Propane: Indiana Laws and Incentives in Indiana
Alternative Fuel and Special Fuel Definitions
The definition of alternative fuel includes propane. Special fuel is defined as all combustible gases and liquids that are suitable for powering an internal combustion engine or motor or are used exclusively for heating, industrial, or farm purposes. Special fuels include biodiesel, blended biodiesel, and natural gas products, including liquefied and compressed natural gas. (Reference Indiana Code 6-6-2.5-1 and 6-6-2.5-22)
Alternative Fuel and Special Fuel Inventory Tax
Owners of fuel that have title to a fuel storage tank containing propane, biodiesel, blended biodiesel, or natural gas for sale to a motor carrier for highway use in Indiana are subject to an inventory tax. The tax rate is based on the number of gallons of fuel in storage at the close of business on the inventory date, minus the amount of fuel that is below the mouth of the draw pipe. To account for the fuel that will not be pumped, a fuel owner may deduct 200 gallons from the fuel inventory for a fuel storage tank with a capacity of less than 10,000 gallons, and 400 gallons for a fuel storage tank with a capacity of over 10,000 gallons. (Reference Indiana Code 6-6-4.1 and 6-6-2.5-29)
Certified Technology Park Designation
The Indiana Economic Development Corporation (IDEC) may designate an area as a certified technology park if certain criteria are met, including a commitment from at least one business engaged in a high technology activity that creates a significant number of jobs. The establishment of high technology activities and public facilities within a technology park serves a public purpose and benefits the public’s general welfare by encouraging investment, job creation and retention, and economic growth and diversity. High technology activities include advanced vehicles technology, which is any technology that involves electric vehicles, hybrid electric vehicles, or alternative fuel vehicles, or components used in the construction of these vehicles. For more information, see the IEDC Indiana Certified Technology Parks website. (Reference Indiana Code 36-7-32)
Propane Vehicle Decals
An individual may place propane into the fuel tank of a motor vehicle only if the vehicle has a valid alternative fuel decal affixed to the front windshield or the individual has submitted an application for a decal within the last 30 days. The cost of the decal varies according to vehicle type and the gross vehicle weight rating. The annual fee may be prorated if the vehicle is newly purchased, registered in Indiana, or converted to operate using an alternative fuel. For propane vehicles registered outside of Indiana, owners must purchase a temporary trip permit from a licensed propane dealer. For more information, see the Indiana Department of Revenue Fuel Tax Forms website. (Reference Indiana Code 6-6-14 and 6-6-2.5-67)
Special Fuel License Tax
Certain special fuels sold or used to propel motor vehicles are subject to a license tax. Liquefied natural gas is subject to a tax per diesel gallon equivalent. Compressed natural gas, butane, and propane are subject to a tax per gasoline gallon equivalent. From July 1, 2018, through July 1, 2024, the tax rate will be determined each year based on the special fuel tax index factor. The tax does not apply to nominal biodiesel blends of at least 20% (B20); special fuel used only for a personal, noncommercial use and not for resale; and biodiesel used by a biodiesel producer holding an exemption certificate. Other exemptions apply. For the current tax rate and more information, see the Indiana Miscellaneous Tax Rates website. (Reference Indiana Code 6-6-2.5 and 6-6-1.6)
Propane: Indiana Incentives
Alternative Fuel Vehicle (AFV) Inspection and Maintenance Exemption
Dedicated AFVs are exempt from inspection and maintenance requirements if they operate exclusively on natural gas, propane, ethanol, hydrogen, or methanol. (Reference 326 Indiana Administrative Code 13-1.1)
Diesel Vehicle Retrofit and Improvement Grants
The Indiana Department of Environmental Management (IDEM) administers the DieselWise Indiana grant programs to support projects that reduce diesel emissions. The Clean Diesel Across Indiana program provides grants ranging from $10,000 to $75,000 for projects throughout the state. Eligible applicants include private and public entities that operate equipment serving the public, including private bus fleets and sanitation fleets. Eligible projects include replacing or converting a diesel vehicle or vehicle component with one that operates on alternative fuel, as well as installing exhaust retrofit technologies, idle reduction technologies, aerodynamic technologies, and low rolling resistance tires. For more information see the IDEM DieselWise website.
Propane Equipment and Infrastructure Liability Exemption
Propane equipment, infrastructure, and fuel providers are exempt from civil liability for personal injury or property damage resulting from an individual who modifies, repairs, materially alters, or uses propane equipment or fuel for purposes not intended by the manufacturer or fuel producer. (Reference Indiana Code 34-31-11.2-2)
Vehicle Research and Development Grants
The Indiana 21st Century Research and Technology Fund provides grants and loans to support economic development in high technology industry clusters. Incentives are available for qualified alternative fuel technologies and fuel-efficient vehicle development and production. For more information, see the Indiana Venture Development website. (Reference Indiana Code 5-28-16-2)
What is Propane?
Also known as liquefied petroleum gas (LPG), propane is an odorless, nontoxic hydrocarbon, gas at normal pressures and temperatures. When pressurized, it is a liquid with an energy density 270 times greater than its gaseous form. A gallon of liquid propane has about 25% less engery than a gallon of gasoline. Propane powers about 190,000 vehicles in the United States and more than 14 million worldwide.1 Propane vehicles are a good choice for many fleet applications, including school buses, shuttle buses, taxis and light-duty trucks. The advantages of propane as an alternative fuel include its domestic availability, performance, safety, and clean-burning qualities.
Propane is a clean-burning, domestically produced alternative fuel that can power light-, medium-, and heavy-duty vehicles. The fuel is a colorless, odorless liquid that is stored under pressure. An odorant, ethyl mercaptan, is added to the fuel for leak detection. Propane is also known as liquefied petroleum gas or liquefied propane gas (LPG), or propane autogas. In the United States, these terms are used interchangeably.
Propane vehicles work much like spark-ignited gasoline vehicles. The fuel is stored as a liquid in a relatively low-pressure tank (about 150 pounds per square inch). There are two types of propane fuel systems:
Vapor-Injected Systems: Liquid propane travels along a fuel line into the engine compartment. The supply of propane to the engine is controlled by a regulator or vaporizer, which converts the liquid propane to a vapor. The vapor is then fed to a mixer located near the intake manifold where it is metered and mixed with filtered air before being drawn into the combustion chamber and burned to produce power, similar to gasoline. An example is the Alliance AutoGas Prins bi-fuel system.
Liquid Propane Injection Systems: Propane is not vaporized. Instead, it is injected into the combustion chamber in liquid form. Examples are the CleanFUEL USA and Roush CleanTech technologies.
Propane vehicles are available in the following configurations:
Dedicated Vehicle: These vehicles are designed to run on only propane and are used in light-, medium-, and heavy-duty applications.
Bi-Fuel Vehicle: These vehicles are able to run on either propane or gasoline because they have two separate fueling systems. Bi-fuel vehicles include light-duty models and, more recently, medium- and heavy-duty vehicles.
Please note that some agencies may use the term dual-fuel to describe bi-fuel vehicles. However, Clean Cities uses dual-fuel to describe vehicles that have fuel systems that run on alternative fuel and use diesel fuel for ignition assistance. By this definition, there are not currently any dual-fuel propane systems available.
The power, acceleration, and cruising speed of propane vehicles, whether they are dedicated or bi-fuel, are comparable to those of gasoline vehicles.
Fueling Infrastructure Components
Propane fueling infrastructure is very similar to gasoline equipment, including:
Storage Tank: Propane is brought to the station via a transport truck and put into on-site storage—traditionally an aboveground storage tank on a concrete pad.
Pump and Fuel Dispenser: The main difference between a propane fueling dispenser and a gasoline dispenser is that propane is delivered to the vehicle under pressure so it remains a liquid. When the vehicle tank is full, the dispenser stops automatically just like a gasoline dispenser.
Credit Card Reader: A card reader is necessary for a public station accepting payment. Note that federal regulations require a “competent attendant” to fuel propane vehicles, so drivers may need to be trained before they can use an unmanned pump (Title 29 of the Code of Federal Regulations, section 1910.110; National Fire Protection Association (NFPA) 58 and 54).
Fueling stations may fall into one of the following categories:
Skid-Mounted: The storage tank, dispenser, pump, and any additional piping or controls are mounted to a portable concrete or steel frame that can be installed easily, removed, or relocated. Skid-mounted systems tend to be more affordable than stationary equipment.
Stationary: In a stationary system, the storage tank may be underground, and the station may include additional features not available on a skid-mounted system, including spill-proof pumps and additional metering capabilities.