Illinois 2023-2024 Regular Session

Illinois House Bill HB2051 Compare Versions

Only one version of the bill is available at this time.

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1	1	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB2051 Introduced , by Rep. Terra Costa Howard SYNOPSIS AS INTRODUCED: New Act35 ILCS 5/240 new Creates the Hydrogen Fuel Replacement Tax Credit Act. Creates an income tax credit for eligible taxpayers in an amount equal to $1 per kilogram of eligible zero-carbon hydrogen used by the eligible taxpayer during the tax year for which a credit is sought. Provides for additional credits if the use of the zero-carbon hydrogen by the eligible taxpayer occurs in an equity investment eligible community. Provides that the total amount of tax credits to be allocated by the Department of Revenue to taxpayers for eligible zero-carbon hydrogen use occurring in the tax year ending during that State fiscal year shall not exceed $100,000,000, plus the amount of tax credits that were available to be allocated for eligible zero-carbon hydrogen use in the tax year ending during the prior State fiscal year but were not allocated. Effective immediately. LRB103 05879 HLH 50900 b A BILL FOR 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB2051 Introduced , by Rep. Terra Costa Howard SYNOPSIS AS INTRODUCED: New Act35 ILCS 5/240 new New Act 35 ILCS 5/240 new Creates the Hydrogen Fuel Replacement Tax Credit Act. Creates an income tax credit for eligible taxpayers in an amount equal to $1 per kilogram of eligible zero-carbon hydrogen used by the eligible taxpayer during the tax year for which a credit is sought. Provides for additional credits if the use of the zero-carbon hydrogen by the eligible taxpayer occurs in an equity investment eligible community. Provides that the total amount of tax credits to be allocated by the Department of Revenue to taxpayers for eligible zero-carbon hydrogen use occurring in the tax year ending during that State fiscal year shall not exceed $100,000,000, plus the amount of tax credits that were available to be allocated for eligible zero-carbon hydrogen use in the tax year ending during the prior State fiscal year but were not allocated. Effective immediately. LRB103 05879 HLH 50900 b LRB103 05879 HLH 50900 b A BILL FOR
2	2	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB2051 Introduced , by Rep. Terra Costa Howard SYNOPSIS AS INTRODUCED:
3	3	New Act35 ILCS 5/240 new New Act 35 ILCS 5/240 new
4	4	New Act
5	5	35 ILCS 5/240 new
6	6	Creates the Hydrogen Fuel Replacement Tax Credit Act. Creates an income tax credit for eligible taxpayers in an amount equal to $1 per kilogram of eligible zero-carbon hydrogen used by the eligible taxpayer during the tax year for which a credit is sought. Provides for additional credits if the use of the zero-carbon hydrogen by the eligible taxpayer occurs in an equity investment eligible community. Provides that the total amount of tax credits to be allocated by the Department of Revenue to taxpayers for eligible zero-carbon hydrogen use occurring in the tax year ending during that State fiscal year shall not exceed $100,000,000, plus the amount of tax credits that were available to be allocated for eligible zero-carbon hydrogen use in the tax year ending during the prior State fiscal year but were not allocated. Effective immediately.
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9	9	A BILL FOR
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12	12	1 AN ACT concerning revenue.
13	13	2 Be it enacted by the People of the State of Illinois,
14	14	3 represented in the General Assembly:
15	15	4 Section 1. Short title. This Act may be cited as the
16	16	5 Hydrogen Fuel Replacement Tax Credit Act.
17	17	6 Section 5. Legislative findings; purpose. The General
18	18	7 Assembly finds that:
19	19	8 (1) the health, welfare, and prosperity of all
20	20	9 Illinois residents require that the State of Illinois act
21	21	10 to reduce carbon emissions and other air pollutants in the
22	22	11 State;
23	23	12 (2) the State currently invests in a variety of
24	24	13 strategies to reduce carbon emissions and other air
25	25	14 pollutants, including, but not limited to, strategies that
26	26	15 encourage the use of renewable energy, nuclear energy,
27	27	16 energy efficient processes, and low-emission vehicles;
28	28	17 (3) zero-carbon hydrogen can be produced through the
29	29	18 electrolysis of water using electricity generated by
30	30	19 emissions-free energy sources; and
31	31	20 (4) replacing fossil fuels and hydrogen produced from
32	32	21 fossil fuels with zero-carbon hydrogen will reduce carbon
33	33	22 emissions and other air pollutants and benefit the
34	34	23 environment and public health of this State.
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38	38	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB2051 Introduced , by Rep. Terra Costa Howard SYNOPSIS AS INTRODUCED:
39	39	New Act35 ILCS 5/240 new New Act 35 ILCS 5/240 new
40	40	New Act
41	41	35 ILCS 5/240 new
42	42	Creates the Hydrogen Fuel Replacement Tax Credit Act. Creates an income tax credit for eligible taxpayers in an amount equal to $1 per kilogram of eligible zero-carbon hydrogen used by the eligible taxpayer during the tax year for which a credit is sought. Provides for additional credits if the use of the zero-carbon hydrogen by the eligible taxpayer occurs in an equity investment eligible community. Provides that the total amount of tax credits to be allocated by the Department of Revenue to taxpayers for eligible zero-carbon hydrogen use occurring in the tax year ending during that State fiscal year shall not exceed $100,000,000, plus the amount of tax credits that were available to be allocated for eligible zero-carbon hydrogen use in the tax year ending during the prior State fiscal year but were not allocated. Effective immediately.
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45	45	A BILL FOR
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71	71	1 This Act is intended to encourage the replacement of
72	72	2 fossil fuels and hydrogen produced from fossil fuels with
73	73	3 zero-carbon hydrogen for the purposes of promoting
74	74	4 decarbonization and improving the State's air quality.
75	75	5 Section 10. Definitions. As used in this Act:
76	76	6 "Attestation" means a statement that is made under penalty
77	77	7 of perjury by a producer under Section 13.
78	78	8 "Department" means the Department of Revenue.
79	79	9 "Eligible taxpayer" means a taxpayer that:
80	80	10 (1) is subject to subsections (a) and (b) of Section
81	81	11 201 of the Illinois Income Tax Act;
82	82	12 (2) has eligible zero-carbon hydrogen use for which
83	83	13 the producer has provided an attestation and verification
84	84	14 under Section 13;
85	85	15 (3) complies with subsection (e) of Section 15 if
86	86	16 applicable; and
87	87	17 (4) is allocated credits by the Department under
88	88	18 Section 25.
89	89	19 If the taxpayer is an individual, partnership, trust,
90	90	20 estate, or Subchapter S corporation, then the taxpayer is an
91	91	21 eligible taxpayer only to the extent that the taxpayer's
92	92	22 Illinois income tax liability is due to an equity interest in a
93	93	23 partnership that uses zero-carbon hydrogen, a Subchapter S
94	94	24 corporation that uses zero-carbon hydrogen, or a similar
95	95	25 pass-through entity that uses zero-carbon hydrogen.
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106	106	1 "Eligible zero-carbon hydrogen use" means the consumption,
107	107	2 in Illinois, of zero-carbon hydrogen.
108	108	3 "Environmental attribute credit" means a renewable energy
109	109	4 credit, zero-emission credit, or carbon mitigation credit, as
110	110	5 those terms are defined in Sections 1-10 and 1-75 of the
111	111	6 Illinois Power Agency Act, or any other environmental
112	112	7 attribute credit tracked by the Generation Attribute Tracking
113	113	8 System administered by PJM Interconnection, LLC.
114	114	9 "Equity investment eligible community" has the meaning
115	115	10 provided in Section 5-5 of the Energy Transition Act.
116	116	11 "MISO" means Midcontinent Independent System Operator,
117	117	12 Inc.
118	118	13 "MISO maximum generation event" has the same meaning as in
119	119	14 MISO's Reliability Operating Procedures.
120	120	15 "PJM performance assessment interval" has the same meaning
121	121	16 as provided in the PJM Open Access Transmission Tariff.
122	122	17 "Producer" means a zero-carbon hydrogen producer.
123	123	18 "Qualified renewable energy resource" means an electric
124	124	19 generator that (1) is fueled by wind, solar thermal energy,
125	125	20 photovoltaic cells and panels, geothermal energy, or
126	126	21 hydropower that does not involve new construction or
127	127	22 significant expansion of hydropower dams; and (2) produces
128	128	23 renewable energy credits that are eligible to be counted
129	129	24 toward the renewable energy requirements in subsection (c) of
130	130	25 Section 1-75 of the Illinois Power Agency Act.
131	131	26 "Regional grid" means the territory served by a specific
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142	142	1 regional transmission organization.
143	143	2 "Regional transmission organization" means PJM
144	144	3 Interconnection, LLC; Midcontinent Independent System
145	145	4 Operator; or any other entity charged with regional real-time
146	146	5 balancing of electricity generation and load.
147	147	6 "Zero-carbon hydrogen" means hydrogen that is produced
148	148	7 through electrolysis by an electrolyzer powered from
149	149	8 electricity generated by one or more zero-emission facilities
150	150	9 or qualified renewable energy resources that, in either
151	151	10 instance, are located in the same regional grid where the
152	152	11 zero-carbon hydrogen is produced.
153	153	12 "Zero-emission facility" has the same meaning as provided
154	154	13 in Section 1-10 of the Illinois Power Agency Act as that Act
155	155	14 exists on the effective date of this Act.
156	156	15 Section 13. Attestation and verification required. Each
157	157	16 taxpayer seeking credits under this Act shall submit with its
158	158	17 application for credits under this Act an attestation from the
159	159	18 producer, made under penalty of perjury, that the producer or
160	160	19 its electricity supplier has retired environmental attribute
161	161	20 credits associated with generation from a zero-emission
162	162	21 facility or a qualified renewable energy resource facility,
163	163	22 located in the same regional grid where the zero-carbon
164	164	23 hydrogen is produced, during each hour in which the hydrogen
165	165	24 for which a tax credit is claimed is produced, in an amount at
166	166	25 least as great as the energy consumed in that hour for
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177	177	1 production of the volume of hydrogen for which a tax credit is
178	178	2 claimed. The attestation shall also confirm that the hydrogen
179	179	3 for which a tax credit is claimed has not been produced during
180	180	4 an applicable PJM performance assessment interval or an
181	181	5 applicable MISO maximum generation event. In so attesting, the
182	182	6 producer may credit a portion of a monthly attribute
183	183	7 certificate to a specific hour within that month in an amount
184	184	8 equal to the generation quantity reflected in the certificate,
185	185	9 multiplied by the ratio of the zero-emission facility's or
186	186	10 qualified renewable energy resource's total generation in that
187	187	11 hour to its total monthly generation. Each taxpayer seeking
188	188	12 credits under this Act shall also be required to submit to the
189	189	13 Department, at the time of the tax filing for the applicable
190	190	14 year, documentation verifying the facts set forth in the
191	191	15 attestation required by this Section.
192	192	16 Section 15. Allowable credit.
193	193	17 (a) For tax years ending on or after December 31, 2023, a
194	194	18 credit is allowed against the taxes imposed on an eligible
195	195	19 taxpayer under subsections (a) and (b) of Section 201 of the
196	196	20 Illinois Income Tax Act in an amount equal to $1 per kilogram
197	197	21 of eligible zero-carbon hydrogen used by the eligible taxpayer
198	198	22 during the tax year for which a credit is sought.
199	199	23 (b) The allowable credit provided in subsection (a) of
200	200	24 this Section shall be increased by $0.15 per kilogram of
201	201	25 eligible zero-carbon hydrogen if the use of the zero-carbon
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212	212	1 hydrogen by the eligible taxpayer occurs in an equity
213	213	2 investment eligible community, after consultation with the
214	214	3 community and reasonable efforts to accommodate the community.
215	215	4 (c) The allowable credit provided in subsection (a) of
216	216	5 this Section shall be increased by $0.15 per kilogram of
217	217	6 eligible zero-carbon hydrogen if the eligible taxpayer uses
218	218	7 contractors or employs labor at a project location in an
219	219	8 equity investment eligible community, as defined in Section
220	220	9 5-5 of the Energy Transition Act on the effective date of this
221	221	10 Act, to convert existing equipment or install new equipment to
222	222	11 enable eligible zero-carbon hydrogen use for which a credit is
223	223	12 claimed under this Act.
224	224	13 (d) An eligible taxpayer may not earn tax credits for a tax
225	225	14 year for eligible zero-carbon hydrogen use in an amount that
226	226	15 exceeds the amount of tax credit allocated to it for the tax
227	227	16 year under Section 25. The credit or credits may not reduce the
228	228	17 taxpayer's liability to less than zero. An eligible taxpayer
229	229	18 may carry forward any tax credit that has been earned but not
230	230	19 used (or transferred pursuant to Section 35) for a period of up
231	231	20 to 5 tax years after the last tax year in which a credit was
232	232	21 earned by that taxpayer for eligible zero-carbon hydrogen use.
233	233	22 Unused credits that are not transferred pursuant to Section 35
234	234	23 shall expire at the end of this 5-year carryforward period.
235	235	24 (e) Labor performed on or after the effective date of this
236	236	25 Act to convert the eligible taxpayer's existing equipment or
237	237	26 install for the eligible taxpayer new equipment to enable
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248	248	1 eligible zero-carbon hydrogen use for which a credit is
249	249	2 claimed under this Act shall be performed by general
250	250	3 contractors that enter into a project labor agreement, as
251	251	4 defined by the Illinois Power Agency Act, prior to
252	252	5 construction. The project labor agreement shall be filed with
253	253	6 the Department. At a minimum, the project labor agreement must
254	254	7 provide the names, addresses, and occupations of the owner of
255	255	8 the facilities and the individuals representing the labor
256	256	9 organization employees participating in the project labor
257	257	10 agreement consistent with the Project Labor Agreements Act.
258	258	11 The agreement must also specify the terms and conditions as
259	259	12 defined by the Illinois Power Agency Act. Any information
260	260	13 submitted pursuant to this subsection (e) shall be considered
261	261	14 commercially sensitive information.
262	262	15 Section 20. Credit availability. Beginning with the State
263	263	16 fiscal year ending on June 30, 2024, and in each subsequent
264	264	17 State fiscal year, the total amount of tax credits to be
265	265	18 allocated by the Department to taxpayers for eligible
266	266	19 zero-carbon hydrogen use occurring in a tax year ending during
267	267	20 that State fiscal year shall not exceed $100,000,000, plus the
268	268	21 amount of tax credits that were available under this Section
269	269	22 to be allocated for eligible zero-carbon hydrogen use in the
270	270	23 tax year ending during the prior State fiscal year but were not
271	271	24 allocated.
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282	282	1 Section 25. Credit allocation by the Department.
283	283	2 (a) Taxpayers shall notify the Department, by July 1,
284	284	3 2023, of the dollar amount of credit the taxpayer estimates it
285	285	4 will earn for eligible zero-carbon hydrogen use in tax years
286	286	5 ending on or after December 31, 2023 and ending on or before
287	287	6 June 30, 2024. For tax years ending on or after July 1, 2024,
288	288	7 taxpayers shall notify the Department of the dollar amount of
289	289	8 credit the taxpayer estimates it will earn for eligible
290	290	9 zero-carbon hydrogen use by January 1 immediately preceding
291	291	10 the first day of the fiscal year in which the tax year ends.
292	292	11 (b) The Department shall notify each taxpayer of the
293	293	12 dollar amount of credit allocated to that taxpayer for
294	294	13 zero-carbon hydrogen use. That notification shall occur by
295	295	14 March 1 following the date on which the taxpayer notifies the
296	296	15 Department of its estimated zero-carbon hydrogen use under
297	297	16 subsection (a). The taxpayer must notify the Department within
298	298	17 30 days after the notification by the Department under this
299	299	18 subsection (b) if it wishes to surrender its allocation.
300	300	19 (c) The Department shall not allocate any credit under
301	301	20 this Act to a taxpayer for a tax year that ends on or after
302	302	21 December 31, 2032 if the taxpayer has not previously claimed a
303	303	22 credit under this Act for eligible zero-carbon hydrogen use.
304	304	23 (d) Notwithstanding any other provision of this Section or
305	305	24 Section 30, the Department shall not allocate credits under
306	306	25 this Act to a taxpayer for more than 10 years.
307	307	26 (e) The amount of credit allocated to a taxpayer by the
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318	318	1 Department in subsection (b) of this Section shall be the
319	319	2 maximum credit that the taxpayer is permitted to earn for the
320	320	3 tax year ending in the State fiscal year for which credits are
321	321	4 allocated.
322	322	5 (f) In years when the total allocation of credits sought
323	323	6 by taxpayers exceeds the available credits to be allocated to
324	324	7 all taxpayers under Section 20, a taxpayer that fails to earn
325	325	8 credit for eligible zero-carbon hydrogen use for at least 90%
326	326	9 of the credit allocated to that taxpayer shall pay a penalty
327	327	10 equal to the dollar amount of tax credit allocated but
328	328	11 unearned. This subsection shall not apply if a taxpayer's
329	329	12 failure to use its full allocation of credits is due to an
330	330	13 extraordinary event that was unforeseen at the time of the
331	331	14 requested allocation under subsection (a) of this Section or
332	332	15 the 30-day surrender period in subsection (b) of this Section,
333	333	16 such as an unexpected outage of the generator providing
334	334	17 electricity used to produce zero-carbon hydrogen, an
335	335	18 unexpected outage of the hydrogen production facility, or an
336	336	19 unexpected outage of the taxpayer's facility using the
337	337	20 zero-carbon hydrogen.
338	338	21 (g) Except as provided in Section 35, an allocation may
339	339	22 not be transferred, sold, or otherwise conveyed, nor may an
340	340	23 allocation be rolled forward to a subsequent year.
341	341	24 Section 30. Prioritization of tax credit allocation. If
342	342	25 the total amount of tax credits sought by taxpayers under
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353	353	1 Section 25 exceeds the total amount of tax credits that are
354	354	2 allowed to be allocated under Section 20, the Department shall
355	355	3 prioritize allocation as follows:
356	356	4 (1) First, tax credits shall be allocated to eligible
357	357	5 taxpayers who (i) participate in a United States
358	358	6 Department of Energy Hydrogen Hub for their associated
359	359	7 eligible zero-carbon hydrogen use, (ii) purchase hydrogen
360	360	8 from a participant in a United States Department of Energy
361	361	9 Hydrogen Hub for their associated eligible zero-carbon
362	362	10 hydrogen use, or (iii) purchase electricity to produce and
363	363	11 use zero-carbon hydrogen from a participant in a United
364	364	12 States Department of Energy Hydrogen Hub for their
365	365	13 associated eligible zero-carbon hydrogen use.
366	366	14 (2) Next, any remaining credits shall be allocated to
367	367	15 eligible taxpayers who previously received a credit
368	368	16 allocation and who engaged in eligible zero-carbon
369	369	17 hydrogen use in the prior calendar year, in an amount
370	370	18 equal to the most recent allocation; however, if there are
371	371	19 insufficient remaining credits available, then priority
372	372	20 shall be given to such eligible taxpayers based on the
373	373	21 amount of eligible zero-carbon hydrogen they used in the
374	374	22 prior calendar year, in order from greatest to least.
375	375	23 (3) Finally, any remaining credits shall be allocated
376	376	24 to taxpayers in proportion to their requested allocation,
377	377	25 excluding any amount already allocated to a taxpayer
378	378	26 pursuant to subsections (1) and (2) of this Section.
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389	389	1 Section 35. Transfer of credits.
390	390	2 (a) Any eligible taxpayer earning tax credits under this
391	391	3 Act (referred to in this Section as the assignor), which tax
392	392	4 credits have been allocated and earned but not yet used by the
393	393	5 eligible taxpayer against its tax liability for any tax year
394	394	6 and which have not expired, may sell, assign, convey, or
395	395	7 otherwise transfer such credits. The taxpayer acquiring the
396	396	8 credits (referred to in this Section as the assignee) may use
397	397	9 the amount of the acquired credits against the tax imposed
398	398	10 under subsections (a) and (b) of Section 201 of the Illinois
399	399	11 Income Tax Act for the tax year in which the assignee acquired
400	400	12 the credit and may carry forward any unused credit for 5 tax
401	401	13 years after the tax year in which the assignee acquired the
402	402	14 credit.
403	403	15 (b) The Department shall certify the eligibility of the
404	404	16 credit to be transferred by the assignor upon assignor's
405	405	17 application to the Department. The application shall set forth
406	406	18 the hydrogen producer's name and attestation, the amount of
407	407	19 all credits earned and previously used by the assignor, the
408	408	20 amount of all credits earned and unused by the assignor, the
409	409	21 amount of credits proposed to be transferred, and the
410	410	22 assignee's name and tax identification number. The Department
411	411	23 shall thereafter certify whether the amount of credits
412	412	24 proposed to be transferred to the assignee is available to the
413	413	25 assignor.
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424	424	1 Section 37. Rules. The Department may adopt rules to
425	425	2 implement and administer this Act.
426	426	3 Section 40. Severability. If any provision of this Act or
427	427	4 its application to any person or circumstance is held invalid,
428	428	5 the invalidity of that provision or application does not
429	429	6 affect other provisions or applications of this Act that can
430	430	7 be given effect without the invalid provision or application.
431	431	8 Section 900. The Illinois Income Tax Act is amended by
432	432	9 adding Section 240 as follows:
433	433	10 (35 ILCS 5/240 new)
434	434	11 Sec. 240. Hydrogen fuel replacement tax credits.
435	435	12 (a) For tax years ending on or after December 31, 2023 and
436	436	13 before January 1, 2043, an eligible taxpayer who qualifies for
437	437	14 a credit under the Hydrogen Fuel Replacement Tax Credit Act is
438	438	15 entitled to a credit against the taxes imposed under
439	439	16 subsections (a) and (b) of Section 201 of this Act as provided
440	440	17 in that Act. If the eligible taxpayer is a partnership or
441	441	18 Subchapter S corporation, the credit shall be allowed to the
442	442	19 partners or shareholders in accordance with the determination
443	443	20 of income and distributive share of income under Sections 702
444	444	21 and 704 and Subchapter S of the Internal Revenue Code.
445	445	22 (b) If the amount of any tax credit awarded under this
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456	456	1 Section exceeds the qualified taxpayer's income tax liability
457	457	2 for the year, the excess amount may be carried forward as
458	458	3 provided in the Hydrogen Fuel Replacement Tax Credit Act.
459	459	4 (c) The Department shall allocate available credits to
460	460	5 taxpayers in accordance with the Hydrogen Fuel Replacement Tax
461	461	6 Credit Act.
462	462	7 (d) A sale, assignment, or transfer of the tax credit may
463	463	8 be made in accordance with the Hydrogen Fuel Replacement Tax
464	464	9 Credit Act by the taxpayer earning the credit.
465	465	10 (e) The Department shall certify the available credit for
466	466	11 transfer by an assignor in accordance with the Hydrogen Fuel
467	467	12 Replacement Tax Credit Act.
468	468	13 Section 999. Effective date. This Act takes effect upon
469	469	14 becoming law.
470	470
471	471
472	472
473	473
474	474
475	475	HB2051 - 13 - LRB103 05879 HLH 50900 b