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FCCTC students conduct tests while producing biodiesel. Photo by Mary Jo Harrod

Division of Biofuels
Industry and Business

Biofuel Considerations

The production of motor fuels is heavily regulated, and all fuels and fuel additives must meet state and federal requirements. Whether the fuel is made in small quantities for personal use or in an industrial plant, it is the producer’s responsibility to know and follow the regulations that apply.

Biofuel Production in Kentucky - Business Considerations and Resources, a seven-page fact sheet, is intended to give prospective business owners a first look at some of the issues that should be considered before entering this competitive industry and to provide contact resources for additional information. Additionally, EPA's Guidance for Biodiesel Producers and Biodiesel Blenders/Users explains and clarifies regulatory requirements for biodiesel producers and biodiesel blenders/users. A biofuels Market Penetration Analysis is available showing E-85, E-10, gasoline, biodiesel, diesel and E-10 Market Share in Kentucky.

Small Batch Operations

It is illegal to distill alcohol (ethanol) without first obtaining a federal permit through the Alcohol and Tobacco Tax and Trade Bureau (TTB). Failure to obtain a federal permit prior to engaging in this activity is a criminal offence under the Internal Revenue Code.

The Environmental Compliance Assistance Program assists regulated entities in obtaining a permit and understanding and complying with environmental obligations.

Individuals making their own fuel for on-road use (making biodiesel that constitutes blending homemade biodiesel with diesel fuel or making alcohol and blending it with gasoline) are required to be a licensed gasoline or special fuels dealer. Every individual or legal company holding a valid Kentucky Special Fuels Dealer license must post a minimum $5,000 bond. Contact the Kentucky Department of Revenue at 502-564-3853 for more information. See the Kentucky Department of Revenue Form 72A301.


Biopower is the process of using biomass to generate electricity. Biomass can be burned directly to produce steam for electricity production or manufacturing processes. Some coal power plants “co-fire” with biomass as a supplementary energy source to significantly reduce emissions.

Biomass can also be turned into gas to generate electricity. Landfills produce methane gas that can be burned to produce electricity, and gasification technologies use high temperatures to convert biomass into gasses that can be used to fuel a turbine to turn an electric generator.