Oklahoma OK's tax credits for alternative fuels

| 8/15/2005

Oklahoma Gov. Brad Henry has signed two pieces of legislation into law that encourage the manufacturing of alternative fuels in the state.

One law – formerly HB1398 – sponsored by Rep. James Covey, D-Custer City, provides credit against the tax imposed for any biodiesel facility that produces at a rate of 25 percent of its “originally-designed capacity.” A 20-cent-per-gallon tax credit would be given for every gallon of biodiesel produced.

A company must build and begin operating a biodiesel plant before it would be granted the tax credit. In addition, facilities must specialize in producing biodiesel derived from organic materials, including animal fats and grain components.

Covey said in a written statement a total of $125 million will be available to finance the tax credits, which will be available for five years beginning Dec. 31, 2007.

Biodiesel is an alternative fuel made from agricultural products such as grains or animal fat. It can be used alone or blended with petroleum-based diesel and used in diesel engines.

Experts have told Land Line that fuel meeting the federal standard for biodiesel can be used in any diesel engine without modification.

Covey said he also believes the fuel will eventually reduce the nation’s dependence on foreign oil by extending the nation’s domestic supply of fuel.

A separate effort creates tax credits for producers of ethanol in Oklahoma and provides for certain eligibility requirements for those facilities.

The new law, previously HB1556, also offers tax cuts on ethanol prices at the pump.

The Sooner State is not alone in its pursuit of alternative fuels. Illinois and New Mexico recently have made commitments to increasing their state’s dependence on biofuels.

Illinois Gov. Rod Blagojevich signed a bill into law promoting the use of biodiesel by government-owned diesel vehicles.

The new law requires any government-owned diesel vehicles to use a 2 percent biodiesel blend, but only under certain conditions. For example, use of the blend is required only if the state vehicle is fueling at a bulk, central fueling facility where the blend is available.

In New Mexico, Gov. Bill Richardson has made a commitment to boosting the state government’s dependence on alternative fuels such as biodiesel and ethanol-blended gasoline.

Richardson said in a written statement earlier this month he will issue an executive order to require that 15 percent of the fuel used by state vehicles comes from renewable sources by the end of the decade.