Minnesota Incentives and Laws

Last Updated July 2006

State Incentives

Ethanol Infrastructure Grants

Grants administered by the Minnesota E85 Team are available to service stations installing equipment or converting existing equipment for dispensing E85 fuel to flexible fuel vehicles. Cost eligibility and grant amounts vary according to grant sponsorship.

Point of Contact

Tim Gerlach
Clean Cities Coordinator
American Lung Association of the Upper Midwest
Phone (651) 223-9577
Fax (651) 281-0242
gerlach@alamn.org
http://www.cleanairchoice.org/outdoor/cleancities.asp
 

Ethanol Production Incentive

Through June 30, 2010, there is an ethanol production incentive of $0.20 per gallon of ethanol produced. Appropriated funds have temporarily reduced this incentive to $0.13 per gallon for fiscal year (FY) 2004 through FY 2007. This incentive only applies to qualified ethanol production facilities that began production on or before June 30, 2000. Annual payments are limited to $3 million to any one producer. (Reference Minnesota Statutes Section 41A.09)

Point of Contact

Ralph Groschen
Senior Marketing Specialist
Minnesota Department of Agriculture
Phone (651) 201-6223
Fax (651) 201-6114
ralph.groschen@state.mn.us
 

State Laws and Regulations

Ethanol Blend Mandate

All gasoline sold or offered for sale in the state must contain at least 10% ethanol by volume (E10). Some exemptions apply. Effective August 30, 2013, all gasoline sold or offered for sale in the state must contain at least 20% ethanol by volume (E20), unless ethanol has already replaced 20% of the motor vehicle fuel sold in the state by December 31, 2010 or federal approval has not been granted the use of E20. (Reference Senate File 0004, 2006 and Minnesota Statutes Section 239.791)

Alternative Fuel Use Requirement

State agencies are required to take all reasonable actions necessary to strengthen the infrastructure for increasing the availability and use of E85 and biodiesel throughout the state. Employees using state vehicles are expected to use E85 fuel when operating flexible fuel vehicles, whenever E85 is reasonably available. The state’s SmartFleet Committee is directed to develop a plan to facilitate the use of E85 and biodiesel in state vehicles, including actively pursuing the establishment of additional E85 refueling facilities at public retail outlets throughout the state. (Reference Executive Order 06-03, 2006)

Hydrogen Energy Plan

The state Department of Administration is required to identify opportunities for demonstrating the use of hydrogen fuel cells within state-owned facilities, vehicle fleets, and operations. The department is required to purchase and demonstrate hydrogen, fuel cells, and related technologies in ways that strategically contribute to realizing Minnesota's hydrogen economy goals. Additionally, the state Department of Commerce is expected to report to the legislature every two years with a list of proposed pilot projects that contribute to realizing these goals, including those demonstrating technologies such as hybrid-electric, off-road, and fleet vehicles operating on hydrogen or fuels blended with hydrogen.

The Commissioner of Commerce is authorized to accept federal funds, expend funds, and participate in projects to design, develop, and construct multi-fuel hydrogen refueling stations that eventually link urban centers along key trade corridors across the jurisdictions of Manitoba, the Dakotas, Minnesota, Iowa, and Wisconsin. These energy stations should accommodate a wide variety of vehicle technologies and fueling platforms, including hybrid, flexible fuel, and fuel cell vehicles. They may offer, but not be limited to, gasoline, diesel, ethanol (E85), biodiesel, and hydrogen, and may simultaneously test the integration of on-site combined heat and power technologies wit the existing energy infrastructure.

The state’s public research and higher education institutions are encouraged to collaborate to establish a regional energy research and education partnership for the production of renewable energy and products, including hydrogen, fuel cells, and related technologies. The Board of Trustees of the Minnesota State Colleges and Universities is encouraged to develop a fuel cell curriculum pilot program.

(Reference Senate File 1368, 2006 and Minnesota Statutes Sections 216B.811 to 216B.815)

Neighborhood Electric Vehicle (NEV) Access to Roadways

A neighborhood electric vehicle (NEV) is defined as an electric vehicle that has four wheels, and has a speed attainable of at least 20 miles per hour (mph) but not more than 25 mph on a paved level surface. An NEV must be titled according to state law and may be operated on public streets and highways if it meets all equipment and vehicle safety requirements in Code of Federal Regulations, title 49, section 571.500 and successor requirements. An NEV may not be operated on a street or highway with a speed limit greater than 35 miles per hour, except to make a direct crossing of that street or highway. A road authority, including the commissioner of transportation, may prohibit or further restrict the operation of NEVs on any street or highway under the road authority's jurisdiction. (Reference House File 1838, 2006 and Minnesota Statutes Sections 168.011, 169.01, and 169.224)

Plug-In Hybrid Electric Vehicle (PHEV) and Neighborhood Electric Vehicle (NEV) Initiatives

All solicitation documents for the purchase of a passenger automobile issued under the jurisdiction of the Department of Administration after June 30, 2006, must state the intention of the state of Minnesota to begin purchasing PHEVs and NEVs as soon as they become commercially available, meet the state's performance specifications, and are priced no more than 10% above the price for comparable gasoline-powered vehicles.

A PHEV is defined as a vehicle containing an internal combustion engine that also allows power to be delivered to the drive wheels by a battery-powered electric motor and that meets applicable federal motor vehicle safety standards. When connected to the electrical grid via an electrical outlet, the vehicle must be able to recharge its battery. The vehicle must have the ability to travel at least 20 miles, powered substantially by electricity.

Additionally, a PHEV task force is established and is responsible for identifying barriers to the adoption of PHEVs by state agencies, small and large private fleets, and Minnesota drivers at-large. The commissioner of the Pollution Control Agency is responsible for analyzing and reporting to the task force by April 1, 2007 the environmental impacts of purchasing PHEVs for the state-owned vehicle fleet and at hypothetical penetration rates of 10%, 25%, and 50% of all motor vehicles registered in the state. The task force expires on June 30, 2008.

(Reference House File 3718, 2006)

Alternative Fuel Vehicle (AFV) Acquisition Requirements

Using 2005 as a baseline, the state is required to achieve a 25% and 50% reduction in the use of gasoline for state department owned on-road vehicles by 2010 and 2015, respectively. Additionally, the state is required to achieve a 10% and 25% reduction in the use of petroleum-based diesel fuel for state owned by 2010 and 2015, respectively. To meet these goals, each state department will, whenever legally, technically, and economically feasible, ensure that at least 75% of new on-road vehicles purchased use alternative fuels (B20-B100 biodiesel blends, compressed or liquefied natural gas, E70-E100 ethanol blends, hydrogen, or liquefied petroleum gas). Alternatively, each state department may ensure that at least 75% of purchases of new on-road vehicles have fuel economy ratings that exceed 30 miles per gallon (mpg) for city usage or 35 mpg for highway usage, including but not limited to hybrid electric and hydrogen vehicles. (Reference Executive Order 04-10, 2004 and Minnesota Statutes Section 16C.135)

State Agency Emissions Reduction Requirement

Each state department must seek to reduce air pollution by implementing two or more of the actions outlined in Executive Order 04-08 whenever legally, technically, and economically feasible, subject to the specific needs of the department and responsible management of agency finances. The actions include the purchase or lease of the most fuel-efficient and least polluting vehicles that meet the operational needs of the state department, and refueling state-operated vehicles with the cleanest fuel available. (Reference Executive Order 04-08, 2004)

Biodiesel Blend Mandate

Effective September 29, 2005, all diesel fuel sold or offered for sale in the state for use in internal combustion engines must contain at least 2% biodiesel fuel by volume. (Reference Minnesota Statutes Section 239.77)

Biodiesel Task Force

To help reach the state's goal of an eight million gallon biodiesel production capacity and ensure a smooth introduction of biodiesel into the marketplace, a Biodiesel Task Force was established in March 2003 to help promote and educate possible biodiesel developers, marketers, consumers and manufacturers. The 10-member task force advises the Minnesota Department of Agriculture on methods to increase production and use of biodiesel in Minnesota.

Point of Contact

Ralph Groschen
Senior Marketing Specialist
Minnesota Department of Agriculture
Phone (651) 201-6223
Fax (651) 201-6114
ralph.groschen@state.mn.us
 

Alternative Fuel Use and Vehicle Acquisition Requirements

State agencies are required to use alternative fuels (B20-B100 biodiesel blends, compressed or liquefied natural gas, E70-E100 ethanol blends, hydrogen, or liquefied petroleum gas) in state motor vehicles if the clean fuels are reasonably available at similar costs to other fuels and are compatible with the intended use of the motor vehicle. Additionally, state agencies are required to purchase alternative fuel vehicles, which include those capable of being powered by the fuels listed above or motor vehicles powered by electricity or by a combination of electricity and liquid fuel, if such a motor vehicle is reasonably available at similar costs to other vehicles and if the vehicle is capable of carrying out the purpose for which it is purchased. (Reference Minnesota Statutes Section 16C.135)

Alternative Fuel Tax

An excise tax is imposed on the first licensed distributor who receives E85 fuel products in the state and on distributors, special fuel dealers, or bulk purchasers of other alternative fuels. E85 is taxed at a rate of $0.142 per gallon, liquefied petroleum gas is taxed at $0.15 per gallon, liquefied natural gas is taxed at $0.12 per gallon, and compressed natural gas is taxed at the rate of $1.739 per thousand cubic feet or $0.20 per gasoline gallon equivalent. Gasoline is taxed at the rate of $0.20 per gallon. (Reference Minnesota Statutes Sections 296A.07 and 296A.08)

Utilities/Private Incentives

There are currently no known utility or private incentives offered in Minnesota

Minnesota Points of Contact: