commission may also review any state regulation that may hinder the use, research, and development of alternative fuels and AFVs, and recommend changes to the governor. By July 2007, the Commission must submit a report on its investigation and recommendations to the legislature and the governor, with follow-up reports issued at least annually until January 1, 2010. (Reference House Bill 5181, 2006)

Biofuels Blender Requirements

Blenders of ethanol and gasoline and biodiesel and diesel fuels outside of the bulk transfer terminal system must obtain a blender’s license and are subject to blender reporting requirements. A licensed supplier who blends ethanol and gasoline or biodiesel and diesel fuels is also required to obtain a blender’s license. (Reference Senate Bill 1074, 2006, and Michigan Compiled Laws 207.1008)

Hydrogen Production and Retail Requirements

All hydrogen fuel produced and sold in the state must meet state quality requirements. Any retailer offering hydrogen fuel for sale in the state must register with, and obtain approval from, the Michigan Department of Agriculture (MDA). A hydrogen retailer must also obtain a license from the MDA for each retail outlet they operate. (Reference Senate Bill 1079, 2006, and Michigan Compiled Laws 290.642-290.647)

Biodiesel Retail and Storage Requirements

All biodiesel and biodiesel blends sold in the state must meet state quality requirements. A refiner, distributor, or retailer cannot transfer or dispense biodiesel or biodiesel blends unless the fuel is visibly free of undissolved water, sediments, and other suspended matter. Additionally, a biodiesel retailer is prohibited from selling biodiesel or biodiesel blends drawn from a storage tank that has more than two inches of water or water-alcohol at the bottom. Any retailer of biodiesel or biodiesel blends must obtain a license from the Michigan Department of Agriculture for each retail outlet they operate. (Reference Senate Bill 1079, 2006, and Michigan Compiled Laws 290.642-290.647)

Emission Credit Trading Registry

Michigan's Emission Trading Registry provides information regarding the generation, use, and trading of Emission Reduction Credits (ERCs) under the Michigan Air Emission Trading Program. This voluntary, statewide emissions trading program allows ERCs to be traded or retained for future use based on an emission reductions basis.

Point of Contact

Teresa Walker
Senior Environmental Quality Analyst, Emissions Trading Programs
Michigan Department of Environmental Quality
Phone (517) 335-2247
Fax (517) 241-7499
walkertr@michigan.gov
http://www.deq.state.mi.us/maets
 

Utilities/Private Incentives

Alternative Energy Technology Promotion

NextEnergy is an organization with a comprehensive set of actions and incentives designed to help position Michigan as the world's leading center for alternative energy technology, research and development, education, and manufacturing. NextEnergy programs support technologies for both mobile and stationary applications using renewable and distributed energy solutions. NextEnergy offers several incentives for companies that develop or utilize alternative energy applications.

Point of Contact

Dan Radomski
Clean Cities Coordinator
Detroit Clean Cities Coalition/NextEnergy
Phone (313) 833-0100 x150
Fax (313) 833-0101
detroitcleancities@nextenergy.org
http://www.nextenergy.org
 

Michigan Points of Contact: