Natural Gas Laws and Incentives in Colorado
The list below contains summaries of all Colorado laws and incentives related to natural gas.
Laws and Regulations
Alternative Fuel Tax
Compressed natural gas (CNG), liquefied natural gas (LNG), and propane are subject to excise tax imposed on a per gallon basis as follows:
| Fuel Type | Tax |
|---|---|
| CNG | $0.183 |
| LNG | $0.12 |
| Propane | $0.135 |
(Reference Colorado Revised Statutes 39-27-102)
Alternative Fuel Vehicle (AFV) Registration
Upon registering a motor vehicle with the Colorado Department of Revenue Division of Motor Vehicles, the vehicle owner must report the type of alternative fuel used to operate the vehicle and whether the vehicle is dedicated to one alternative fuel or uses more than one fuel. The Department of Revenue provides forms for the purpose of registering motor vehicles and must include space for the following fuel types: gasoline, diesel, propane, electricity, natural gas, methanol/M85, ethanol/E85, biodiesel, and other. For more information, see the Colorado Department of Revenue Division of Motor Vehicles website.
(Reference Colorado Revised Statutes 42-3-113)
Clean Energy Career Program
The State Council and the Colorado Department of Natural Resources must create an industry driven energy sector career pathway for implementation before the 2022-2023 academic year. The energy sector includes occupations and activities relating to the development, installation, and maintenance of products or technologies in the areas of electric vehicles, electric vehicle supply equipment, hydrogen fuel cell technology, and renewable natural gas.
(Reference Colorado Revised Statutes 42-46.3-104)
Fleet Alternative Fuel Vehicle Incentive Authorization
The Colorado Department of Public Health and Environment (CDPHE) is authorized to issue grants, loans, and rebates through the Clean Fleet Enterprise (Enterprise), a government-owned business, to business and government entities for the replacement of light-, medium-, and heavy-duty fleet vehicles with clean vehicles. Eligible projects include electric, hydrogen, and renewable natural gas vehicles as well as idle reduction technology. The Enterprise may impose fees to raise funds for financing programs. For more information, see the CDPHE Enterprise website.
(Reference Colorado Revised Statutes 25-7.5-103)
Gasoline and Diesel Gallon Equivalent Definition
Motor fuels, including alternative fuels, may be sold by gasoline gallon equivalent (GGE) or diesel gallon equivalent (DGE) as long as the dispenser used for the sale of motor fuel in GGEs or DGEs clearly displays the applicable conversion factor and other required information. (Reference Colorado Revised Statutes 8-20-232.5)
Natural Gas Fueling Station Regulations
The Colorado Department of Labor and Employment, Division of Oil and Public Safety, enforces regulations concerning the design, construction, siting, installation, and operation of retail natural gas fueling stations, including mobile fueling vehicles and equipment.
(Reference 7 Code of Colorado Regulations 1101-16 and Colorado Revised Statutes 8-20.5-202 and 8-20.5-302)
Natural Gas and Propane Licenses
Any person or entity that distributes, supplies, imports, exports, carries, or blends natural gas or propane must obtain a license from the Colorado Department of Revenue.
(Reference Colorado Revised Statutes 39-27-104)
Public Utility Definition
A corporation or individual that resells alternative fuel supplied by a public utility for use in an alternative fuel vehicle (AFV) is not subject to regulation as a public utility. Additionally, a corporation or individual that owns, controls, operates, or manages a facility that generates electricity exclusively for use in AFV charging or fueling facilities is not subject to regulation as a public utility provided that the electricity is generated on the property where the charging or fueling facilities are located and the electricity is generated from a renewable resource. For the purposes of this definition, alternative fuel is defined as propane, liquefied natural gas, compressed natural gas, or electricity.
(Reference Colorado Revised Statutes 40-1-103.3)
State Agency Alternative Fuel Use and Vehicle Acquisition Requirement
The Colorado Department of Personnel and Administration (DPA) requires all state-owned diesel vehicles and equipment to be fueled with a diesel blend of 20% biodiesel (B20), subject to the availability of the fuel and so long as the price differential is not greater than $0.10 more per gallon compared to conventional diesel. Biodiesel is defined as fuel composed of mono-alkyl esters of long chain fatty acids derived from plant or animal matter that meets ASTM specifications and is produced in Colorado. DPA must increase the use of alternative fuels and establish objectives to increase its use for each succeeding year. DPA must purchase motor vehicles that operate on compressed natural gas (CNG), electric vehicles, or vehicles that operate on other alternative fuels, subject to the availability of vehicles and adequate fueling infrastructure and assuming the incremental base or life cycle cost of the vehicle is not more than 10% over the cost of a comparable dedicated conventional vehicle. Some vehicles may be exempt from this requirement if available alternative fuel vehicles (AFVs) do not meet application requirements. On or before November 1 of each year, DPA must submit a report to the general assembly outlining vehicle purchases, including alternative fuel and conventional vehicles; alternative fueling infrastructure availability in the state; AFV purchase exemptions; administrative policies in place to facilitate the purchase of AFVs; suggested changes to facilitate the gradual conversion of the motor vehicle fleet to AFVs; and a plan for the necessary infrastructure development.
(Reference Executive Order D 2015-013, 2015 and Colorado Revised Statutes 24-30-1104)
Vehicle Fleet Maintenance and Fuel Cost-Savings Contracts
Government fleets may finance the lease or purchase cost of alternative fuel vehicles and alternative fueling infrastructure through energy performance contracts where vehicle operational and fuel cost savings pay for the capital investment. Energy performance contracts must show that the annual cost savings associated with the fueling and maintenance of vehicles with higher efficiency ratings or alternative fueling methods is equal to or higher than the annual contract payments.
(Reference Colorado Revised Statutes 24-30-2001 through 24-30-2003 and 29-12.5-101 through 29-12.5-104)
State Incentives
Alternative Fuel Vehicle (AFV) Weight Exemption
Gross vehicle weight rating limits for AFVs are 2,000 pounds greater than those for comparable conventional vehicles, as long as the AFVs operate using an alternative fuel or both alternative and conventional fuel, when operating on a highway that is not part of the interstate system. For the purpose of this exemption, alternative fuel is defined as compressed natural gas, propane, ethanol, or any mixture containing 85% or more ethanol (E85) with gasoline or other fuels, electricity, or any other fuels, which may include clean diesel and reformulated gasoline, so long as the Colorado Air Quality Control Commission determines that these other fuels result in comparable reductions in carbon monoxide emissions and brown cloud pollutants.
(Reference Colorado Revised Statutes 24-4-1104 and 42-4-508)
Electric Vehicle (EV) and Infrastructure Coaching Service
The Colorado Energy Office (CEO) administers the ReCharge Colorado program (ReCharge) to advance the adoption of EVs and installation of charging infrastructure in Colorado. ReCharge provides coaching services to consumers, local governments, workplaces, and multi-unit dwellings to help them identify monetary savings, grant opportunities, and other EV benefits. ReCharge also helps build local stakeholder support for EVs. For more information, see the CEO ReCharge Colorado website.
Point of Contact
Matt Mines
Program Manager, Transportation Fuels and Technology
Colorado Energy Office
Phone: (303) 866-2128
matt.mines@state.co.us
https://energyoffice.colorado.gov
Fleet Alternative Fuel Vehicle (AFV) and Technology Grants
The Clean Fleet Vehicle and Technology Grant Program, administered by the Colorado Department of Public Health and Environment (CDPHE) through the Clean Fleet Enterprise, offers grants to business and government fleets for the purchase of new AFVs or the conversion of existing fleet vehicles to operate on alternative fuels. Eligible projects include light-, medium-, and heavy-duty vehicles, and eligible alternative fuels include electricity, hydrogen, and compressed natural gas. Incentive amounts vary based on vehicle technology and gross vehicle weight rating. For more information, including additional eligibility criteria, see the CDPHE Clean Fleet Enterprise website and the Clean Fleet Vehicle Technology Grant Program guide.
Low Emission Vehicle (LEV) Sales Tax Exemption
Vehicles, vehicle power sources, or parts used for converting a vehicle power source to reduce emissions are exempt from state sales and use tax. Exempt vehicles include vehicles certified to federal LEV standards that have a gross vehicle weight rating (GVWR) of over 26,000 pounds (lbs.). The exemption also applies if the GVWR is greater than 10,000 lbs. and if the vehicle, power source, or parts used for converting the power source meet the definition of a category 4, 4A, 4B, 4C, 7, or 7A truck, as defined in Colorado Revised Statutes 39-22-516.8. The vehicle power source includes the engine or motor and associated wiring, fuel lines, engine coolant system, fuel storage containers, and other components.
(Reference Colorado Revised Statutes 39-26-719)
Natural Gas Fueling Station Air Quality Permit Exemption
Natural gas fueling stations are exempt from the requirement to file Air Pollutant Emission Notices.
(Reference Colorado Air Quality Control Commission Regulations Number 3, Part A, Section II.D.1.hhh)
More Laws and Incentives
To find laws and incentives for other alternative fuels and advanced vehicles, search all laws and incentives.