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2026 Nebraska Legislative Session Green Transportation & Energy Policy Update
Nebraska’s 2026 legislative session reflected a period of transition in energy and transportation policy. While there was limited expansion of new clean transportation programs, lawmakers focused heavily on grid capacity, large energy users, fuel taxation, and infrastructure funding. Biofuels and transportation funding remain stable policy pillars, while renewable energy incentives face increased scrutiny. Overall, the session emphasized system reliability, cost allocation, and long-term energy planning for state fleets, cities, and counties.
Municipal Clean Energy Financing and Infrastructure Tools Expand
Recent legislation strengthens the tools available to Nebraska cities and municipalities to plan, finance, and implement clean energy and transportation-related infrastructure projects.
One of the most directly relevant measures, LB 1135, updates Nebraska’s Property Assessed Clean Energy (PACE) program. PACE financing allows cities to support energy efficiency and renewable energy improvements by enabling property owners to repay project costs through property tax assessments. This can support municipal and private investment in permanently installed EV charging infrastructure at workplaces, multifamily housing, and fleet depots.
LB 1021 provides a tax exemption for renewable energy facilities owned by municipalities. These facilities matter for EV adoption because they can:
• Supply locally generated electricity for EV charging
• Stabilize energy costs for municipal fleet electrification
• Support public charging stations or depot charging
• Reduce reliance on wholesale grid electricity during peak pricing
LB 1027 adjusts siting and regulatory requirements for privately developed renewable energy projects, which can affect local zoning, land use planning, and infrastructure coordination at the city level. This affects how quickly renewable energy projects are developed and where infrastructure can be located—both of which influence the availability of clean electricity needed for EV charging and broader transportation electrification.
Renewable Energy and Grid Capacity: Key Policy Debate
Legislative debate centered on how Nebraska should manage rising electricity demand driven by large industrial users such as data centers and energy-intensive facilities. Key concerns included grid reliability, infrastructure costs, and how risks should be allocated between public utilities and private developers.
A major theme throughout the session was how to accommodate very large energy users—such as data centers and industrial projects—while ensuring that infrastructure costs and system risks do not fall on the broader public power system. These discussions also included broader questions about tax incentives, long-term energy planning, and how energy policy may affect transportation systems, including state fleets and local infrastructure.
This conversation was heavily influenced by growing interest in large, energy-intensive projects like data centers. A proposed Google data center in Lincoln has drawn attention because it could require as much—or even several times more—electricity than the city itself uses at peak demand. Lawmakers debated how projects like this should be powered, who pays for the infrastructure, and whether existing incentives are appropriate at that scale.
Passed: LB1010 – Large Load Customer Regulation Act
LB1010 establishes a framework for regulating very large electricity users (over 20 megawatts at a single site), such as data centers and other high-demand facilities. Utilities may require studies, set special rates, establish service conditions, and require demand reduction or backup generation during grid stress. The intent is to improve planning and reliability as large electricity demand grows.
Passed: LB1064 – Large Load and Data Center Regulation
LB1064 expands utility authority over large energy users, including cost recovery for infrastructure, operational requirements during emergencies, and compliance with service standards.
Passed: LB1111 – Data Center Cost Responsibility and Reporting
LB1111 requires large data centers to:
• Pay full system costs, including infrastructure
• Report annually on energy and water use
• Cover decommissioning costs
• Enter community benefit agreements
Passed: LB1193 – Energy Storage Taxation
LB1193 establishes an annual nameplate capacity tax for large energy storage systems (100 kW or larger) and exempts certain equipment from personal property tax.
Passed: LB1261 – Limits on Eminent Domain for Electric Generation Facilities
Overall, LB1261 reflects ongoing efforts to balance large-scale infrastructure development with private property rights, while ensuring that the financial and operational risks associated with major new energy demand remain primarily with the benefiting customer rather than the public power system. The bill places limits on the use of eminent domain by utilities to acquire privately owned electric generation facilities. It includes a narrow exception for extremely large industrial projects (over 1,000 MW) under strict conditions.
Failed or Deferred Renewable Energy Legislation
LB1109, introduced at the request of the Governor, would have phased out tax credits for electricity generated by new renewable energy facilities, including wind and solar, with full elimination after July 1, 2026.
Broader Energy Policy Trends
Additional bills introduced this session—including LB1026, LB1027, LB1186, LB1003, LB761, and LB1259—addressed topics such as renewable energy siting, grid planning, and infrastructure development.
Overall, Nebraska appears to be shifting toward:
• More targeted economic development incentives (such as job creation and capital investment programs)
• Increased scrutiny of large energy users and their infrastructure impacts
• Greater focus on how grid capacity will support future industrial growth
This dynamic is likely to shape how both renewable energy development and clean transportation projects evolve in the state in the years ahead.
These policy discussions have indirect impacts on transportation systems and electrification efforts. Changes in renewable energy incentives and grid planning can influence:
• The availability of lower-carbon electricity for EV charging
• The cost and pace of building charging infrastructure
• The overall emissions profile of electrified state, municipal, and county fleets
If renewable development slows or shifts, EV adoption may rely more heavily on the existing generation mix, which can affect lifecycle emissions outcomes for transportation electrification programs.
Biofuels Policy Climate: Stable Foundation, Shifting Support Structure
Lawmakers continue to recognize ethanol and other renewable fuels as a core part of the state’s transportation energy system, but there is growing emphasis on how those programs are funded and managed rather than expanding direct incentives.
Recent changes reflect a move toward more streamlined, tax- and compliance-based mechanisms in place of larger subsidy programs, alongside ongoing attention to fuel tax stability and transportation funding needs. For state fleets, cities, counties, agriculture, and freight users, this signals a more constrained but more predictable policy framework for biofuels moving forward, with future growth increasingly tied to market demand and broader energy policy decisions rather than direct state support.
Passed: LB815 – Motor Fuel Tax & Ethanol Policy Changes
LB815 makes several updates to Nebraska’s motor fuel system, with two key areas of change: diesel taxation and ethanol incentives.
The bill creates a revised diesel tax structure by adjusting how different types of diesel fuel are taxed and regulated. Beginning Oct. 1, a quarter-cent per gallon excise tax will be imposed on dyed diesel used for off-road purposes. The first $140,000 collected each year will be directed to the Motor Fuel Tax Enforcement and Collection Cash Fund, with the remainder directed to the Agricultural Alcohol Fuel Tax Fund. The bill also updates allowable uses of that fund and shifts existing fees by removing one on dyed diesel and increasing the fee on clear diesel to 0.6 cents per gallon, which will indirectly affect biodiesel blends because biodiesel is typically used in combination with clear diesel in on-road fuel.
The new dyed diesel tax provides more consistent funding for ethanol programs by generating a steady revenue stream tied to fuel use, replacing the Ethanol Production Incentive Cash Fund, a long-standing program that provided direct financial incentives to ethanol producers that had become financially unsustainable.
The bill also tightens oversight of dyed diesel and updates how fuel tax refunds are administered, improving consistency and compliance across fuel uses. This is aimed at improving compliance and ensuring fuel taxes are collected more consistently across off-road diesel users, including agriculture and transportation, to ensure the state’s transportation funding system keeps pace with changes in fuel use and the energy landscape. This is particularly relevant for state fleet operations, county road equipment, and municipal diesel users who rely on clear and consistent fuel taxation structures.
Passed: LB207 - New Fee for Alternative Fuel Vehicles
LB207 makes an update to how Nebraska funds its roads as more alternative fuel vehicles hit the road. The new law keeps the existing $150 annual fee for most alternative fuel vehicles (and $75 for motorcycles and plug-in hybrids), but adds a higher fee for heavier, commercially registered alternative fuel vehicles—specifically those over 7,500 pounds, which will now pay three times the standard amount. These fees go directly into the Highway Trust Fund, helping ensure all vehicle types contribute to maintaining Nebraska’s roads as the transportation system evolves. This is particularly relevant for public fleets and commercial operators transitioning to alternative fuel vehicles.
Failed or Deferred Biofuels Legislation
LB1257 - Tax/Revenue and Fuel-Related Provisions focused on tax and revenue-related adjustments tied to fuel policy, including potential changes affecting fuel taxation and exemptions. One of the key provisions discussed was an extension of the existing diesel sales tax exemption through 2027, which would have continued to support lower fuel costs for diesel users in agriculture and transportation. However, the bill did not advance into law.
Natural Gas and CNG Infrastructure
Compressed natural gas (CNG) uses the same pipeline system that serves homes and industry, meaning broader natural gas policy and infrastructure decisions can influence CNG availability and cost. Nebraska currently has fewer than 10 CNG stations statewide, concentrated in Omaha and Lincoln and primarily serving fleet users—highlighting both limited access and significant opportunity for expansion.
Several measures passed this session focus on strengthening the natural gas system. LB 548 allows municipal gas utilities to negotiate custom contracts with large industrial users—such as ethanol plants and data centers—supporting economic development and long-term energy demand. Before, municipal gas utilities mostly had to use standard rates.
LR471 signals legislative interest in expanding in-state natural gas production, while LB719 makes natural gas infrastructure eligible for rural development funding.
While not transportation-focused, these policies shape the broader energy system that supports CNG fueling, particularly through infrastructure expansion and industrial demand.
Conclusion
Overall, the 2026 Nebraska legislative session reflects a period of transition rather than major overhaul in energy and transportation policy.