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Michigan Funds 1,000 E85 Pumps

Michigan is setting aside $250,000 in federal funds for service station owners to offer alternative fuels with the goal of  1,000 pumps being installed or converted by 2008. That would increase the number of Michigan pumps now offering E85 by 20 percent.

Service station owners will have to pay at least half the cost of refitting their pumps or installing new ones, The Mercury News reports. Refitting costs about $5,000, while installing a new pump can cost about $18,000, said Russell Youngdahl, chief executive of CleanFUEL USA, a company that helps convert pumps.

In July, Michigan lowered the state tax on each gallon of ethanol-blended fuel from 19 cents to 12 cents per gallon. The tax on biodiesel fuel dropped from 15 cents to 12 cents.

The new grants are coming from the U.S. Department of Energy and are administered by the Michigan Department of Labor and Economic Growth Energy Office in cooperation with the Michigan Strategic Fund.

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