Natural Gas Laws and Incentives in Minnesota

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

Laws and Regulations

Alternative Fuel Tax

The Minnesota Department of Revenue 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. E85 is taxed at the pump at a rate of $0.2025 per gallon, pure biodiesel (B100) is taxed at $0.285 per gallon, propane is taxed at $0.2135 per gallon, liquefied natural gas is taxed at $0.171 per gallon, and compressed natural gas is taxed at the rate of $2.50 per thousand cubic feet. Gasoline is taxed at the rate of $0.285 per gallon. Exemptions apply. Fuel excise tax rates are updated July 1 of each year and are posted on the Minnesota Fuel Excise Tax Rates and Fees website. (Reference Minnesota Statutes 296A.07 and 296A.08)

Plug-In Electric Vehicle and Natural Gas Vehicle (NGV) Initiatives

All solicitation documents that include the purchase of passenger automobiles issued under the jurisdiction of the Minnesota Department of Administration must assert the intention of the state to begin purchasing all-electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), neighborhood electric vehicles, and NGVs. In order for this requirement to apply, vehicles must meet the state's performance specifications and have a total life-cycle cost of ownership less than or comparable to that of gasoline-powered vehicles. An EV is defined as a motor vehicle that can be powered by an electric motor drawing current from rechargeable storage batteries, fuel cells, or other portable sources of electrical current, and meets or exceeds applicable requirements in Title 49 of the U.S. Code of Federal Regulations, section 571, and future regulations. A PHEV is defined as an EV that contains an internal combustion engine and uses a battery-powered electric motor to deliver power to the drive wheels. When connected to the electrical grid via an electrical outlet, the vehicle must be able to recharge its battery. The vehicle must have the ability to travel at least 20 miles powered substantially by electricity. (Reference Minnesota Statutes 16C.138 and 169.011)

State Agency Sustainability Plan and Requirements

State agencies must establish interagency teams to develop and implement sustainability goals that reduce state vehicle petroleum consumption. In addition, each state department or agency must prepare an annual sustainability plan that includes ways to modify vehicle use practices and report annually on progress towards implementing their plan. Each state agency plan must be based on following targets and mandates:

  • When reasonably possible, state agencies must purchase on-road vehicles that use alternative fuels, including biodiesel blends of 20% (B20) or greater, compressed or liquefied natural gas, ethanol blends of 70% (E70) or greater, hydrogen, propane, or electricity, or (with the exception of buses, snowplows, and construction vehicles) have a fuel economy rating that exceeds 30 miles per gallon (mpg) in the city and 35 mpg on the highway;
  • When reasonably possible, state employees must fuel vehicles capable of operating on an alternative fuel with that fuel;
  • State agencies must increase the use of renewable fuels derived from agricultural products or waste products; and
  • State agencies must increase the use of technology for delivering information and services in order to reduce reliance on the state's fleet.
(Reference Executive Order 11-13, 2011, and Minnesota Statutes 16C.135 and 16C.137)

State Agency Vehicle Procurement and Management Requirement

When purchasing a motor vehicle, a state agency must select one that is capable of being powered by cleaner fuels, including electricity and natural gas, if the total life cycle cost of ownership is less than or comparable to that of a gasoline-powered vehicle.

A committee of representatives from the Minnesota Departments of Administration, Agriculture, Commerce, Natural Resources, and Transportation, as well as the Pollution Control Agency, will implement a state fleet reporting and information management system. The committee will submit findings to the governor and appropriate legislative committees on a bi-yearly basis with recommendations for goals, directives, or legislative initiatives to meet these objectives.

(Reference Minnesota Statutes 16C.137 and 16C.138)

State Incentives

Natural Gas Vehicle Weight Exemption

A vehicle powered by natural gas may exceed the state's gross vehicle and axle weight limits by the amount of weight calculated as provided under U.S. Code of Federal Regulations Title 23, section 127(s), not to exceed 2,000 pounds. The vehicle operator must provide documentation or demonstrate that the vehicle meets these requirements. (Reference Minnesota Statutes 169.824)

More Laws and Incentives

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