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(Post and Courier, The (Charleston, SC) (KRT) Via Thomson Dialog NewsEdge) Oct. 15--In a dramatic turnaround from previous years, South Carolina is offering a number of tax incentives to encourage the use of alternative fuels.
The incentives include a sales tax rebate for buying one of the many new and used vehicles that can run on ethanol-blend fuel.
The state also approved this year a tax credit for buying hybrid vehicles, credits for installing solar power systems, and incentives to spur more production and distribution of ethanol-blend and biodiesel fuels.
Last year, the only tax incentive South Carolina offered to consumers for using alternative fuels was a $1,000 tax credit for installing a solar water heater. The state provided only enough funding for 20 people to receive the tax credit, and no one applied.
"In the past year and a half, we've seen tremendous awareness of energy issues and global warming issues," said John Clark, director of the South Carolina Energy Office. "It seems to be snowballing, nationally and locally."
The federal government approved tax credits for purchasing hybrid vehicles, solar heating systems, energy-efficient windows and other fuel-saving measures in 2005.
Unlike the federal incentives, South Carolina's income tax credit for hybrid vehicle purchases is not slated to expire. The state credit is worth 20 percent of the current federal credit, which varies by vehicle make, model and year.
The state sales tax rebate for flex-fuel vehicles, which can use either gasoline or the ethanol-gas blend known as E85, is good only through June 30, 2007, but applies to new and used vehicles.
Hybrid vehicles typically cost more than non-hybrids, and there are waiting lists to buy some models, but vehicles that can run on E85 are common and usually carry the same price as similar models that only run on gasoline.
"There are a good number of E85 vehicles on the market," said Pat Watson, executive vice president of the South Carolina Automobile Dealers Association. "You didn't hear much about them before, when gas prices were low."
Automakers started cranking out E85 vehicles in the 1990s, partially because the federal government gave the manufacturers a break on gas mileage requirements in exchange for producing vehicles that can run on cleaner-burning ethanol, made from corn.
Vehicles that can run on E85 range from some models of Ford F-150 pickup trucks to high-end Mercedes sedans. The rebate now offered in South Carolina is worth up to $300, which is the maximum sales tax on a vehicle purchase.
"I think a number of states are doing this now, for one reason," Watson said. "It's an election year, and it's good to look green."
Clark said that in addition to offering people a tax break, the state hopes to encourage the use of cleaner alternative energy, and develop the ethanol and biodiesel industries in South Carolina.
South Carolina already leads the Southeast in the number of filling stations offering E85, although there are none in the greater Charleston area.
"There are incentives for gas stations to put in the dispensing equipment, and to produce ethanol in South Carolina," Clark said. "Right now we get it from Tennessee and Kentucky, by train.
"We want to get where people are producing it in South Carolina, growing the crops in South Carolina, and using it in South Carolina," he said.
Legislation approved during the summer offers a 20-cent-per-gallon tax credit to facilities that manufacture ethanol or biodiesel, which is diesel fuel made from things such as used cooking oil. There are also incentives for buying equipment needed to produce and dispense the fuels, worth 25 percent of the equipment cost.
Filling station owners can receive an incentive payment of 5 cents per gallon for selling ethanol or biodiesel, so long as those fuels are selling for at least a nickel a gallon less than gasoline.
For consumers and businesses, the state is now offering a 25 percent tax credit for installing solar equipment, which reduces greenhouse gas emissions. The federal government separately offers a 30 percent credit for solar equipment.
"It's a good beginning, that's what it is," said Ann Timberlake, executive director of Conservation Voters of South Carolina.
Clark said he hopes the combined incentives will be enough.
"Ideally, these tax incentives are used to get the industry up and running," he said. "As far as I'm concerned, if the federal and state government are paying for 55 percent and the solar equipment dealer can't make it work, then there's something wrong with the price, or the product."
Timberlake said she expects the state to take additional steps toward reducing energy consumption and greenhouse gas emissions.
"I think you will see more legislation coming out the next session," she said. "As the presidential candidates visit the state, we'll also be asking them to state a policy on making us more independent, and taking more of a lead on global warming."
A REASON TO BUY
This year South Carolina lawmakers approved a number of tax incentives for the purchase of alternative-fuel vehicles and systems, and for the production and sale of alternative fuel. Incentives geared toward consumers include:
--A sales tax rebate of up to $300 for the purchase of a new or used vehicle capable of using 85 percent ethanol fuel. For vehicles costing more than $6,000, the measure would rebate the entire sales tax on the vehicle. Many vehicles are capable of using E85 fuel or gasoline. Vehicles must be purchased between July 1, 2006 and June 30, 2007 to qualify.
--A tax credit for the purchase of a hybrid vehicle, retroactive to January 1, 2006. The credit, which is not slated to expire, is equal to 20 percent of the federal tax credit on hybrid vehicles, which varies by make and model. For example, the federal tax credit for purchasing a 2006 2-wheel-drive Ford Escape Hybrid is $2,600; the state tax credit would be $520.
--A tax credit for installing a solar heating or cooling system between 2006 and 2014, equal to 25 percent of the cost of the system. The credit may offset up to 50 percent of state income tax liability, up to $3,500, and any excess may be carried forward. The federal government offers a separate tax credit for installing qualified solar water heating and photovoltaic systems in 2006 or 2007, equal to 30 percent of the cost of the system, up to $2,000.
ON THE WEB
--See a roundup of state and federal tax incentives for alternative fuels, from S.C. Energy Office:
www.tinyurl.com/y3zuue
--Find out which new and used vehicles can use E85 fuel:
www.tinyurl.com/dloww
--Learn where to find filling stations that sell E85 fuel in South Carolina:
www.tinyurl.com/u9ydb
--Discover the value of tax credits for different makes and models of hybrid vehicles:
www.tinyurl.com/y3f9zz
--Learn more about federal tax credits for energy efficiency:
www.tinyurl.com/8oeno
To see more of The Post and Courier, or to subscribe to the newspaper, go to http://www.charleston.net.
Copyright (c) 2006, The Post and Courier, Charleston, S.C.
Distributed by McClatchy-Tribune Business News.
For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
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