Alternative fuels efforts enacted in Michigan

| Monday, August 14, 2006

Gov. Jennifer Granholm has added her signature to a handful of efforts in Michigan to promote renewable fuels. Currently, only four pumps dispense the fuels in the state.

The legislation is intended to help spur growth in Michigan’s agriculture industry and promote and encourage use of E85, a fuel blend that is 85 percent ethanol, and biodiesel, which contains at least 5 percent diesel fuel derived from crops.

“Making renewable fuels available at more locations around the state will promote these cheaper energy sources such as ethanol and biodiesel,” Sen. Jud Gilbert, R-Algonac, said in a written statement.

One of the new laws will lower the state tax on each gallon of biodiesel fuel from 15 cents per gallon to 12 cents. The new law, previously SB1074, also lowers ethanol-blended fuel to 12 cents, down from the 19 cents figured into a gallon of regular gas.

An annual determination of the difference between the amount of revenue collected under the new law and the amount that would have been collected under existing tax provisions is required. In addition, the Legislature is required to appropriate the amount of the differences to the Michigan Transportation Fund.

Another bill signed into law, SB1075, requires the Michigan Department of Management and Budget, by Jan. 1, 2007, to install pumps and related equipment to supply fuel to the state-owned vehicle fleet with alternative fuels – such as E85 and biodiesel.

A separate effort signed into law requires distributors and retail dealers of diesel and alternative fuels to obtain a license for each retail outlet.

Previously SB1079, the new law also amends the Motor Fuels Quality Act to extend to diesel and specified alternative fuels regulations concerning the quality, storage, manufacture, delivery, and sale of fuel.

Another new law, previously HB5752, will expand to 10 the number of the state’s renaissance zones – areas targeted for economic development – to cover the manufacturing of alternative fuels.

A renaissance zone could only be created with the consent of the appropriate city, village, or township, or a combination, and the county in which the facility is located. The zones would be designated by the State Administrative Board on the recommendation of the Michigan Strategic Fund Board.

One other bill signed into law gives fueling stations grant money to cover the cost of adding ethanol and biodiesel pumps in the state.

The new law sets up matching grant programs to provide owners and operators of service stations and bulk plants with up to 50 percent of the cost for creating fuel delivery systems capable of providing E85 fuel and biodiesel blends.

Grants to service station owners and operators for E85 or biodiesel facilities will be capped at $3,000 for the costs of converting an existing system into an E85 or biodiesel system. Grants to construct new E85 systems will be capped at $12,000 while new biodiesel systems will be capped at $4,000.

Grants to bulk plants for biodiesel facilities would be capped at $2,000 for the cost of converting an existing system into a biodiesel system, and $15,000 for the constructing a new biodiesel system. A “bulk plant” is defined as a motor fuel storage and distribution facility that is not a terminal and from which motor fuel may be withdrawn by a tank wagon, a transport truck, or a marine vessel.

The new law, previously HB5754, also requires the MSF to provide up to $500,000 in fiscal year 2006-2007 for the grant programs.

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