North Carolina Laws and Incentives

Listed below are the summaries of all current North Carolina laws, incentives, regulations, funding opportunities, and other initiatives related to alternative fuels and vehicles, advanced technologies, or air quality. You can go directly to summaries of:

• State Incentives (12)
• Laws and Regulations (10)

State Incentives

Renewable Energy Property Tax Credit

Taxpayers who construct, purchase, or lease renewable energy property may qualify for a tax credit equal to 35% of the cost of the property. Renewable energy property includes equipment that uses renewable biomass resources to produce ethanol, methanol, biodiesel, or methane produced from anaerobic biogas, using agricultural and animal waste or garbage; and related devices for converting, conditioning, and storing the liquid fuels and gas produced with the biomass equipment. The taxpayer must claim the credit in five equal installments beginning with the taxable year in which the property is placed into service. There is a maximum credit amount of $2.5 million per installation, which applies to renewable energy property placed in service for any purpose other than residential. To qualify, property must be placed into service before January 1, 2016. (Reference North Carolina General Statutes 105-129.15 and 105-129.16A)

Idle Reduction Technology Rebates

The North Carolina Department of Environment and Natural Resources (NCDENR) offers rebates of up to $2,500 for approved idle reduction technologies through the Idle Reduction Devices Rebate Program. Eligible technologies must be purchased after January 1, 2009, and approved by the U.S. Environmental Protection Agency or California Air Resources Board. Businesses may receive a maximum of six rebates, and NCDENR gives priority to individuals or businesses that have not previously received a rebate. Additional restrictions apply. As of October 2012, there are no available rebates. To register for the rebate waitlist and for information on future funding opportunities, contact NCDENR.

Biofuels Industry Development Grants

The North Carolina Green Business Fund (Fund) provides grants to private businesses with fewer than 100 employees, nonprofit organizations, local governments, and state agencies to encourage the expansion of small and medium sized businesses and to help grow a green economy. One of the Fund's priority areas is the development of the biofuels industry in the state. The North Carolina Department of Commerce may make grants available to maximize development, production, distribution, retail infrastructure, and consumer purchase of biofuels, including grants to enhance biofuels workforce development. As of October 2012, there are no open grant solicitations. (Reference North Carolina General Statutes 143B-437.4)

Biofuels Commercialization Grants

The Biofuels Center of North Carolina (Center) is a private, nonprofit corporation the Legislature funds to implement the goal that by 2017, 10% of liquid fuels sold in North Carolina will come from biofuels grown and produced within the state. The Center awards funds to academic institutions, economic development organizations, nonprofit corporations, and other entities through an annual competitive awards process. Grants and contracts are designed to identify and bridge gaps in knowledge and information, speed up the development of technology, and create a seamless continuum between agriculture and transportation fuels.

Alternative Fuel and Idle Reduction Grants

Diesel Emission Reduction Grants are available from the North Carolina Department of Environment and Natural Resources Division of Air Quality for the incremental cost of purchasing original equipment manufacturer alternative fuel vehicles, vehicle conversions, and implementing idle reduction programs.

High Occupancy Vehicle (HOV) Lane Exemption

Qualified plug-in electric vehicles, dedicated natural gas vehicles, and fuel cell electric vehicles may use North Carolina HOV lanes, regardless of the number of occupants. (Reference North Carolina General Statutes 20-4.01 and 20-146.2)

Plug-In Electric Vehicle (PEV) Emissions Inspection Exemption

Qualified PEVs are exempt from state emissions inspection requirements. Other restrictions may apply. (Reference North Carolina General Statutes 20-4.01 and 20-183.2)

Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Support

The Clean Fuel Advanced Technology (CFAT) project focuses on reducing transportation-related emissions in non-attainment and maintenance counties for National Ambient Air Quality Standards. A project that is adjacent to these areas may also be eligible if the project will reduce emissions in eligible counties. The North Carolina Department of Transportation funds the CFAT project, which covers three broad areas: education and outreach; project funding; and recognition of exemplary activities. Beginning January 2013, funding will be available for the 2013-2016 funding cycles. Financial support is anticipated to be available for AFVs, fueling infrastructure, idle reduction technologies, heavy-duty HEVs, heavy-duty buses, and diesel retrofits.

Alternative Fuel and Alternative Fuel Vehicle (AFV) Fund

The North Carolina State Energy Office administers the Energy Policy Act (EPAct) Credit Banking and Selling Program, which enables the state to generate funds from the sale of EPAct 1992 credits. The funds that EPAct credit sales generate are deposited into the Alternative Fuel Revolving Fund (Fund) for state agencies to offset the incremental costs of purchasing biodiesel blends of at least 20% (B20) or ethanol blends of at least 85% (E85), developing alternative fueling infrastructure, and purchasing AFVs and hybrid electric vehicles. Funds are distributed to state departments, institutions, and agencies in proportion to the number of EPAct credits generated by each. For the purposes of this program, alternative fuels include 100% biodiesel (B100), biodiesel blends of at least B20, ethanol blends of at least E85, compressed natural gas, propane, and electricity. The Fund also covers additional projects approved by the Energy Policy Council. (Reference North Carolina General Statutes 143-58.4, 143-58.5, 143-341(8)i, and 136-28.13)

Alternative Fuel Tax Exemption

The retail sale, use, storage, and consumption of alternative fuels is exempt from the state retail sales and use tax. (Reference North Carolina General Statutes 105-164.13(11))

Biodiesel Tax Exemption

An individual who produces biodiesel for use in that individual's private passenger vehicle is exempt from the state motor fuel excise tax. (Reference North Carolina General Statutes 105-449.88(9))

Bond Exemption for Small Biofuels Suppliers

Fuel blenders or suppliers of ethanol or biodiesel are not required to file a bond with the North Carolina Department of Revenue when the expected motor fuel tax liability is less than $2,000. (Reference North Carolina General Statutes 105-449.72(a))

Laws and Regulations

Ethanol Blend Labeling Requirements

The North Carolina Gasoline and Oil Inspection Board must adopt rules requiring labels to be posted on pumps that dispense ethanol-blended gasoline available for purchase. The labels must specify whether the fuel being dispensed is an ethanol blend of less than 10% (E10) or greater than 10%. (Reference North Carolina General Statutes 119-27.2)

Alternative Fuels Feasibility Study

The North Carolina State Energy Office, Department of Administration, Department of Public Instruction, and Department of Transportation must establish an interagency task force to study the feasibility of increased alternative fuel use in state vehicles. The task force will:

• Perform a cost-benefit analysis on each alternative fuel to identify the fuel or fuel mix that would be the most cost-effective for each type of vehicle used by each agency;
• Evaluate the cost of alternative fuel vehicles (AFVs), including the purchase price, operation and maintenance costs, and associated fueling infrastructure costs;
• Identify opportunities for the use of existing commercial or public fueling infrastructure for alternative fueling and explore opportunities to leverage state funds with other public or private funds to develop new fueling infrastructure; and
• Make recommendations on which fuel or fuel mix and types of AFVs would be appropriate for each agency.

The task force must report results of the study and any recommendations to the Joint Legislative Commission on Energy Policy before December 1, 2012. (Reference House Bill 177, 2012)

State Highway Electric Vehicle Supply Equipment (EVSE) Regulations

The North Carolina Department of Transportation (NCDOT) may install and operate publicly-accessible EVSE at state-owned highway rest stops so long as it has developed a mechanism to charge EVSE users a fee to recover the costs related to electricity consumed, processing the user fee, and EVSE operation and maintenance. NCDOT may consult with other state agencies and industry representatives to develop this required cost recovery mechanism. (Reference House Bill 177, 2012)

Ethanol Blend Requirement

Suppliers that import gasoline for sale in North Carolina must offer fuel that is not pre-blended with fuel alcohol but that is suitable for future blending. Future contract provisions that restrict distributors or retailers from blending gasoline with fuel alcohol are void. (Reference North Carolina General Statutes 75-90, 105-449.60)

Biodiesel Warranty Requirement

All new state government diesel vehicles must have a manufacturer's warranty that allows the use of biodiesel blends of 20% (B20) in the vehicle. This requirement does not apply if the North Carolina Department of Administration determines that there is no vehicle available that is suited for the intended use and that has a manufacturer's warranty allowing the use of B20. (Reference North Carolina General Statutes 20-351.11, 136-28.15, and 143-341(8)(i))

Biodiesel Requirement for School Buses

Every school bus that is capable of operating on diesel fuel must be capable of operating using blends of at least 20% biodiesel (B20). At least 2% of the total volume of fuel purchased annually by local school districts statewide for use in diesel school buses must be a minimum of B20, to the extent that biodiesel blends are available and compatible with the technology of the vehicles and the equipment used. (Reference North Carolina General Statutes 115C-240(c) and 115C-249(a))

Fuel-Efficient Vehicle Acquisition Requirements

When purchasing new state vehicles, the North Carolina Department of Administration must give purchase preference to vehicles with fuel economy ratings that rank among the top 15% of comparable vehicles in their class.(Reference North Carolina General Statutes 143-341(8)(i))

Alternative Fuel Vehicle (AFV) Acquisition Requirements

At least 75% of new or replacement state government light-duty cars and trucks with a gross vehicle weight rating of 8,500 pounds or less must be AFVs or low emission vehicles. (Reference North Carolina General Statutes 143-215.107C)

School Bus Idle Reduction Requirement

All local boards of education in North Carolina have adopted idle reduction policies prohibiting school buses from idling unnecessarily on school grounds or warming up for longer than five minutes. The North Carolina School Boards Association provided a sample policy and administrative procedure to school districts to meet these requirements.

Plug-In Electric Vehicle (PEV) Definition

A PEV is defined as a vehicle that:

• Draws electricity from a battery with a capacity of at least four kilowatt hours and is capable of being charged from an external source;
• Has not been modified from the original equipment manufacturer power train specifications;
• Has a gross vehicle weight rating of 8,500 pounds or less;
• Has a maximum speed of at least 65 miles per hour; and
• Meets applicable requirements in Title 49 of the Code of Federal Regulations, section 571.

(Reference North Carolina General Statutes 20-4.01)