Tennessee Makes $3.5 Million Available for Alternative Fuel Grants and Loans

February 05, 2007

Tennessee Governor Phil Bredesen announced on February 1 that Tennessee will make $3.5 million available in grants and loans to increase the accessibility, development, and production of biofuels in the state. Bredesen made the announcement in a news release that described his alternative fuels strategy, which he said will help Tennessee’s agricultural economy.

"It’s a smart energy strategy, a smart economic strategy, and a smart environmental strategy. Most importantly, it helps create new markets and new opportunities for Tennessee farmers," Bredesen said.

The state opened the application process for the grants and loans on January 29. Four departments will manage the allocation of funds: Agriculture, Economic and Community Development, Environment and Conservation and Transportation.

The $3.5 million will fund three programs:

  • Feedstock Processing Demonstration Loans. The Departments of Agriculture and Economic and Community Development will disperse $1 million in loans of up to $500,000 each. The program is designed to increase Tennessee farm income and production of alternative fuel feedstock, most likely soybeans. Prospective applicants must submit a business plan with their application by March 15, 2007. After the first round of loans has been awarded, additional loan program cycles will be announced until the funds are exhausted.
  • Alternative Fuel Innovations Grants. The Tennessee Department of Environment and Conservation has a total of $1 million for its Alternative Fuel Innovations Grants. They are intended to help local governments and state-funded universities increase the use of alternative fuels in their fleets and measure positive impacts to state air quality, particularly in areas not currently attaining federal air quality standards. Maximum awards are $40,000 for fuel purchasing, maintenance, or fuel promotional projects, and $100,000 for capital projects. Applications will be accepted through May 31, 2007. Once the first round of grants are awarded, additional grant cycles will be announced for up to three years or until the funds are exhausted.
  • Green Island Corridor Grant Project. Through its biofuel corridor grant project, the Tennessee Department of Transportation (TDOT) will use $1.5 million to establish a statewide network of publicly accessible E85 and B20 refueling stations, or "Green Islands," in Tennessee. E85 is a blend of 85 percent ethanol and 15 percent gasoline that can be used in flexible-fuel vehicles designed to run on either conventional gasoline or ethanol blends. B20 is a blend of 20 percent biodiesel and 80 percent petroleum diesel. Biodiesel is a regulated diesel fuel made from natural, renewable sources such as plant oils or animal fats. The program will assist retail stations with the capital costs of converting or installing the necessary infrastructure to offer B20 and E85 biofuels to the public. Retail stations will be required to provide at least 20 percent of these capital costs. The department’s goal is to have more than 50 biofuel pumps stationed along the state’s interstates and major highway corridors and in major population centers in 2007. Grant applications will be accepted through April 12, 2007.

More information, see the governor’s February 1 press release.