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. Exemptions apply. For more information, see the Minnesota Fuel Excise Tax Rates and Fees website. (Reference Minnesota Statutes 296A.07 and 296A.08)

Plug-In Electric Vehicle (PEV) 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 Code of Federal Regulations, section 571, and future regulations. A PHEV is defined as a PEV 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)

Public Utility Definition

An individual, corporation, or other legal entity that resells compressed natural gas as a vehicular fuel or electricity to recharge a battery that powers an electric vehicle is not defined as a public utility. (Reference Minnesota Statutes 216B.02)

State Agency Sustainability Plan and Requirements

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 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

Idle Reduction and Natural Gas Vehicle (NGV) Weight Exemption

A motor vehicle equipped with idle reduction or emissions reduction technology may exceed the maximum gross vehicle weight and axle weight limits by up to 550 pounds (lbs.) to compensate for the additional weight of the technology.

NGVs may exceed the state's gross vehicle and axle weight limits by the amount of weight calculated as provided under Code of Federal Regulations Title 23, section 127(s), not to exceed 2,000 lbs.

The vehicle operator must be able to provide documentation or demonstrate that the vehicle meets these requirements.

(Reference Minnesota Statutes 169.824)

Off-Road Diesel Replacement Grants

The Minnesota Pollution Control Agency (MPCA) provides funding to public, private, and nonprofit fleet owners for the replacement of eligible off-road diesel equipment. Eligible equipment includes trailer refrigeration units, terminal tractors/drayage trucks, and more. MPCA is accepting applications until September 18, 2020. For more information, including how to apply, see the MPCA Diesel Emission Reduction Act website.

More Laws and Incentives

To find laws and incentives for other alternative fuels and advanced vehicles, search all laws and incentives.