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Clean Fuel Vehicle Incentives
(updated September, 2009)

State Incentives

The State of Maine has enacted legislation that provides incentives for the purchase and operation of Clean Fuel Vehicles. Businesses, municipalities, and individuals can now save money when adding clean, alternative fuel vehicles to their fleet.

Fuel Tax Equalization for Clean Fuels in Maine. Beginning October 1, 2000 the State Highway Tax on clean fuels was equalized to gasoline according to their relative energy BTU content by volume.In 2008 adjustments were made and some fuels were added.  Beginning July, 2009 ethanol and biodiesel blends up to 90% are taxed at gasoline and diesel rates, respectively.  All fuels are subject to annual indexiing relative to the petroleum product they displace.

Fuel Type	BTU content per gallon	Formula (BTU value fuel/ BTU value gasoline)	Tax Rate
Gasoline	115,000	100% x $0.295	$0.295 per gallon
Methanol (M85)	56,800	49% x $0.295	$0.145 per gallon
Ethanol (E85)	76,800	66% x $0.295	$0.195 per gallon
Propane (LPG)	84,500	73% x $0.295	$0.215 per gallon
Compressed Natural Gas (CNG)	115,000*	100% x $0.295	$0.295 per GGE**
Hydrogen	115,000*	100% x $0.295	$0.295 per GGE**
HCNG***	115,000*	100% x $0.295	$0.295 per GGE**
Diesel	128,400	100% x $0.307	$0.307 per gallon
Natural Gas (LNG)***	73,500	57% x $0.307	$0.175 per gallon
BioDiesel (B100)	118,300	100% x $0.307	$0.282 per gallon
*BTU per gasoline gallon equivalent (GGE) ** Hydrogen Compressed Natural Gas *** Liquefied Natural Gas

Clean Fuel Vehicle Fund. This fund was established under the jurisdiction of the Finance Authority of Maine in consultation with the Maine Office of Energy Independence and Security to support the production, distribution and consumption of clean fuels and biofuels through both grants and loans.

Insurance Incentives. Insurers are allowed, but not required, to offer incentive rates to encourage policyholders to use clean fuel vehicles. Ask your agent. Many vehicle manufacturers offer substantial incentives as well.

Federal Incentives

In addition to Maine State incentives, taxpayers can also take advantage of Federal tax incentives. The Energy Policy Act of 2005, the Highway Bill of 2005 and the American Reinvestment and Recovery Act of 2009 (ARRA) contain provisions for alternative fuel vehicles, infrastructure and fuel sales. Highlights are below. For more details, visit the Department of Energy Alternative Fuels and Advanced Vehicles Data Center at www.afdc.energy.gov incentives and laws.

Alternative Motor Vehicle Credit –

• Provides a tax credit to the buyer for the purchase of a new, dedicated alternative fuel vehicle of 50% of the incremental cost of the vehicle, plus an additional 30% if the vehicle meets certain tighter emissions standards.
• These credits range from $5000- $40,000 depending on the size of the vehicle.
• For non-tax paying entities, the seller of the vehicle can take the credit.
• Credit is effective on purchases made after 12/31/05 and expires 12/31/10.
• This provision makes credits available for the acquisition of LD, MD and HD fuel cell vehicles, hybrids, and dedicated natural gas, propane, hydrogen and M85 alt fuel vehicles and LD lean burn diesel vehicles (less than 8500 lbs.).
• View a list of IRS Qualified Alternative Fuel Motor Vehicles (QAFMV) and Heavy Hybrid Vehicles.

Credit for Installation of Alternative Fueling Stations –

• Provides a tax credit equal to 30% of the cost of alt fuel refueling equipment
• Up to $30,000 in the case of large stations
• Up to $1,000 for home refueling appliances.
• For non-tax-paying entities, the seller of the fueling equipment can take the credit.
• Credit applies to E85, natural gas, LPG, hydrogen, and biodiesel (at blends of at least 20%).
• Credit is effective on purchases placed in service after 12/31/05 and expires 12/31/09.

Extension of Excise Tax Provisions and Income Tax Credit for Biodiesel – Extends the current biodiesel and ethanol excise tax provisions and income tax credit from 2006 to 2009.

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National Clean Diesel Campaign

• Establishes a program to make grants and loans available to State and local government agencies and non-profit organizations for reducing emissions from diesel engines.
• The program focuses on replacing/retrofitting engines in non-attainment areas and would require that at least 50 percent of the federal program funds be used on public fleets.
• EPA or CARB certified or verified technologies qualify. NGV repowers and replacements will be eligible.
• Legislation authorizes $200 million per year for FY 2006 through 2010. ARRA provided additional funds.

Clean School Bus Program (now part of the National Clean Diesel Campaign) -

• EPA in consultation with DOE, provides funds to school districts and related organizations to replace, repower, or retrofit buses. EPA must "achieve an appropriate balance between replacement and retrofit."
• For replacement buses, grantees receive 50% of the cost of the new bus if it meets 2010 standards for NOx and PM emissions in advance of 2010. Currently, only CNG and propane buses meet that standard. Other replacement buses will receive 25% of the cost of a new bus.
• Buses are only eligible for funding if they replace existing buses before the replacement schedule. Buses 10 years or older are not eligible. The replaced bus must be taken out of commission; they cannot be sold.

Diesel Truck Retrofit and Fleet Modernization Program - EPA, in consultation with DOE, administers a competitive grant program for fleet modernization and retrofit of diesel trucks. Grants go to state or local governments who will allocate funds with preference for ports and other major hauling operations. 50% cost share required. Replaced trucks must be 1998 or older.

Volumetric Excise Tax Credit for Alternative Fuels

• Provides an excise tax credit (referred to as VEETC) to the seller of CNG or LNG.
• The credit is 50-cent per gasoline-gallon-equivalent for CNG and 50-cents per liquid gallon for LNG for the sale of CNG and LNG for use as a motor vehicle fuel.
• Expires on December 31, 2009 (except for the credit for liquified hydrogen, which expires September 30, 2014).
• Under this approach, CNG and LNG will pay the same rate of tax into the Highway Trust Fund as all other transportation fuels, but then CNG and LNG would receive an excise tax credit paid out of the general fund.
• The credit will be paid to eligible recipients on a regular basis without regard to the actual amount of excise tax paid.
• Propane, hydrogen and some minor fuels also are eligible for this credit.
• The value of the excise tax credit is offset by an increase in the motor fuels excise tax rate for both CNG and LNG.
• CNG is increased from 4.9 cents per GGE to 18.3 cents
• LNG is increased from 11.9 cents per LNG gallon to 24.3 cents
• Compared to the current situation, the net benefit will be:
• For CNG: 36.6 cents per GGE
• For LNG: 63.6 cents per DGE
• For non-tax paying entities, the full 50-cents per gge will be paid.

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Alternative Fuel Update

Biofuels

December, 2009.  Maine Clean Communities’ Biofuels Summit a Success

Showcasing groundbreaking biofuel production, Maine Clean Communities’ (MC2) recent Biofuels Summit was well-attended despite an impending storm.  It was also well-received – attendees were pleased with the utility and relevance of the presentations, which represented a range of fuels and technologies including closed-loop biodiesel production, ethyl levulinate, biobutanol and biogas. 

Maine Clean Communities Coordinator Steve Linnell opened the Summit, discussing the gap between a much-discussed problem in Maine – high gasoline prices – and the much discussed solution – home weatherization.  Given that transportation is such a large part of the problem (in terms of cost, energy independence and greenhouse gas emissions) it needs to be part of the solution, as well.  Maine Clean Communities is part of the national Clean Cities network that addresses the transportation problem by promoting alternative fuels and advanced vehicle technology.  Since no single alternative is capable of fully replacing petroleum, it is important to develop a diversity of technologies and fuels.

Dean Sgouros, Executive Vice President of Sales and Marketing at Maine Standard Biofuels in Portland, presented on closed-loop biodiesel production, focusing on the environmental benefits of biodiesel.  Maine Standard Biofuels produces biodiesel from waste restaurant grease, utilizing a process that recycles and reuses most of its inputs and byproducts, including methanol and glycerin.  With a capacity of one million gallons a year, Maine Standard Biofuels is striving for carbon-neutral, zero-waste production. Click here to listen to his talk.*

Steve Fitzpatrick of Biofine Technology (Gorham, ME) discussed levulinic acid, a chemical that can be produced from virtually any type of cellulose and converted into a variety of products.  Levulinic acid can be blended with ethanol to produce ethyl levulinate, a versatile biofuel.  Unlike most biofuels, ethyl levulinate blends well with either diesel or gasoline.  It can also be used as a home-heating fuel.  When blended with biodiesel, it lowers the gel temperature, improving biodiesel’s cold weather properties.  Click here to view the presentation and click here to listen to his talk.*

Jim St. Pierre of Old Town Fuel and Fiber (Old Town, ME) presented on biobutanol, which the company produces on a pilot scale as a complement to pulp production at a refurbished paper mill.  Formerly Red Shield Environmental LLC, Old Town Fuel and Fiber switched its focus from producing ethanol to producing biobiotanol because butanol is safer to handle, can be shipped through existing pipelines and has a higher energy content. 

Will Brinton, President of the Woods End Laboratories (Mt. Vernon, ME), presented on biogas. Brinton brought cutting edge biogas technology called dry digestion from Germany to Maine, where he is working to perfect it.  Dry digestion enables biogas production from 30% solid mixtures as compared to just 3%.  This expands production potential, particularly on farms. Woods End Laboratories worked with Rainbow Valley Farm piloting on-farm biogas production.  The company also produces biogas in-house on an experimental scale.  The output of this process is compost.  Biogas is similar to natural gas, but is produced from the anaerobic decomposition of organic waste, such as food scraps or sewage. Click here to view the presentation and click here to listen to his talk.*

State Representative Steve Butterfield (Bangor) kicked off an open discussion with a brief legislative update.  Butterfield is an enthusiastic proponent of biofuels and the sponsor of 100% of the biofuel-related bills introduced in the last year.  His current bill would require 2% biofuels blended in all home heating oil.  Butterfield discussed his frustration with the State Legislature and the general public, which, due to an association with corn ethanol, has prematurely dismissed all biofuels.  His three keywords are “renewable, sustainable and affordable” – if it meets those criteria, he supports it. 

Maine Clean Communities’ Biofuels Summit revealed some surprising synergies between the speakers and the technologies they represent.  Production of ethyl levulinate, for example, could integrate into pulp and paper mills in a way that complements Old Town Fuel and Fiber’s process.  Ethyl levulinate can be blended with biodiesel, improving biodiesel’s cold weather properties (after the Summit, Dean Sgouros arranged to get a sample of ethyl levulinate to try it out).  With the potential to use byproducts as a feedstock, production of biogas could complement production of the other biofuels. 

Maine Clean Communities hopes to continue an energetic discussion on diversifying Maine’s transportation energy.  We are collecting ideas for future Summit topics.  To suggest ideas or provide feedback, please contact Steve Linnell at slinnell@gpcog.org or Rebecca Lambert at rlambert@gpcog.org.

To view a summary of evaluations and a sampling of comments, please click here.

*Podcasts courtesy of Chewonki's Pathway to the Future Program.  Podcasts are of variable quality.

Propane

How do you fuel a propane vehicle?

This new video from Roush Performance demonstrates how to fill the tank of a propane vehicle.  Filling up with propane is easy and safe - watch the video. 

At the August 5, 2009 meeting, Dan Abbot gave a brief talk about his Roush Propane Truck.  See the handout for more information

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Compressed Natural Gas

Conversions

For the latest information on converting to CNG, click here for a link to “FAQ – Converting to NGV,” on the NGVAmerica website. 

This document answers most – if not all – of the questions about what retrofit (conversion) systems are available, from who, how they are installed, what rules/regs apply, what’s the estimated cost, what about CNG Cylinder safety inspections, fueling at home, and suggestions if converting is not a viable option – such as buying a new OEM NGV or  purchasing a used government- or other fleet- vehicle at auction.

 

Compressed Natural Gas Pump

On May 1, 2006, Greater Portland METRO and Maine Clean Communities celebrated the opening of Maine’s first Compressed Natural Gas (CNG) fueling infrastructure and the introduction of 13 new CNG transit buses and three school buses operated by the Portland School District.

Maine Clean Communities has played a key role in this $6.5 million project. The local Clean Cities coalition acquired grant funding through the US Department of Energy totaling more than $600,000 including state and local match.

Natural gas is inherently clean burning and has for many years been the fuel of choice for transit agencies seeking to improve air quality. In recent years, advanced emission control technologies have been developed for diesel buses. Particularly important and challenging for these buses is reducing emissions of nitrogen oxides (NOx), key ingredients in the formation of ground-level ozone (smog). Results of testing by the National Renewable Energy Lab at the US Department of Energy suggest that, among buses with engines of similar vintage, natural gas buses remain the cleanest option, with NOx emissions 25%-49% lower than their diesel counterparts. The natural gas buses also produced 10%-84% lower emissions of particulate matter (PM), another key pollutant. In addition, CNG buses are quieter than comparable diesel vehicles. The noise level for CNG engines is generally 10 to 15 decibels lower than diesel.

The fueling infrastructure, installed by the Hanover Group features:

* Standard cubic feet per minute

The Orion VII Transit Buses are equipped with:

The three Thomas Safety Liner school buses use the same John Deere Engine and have 56 gasoline gallon equivalents of on-board storage.

The project also required making facility improvements to METRO’s maintenance and storage garages. These included: