HB 5878’08 was introduced by Rep. Joel Sheltrown in March 2008. The bill was signed into law on December 30, 2008 and assigned as PA 355’08.
Gas stations in Michigan now have greater incentive to provide alternative fuel to the public, though it may not be quite the incentive they were looking for. A recently passed bill will provide a tax credit to gas station owners who install or upgrade existing fuel pumps to dispense E85 or biodiesel fuel. The credit is for up to 30% of the total costs of installing or upgrading the pump, with a cap placed at $20,000 per taxpayer per year. (read more...)
The tax credit will be available from January 1, 2009 until December 31, 2012 and station owners must first receive a certificate of approval from the Energy Office of Michigan.
In addition, there is a $1 million cap placed on the total amount of tax credits that can be given out during any given year. The Senate Fiscal Agency analysis notes that the likelihood of reaching this $1 million cap is very low considering the diminutive demand for these kinds of pumps currently.
If a station owner claims the credit but terminates usage of the pump within three years of receiving the credit then the full amount of the credit could be tacked onto their taxes for that year.
Josh Clayton is the owner of H & H Mobil in East Lansing who installed an E85 pump in 2007. He appreciates that the state is trying to push the development of alternative fuels, but wishes incentives would be offered more to consumers rather than station owners.
“They need to make the cost of the gas more advantageous for the consumer if they want to boost volume statewide,” said Clayton. He reports that over the summer when conventional gas prices were sky high that “E85 was the best thing in the world.” But now that those conventional prices have dropped, the business from his E85 pump has fallen off the table. “If you offered me another pump right now I wouldn’t even take it,” he said.
The price of regular unleaded at his station on January 6th was $1.99 while E85 cost $1.71.
Even though Clayton admits that he and other station owners across the state have been underwhelmed by the profits being brought in by E85 and biodiesel fuel pumps, he still counts himself as a “huge advocate of ethanol” and thinks its development is positive for Michigan.
The E85 pump at H & H Mobil cost about $75,000 for the complete installation including marketing. At the time Clayton received $12,000 in tax credits for the pump.
E85 fuel is defined as a fuel blend containing between 70-85% ethanol. Biodiesel is defined as a blend of biofuel and petroleum-based diesel fuel.
HB 5878’08 is part of a package of bills signed into law recently by Governor Granholm that are designed to increase the creation and use of alternative fuels in Michigan.
Read the bill in it’s entirety: HB 5878’08