South Carolina

Biofuels Retail Incentive

Beginning July 1, 2009, a $0.05 incentive payment is available to E85 retailers for each gallon of E85 fuel sold, provided that the E85 fuel is subject to the South Carolina motor fuel tax. Additionally, a $0.25 incentive payment is available to biodiesel retailers for each gallon of pure biodiesel (B100) sold, provided that the resulting blends contain at least 2% biodiesel (B2). These incentives apply only to fuel sold before July 1, 2012. Biodiesel fuel is defined as a fuel for motor vehicle diesel engines comprised of vegetable oils or animal fats and meeting ASTM specifications D6751 or D975. (Reference South Carolina Code of Laws 12-63-20)

Biofuels Production Tax Credit

An income tax credit is available to qualified ethanol and biodiesel producers for taxable years beginning after 2006 and before 2017. Corn-based ethanol and soy-based biodiesel producers are eligible for a tax credit of $0.20 per gallon of fuel produced. Producers using feedstocks other than corn or soy oil are eligible for $0.30 per gallon tax credit. An eligible production facility must be operating at a production rate of at least 25% of its name plate design capacity, before denaturing, on or before December 31, 2011. The credit is allowed for 60 months beginning with the first month for which the facility is eligible to receive the credit and ending not later than December 31, 2016. The credit may only be claimed if the facility maintains an average production rate of at least 25% of its name plate design capacity for at least six months after the first month for which it is eligible to receive the credit. Beginning January 1, 2017, the credit changes to $0.075 per gallon of fuel produced. (Reference House Bill 3649, 2008, and South Carolina Code of Laws 12-6-3600)

Biofuels Research and Development Tax Credit

For taxable years beginning after 2007 and ending before 2012, an income tax credit is available for up to 25% of qualified research and development expenditures, which include developing feedstocks and production processes for cellulosic ethanol and algae-derived biodiesel. Cellulosic ethanol is defined as fuel from ligno-cellulosic materials, including wood chips, corn stover, and switchgrass. (Reference South Carolina Code of Laws 12-6-3631

Biofuels Distribution Infrastructure Tax Credit

A taxpayer that constructs, installs, and places into service a qualified commercial facility for distribution or dispensing of renewable fuels in the state is eligible for an income tax credit of up to 25% of the construction and installation costs. Eligible property includes pumps, storage tanks, and related equipment used exclusively for distribution, dispensing, and storing renewable fuel. A qualified facility must clearly label the equipment used to store or dispense the fuel as being associated with the renewable fuel. The credit must be taken in three equal annual installments beginning with the taxable year in which the facility is placed into service. Renewable fuel is defined as ethanol fuel blends of 70% or greater (E70) dispensed at the retail level for use in motor vehicles, and pure ethanol or biodiesel fuel dispensed by a distributor or facility that blends these non-petroleum liquids with gasoline fuel or diesel fuel for use in motor vehicles. (Reference South Carolina Code of Laws 12-63-3610)

Biofuels Production Facility Tax Credit

A taxpayer that constructs and places into service a commercial facility for the production of renewable fuel is eligible for a tax credit of up to 25% of the cost of constructing or renovating a building and equipping the facility, not to exceed $1 million. Production of renewable fuel includes intermediate steps such as milling, crushing, and handling feedstock and the distillation and manufacturing of the final product. The entire credit must be taken in seven equal annual installments beginning with the taxable year in which the facility is placed in service. Renewable fuel is defined as liquid non-petroleum based fuel that can be placed in motor vehicle fuel tanks and used to operate on-road vehicles, including all forms of fuel commonly or commercially known or sold as biodiesel and ethanol. (Reference South Carolina Code of Laws 12-63-3610)

State Agency Preference for Alternative Fuel and Advanced Vehicles

Preference in purchasing state motor vehicles must be given to hybrid, plug-in hybrid, biodiesel, hydrogen, fuel cell, or flex fuel vehicles when the performance, quality, and anticipated life cycle costs are comparable to other available motor vehicles. (Reference Senate Bill 368, 2008, and South Carolina Code of Laws 1-11-310)

State Agency Biodiesel Blend Mandate

All state-owned diesel fueling facilities must provide fuel containing at least 5% biodiesel (B5) in all diesel pumps. (Reference South Carolina Code of Laws 12-63-30)

Biodiesel Use in School Buses

The South Carolina Department of Education is required to fuel the state school bus fleet with biodiesel when feasible. (Reference South Carolina Code of Laws 59-67)

State Agency Alternative Fuel Use Requirement

Whenever practical and economically feasible, all state agencies operating alternative fuel vehicles are required to use alternative fuels in those vehicles. Private businesses are encouraged to increase the use of alternative fuels in the state. (Reference Executive Order 2001-35)

Alternative Fuel Tax

All fuels, including alternative fuels and alternative fuel blends, are exempt from the state sales and use tax. However, all fuels are subject to a state fuels user fee of $0.16 per gallon. Alternative fuels include butane, liquefied petroleum gas, and compressed natural gas. Blended fuels are defined as mixtures composed of gasoline or diesel fuel and another liquid, other than products such as carburetor detergent or oxidation inhibitor, which can be used as a fuel to operate a highway vehicle. (Reference South Carolina Code of Laws 12-28-110, 12-28-310, and 12-36-2120)