Propane Laws and Incentives in California
The list below contains summaries of all California laws and incentives related to propane.
Laws and Regulations
Alternative Fuel Tax
The excise tax imposed on compressed natural gas (CNG), liquefied natural gas (LNG), and propane used to operate a vehicle can be paid through an annual flat rate sticker tax based on the following vehicle weights:
| Unladen Weight | Fee |
|---|---|
| All passenger cars and other vehicles 4,000 pounds (lbs.) or less | $36 |
| More than 4,000 lbs. but less than 8,001 lbs. | $72 |
| More than 8,000 lbs. but less than 12,001 lbs. | $120 |
| 12,001 lbs. or more | $168 |
Alternatively, owners and operators may pay an excise tax on CNG of $0.0887 per gasoline gallon equivalent (GGE) measured at standard pressure and temperature, $0.1017 for each diesel gallon equivalent (DGE) of LNG, and $0.06 per gallon of propane. One GGE is equal to 126.67 cubic feet or 5.66 lbs. of CNG and one DGE is equal to 6.06 lbs. of LNG. The excise tax on ethanol and methanol fuel blends containing up to 15% gasoline or diesel fuel is one-half the tax on gasoline and diesel prescribed by California Revenue and Taxation Code section 8651.
(Reference California Revenue and Taxation Code 8651-8651.8 and California Business and Professions Code 13404 and 13470)
Alternative Fuel Vehicle (AFV) Manufacturing Incentive Authorization
Cities and counties may establish a capital investment incentive program for qualified manufacturing facilities that manufacture fuels or components used in AFVs and related infrastructure. Each county or city that elects to establish a capital investment incentive program must notify the Governor’s Office of Business and Economic Development. Additional requirements apply.
(Reference Assembly Bill 2922, 2024)
Alternative Fuel Vehicle (AFV) Parking Incentive Programs
The California Department of General Services (DGS) and California Department of Transportation (Caltrans) must develop and implement AFV parking incentive programs in public parking facilities operated by DGS with 50 or more parking spaces and park-and-ride lots owned and operated by Caltrans. The incentives must provide meaningful and tangible benefits to drivers, such as preferential spaces, reduced fees, and fueling infrastructure.
(Reference California Public Resources Code 25722.9)
Alternative Fuel Vehicle (AFV) and Fueling Infrastructure Grants
The Motor Vehicle Registration Fee Program (Program) provides funding for projects that reduce air pollution from on- and off-road vehicles. Eligible projects include purchasing AFVs and developing alternative fueling infrastructure. For more information, including grant funding and distribution, you may contact you local air districts or see the Program website for more information about available grant funding and distribution information.
(Reference California Health and Safety Code 44220 (b))
Alternative Fuel and Hybrid Electric Vehicle Retrofit Regulations
Converting a vehicle to operate on an alternative fuel in lieu of the original gasoline or diesel fuel is prohibited unless the California Air Resources Board (CARB) has evaluated and certified the retrofit system. CARB will issue certification to the manufacturer of the system in the form of an Executive Order once the manufacturer demonstrates compliance with the emissions, warranty, and durability requirements. A manufacturer is defined as a person or company who manufactures or assembles an alternative fuel retrofit system for sale in California; this definition does not include individuals wishing to convert vehicles for personal use. Individuals interested in converting their vehicles to operate on an alternative fuel must ensure that the alternative fuel retrofit systems used for their vehicles have been CARB certified. For more information, see the CARB Alternative Fuel Retrofit Systems website.
A hybrid electric vehicle that is Model Year 2000 or newer and is a passenger car, light-duty truck, or medium-duty vehicle may be converted to incorporate off-vehicle charging capability if the manufacturer demonstrates compliance with emissions, warranty, and durability requirements. CARB issues certification to the manufacturer and the vehicle must meet California emissions standards for the model year of the original vehicle.
(Reference California Code of Regulations Title 13, Section 2030-2032 and California Vehicle Code 27156)
Alternative Fuel and Vehicle Policy Development
The California Energy Commission (CEC) must prepare and submit an Integrated Energy Policy Report (IEPR) to the governor on a biannual basis. The IEPR provides an overview of major energy trends and issues facing the state, including those related to transportation fuels, technologies, and infrastructure. The IEPR also examines potential effects of alternative fuels use, vehicle efficiency improvements, and shifts in transportation modes on public health and safety, the economy, resources, the environment, and energy security. The IEPR’s primary purpose is to develop energy policies that conserve resources, protect the environment, ensure energy reliability, enhance the state’s economy, and protect public health and safety.
As of November 1, 2015, and every four years thereafter, the CEC must also include in the IEPR strategies to maximize the benefits of natural gas in various sectors. This includes the use of natural gas as a transportation fuel. For more information, see the 2023 Integrated Energy Policy Report.
(Reference California Public Resources Code 25302 and 25303.5)
Fleet Emissions Reduction Requirements - South Coast
The South Coast Air Quality Management District (SCAQMD) requires government fleets and private contractors under contract with public entities to purchase non-diesel lower emission and alternative fuel vehicles. The rule applies to transit bus, school bus, refuse hauler, and other vehicle fleets of at least 15 vehicles that operate in Los Angeles, San Bernardino, Riverside, and Orange counties.
(Reference SCAQMD Rules 1186.1 and 1191-1196)
Low Emission Vehicle (LEV) Standards
California’s LEV II exhaust emissions standards apply to Model Year (MY) 2004 and subsequent model year passenger cars, light-duty trucks, and medium-duty passenger vehicles meeting specified exhaust standards. The LEV II standards represent the maximum exhaust emissions for LEVs, Ultra LEVs, and Super Ultra LEVs, including flexible fuel, bi-fuel, and dual-fuel vehicles when operating on an alternative fuel. MY 2009 and subsequent model year passenger cars, light-duty trucks, and medium-duty passenger vehicles must meet specified fleet average greenhouse gas (GHG) exhaust emissions requirements. Each manufacturer must comply with these fleet average GHG requirements, which are based on California Air Resources Board (CARB) calculations. Bi-fuel, flexible fuel, dual-fuel, and grid-connected hybrid electric vehicles may be eligible for an alternative compliance method when operating on gasoline.
In December 2012, CARB finalized regulatory requirements, referred to as LEV III, which allow vehicle manufacturer compliance with the U.S. Environmental Protection Agency’s GHG requirements for MY 2017-2025 to serve as compliance with California’s adopted GHG emissions requirements for those same model years.
In November 2022, CARB approved LEV IV standards, which updates regulations for light- and medium-duty internal combustion engine vehicles by reducing allowable exhaust emissions and emissions caused by evaporation. LEV IV also changes the calculation procedure for new vehicle fleet-average emissions and prohibits zero emissions vehicles from being considered in fleet-average emissions calculations by MY 2029.
For more information, see the CARB LEV website for more information.
(Reference California Code of Regulations Title 13, Section 1961-1961.4)
Mobile Source Emissions Reduction Requirements
Through its Mobile Sources Program, the California Air Resources Board (CARB) has developed programs and policies to reduce emissions from on-road heavy-duty diesel vehicles through the installation of verified diesel emission control strategies (VDECS) and vehicle replacements.
The on-road heavy-duty diesel vehicle rule (i.e., truck and bus regulation) requires the retrofit and replacement of nearly all privately owned vehicles operated in California with a gross vehicle weight rating (GVWR) greater than 14,000 pounds (lbs.). School buses owned by private and public entities and federal government owned vehicles are also included in the scope of the rule. By January 1, 2023, nearly all vehicles must have engines certified to the 2010 engine standard or equivalent. The drayage truck rule regulates heavy-duty diesel-fueled vehicles that transport cargo to and from California’s ports and intermodal rail facilities. The rule requires that certain drayage trucks be equipped with VDECS and that all applicable vehicles have engines certified to the 2007 emissions standards. By January 1, 2023, all applicable vehicles must have engines certified to 2010 standards. The solid waste collection vehicle rule regulates solid waste collection vehicles with a gross vehicle weight rating of 14,000 lbs. or more that operate on diesel fuel, have 1960 through 2006 engine models, and collect waste for a fee. The fleet rule for public agencies and utilities requires fleets to install VDECS on vehicles or purchase vehicles that run on alternative fuels or use advanced technologies to achieve emissions requirements by specified implementation dates.
(Reference California Code of Regulations Title 13, 2021-2027)
Point of Contact
Moyer Help
California Air Resources Board
MoyerHelp@arb.ca.gov
State Agency Low Carbon Fuel Use Requirement
At least 3% of the aggregate amount of bulk transportation fuel purchased by the state government must be from very low carbon transportation fuel sources. The required amount of very low carbon transportation fuel purchased will increase by 1% annually until January 1, 2024. Some exemptions may apply, as determined by the California Department of General Services (DGS). Very low carbon fuel is defined as a transportation fuel having no greater than 40% of the carbon intensity of the closest comparable petroleum fuel for that year, as measured by the methodology in California Code of Regulations Title 17, Sections 95480-95486. DGS will submit an annual progress report to the California Legislature.
(Reference California Code of Regulations Title 17, Section 95480-95486)
State Transportation Plan
The California Department of Transportation (Caltrans) must publish a California Transportation Plan (Plan) every five years, beginning December 31, 2015. The Plan must address how the state will achieve maximum feasible emissions reductions, taking into consideration the use of alternative fuels, new vehicle technology, and tailpipe emissions reductions. Caltrans must consult and coordinate with related state agencies, air quality management districts, public transit operators, and regional transportation planning agencies. Caltrans must also provide an opportunity for public input. Caltrans must submit a final draft of the Plan to the legislature and governor. A copy of the 2020 report is available on the Caltrans website. Caltrans must also review the Plan and prepare a report for the legislature and governor that includes actionable, programmatic transportation system improvement recommendations every five years.
(Reference California Government Code 65070-65073.1)
Vehicle Acquisition and Petroleum Reduction Requirements
The California Department of General Services (DGS) is responsible for maintaining specifications and standards for passenger cars and light-duty trucks that are purchased or leased for state office, agency, and department use. These specifications include minimum vehicle emissions standards and encourage the purchase or lease of fuel-efficient and alternative fuel vehicles (AFVs). Specifically, DGS must reduce or displace the fleet’s consumption of petroleum products by 20% by January 1, 2020, as compared to the 2003 consumption level. DGS must also ensure that at least 50% of the light-duty vehicles purchased by the state are zero emission vehicles (ZEVs). Further, at least 15% of DGS’ fleet of new vehicles with a gross vehicle weight rating of 19,000 pounds or more must be ZEVs by 2025, and at least 30% by 2030.
On an annual basis, DGS must compile information including, but not limited to, the number of AFVs and hybrid electric vehicles acquired, the locations of the alternative fuel pumps available for those vehicles, and the total amount of alternative fuels used. Vehicles the state owns or leases that are capable of operating on alternative fuel must operate on that fuel unless the alternative fuel is not available. DGS is also required to:
- Take steps to transfer vehicles between agencies and departments to ensure that the most fuel-efficient vehicles are used and to eliminate the least fuel-efficient vehicles from the state’s motor vehicle fleet;
- Submit annual progress reports to the California Department of Finance, related legislative committees, and the general public via the DGS website;
- Encourage other agencies to operate AFVs on the alternative fuel for which they are designed, to the extent feasible;
- Encourage the development of commercial fueling infrastructure at or near state vehicle fueling or parking sites;
- Work with other agencies to incentivize and promote state employee use of AFVs through preferential or reduced-cost parking, access to electric vehicle charging, or other means, to the extent feasible; and
- Establish a more stringent fuel economy standard than the 2007 standard.
Beginning January 1, 2024, DGS must develop criteria to evaluate commercial car rental service contracts based on the number of ZEVs or PHEVs available in the service’s fleet.
(Reference California Public Resources Code 25722.5-25722.11, and 25724)
State Incentives
Alternative Fuel Vehicle (AFV) Incentives - San Joaquin Valley
The San Joaquin Valley Air Pollution Control District administers the Public Benefit Grant Program, which provides funding to cities, counties, special districts (such as water districts and irrigation districts), and public educational institutions for the purchase of new AFVs, including electric, hybrid electric, natural gas, and propane vehicles. The maximum grant amount allowed per vehicle is $20,000, with a limit of $100,000 per agency per year. Projects are considered on a first-come, first-serve basis. For more information, see the Public Benefit Grant Program website.
Alternative Fuel and Vehicle Incentives
The California Energy Commission (CEC) administers the Clean Transportation Program (Program) to provide financial incentives for businesses, vehicle and technology manufacturers, workforce training partners, fleet owners, consumers, and academic institutions with the goal of developing and deploying alternative and renewable fuels and advanced transportation technologies. Funding areas include:
- Electric vehicles and charging infrastructure;
- Hydrogen vehicles and refueling infrastructure;
- Medium- and heavy-duty zero emission vehicles; and,
- Workforce development.
(Reference California Health and Safety Code 44272 - 44273 and California Code of Regulations, Title 13, Chapter 8.1)
Employer Invested Emissions Reduction Funding - South Coast
The South Coast Air Quality Management District (SCAQMD) administers the Air Quality Investment Program (AQIP). AQIP provides funding to allow employers within SCAQMD’s jurisdiction to make annual investments into an administered fund to meet employers’ emissions reduction targets. The revenues collected are used to fund alternative mobile source emissions and trip reduction programs, including alternative fuel vehicle projects, on an on-going basis. Programs such as low emission, alternative fuel, or zero emission vehicle procurement and old vehicle scrapping may be considered for funding. For more information, including current requests for proposals and funding opportunities, see the AQIP website.
Heavy-Duty Truck Emission Reduction Grants - San Joaquin Valley
The San Joaquin Valley Air Pollution Control District (SJVAPCD) administers the Truck Replacement Program, which provides funding for fleets to replace old vehicles with lower emitting vehicles or to purchase new zero emission, hybrid, or low oxides of nitrogen (NOx) vehicles. Funding is available for the following projects:
- Replacement of model year (MY) 2018 Class 4-8 heavy-duty trucks with new zero emission or low NOx trucks;
- Replacement of MY 2018 or older Class 7-8 diesel truck with new zero emission trucks; and,
- Replacement of MY 2018 or older Class 7-8 diesel trucks with new zero emission trucks.
Incentive amounts vary by weight class and fuel type. Fleets may receive up to 80% of the vehicle cost for new diesel trucks. To qualify, eligible trucks for replacement must be garaged in the SJVAPCD and have operated at least 75% of the time in California and 50% of the time in the SJVAPCD for the previous two years. For more information, including application requirements, see the SJVAPCD Truck Replacement Program website.
More Laws and Incentives
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