Natural Gas Laws and Incentives in Utah

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

State Incentives

Alternative Fuel Tax Exemptions and Reductions

Propane, natural gas, electricity, and hydrogen, also known as special fuel, used to operate motor vehicles are exempt from state fuel taxes, but subject to a special fuel tax at the rate of three-nineteenths of the conventional motor fuel tax. A reduction in special fuel tax is permissible if the fuel is already taxed by the Navajo Nation. Retailers, wholesalers, and suppliers of special fuel are eligible for a refund of the special fuel tax if dyed diesel fuel is mixed with special fuel and the mixed special fuel is returned to the refinery. For more information, see the Utah State Tax Commission Fuel Taxes website. (Reference Utah Code 59-13-102, 59-13-201, 59-13-301, and 59-13-322)

Point of Contact
Utah State Tax Commission Motor Vehicle Division
Phone: (800) DMV-UTAH or (801) 297-7780
dmv@utah.gov
http://dmv.utah.gov

Alternative Fuel Vehicle Conversion Grants for Businesses

The Utah Conversion to Alternate Fuel Grant Program, funded through the Clean Fuels and Vehicle Technology fund, provides grants to businesses that install conversion equipment on eligible vehicles. Businesses are required to pass these savings along to the individual who purchases the converted vehicle. Grants are available for 50% of the cost of conversion, up to $2,500. This program does not support E85 or biodiesel projects. This program defines clean fuels to include propane, compressed natural gas, and electricity. For more information, see the Utah Conversion to Alternative Fuel Grant Program website.

(Reference Utah Code 19-1-401, 19-1-402, 19-1-403.3, and 19-1-405)

Point of Contact
Mat Carlile
Clean Fuel Tax Coordinator
Utah Department of Environmental Quality, Division of Air Quality
Phone: (801) 536-4136
mcarlile@utah.gov

Alternative Fuel Vehicle Decal and High Occupancy Vehicle (HOV) Lane Exemption

Vehicles operating on propane, natural gas, or electricity are permitted to use HOV lanes, regardless of the number of passengers. Qualified vehicles must display the special clean fuel decal issued by the Utah Department of Transportation (UDOT); a limited number of decals are available. This exemption expires September 30, 2019. For more information about qualifying vehicles and decal availability, see the UDOT Clean Fuel Vehicle Decal and Permit website. (Reference Utah Code 41-1a-416, 41-1a-418, 41-6a-702, 59-13-102, and 72-6-121)

Alternative Fuel Vehicle and Fueling Infrastructure Grants and Loans

The Utah Clean Fuels and Vehicle Technology Grant and Loan Program, funded through the Clean Fuels and Vehicle Technology Fund, provides grants and loans to assist businesses and government entities to include:

  • Up to 50% of the incremental cost of purchasing original equipment manufactured clean fuel vehicles,
  • Up to 50% of the cost of converting vehicles to a cleaner burning fuel, and
  • The cost of fueling equipment for public/private sector business and government vehicles (grants require federal and non-federal matching funds).
This program does not support E85 or biodiesel projects. For the purpose of this program, clean fuels include propane, compressed natural gas, and electricity. The program is not currently funded (verified February 2018). For more information, see the Utah Clean Fuels Program website.

(Reference Utah Code 19-1-401 through 19-1-405)

Point of Contact
Lisa Burr
Senior Research Analyst
Utah Department of Environmental Quality, Division of Air Quality
Phone: (801) 536-4019
lburr@utah.gov

Hydrogen Fuel Production Incentives

Businesses that convert natural gas to hydrogen fuel, or produce natural gas solely for use in the production of hydrogen fuel for zero emission vehicles (ZEVs), may be eligible for an oil and gas severance tax credit. Each eligible applicant may receive a tax credit equal to the amount of the severance tax owed, up to $5,000,000 per year. Entities that produce hydrogen fuel for use in ZEVs or hydrogen fueled trucks may also qualify for grant funding or loans from the Community Impact Fund. (Reference Utah Code 35A-8-302 and 59-5-102)

Natural Gas Vehicle (NGV) Weight Exemption

A vehicle primarily powered by natural gas may exceed the state's gross vehicle weight limits by a weight equal to the difference between the weight of the vehicle with the natural gas tank and fueling system and the weight of a comparable vehicle with a diesel tank and fueling system. The NGV maximum gross weight may not exceed 82,000 pounds. (Reference Utah Administrative Code R909-2-5)

Qualified Heavy-Duty Alternative Fuel Vehicle (AFV) Tax Credit

Qualified taxpayers are eligible for a tax credit for the purchase of a qualified heavy-duty AFV. Qualifying fuels include natural gas, electricity, and hydrogen. Each qualified heavy-duty AFV is eligible for the following tax credit amounts:

YearCredit Amount
2017$25,000
2018$20,000
2019$18,000
2020$15,000

At least 50% of the qualified vehicle's miles must be driven in the state. A single taxpayer may not claim credits for more than 10 AFVs annually or a total annual amount of $500,000. If more than 30% of the total available tax credits in a single year have not been claimed by May 1, a taxpayer may apply for credits on an additional eight AFVs. Up to 25% of the tax credits are reserved for taxpayers with small fleets of less than 40 vehicles. This credit expires December 31, 2020. Additional conditions and restrictions may apply.

(Reference Utah Code 59-7-618, 59-10-1033, and 59-13-201)

Point of Contact
Mat Carlile
Clean Fuel Tax Coordinator
Utah Department of Environmental Quality, Division of Air Quality
Phone: (801) 536-4136
mcarlile@utah.gov

Laws and Regulations

Alternative Fuel Use and Vehicle Acquisition Requirement

By August 30, 2018, at least 50% of new or replacement light-duty state agency vehicles must meet Bin 2 emissions standards established in Title 40 of the U.S. Code of Federal Regulations, or be propelled to a significant extent by electricity, natural gas, propane, hydrogen, or biodiesel. (Reference Utah Code 63A-9-401 and 63A-9-403)

Alternative Fuel Vehicle Inspection and Permit

The Utah State Tax Commission (Commission) may require vehicles operating on clean fuels to be inspected for safe operation. In addition, clean fuel vehicles that have a gross vehicle weight rating of more than 26,000 pounds or have more than three axels are required to obtain a special fuel user permit from the Commission. Clean fuels are defined as propane, natural gas, electricity, and hydrogen. (Reference Utah Code 59-13-102, 59-13-303, and 59-13-304)

Compressed Natural Gas (CNG) Vehicle Aftermarket Conversion Requirements

Vehicles converted to operate on CNG must be inspected and certified in accordance with relevant safety standards by a CSA America-certified CNG Fuel System Inspector. The vehicle must also be tested to ensure that it meets emissions standards in the applicable county, or the county with the most lenient emissions standards if the vehicle is registered in a county without its own emissions standards. A person who performs a conversion must certify to the vehicle owner that the conversion does not tamper with, circumvent, or otherwise affect the vehicle's on-board diagnostic system, if applicable. A CSA America-certified CNG Fuel System Inspector must also inspect the vehicle every three years, or every 36,000 miles, and after a collision occurring at a speed greater than five miles per hour.

The Utah Division of Air Quality may develop programs to facilitate coordination between government agencies and the private sector regarding emissions and anti-tampering compliance testing, vehicle safety, and potential improvements in the air quality of the state.

(Reference Utah Code 19-1-406)

Natural Gas Rate and Cost Recovery Authorization

The Utah Public Service Commission (Commission) may allow a gas corporation to set a natural gas vehicle fuel rate that is less than full cost of service if it is reasonable and in the interest of the public. If the Commission approves such a request, the remaining costs may be spread to other customers of the gas corporation.

The Commission may also allow a gas corporation to recover expenditures directly related to the construction, operation, and maintenance of natural gas fueling stations and related facilities through an incremental surcharge to all of its rate classes. The Commission may allow this only if it finds that the expenditures are reasonable, do not exceed $5 million in any calendar year, are in the interest of the public, and will result in an annual incremental increase in revenue greater than 50% of the corporation's annual revenue requirement for the stations and facilities.

(Reference Utah Code 54-4-13.1 and 54-4-13.4)

Natural Gas and Hydrogen Tax

Compressed natural gas (CNG) and hydrogen are taxed at a rate of $0.145 per gasoline gallon equivalent (GGE) until June 30, 2018; this rate will increase to $0.165 on July 1, 2018. Liquefied natural gas (LNG) is taxed at a rate of $0.145 per diesel gallon equivalent (DGE) until June 30, 2018; this rate will increase to $0.165 on July 1, 2018. One GGE is equal to 5.660 pounds (lbs.) of CNG or 2.198 lbs. of hydrogen. One DGE is equal to 6.06 lbs. of LNG. (Reference Utah Code 59-13-301)

Provision for Establishment of Alternative Fuel Use Mandate

The Utah Air Quality Board may require fleets that own 10 or more vehicles capable of being fueled at a central location to use clean fuels if such a mandate is necessary to meet national air quality standards. Clean fuels are defined as propane, compressed natural gas, and electricity. This program expires July 1, 2019. Additional restrictions apply. (Reference Utah Code 19-2-105.3 and 63I-1-219)

Public Access to State Compressed Natural Gas (CNG) Fueling Stations

The Utah Department of Administrative Services Division of Fleet Services (Division) may allow a private individual or entity to purchase CNG from a state-operated fueling station if there are no commercial fueling stations that meet the geographical needs of the individual or entity and there is not an emergency that requires the state to reserve CNG for use by state or emergency vehicles. For information on obtaining a GasCard for fueling as well as state fueling network stations that are available to private individuals and entities, see the Division Fleet website. (Reference Utah Code 63A-9-702)

Support for Clean Fuel School Buses

The Utah Legislature supports dedicating the Volkswagen Clean Air Act Civil Settlement funds allocated to Utah to replace diesel school buses that are Model Year 2006 and older with clean fuel school buses. (Reference House Concurrent Resolution 5, 2017)

More Laws and Incentives

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