North Carolina Incentives and Laws

Last Updated September 2006

State Incentives

Biodiesel Production Tax Credit

A biodiesel provider that produces at least 100,000 gallons of biodiesel during the taxable year is allowed a credit equal to the per gallon excise tax the producer paid in accordance with motor fuel excise tax rate. The credit does not apply to tax paid on the diesel fuel portion of the biodiesel blends and the credit may not exceed $500,000. This credit is effective for taxable years beginning on January 1, 2008, and is in effect until January 1, 2010. (Reference Senate Bill 1741, 2006, and North Carolina General Statutes 105 129.16F)

Alternative Fuel Production Tax Credit

A tax credit is available for the processing of biodiesel, 100% ethanol or ethanol/gasoline blends consisting of at least 70% ethanol. The credit is equal to 25% of the cost of constructing and equipping the facility, and facilities must be placed in service before January 1, 2011.

In lieu of the above credit, a taxpayer that constructs and places in service in North Carolina three or more commercial facilities for processing renewable fuel and invests a total amount of at least $400,000,000 in the facilities is allowed a credit equal to 35% of the cost to the taxpayer of constructing and equipping the facilities. In order to claim the credit, the taxpayer must obtain a written determination from the Secretary of Commerce that the taxpayer is expected to invest within a five-year period a total amount of at least $400,000,000 in three or more facilities. Facilities must be placed in service before January 1, 2011.

(Reference Senate Bill 1741, 2006, and North Carolina General Statutes 105-129.16D)

Renewable Energy Property Tax Credit

Taxpayers who construct, purchase, or lease renewable energy property, are eligible for a tax credit equal to 35% of the cost of the property. Renewable energy property includes: equipment that uses renewable biomass resources to produce ethanol, methanol, biodiesel, or methane produced via anaerobic biogas utilizing agricultural and animal waste or garbage; and related devices for converting, conditioning, and storing the liquid fuels and gas produced with biomass equipment. The credit must be taken in five equal installments beginning with the taxable year in which the property is placed in service. A ceiling of $2,500,000 per installation applies to renewable energy property placed in service for any purpose other than residential. Property must be placed in service before January 1, 2011. (Reference North Carolina General Statutes 105-129.15 and 105-129.16A)

Alternative Fuel Refueling Infrastructure Tax Credit

A tax credit is available for qualified refueling facilities that dispense biodiesel, 100% ethanol or ethanol/gasoline blends consisting of at least 70% ethanol. The credit is equal to 15% of the cost to the taxpayer of construction and installation portion of the dispensing facility, including pumps, storage tanks, and related equipment, that is directly and exclusively used for dispensing or storing the fuel. The credit must be taken in three equal annual installments beginning with the taxable year in which the facility is placed in service. Facilities must be placed in service before January 1, 2011. (Reference North Carolina General Statutes 105 129.16D)

Alternative Fuel Vehicle (AFV) Grants

Grants from the Department of Environment and Natural Resources Division of Air Quality are available for the incremental cost of purchasing Original Equipment Manufacturer (OEM) AFVs, vehicle retrofits, implementing idle reduction programs, and constructing or installation of alternative fuel public refueling facilities. More than $500,000 in funding is available.

Point of Contact

Heather Hildebrandt
Division of Air Quality, Mobile Source Compliance Branch
Department of Environment and Natural Resources
Phone (919) 733-1498
Fax (919) 733-1812
heather.hildebrandt@ncmail.net
http://www.daq.state.nc.us/motor/ms_grants
 

Alternative Fuel and Alternative Fuel Vehicle (AFV) Fund

The State Energy Office administers an energy credit banking program which enables the state to generate funds from the sale of Energy Policy Act of 1992 (EPAct) credits. The moneys generated by the sale of EPAct credits are deposited into the Alternative Fuel Revolving Fund (Fund), which enables state agencies to offset the incremental costs of alternative fuel, related refueling infrastructure, and purchasing AFVs. Funds are distributed to state departments, institutions and agencies in proportion to the number of EPAct credits generated by each. For the purposes of this program, “alternative fuel” includes biodiesel (minimum of B20), ethanol (minimum of E85), compressed natural gas, propane, and electricity and includes hybrid electric vehicles. The Fund also covers additional projects approved by the Energy Policy Council. (Reference North Carolina General Statutes 143-58.4, 143-58.5, 143-341(8)i, and 136-28.13)

State Laws and Regulations

Biofuels Industry Promotion Task Force

The State has established the Biofuels Industry Strategic Plan Work Group (BISP Work Group) in order to develop a strategic plan for expansion of biofuels industry in North Carolina, including delineating the increasing role of biotechnology in the development of biofuels. The Work Group shall include representatives from various North Carolina colleges and universities, the North Carolina Biotechnology Center, and the Rural Economic Development Center, Inc. The BISP Work Group will submit a final report on the development of the strategic plan, including any findings, recommendations, and legislative proposals, to the Environmental Review Commission no later than April 1, 2007. (Reference Senate Bill 2051, 2006)

Alternative Fuel Use and Fuel Efficient Vehicle Requirements

State-owned vehicle fleets, with more than 10 motor vehicles designed for highway use, have plans to improve the use of alternative fuels and efficient vehicles. The plans must enable the state-owned fleets to achieve a 20% reduction or displacement of the current petroleum products consumed by January 1, 2010. Reductions may be met by petroleum or oils displaced through he use of biodiesel, ethanol, synthetic oils or lubricants, other alternative fuels, the use of hybrid electric vehicles, other fuel-efficient or low-emission vehicles or additional methods as may be approved by the State Energy Office. (Reference Session Law 2005-276, Section 19.5)

Alternative Fuel Vehicle (AFV) Acquisition Requirements

Since January 1, 2004, it has been the goal of the state, that at least 75% of the new or replacement light duty cars and trucks (8,500 pounds or less Gross Vehicle Weight Rating) purchased by the state must be AFVs or low emission vehicles. (Reference North Carolina General Statutes 143-215.107C)

Alternative Fuel Tax Exemption

The retail sale, use, storage or consumption of alternative fuels is exempt from the state retail sales and use tax. (Reference North Carolina General Statutes 105-164.13)

Idle Reduction Requirement

The North Carolina State Board of Education adopted reduced idling incentives by revising the Allotment Policy Manual. A mid-year transportation allotment was available to Local Education Agencies that implemented a reduced idling policy by January 10, 2006. The local policies prohibit unnecessary school bus idling on school grounds and prohibit the warming up of buses for longer than 5 minutes. The North Carolina School Boards Association has provided a sample policy and administrative procedure that meet the requirements.

Point of Contact

Transportation Services
North Carolina Department of Public Instruction
Phone (919) 807-3570
Fax (919) 807-3578
http://www.ncbussafety.org/Idling.html
 

Utilities/Private Incentives

Biodiesel Distribution Credit

The North Carolina Soybean Producers Association offers new dealers and distributors of soy biodiesel (B100) a rebate on the first 250 of 500 gallons purchased and will provide a 50% rebate to new dealers and distributors to cover the cost of any equipment changes that may be needed to begin selling soy biodiesel, up to of $2,500 per dealer. Rebates are available until funding has expired.

Point of Contact

North Carolina Soybean Producers Association
Phone (919) 839-5700
http://www.ncsoy.org/
 

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