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Introduction > Alabama Legislative Proposals > Biofuels Working Group Recommendations 

Biofuels Working Group Recommendations 

The Biofuels Working Group has developed the following recommendations for consideration.  These actions are proposed to increase the production, availability and use of biofuels for transportation in Alabama. 

1.      Encourage alternative transportation fuel and hybrid and electric technology usage by state agencies and other governmental entities.  The advisory group recommends this be addressed by an executive order including the following provisions: 1) All state agencies shall be directed to use alternative transportation fuels and hybrid and electric vehicle technologies when available and feasible; 2) Other governmental entities shall be encouraged to use alternative fuels and hybrid and electric vehicle technologies when available and feasible; 3) The state bid list for flex fuel and hybrid and electric vehicles and alternative fuels shall be extended; and 4) Vendors using alternative fuels and/or hybrid and electric vehicles in their operations shall be designated as “preferred vendors”. 

2.      Provide funding for alternative fuel research, development and education.  In addition to any other possible funding sources, an income tax check-off program should be established as a funding mechanism for alternative fuel research, development and education.  These funds should be made available through a competitive grant process.  Funds for R&D should address commercialization in addition to technology development.

Feedstock Development.  Increased funding should be made available to Alabama universities for research, development and extension of regionally appropriate feedstock development and a balanced portfolio of fuel conversion technologies.

 3.      Establish an Alabama Energy Commission.  An Alabama Energy Commission should be established to further prepare Alabama for leadership in alternative fuels.  This Commission would be responsible for, but not limited to:  1) conducting yearly status reports for the legislature and general public; 2) proposing legislation and establishing policy to keep Alabama in line with federal guidelines; 3) establishing an Alternative Fuel Incentives Fund to provide state grants as available and appropriate; 4) establishing benchmarks for the State to reduce consumption of foreign oil by the use of alternative fuels; and 5) establishing Prosper Alabama: a promotion, education, and research fund to promote biofuels use and research new sources of biofuels from agriculture and forest products.

4.      Incentives for Biofuel Feedstock Producers.  Legislation should be drafted to provide an income tax credit equal to $.20 per gallon of 100% biofuel used on-farm and in non-farm feedstock production.  Additional incentives should be provided to encourage sustainable feedstock production and conservation practices.  Slight language changes are recommended to the Wallace Linked Deposit Program (Chapter 21, Title 5; Code of Alabama) to provide low-interest loans and to the Tax Incentive Reform Act (Chapter 9B, Title 40; Code of Alabama) to provide tax abatement for new feedstock harvesting, handling, processing and transporting equipment.  See recommended definition of biofuel.

5.      Income Tax Credit for Retail Distribution and Infrastructure.  The advisory group supports previously drafted legislation providing an income tax credit equal to 50% of the cost of constructing and installing the part of the dispensing facility, including pumps, storage tanks, and related equipment, that is directly and exclusively used for dispensing or storing alternative fuels.  See recommended definition of alternative fuel.

6.      Incentives for Consumers.  A sales tax credit for the purchase of alternative fuel vehicles similar to that in the previously drafted legislation should be made available to consumers.  The provision should be expanded to cover not only flex fuel vehicles that can operate on E85 but also other alternative fueled vehicles, including hybrid and electric vehicle technologies and other proven fuel conservation technologies. 

7.      Motor Fuels Excise Tax Exemption for Biofuels.  The fuel excise tax should be removed or significantly reduced for blended biofuels produced and sold in Alabama.

8.      Biofuel Fuel Production Incentives.  The advisory group supports previously drafted legislation providing an income tax credit equal to $.10 per gallon of 100% biofuel produced in Alabama ($.20 per gallon of 100% biofuel produced in “Favored Geographic Areas”).  See recommended definition for biofuel.

9.      Establish an Interagency Alternative Fuels Working Group.  The advisory group recommends that an interagency working group be established by executive order to facilitate coordination between state agencies on fuels and energy.  The working group should be tasked to promote education, research & development, production, and consumption of alternative fuels.  An invitation should be extended to agencies not directly under control of the Governor’s Office to participate in the working group through a Memorandum of Cooperation (MOC).

10.  Quality Assurance.  Legislation should be drafted to require all motor fuels sold in Alabama to meet the fuel appropriate American Society of Testing and Materials (ASTM) standards.  The operating budget for the Alabama Department of Agriculture & Industries (ADAI) should be increased to cover additional lab costs and related expenditures to allow for quality assurance and direct regulation of alternative fuels.  The ADAI percentage of the current fuel inspection fee should be increased to help cover these costs.

11.  Amend Title 28 Code of Alabama to permit the manufacture, sale and transportation of ethyl alcohol where the ethyl alcohol is manufactured, sold and transported for use as a transportation fuel.

12.  Legislation developed in regard to alternative fuels should be economically feasible and include provisions for tax exempt entities.


Biofuel means motor vehicle fuel that:

(I) is produced from grain, starch, oilseeds, vegetable, animal, or fish materials including fats, greases and oils, sugarcane, sugar beets, sugar components, tobacco, potatoes, and lignocellulosic or other biomass.

(II) is used to replace fossil fuel or reduce the quantity of fossil fuel present in a fuel mixture used to operate a motor vehicle.

Biofuel includes:

(I) cellulosic biomass biofuels and waste derived biofuels; and
(II) biodiesel (as defined in section 757(e) of 2005 EPACT: `biodiesel' means a diesel fuel substitute produced from nonpetroleum renewable resources that meets the registration requirements for fuels and fuel additives established by the Environmental Protection Agency under section 211 of the Clean Air Act (42 U.S.C. 7545) and that meets the American Society for Testing and Materials D6751-02a Standard Specification for Biodiesel Fuel (B100) Blend Stock for Distillate Fuels.) and any blending components derived from renewable fuel (provided that only the renewable fuel portion of any such blending component shall be considered part of the applicable volume under the renewable fuel program.)

Cellulosic biomass biofuels means any biofuel such as ethanol, butanol, diesel, gasoline and aviation fuel derived from any lignocellulosic, hemicellulosic and/or cellulosic matter that is available on a renewable or recurring basis, including dedicated energy crops and trees; wood and wood residues, plants; grasses; ag residues; fibers, animal wastes and other waste material and municipal solid waste.

Alternative Fuel means motor vehicle fuel that is produced from:
(1) biofuel (as defined above)
(2) compressed natural gas
(3) liquefied natural gas
(4) propane
(5) electricity