Biodiesel Laws and Incentives in Minnesota

The list below contains summaries of all Minnesota laws and incentives related to biodiesel.

Laws and Regulations

Alternative Fuel Tax

The Minnesota Department of Revenue (DOR) imposes an excise tax on the first licensed distributor that receives E85 fuel products in the state and on distributors, special fuel dealers, or bulk purchasers of other alternative fuels. The Minnesota Department of Revenue Commissioner must determine the tax rate for alternative fuel sales annually. The tax rate for E85 is set by the Minnesota Highway Construction Cost Index. The tax rate for propane is $0.239 per gallon, liquified natural gas is $0.192, E85 is $0.2259 per gallon, biodiesel (B100) is $0.318 per gallon, and compressed natural gas is $0.00251 per thousand cubic feet. Exemptions for certain categories of fuel purchasers apply. For more information, including current tax rates and fees, see the DOR Petroleum Tax Fuel Excise Tax Rates and Fees website.

(Reference Minnesota Statutes 296A.07 and 296A.08)

Biodiesel Blend Mandate

During the months of April through September, diesel fuel sold in the state must contain at least 20% biodiesel (B20). Diesel fuel sold during the remainder of the year must contain at least 5% biodiesel (B5). From April 1 to April 14, diesel fuel sold in the state can be a lower blend than B20, but not less than 10% biodiesel (B10).

The Minnesota Department of Agriculture, Department of Commerce, and the Pollution Control Agency, in consultation with the Biodiesel Task Force and other technical experts, must submit annual reports regarding the implementation of minimum biodiesel content requirements, including information about the price and supply of biodiesel fuel.

(Reference Minnesota Statutes 239.75 and 239.77)

Biodiesel Definition

Biodiesel is defined as a renewable, biodegradable, mono alkyl ester combustible liquid fuel that is derived from agricultural plant oils or animal fats and meets ASTM Standard D6751-11b for pure biodiesel (B100). A biodiesel blend is a blend of diesel fuel and biodiesel fuel (between 6% and 20%) for on-road and off-road diesel vehicle use. Biodiesel blends must comply with ASTM Standard D7467-10. Biodiesel produced from palm oil is not considered biodiesel fuel unless the palm oil is waste oil or grease collected from within the United States or Canada.

(Reference Minnesota Statutes 239.761 and 239.77)

Biofuel Blend Specifications

All gasoline sold or offered for sale in Minnesota must contain at least:

• 10% corn-based ethanol by volume or the maximum percent by volume of corn-based ethanol authorized in a waiver issued by the U.S. Environmental Protection Agency (EPA), whichever is greater; or
• 10% other biofuel authorized in an EPA waiver by volume, or a biofuel formulation registered by EPA under Title 42 of the Code of Federal Regulations, section 7545.

Biofuel is defined as renewable fuel with an approved fuel pathway under the Energy Policy Act of 2005, as amended under the Energy Independence and Security Act of 2007.

(Reference Minnesota Statutes 239.761 and 239.791)

Biofuel Incentive Authorization

The Agricultural Growth, Research, and Innovation Program may offer grants, loans, or other financial incentives to alternative fuel retailers for the installation of ethanol blender pumps or other rural economic infrastructure activities, or to producers of transportation fuels from cellulosic material or bio-based products.

(Reference Minnesota Statutes 41A.12)

Minnesota Biofuels Replacement Goals

The Minnesota Department of Weights and Measures promotes the replacement of petroleum used in the state with the goal that biofuels will account for at least the specified percentage of all gasoline offered for sale by the dates below:

(Reference Minnesota Statutes 239.7911)

State Incentives

Biofuel Production Grant Program

The Minnesota Department of Agriculture provides grants to biofuel producers for up to $2.1053 per million British Thermal Unit (MMbtu) for advanced biofuel produced from cellulosic biomass and $1.053 per MMbtu for advanced biofuel produced from sugar or starch feedstocks. Eligible facilities must obtain 80% of their feedstocks from Minnesota, unless the facility is 50 miles or less from the state border; begin production by June 30, 2025; and meet minimum production levels. Additional requirements apply. For more information, see the Agricultural Growth, Research and Innovation Bioincentive Program website.

(Reference Minnesota Statutes 41A.16 and 239.051)

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