Michigan Incentives and Laws

Last Updated December 2007

Michigan is the home of the Ann Arbor (www.aacleancities.org), Detroit (www.nextenergy.org/services/collaborativeprograms/wg_cleancities.aspxp), and Greater Lansing Area (www.michigancleancities.org) Clean Cities Coalitions. Coordinator contact information is listed in the Points of Contact section.

State Incentives

Hybrid Electric Vehicle Research and Development Tax Credit

For tax years beginning on or after January 1, 2008, and ending before January 1, 2016, a taxpayer engaged in research and development of a qualified hybrid system that has the primary purpose of propelling a motor vehicle may claim a tax credit under the Single Business Tax. This tax credit is equal to 3.9% of all wages, salaries, fees, bonuses, commissions, or other payments made in the taxable year for the benefit of employees for services performed in a qualified facility. The maximum amount of credit allowed for any one taxpayer is $2 million in a single tax year. The qualified taxpayer may also claim a tax credit under the Michigan Business Tax equal to 3.9% of all wages, salaries, fees, bonuses, commissions, or other payments made in the taxable year on behalf of or for the benefit of employees for services performed in a qualified facility. The maximum amount of credit allowed for any one taxpayer is $3 million in a single tax year. (Reference Senate Bill 944, 2007, House Bill 5409, 2007 and Michigan Compiled Laws 208.1101 to 208.1601 and 208.32)

Alternative Fuel Research and Development Tax Exemption

The Michigan Strategic Fund (MSF) has designated an Alternative Energy Zone (AEZ) within Wayne State University's Research and Technology Park in Detroit to promote the research, development, and manufacturing of alternative energy technologies, including alternative fuel vehicles (AFV). Businesses located within the AEZ that are engaged in qualified activities are eligible for exemption from state and local taxes, to be determined by the Michigan NextEnergy Authority (MNEA). Alternative energy technology companies located in the AEZ may also be eligible for a refundable payroll credit under the Single Business Tax. For more information, see the MNEA Web site. (Reference Michigan Compiled Laws 207.821-207.827)

Alternative Fuel Fueling Infrastructure Grants

The Michigan Strategic Fund (MSF) has created the Ethanol and Biodiesel Matching Grant Program to provide incentives to owners and operators of service stations to convert existing and install new fuel delivery systems designed to provide E85 and biodiesel blends. Grants may not exceed 75% of the costs to convert existing fueling infrastructure, up to $3,000 per facility. Grants may not exceed 50% of the new construction costs to install new fueling infrastructure, up to $12,000 per facility for E85 and $4,000 per facility for biodiesel blends. Other funding limitations may apply. For the purpose of this grant program, biodiesel must meet American Society for Testing and Materials (ASTM) D-6751 specification and be approved by the Michigan Department of Agriculture. E85 is defined as a fuel blend containing between 70% and 85% denatured ethanol and meets ASTM D-5798 specifications. (Reference Michigan Compiled Laws 125.2078)

Reduced Biofuels Tax

A tax of $0.12 per gallon is imposed on gasoline containing at least 70% ethanol and diesel fuel containing at least 5% biodiesel. Ethanol is defined as denatured fuel ethanol that is suitable for use in a spark-ignition engine when mixed with gasoline and must meet the American Society for Testing and Materials (ASTM) D-5798 specifications. Biodiesel is defined as a fuel composed of mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats and, in accordance with standards specified for 100% biodiesel fuel and meets ASTM D-6571 specification, as approved by the Michigan Department of Agriculture. (Reference Michigan Compiled Laws 207.1008)

Alternative Fuel Development Property Tax Exemption

A tax exemption may apply to industrial property which is used for, among other purposes, high-technology activities or the creation or synthesis of biodiesel fuel. High-technology activities include those related to advanced vehicle technologies such as electric, hybrid, or alternative fuel vehicles and their components. In order to qualify for the tax exemptions, an industrial facility must obtain an exemption certificate for the property from the State Tax Commission. (Reference Senate Bill 207, 2007, and Michigan Compiled Laws 207.552 and 207.803)

Alternative Fuel Vehicle (AFV) Emissions Inspection Exemption

Dedicated AFVs powered by compressed natural gas, propane, electricity, or any other source as defined by rule promulgated by the Michigan Department of Transportation are exempt from emissions inspection requirements. (Reference Michigan Compiled Laws 324.6311 and 324.6512)

State Laws and Regulations

Acquisition and Alternative Fuel Use Requirement

The Department of Management and Budget (DMB) is required to continue to comply with the requirements of the federal Energy Policy Act of 1992. The DMB must include hybrid electric vehicles within the state's fleet if the vehicles are determined to be cost effective and capable of meeting the state's transportation needs. In addition, as the state's public alternative fuel fueling infrastructure continues to develop, state motor fleet AFVs are required to fuel with alternative fuels to the extent possible. The DMB will develop rules to encourage or require the use of diesel fuel with the highest percentage of biodiesel content available for diesel-powered vehicles in the state fleet. (Reference Executive Directive 22, 2007)

Regional Biofuels Promotion Plan

Michigan has joined Indiana, Iowa, Kansas, Minnesota, Ohio, South Dakota, and Wisconsin in adopting the Energy Security and Climate Stewardship Platform Plan (Platform) (PDF 2 MB), which establishes shared goals for the Midwest region, including increased biofuels production and use. Specifically, the Platform sets the following goals:

• Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012;
• Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025;
• Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025;
• By 2025, at least 50% of all transportation fuels consumed by the Midwest will be from regionally produced biofuels and other low-carbon transportation fuels.

The Platform also establishes a regional biofuels corridor program. The program directs state transportation, agriculture, and regulatory officials to develop a system of coordinated signage across the region for biofuels and advanced transportation fuels and to collaborate to create regional E85 corridors. The program requires standardized fuel product coding at fueling stations as well as increased education for retailers about converting existing fueling infrastructure to dispense E85. The state transportation, agriculture, and regulatory officials are required to report their corridor implementation plans to the Midwest Governors Association by April 1, 2008.

Renewable Fuels Commission

The Renewable Fuels Commission is established within the Michigan Department of Agriculture to investigate and recommend strategies that the governor and the legislature may implement to promote the use of alternative fuels and alternative fuel vehicles (AFV). The Commission will also identify mechanisms that promote alternative fuel research and effective communication and coordination of efforts between state and local governments, private industry, and institutes of higher education. The commission may also review any state regulation that may hinder the use, research, and development of alternative fuels and AFVs, and recommend changes to the governor. In June 2007, the Commission submitted a report on its investigation and recommendations to the legislature and the governor (PDF 453). The Commission must issue follow-up reports at least annually until January 1, 2010. (Reference Michigan Compiled Laws 290.581-290.586)

Biofuels Blender Requirements

Blenders of ethanol and gasoline and biodiesel and diesel fuels outside of the bulk transfer terminal system must obtain a blender's license and are subject to blender reporting requirements. A licensed supplier who blends ethanol and gasoline or biodiesel and diesel fuels is also required to obtain a blender's license. (Reference Senate Bill 1074, 2006, and Michigan Compiled Laws 207.1008)

Hydrogen Production and Retail Requirements

All hydrogen fuel produced and sold in the state must meet state quality requirements. Any retailer offering hydrogen fuel for sale in the state must register with, and obtain approval from, the Michigan Department of Agriculture (MDA). A hydrogen retailer must also obtain a license from the MDA for each retail outlet they operate. (Reference Senate Bill 1079, 2006, and Michigan Compiled Laws 290.642-290.647)

Biodiesel Retail and Storage Requirements

All biodiesel and biodiesel blends sold in the state must meet state quality requirements. A refiner, distributor, or retailer cannot transfer or dispense biodiesel or biodiesel blends unless the fuel is visibly free of undissolved water, sediments, and other suspended matter. Additionally, a biodiesel retailer is prohibited from selling biodiesel or biodiesel blends drawn from a storage tank that has more than two inches of water or water-alcohol at the bottom. Any retailer of biodiesel or biodiesel blends must obtain a license from the Michigan Department of Agriculture for each retail outlet they operate. (Reference Senate Bill 1079, 2006, and Michigan Compiled Laws 290.642-290.647)

Utilities/Private Incentives

Alternative Energy Technology Promotion

NextEnergy is an organization with a comprehensive set of actions and incentives designed to help position Michigan as the world's leading center for alternative energy technology, research and development, education, and manufacturing. NextEnergy programs support technologies for both mobile and stationary applications using renewable and distributed energy solutions. NextEnergy offers several incentives for companies that develop or utilize alternative energy applications.

Point of Contact

Dan Radomski
Clean Cities Coordinator
Detroit Clean Cities Coalition/NextEnergy
Phone (313) 833-0100 x150
Fax (313) 833-0101
danr@nextenergy.org
http://www.nextenergy.org/services/collaborativeprograms/wg_cleancities.aspx

Points of Contact:

NAME/EMAIL	AGENCY	TITLE	PHONE/FAX
Sean Reed reed@cec-mi.org	Ann Arbor Clean Cities Coalition	Clean Cities Coordinator	Phone: (734) 717-1455 Fax: (734) 714-3075
Dan Radomski danr@nextenergy.org	Detroit Clean Cities Coalition/NextEnergy	Clean Cities Coordinator	Phone: (313) 833-0100 x150 Fax: (313) 833-0101
Maggie Striz Calnin maggie@kbsincorporated.com	Greater Lansing Area Clean Cities Coalition	Communications & Program Coordinator	Phone: (517) 290-2298 Fax:
Kay (Milewski) Kelly kay.kelly@netl.doe.gov	U.S. Department of Energy, National Energy Technology Laboratory	Project Manager	Phone: (304) 285-4535 Fax: (304) 285-4638
Tim Shireman shiremant@michigan.gov	Michigan Energy Office	Department of Labor and Economic Growth	Phone: (517) 241-6281 Fax: (517) 241-6229
Jody Pollok-Newsom jpollok@micorn.org	Corn Marketing Program of Michigan and Michigan Corn Growers Association	Executive Director	Phone: (517) 668-2676 Fax: (517) 668-2670
Lisa Scramlin lscramlin@micorn.org	Corn Marketing Program of Michigan and Michigan Corn Growers Association	Communication and Programs Coordinator	Phone: (517) 668-2676 Fax: (517) 668-2670
Pete Porciello porciellop@michigan.gov	Michigan Department of Transportation	Air Quality Specialist	Phone: (517) 335-2603 Fax: (517) 373-9255
Robert Rusch ruschr@michigan.gov	Michigan Department of Environmental Quality	Environmental Quality Specialist, Strategic Development Unit	Phone: (517) 373-7041 Fax: (517) 241-7499
Teresa Walker walkertr@michigan.gov	Michigan Department of Environmental Quality	Senior Environmental Quality Analyst, Emissions Trading Programs	Phone: (517) 335-2247 Fax: (517) 241-7499
Scott Benson scott.benson@gsa.gov	U.S. General Services Administration	Transportation Specialist, Great Lakes Region	Phone: (312) 886-8682 Fax: (312) 886-0989