Natural Gas Laws and Incentives in Virginia
The list below contains summaries of all Virginia laws and incentives related to natural gas.
Laws and Regulations
Alternative Fuel Provider License
Alternative fuel providers, bulk users, and retailers, or any person who fuels an alternative fuel vehicle from a private source that does not pay the alternative fuels tax must obtain an alternative fuel license from the Virginia Department of Motor Vehicles (DMV). For more information, see the DMV Fuels Tax Licensing website. (Reference Virginia Code 58.1-2244)
Alternative Fuel School Bus Regulations
The Virginia Board of Education may not unreasonably limit the authority of any local school division to purchase and use school buses powered by or converted to compressed natural gas or other alternative fuels.
The Virginia Board of Education may provide for the display of signs or other markings on school buses using alternative fuels to identify the vehicle as an alternative fuel vehicle and indicate the type of alternative fuel used.
(Reference Virginia Code 22.1-177 and 46.2-1089.1)
Alternative Fuel School Bus and Fueling Infrastructure Loans
The Virginia Board of Education may use funding from the Literary Fund to provide loans to school boards that convert school buses to operate on alternative fuels or construct alternative fueling stations. (Reference Virginia Code 22.1-146)
Alternative Fuel Vehicle (AFV) Tax Reduction Authorization
Local governments may reduce personal property taxes paid on AFVs and low-speed vehicles. AFVs include vehicles that operate using natural gas, liquefied petroleum gas or propane, hydrogen, or electricity. (Reference Virginia Code 58.1-3506)
Alternative Fuel and Vehicle Tax
Alternative fuels used to operate on-road vehicles are taxed at a rate of $0.162 per gasoline gallon equivalent (GGE). Alternative fuels are taxed at the same rate as gasoline and gasohol (5.1% of the statewide average wholesale price of a gallon of self-serve unleaded regular gasoline). Refer to the Virginia Department of Motor Vehicles (DMV) Fuels Tax Rates and Alternative Fuels Conversion website for fuel-specific GGE calculations.All-electric vehicles (EVs) registered in Virginia are subject to a $64.00 annual license tax at time of registration. For more information, see the Virginia DMV Electric Vehicles website. (Reference Virginia Code 58.1-2217 and 58.1-2249)
Compressed Natural Gas (CNG) Deregulation
The Virginia State Corporation Commission may refrain from regulating and setting rates, charges, and fees for retail CNG service provided by corporations other than public service corporations. (Reference Virginia Code 56-232.2)
Natural Gas Vehicle (NGV) Technician Certification
The Virginia Department of Professional and Occupational Regulation (DPOR) administers a program to certify NGV mechanics and technicians. For application and certification information, see the DPOR Natural Gas Automobile Mechanics and Technicians Advisory Board website. (Reference Virginia Code 54.1-2355 through 54.1-2358 and Virginia Administrative Code 18-120-50)
State Energy Plan
The Department of Mines, Minerals and Energy (DMME) is responsible for creating the Virginia Energy Plan (Plan) to assess the commonwealth's primary energy sources and recommends actions to meet state energy goals. The Plan includes policies to promote alternative fuel and efficient vehicle use, encourage efficient driving techniques, and reduce vehicle miles traveled. The DMME must submit the Plan to the governor, the State Corporation Commission, and the General Assembly by October 1 of each year following the election of a new governor. For more information, see the Virginia Energy Plan website.
(Reference Virginia Code 67-101 and 67-102)
Alternative Fuel Tax Exemption
Alternative fuel is exempt from taxes if it is sold to a government entity for its exclusive use, a non-profit charitable organization for the purpose of providing charitable services for low-income medical patients, or produced by an agricultural operation and used exclusively for farm use or vehicles of that producer. (Reference Virginia Code 58.1-2250)
Alternative Fuel and Hybrid Electric Vehicle (HEV) Emissions Testing Exemption
Vehicles powered exclusively by natural gas, propane, hydrogen, a combination of compressed natural gas and hydrogen, or electricity are exempt from the Virginia emissions inspection program. Qualified HEVs with U.S. Environmental Protection Agency fuel economy ratings of at least 50 miles per gallon (city) are also exempt from the emissions inspection program unless remote sensing devices indicate the HEV may not meet current emissions standards. For more information, including a list of HEVs that qualify, see the Virginia Department of Motor Vehicles Emissions Inspections website. (Reference Virginia Code 46.2-1177 through 46.2-1178 and 46.2-749.3)
Government Alternative Fuel Vehicle (AFV) Incentive
The Virginia Department of Mines, Minerals and Energy, in collaboration with the Virginia Department of Transportation, offers up to $10,000 to state agencies and local governments for the incremental cost of new or converted AFVs. To be eligible, vehicles must comply with Buy America provisions or qualify for a waiver from the U.S. Department of Transportation Federal Highway Administration, and must be garaged in areas of air quality nonattainment, as recognized by the federal Congestion Mitigation and Air Quality Improvement (CMAQ) program. Current funding applications are due July 1, 2020. For more information, see the Virginia CMAQ Incentive Program website.
Point of Contact
Virginia Department of Mines, Minerals, and Energy
Phone: (804) 692-3224
Green Jobs Tax Credit
Qualified employers are eligible for a $500 tax credit for each new green job created that offers a salary of at least $50,000, for up to 350 jobs per employer. The credit is allowed for the first five years that the job is continuously filled. For the purposes of this tax credit, a green job is defined as employment in industries relating to renewable or alternative energy, including hydrogen and fuel cell technology, landfill gas, and biofuels. The tax credit expires on January 1, 2021. For more information, see the Virginia Department of Taxation website. (Reference Virginia Code 58.1-439.12:05)
High Occupancy Vehicle (HOV) Lane Exemption
Alternative fuel vehicles (AFVs) displaying the Virginia Clean Special Fuel license plate may use Virginia HOV lanes on specified areas of I-64, I-264, the Dulles Toll Road, and in the City of Alexandria, regardless of the number of occupants. For HOV lanes serving the I-66 corridor, only registered vehicles displaying Clean Special Fuel license plates issued before July 1, 2011, are exempt from HOV lane requirements. Eligible vehicles include dedicated AFVs; see the Virginia Department of Motor Vehicles website for a complete list of qualifying vehicles. The annual fee for Clean Special Fuel license plates is $25 in addition to the prescribed fee for commonwealth license plates. This exemption expires September 30, 2025. For more information, see the Virginia Department of Transportation HOV Lanes website. (Reference Virginia Code 33.2-501 and 46.2-749.3)
Idle Reduction and Natural Gas Vehicle (NGV) Weight Exemption
Any motor vehicle equipped with an auxiliary power unit or other idle reduction technology may exceed the gross, single axle, tandem axle, or bridge formula weight limits by up to 550 pounds (lbs.) to compensate for the added weight of the idle reduction technology. Furthermore, any NGV may exceed the limits by up to 2,000 lbs. To be eligible for the weight exemption, certification of the weight of the auxiliary power unit or proof that the vehicle operates on natural gas, and a demonstration that the vehicle is fully functional must be available to law enforcement officials. (Reference Virginia Code 46.2-1129.1 and 46.2-1129.2)
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