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Legislation and Funding

The Department of Energy (DOE) provides a database of state and federal laws and incentives related to alternative fuels and vehicles, air quality, fuel efficiency, and other transportation-related topics on its Alternative Fuels and Advanced Vehicles Data Center (AFDC) site.

State-level information is updated annually after each state’s legislative session ends. Federal information is updated after enacted legislation is signed into law.

DSIRE is a Database of State Incentives for Renewables & Efficiency and lists both federal and state incentive programs that are designed primarily for residents, businesses, and other end-users.

Federal

From the DOE site:

“Key alternative fuel and fuel economy legislation dates back to the Clean Air Act of 1970 (as amended in 1990), which created initiatives to reduce mobile sources of pollutants. In 1988, federal laws established vehicle manufacturer incentives in the form of Corporate Average Fuel Economy (or CAFE) credits (Alternative Motor Fuels Act). In 1992, the Energy Policy Act of 1992 established regulations requiring federal, state, and alternative fuel provider fleets to build an inventory of alternative fuel vehicles. Subsequently, Congress passed the Energy Policy Act in 2005, which emphasized the use of alternative fuels and the development of supporting infrastructure. The Energy Independence and Security Act of 2007 introduced provisions to increase the supply of renewable fuel sources and raise CAFE standards to reach 35 miles per gallon by 2020. Most recently, the Emergency Economic Stabilization Act, signed by then President George W. Bush on October 3, 2008, enacted the Energy Improvement and Extension Act of 2008.”

In addition, The Food, Conservation, and Energy Act of 2008 accelerates the commercialization of advanced biofuels and encourages the production of biomass crops through grants and tax credits.

Most recently, the American Recovery and Reinvestment Act (ARRA) of 2009 directs nearly $800 billion into various programs designed to stimulate the economy. The U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy received $16.8 billion to invest in energy independence and renewable energy technologies.

American Recovery and Reinvestment Act of 2009 (ARRA)

The $16.8 billion will support a variety of alternative fuel and advanced vehicle technology grant programs, research and development initiatives, and fleet improvement efforts. The ARRA also expands the existing tax credits for installing alternative fuel infrastructure and purchasing plug-in electric vehicles, and provides additional funding for the Advanced Technology Vehicle Manufacturing Loan Program. This funding will support a variety of alternative fuel and advanced vehicle technology grant programs, research and development initiatives, and fleet improvement efforts. The ARRA also expands the existing tax credits for installing alternative fuel infrastructure and purchasing plug-in electric vehicles, and provides additional funding for the Advanced Technology Vehicle Manufacturing Loan Program.

The Comptroller’s office is closely reviewing the American Recovery and Reinvestment Act of 2009 to study fully what it means for Texas. According to current estimates, the state is expected to directly receive about $15 billion to $16 billion.

Emergency Economic Stabilization Act/Energy Improvement and Extension Act of 2008

The Energy Improvement and Extension Act of 2008 amends and extends existing biodiesel blending and production tax credits, extends existing alternative fuel excise tax credit, and extends the alternative fueling infrastructure tax credit. The bill also creates a new tax incentive toward the purchase of qualified plug-in hybrid electric vehicles, based on vehicle weight and battery capacity. Additionally, qualified idle reduction devices are exempt for heavy-duty truck retail excise taxes.

Food, Conservation, and Energy Act of 2008

In May, 2008, the U.S. Congress passed the Food, Conservation, and Energy Act of 2008, the new farm bill that will accelerate the commercialization of advanced biofuels, including cellulosic ethanol, encourage the production of biomass crops, and expand the current Renewable Energy and Energy Efficiency Program. Section 9003 provides for grants covering up to 30% of the cost of developing and building demonstration-scale biorefineries for producing "advanced biofuels," which essentially includes all fuels that are not produced from corn kernel starch. It also allows for loan guarantees of up to $250 million for building commercial-scale biorefineries to produce advanced biofuels.

Energy Independence and Security Act of 2007

The Energy Independence and Security Act (EISA) of 2007 aims to improve vehicle fuel economy and help reduce U.S. dependence on petroleum. EISA includes provisions to increase the supply of renewable alternative fuel sources by setting a mandatory Renewable Fuel Standard, which requires transportation fuel sold in the U.S. to be a minimum of 36 billion gallons of renewable fuels by 2022 including advanced and cellulosic biofuels as well as biomass-based diesel. In addition, the law requires the Corporate Average Fuel Economy (CAFE) standard for passenger cars and light trucks to reach 35 miles per gallon by the year 2020. In addition, EISA includes grant programs to encourage the development of cellulosic biofuels and plug-in hybrid electric vehicles and other emerging electric technologies, and the inclusion of electric drive vehicles under EPAct 1992. The law is projected to reduce greenhouse gas emissions by 9% by 2030.

Energy Policy Act of 2005 (H.R. 6)

The Energy Policy Act of 2005 (H.R. 6) was signed into law by President Bush on August 8, 2005, the first major piece of federal energy legislation since the Energy Policy Act of 1992. The bill created the nation’s first Renewable Fuels Standard (RFS), which went into effect on September 1st, 2007, setting new reporting, registration, and compliance requirements for major refiners, fuel blenders, and fuel importers.

Read a summary of selected sections in the Energy Policy Act 2005 that relate to fuel ethanol and to cellulosic ethanol research and development.

Renewable Electricity Production Tax Credits

The Energy Policy Act of 2005 (EPAct 2005) mandates that electricity generated from biomass under the closed loop biomass system (dedicated energy crop) is eligible to receive 1.9 cents per Kwh credit. For this purpose, "closed-loop biomass" includes any organic material from a plant which is planted exclusively for purposes of being used at a qualified facility to produce electricity. A summary of the Renewable Electricity Production Tax Credits is provided by the Northeast Regional Biomass Program (NRBP).

Farm Security and Rural Investment Act of 2002

The 2002 Farm Bill was the first farm bill to contain an energy title and include significant incentives for biomass production and use. The Act requires federal agencies to buy officially designated, bio-based products whenever possible for purchases of $10,000 or more. Numerous projects have been funded, from biomass production issues to improvements in biorefinery production processes. USDA also provides loan guarantees for production of renewable energy and biofuels through the Rural Development Business and Industry Loan Program, through section 9006 of the 2002 farm bill, and through the Rural Utilities Service.

State

Texas HB 1090: Biomass Power Generation and Revised Renewable Energy Requirements

During its 80th Legislative Session in 2007, the Texas Legislature passed HB 1090, which focuses on biomass power production. The bill which authorizes $30 million annually for Department of Agriculture grants to farmers, loggers, and diverters who provide qualified agricultural biomass, forest wood waste, urban wood waste, or storm-generated biomass debris to facilities that use biomass to generate electrical energy. The bill provides funding for those who provide waste in the form of:

  • Landfill diversions
  • Forest wood waste from logging operations
  • Storm debris
  • Urban wood waste
  • Landscape right-of-way trimmings
  • Other agricultural organic waste

Texas Tax Code: Biofuel Tax Exemption

Biodiesel or ethanol blended with taxable diesel that is identified when sold or used as a biodiesel or ethanol fuel blend, is exempt from the diesel fuel tax. Read the details of the Texas Tax Code, Chapter 162: §162.001 and §162.204.

Texas State Pollution Reduction Incentives

A 2007 Texas legislative bill relating to air quality improvement programs, S. B. 12, includes the Emissions Reduction Incentive Grants Program, provides funds to projects that reduce emission of NOx from diesel vehicles. Another, the New Technology Research and Development Program, provides grants to research projects that find ways to reduce pollution in Texas. For more information, please refer to Government Financial Subsidies in the Texas Comptroller’s 2008 energy report.

Texas Biofuel Incentive Program

Notice: The 80th legislative session formally transferred the authority for administration of the biofuel incentive program to the Texas Department of Agriculture (TDA). However, no funds were appropriated for Fiscal Year '08 and Fiscal Year '09 to allow TDA to continue to provide incentive payments to registered plants.The last production report (RED-101) to be accepted was for the month ending August 31, 2007. Please contact Allen Regehr at 512-463-9932 with any questions.

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