Alabama Laws and Incentives

Listed below are the summaries of all current Alabama laws, incentives, regulations, funding opportunities, and other initiatives related to alternative fuels and vehicles, advanced technologies, or air quality. You can go directly to summaries of:

• State Incentives (6)
• Utility / Private Incentives (6)
• Laws and Regulations (7)

State Incentives

Alabama's National Electric Vehicle Infrastructure (NEVI) Planning

The U.S. Department of Transportation’s (DOT) NEVI Formula Program requires the Alabama Department of Transportation (ALDOT) to submit an annual EV Infrastructure Deployment Plan (Plan) to the DOT and U.S. Department of Energy (DOE) Joint Office of Energy and Transportation (Joint Office), describing how the state intends to distribute NEVI funds. The submitted plans must be established according to NEVI guidance.

For more information about Alabama’s NEVI planning process, see the Alabama Department of Economic and Community Affairs Electric Vehicle Charging Infrastructure Program website. To review Alabama’s NEVI plan, see the Joint Office State Plans for EV Charging website.

Electric Vehicle (EV) Charger and Medium- and Heavy-Duty Diesel Vehicle Replacement Rebates

The Alabama Department of Economic and Community Affairs (ADECA) offers grants for light-duty EV chargers and the replacement of qualified medium- and heavy-duty diesel vehicles with new diesel or alternative fuel vehicles. Grants are available for EV chargers; medium- and heavy-duty trucks; school, shuttle, and transit buses; freight switchers; airport ground support equipment; and forklifts and port cargo handling equipment. Vehicles must meet model year requirements. Funding amounts are based on vehicle type, fuel type, and applicant type. Grants are funded by Alabama’s portion of the Volkswagen Environmental Mitigation Trust. For more information, including program guidance and the application, see the ADECA Volkswagen Settlement website.

Biofuel Research and Development Funding

The Alabama Department of Economic and Community Affairs (ADECA) administers the Alabama Research and Development Enhancement Fund (ARDEF) Program to encourage new and continuing research and development efforts within the state for the purpose of increasing employment opportunities, and products and services available to the citizens of Alabama. The production of biofuel is eligible for ARDEF funding. For additional information, see the ADECA Energy Division and ARDEF Program websites.

(Reference Code of Alabama 2-2-90)

Biofuel Production Jobs Tax Credit

Companies that invest in the development of a biofuel production facility may be eligible for a tax credit of 3% of the previous year’s annual employee wages. Companies may claim this credit against the utility gross receipts and utility service use taxes for up to 10 years; the credit may be refundable during the incentive period or claimed as a credit against utility taxes paid with a carryforward for earned but unused amounts. Companies may also be eligible for a tax credit of 1.5% of qualified capital investment annually for up to 10 years. Companies may claim this credit against the income tax, estimated income taxes, financial institution excise tax, or the insurance premium tax. The credit may also be claimed as a credit against taxes paid with a carryforward for earned but unused amounts.

For the purposes of the credit, biofuel is defined as a motor vehicle fuel that is produced from grain, starch, oilseeds, vegetable, algae, animal materials, or other biomass. To be eligible for the tax credits, companies must execute a project agreement with the Governor.

(Reference Code of Alabama 2-2-90 and 40-18-370 through 40-18-383)

Idle Reduction and Natural Gas Vehicle (NGV) Weight Exemption

Any motor vehicle equipped with an auxiliary power unit (APU) or other idle reduction technology may exceed the gross, axle, tandem, or bridge formula weight limits by up to 400 pounds (lbs.). To be eligible for the weight exemption, the vehicle operator must be able to provide written proof or certification of the weight of the APU and demonstrate or certify that the idle reduction technology is fully functional at all times. Any NGV may exceed the limits by up to 2,000 lbs.

(Reference Code of Alabama 32-9-20)

Electric Vehicle (EV) Chargers Grants

The Alabama Department of Economics and Community Affairs (ADECA) administers the EV Charging Infrastructure Program. Government and non-government entities are eligible to receive funding for the installation of publicly accessible direct current (DC) fast chargers and Level 2 EV chargers along non-interstate corridors. Additional terms and conditions apply. For more information, see the ADECA EV Charging Infrastructure Program website.

Utility / Private Incentives

Alabama Power - Alabama

Alabama Power is an investor-owned utility (IOU) that operates in Alabama. This page provides a summary of the types of incentives provided by the utility related to alternative fuels and vehicles. For more information on these incentives, see the Alabama Power website.

Residential Incentives

Non-Residential Incentives

Central Alabama Electric Cooperative - Alabama

Central Alabama Electric Cooperative is a cooperative that operates in Alabama. This page provides a summary of the types of incentives provided by the utility related to alternative fuels and vehicles. For more information on these incentives, see the Central Alabama Electric Cooperative website.

Residential Incentives

Non-Residential Incentives

City of Bessemer Utilities - Alabama

City of Bessemer Utilities is a municipal utility that operates in Alabama. This page provides a summary of the types of incentives provided by the utility related to alternative fuels and vehicles. For more information on these incentives, see the City of Bessemer Utilities website.

Residential Incentives

Non-Residential Incentives

City of Tarrant - Alabama

City of Tarrant is a municipal utility that operates in Alabama. This page provides a summary of the types of incentives provided by the utility related to alternative fuels and vehicles. For more information on these incentives, see the City of Tarrant website.

Residential Incentives

Non-Residential Incentives

Coosa Valley Electric Cooperative - Alabama

Coosa Valley Electric Cooperative is a cooperative that operates in Alabama. This page provides a summary of the types of incentives provided by the utility related to alternative fuels and vehicles. For more information on these incentives, see the Coosa Valley Electric Cooperative website.

Residential Incentives

Non-Residential Incentives

Tennessee Valley Authority (TVA) - Alabama

Tennessee Valley Authority (TVA) is a municipal utility that operates in multiple states. This page provides a summary of the types of incentives provided by the utility related to alternative fuels and vehicles. For more information on these incentives, see the Tennessee Valley Authority (TVA) website.

Residential Incentives

Non-Residential Incentives

Laws and Regulations

Electric Vehicle (EV) Chargers Grant Program

The Alabama Department of Transportation is authorized to administer the Electric Transportation Infrastructure Grant Program to distribute grants for EV charging infrastructure expansion.

(Reference Code of Alabama 40-12-242)

Autonomous Vehicle (AV) Operation Requirements

An AV may be operated without a driver physically present in the vehicle if the AV is capable of operating in compliance with applicable federal and Alabama traffic and motor vehicle laws, certified in accordance with federal motor vehicle safety standards, can achieve a minimal risk condition if the vehicle is unable to perform an intended task or exists its operational design domain, and has proof of insurance. Additional conditions apply.

(Reference Code of Alabama 32-9B-1 through 32-9B-8)

Public Utility Definition

An entity that owns, operates, leases, or controls electric vehicle charging stations is not defined as a public utility.

(Reference Alabama Public Service Commission Docket No. 32694)

Electric Vehicle (EV) Fee

EV owners must pay an annual fee in addition to standard registration fees. All-electric vehicle owners must pay an annual fee of $203 and plug-in hybrid electric vehicle owners must pay an annual fee of $103. EV fees increase by $3 every four years. A portion of fees contribute to the Electric Transportation Infrastructure Grant Program, which provides grants for EV charging stations.

(Reference Code of Alabama 40-12-242)

Alternative Fuel Taxes

The state road tax for vehicles that operate on propane (liquefied petroleum gas or LPG) is paid through the purchase of an annual flat fee sticker, and the amount is based on the vehicle’s gross vehicle weight rating. Each person owning and/or operating a vehicle that operates on propane must obtain a decal annually from the Alabama LPG Board. The decal must be affixed to the vehicle according to LPG Board specification as proof that the issuance fee and decal fee have been paid. Vehicle owners must apply for a decal within 10 days of converting a vehicle to operate on propane, or a 20% penalty will be applied to the decal fee. Out-of-state alternative fuel vehicle operators that purchase propane within the state must pay the current Alabama motor fuel tax or they may elect to purchase the annual flat fee decal. The propane dealer or supplier must remit these funds to the LPG Board before the 20th of the month following the date of sale.

Similarly, the Alabama Department of Revenue administers an excise tax on compressed natural gas (CNG) and liquefied natural gas (LNG) used as vehicle fuel. Taxes are applied in the following amounts: CNG: - $0.13 per GGE from October 1, 2023, until September 30, 2028; and - $0.18 per GGE from October 1, 2028 and beyond. LNG: - $0.13 per DGE from October 1, 2023, until September 30, 2028; and - $0.18 per DGE from October 1, 2028 and beyond.

A GGE is equal to 5.66 pounds (lbs.) or 126.67 cubic feet of natural gas for CNG and a DGE is equal to 6.06 lbs. for LNG.

(Reference Code of Alabama 40-17-160 through 40-17-165 and 40-17-168.2)

Fuel-Efficient Green Fleets Policy and Fleet Management Program Development

The Alabama Legislature established a Green Fleets Review Committee (Committee) and Green Fleets Policy (Policy) outlining a procurement procedure for state vehicles based on criteria that includes fuel economy and life cycle costing. State fleet managers must classify their vehicle inventory for compliance with the Policy and submit annual plans for procuring fuel-efficient vehicles. These plans must reflect a 4% annual increase in average fleet fuel economy for light-duty vehicles, a 3% annual increase in average fleet fuel economy for medium-duty vehicles, and a 2% annual increase in average fleet fuel economy for heavy-duty vehicles per fiscal year. Government entities must manage and operate their fleets in a manner that is energy efficient, minimizes emissions, and reduces petroleum dependency by using specified proven technology the Committee identifies.

(Reference Code of Alabama 41-17A-1 through 41-17A-6)

Electric Vehicle (EV) Charging Station Financing Program Authorization

The Alabama Department of Economic and Community Affairs (ADECA) administers the Commercial Property Assessed Clean Energy (C-PACE) program. Under C-PACE, a county, municipality, or improvement district may issue bonds, notes, or other types of financing methods to support energy efficiency or storm resilience improvements to commercial properties, including the installation of EV charging stations. For more information, see the ADECA Property Insurance and Energy Reduction Act website and the C-PACE Program Report.

(Reference Code of Alabama 11-81-240 through 11-81-250)