Illinois 2023-2024 Regular Session

Illinois House Bill HB3023 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 HB3023 Introduced , by Rep. Lawrence "Larry" Walsh, Jr. SYNOPSIS AS INTRODUCED: New Act35 ILCS 5/234 new Creates the Hydrogen Fuel Replacement Tax Credit Act. Creates an income tax credit 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 that the credit shall be increased by $0.15 per kilogram of eligible zero-carbon hydrogen if the eligible taxpayer uses contractors or employs labor at a project location in an equity investment eligible community. Effective immediately. LRB103 30261 HLH 56689 b A BILL FOR 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB3023 Introduced , by Rep. Lawrence "Larry" Walsh, Jr. SYNOPSIS AS INTRODUCED: New Act35 ILCS 5/234 new New Act 35 ILCS 5/234 new Creates the Hydrogen Fuel Replacement Tax Credit Act. Creates an income tax credit 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 that the credit shall be increased by $0.15 per kilogram of eligible zero-carbon hydrogen if the eligible taxpayer uses contractors or employs labor at a project location in an equity investment eligible community. Effective immediately. LRB103 30261 HLH 56689 b LRB103 30261 HLH 56689 b A BILL FOR
2	2	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB3023 Introduced , by Rep. Lawrence "Larry" Walsh, Jr. SYNOPSIS AS INTRODUCED:
3	3	New Act35 ILCS 5/234 new New Act 35 ILCS 5/234 new
4	4	New Act
5	5	35 ILCS 5/234 new
6	6	Creates the Hydrogen Fuel Replacement Tax Credit Act. Creates an income tax credit 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 that the credit shall be increased by $0.15 per kilogram of eligible zero-carbon hydrogen if the eligible taxpayer uses contractors or employs labor at a project location in an equity investment eligible community. 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 citizens 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 or through methods involving
31	31	20 carbon capture and sequestration; and
32	32	21 (4) replacing fossil fuels with zero-carbon hydrogen
33	33	22 will reduce carbon emissions and other air pollutants and
34	34	23 benefit the environment and public health of this State.
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38	38	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB3023 Introduced , by Rep. Lawrence "Larry" Walsh, Jr. SYNOPSIS AS INTRODUCED:
39	39	New Act35 ILCS 5/234 new New Act 35 ILCS 5/234 new
40	40	New Act
41	41	35 ILCS 5/234 new
42	42	Creates the Hydrogen Fuel Replacement Tax Credit Act. Creates an income tax credit 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 that the credit shall be increased by $0.15 per kilogram of eligible zero-carbon hydrogen if the eligible taxpayer uses contractors or employs labor at a project location in an equity investment eligible community. Effective immediately.
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45	45	A BILL FOR
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51	51	New Act
52	52	35 ILCS 5/234 new
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71	71	1 This Act is intended to encourage the replacement of
72	72	2 fossil fuels with zero-carbon hydrogen, promote
73	73	3 decarbonization, and encourage the production and use of
74	74	4 zero-carbon hydrogen for the purpose of improving the State's
75	75	5 air quality.
76	76	6 Section 10. Definitions. As used in this Act:
77	77	7 "Attestation" means a statement that is made under penalty
78	78	8 of perjury by a producer under Section 13 and Section 30.
79	79	9 "Department" means the Department of Revenue.
80	80	10 "Eligible taxpayer" means a taxpayer that:
81	81	11 (1) is subject to subsections (a) and (b) of Section
82	82	12 201 of the Illinois Income Tax Act;
83	83	13 (2) has eligible zero-carbon hydrogen use for which
84	84	14 the producer has provided an attestation 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 "Eligible zero-carbon hydrogen use" means the consumption,
90	90	20 in Illinois, of zero-carbon hydrogen.
91	91	21 "Environmental attribute credit" means a renewable energy
92	92	22 credit, zero-emission credit, or carbon mitigation credit, as
93	93	23 those terms are defined in Sections 1-10 and 1-75 of the
94	94	24 Illinois Power Agency Act, or any other environmental
95	95	25 attribute credit tracked by the Generation Attribute Tracking
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106	106	1 System run by PJM Interconnection, LLC.
107	107	2 "Environmental justice community" has the meaning provided
108	108	3 in the Illinois Power Agency's long-term renewable resources
109	109	4 procurement plan.
110	110	5 "Producer" means a zero-carbon hydrogen producer.
111	111	6 "Renewable energy resource" has the same meaning as
112	112	7 provided in Section 1-10 of the Illinois Power Agency Act as
113	113	8 that Act exists on the effective date of this Act.
114	114	9 "Zero-carbon hydrogen" means hydrogen that has a carbon
115	115	10 intensity of 0.45 or below and complies with the rules of the
116	116	11 hydrogen production tax credit available under 26 U.S.C. 45V.
117	117	12 "Zero-emission facility" has the meaning provided in
118	118	13 Section 1-10 of the Illinois Power Agency Act as that Act
119	119	14 exists on the effective date of this Act.
120	120	15 Section 15. Attestation required. Each taxpayer seeking
121	121	16 credits under this Act shall submit with its application for
122	122	17 credits under this Act an attestation from the producer, made
123	123	18 under penalty of perjury, that the producer:
124	124	19 (a) has achieved a carbon intensity of 0.45 or below; and
125	125	20 (b) has complied with the rules of the hydrogen production
126	126	21 tax credit available under 26 U.S.C. 45V in determining the
127	127	22 carbon intensity.
128	128	23 Section 20. Allowable credit.
129	129	24 (a) For tax years ending on or after December 31, 2023, a
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140	140	1 credit is allowed against the taxes imposed on an eligible
141	141	2 taxpayer under subsections (a) and (b) of Section 201 of the
142	142	3 Illinois Income Tax Act in an amount equal to $1 per kilogram
143	143	4 of eligible zero-carbon hydrogen used by the eligible taxpayer
144	144	5 during the tax year for which a credit is sought.
145	145	6 (b) The allowable credit provided in subsection (a) of
146	146	7 this Section shall be increased by $0.15 per kilogram of
147	147	8 eligible zero-carbon hydrogen if the use of the zero-carbon
148	148	9 hydrogen by the eligible taxpayer occurs in an environmental
149	149	10 justice community.
150	150	11 (c) The allowable credit provided in subsection (a) of
151	151	12 this Section shall be increased by $0.15 per kilogram of
152	152	13 eligible zero-carbon hydrogen if the eligible taxpayer uses
153	153	14 contractors or employs labor at a project location in an
154	154	15 equity investment eligible community, as defined in Section
155	155	16 5-5 of the Energy Transition Act on the effective date of this
156	156	17 Act, to convert existing equipment or install new equipment to
157	157	18 enable eligible zero-carbon hydrogen use for which a credit is
158	158	19 claimed under this Act.
159	159	20 (d) An eligible taxpayer may not earn tax credits for
160	160	21 eligible zero-carbon hydrogen use in an amount that exceeds
161	161	22 the amount of tax credit allocated to it under Section 25. The
162	162	23 credit or credits may not reduce the taxpayer's liability to
163	163	24 less than zero. An eligible taxpayer may carry forward any tax
164	164	25 credit that has been earned but not used (or transferred
165	165	26 pursuant to Section 35) for a period of up to 5 tax years after
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176	176	1 the last tax year in which a credit was earned by that taxpayer
177	177	2 for eligible zero-carbon hydrogen use. Unused credits that are
178	178	3 not transferred pursuant to Section 35 shall expire at the end
179	179	4 of this 5-year carryforward period.
180	180	5 (e) Labor performed on or after the effective date of this
181	181	6 Act to convert the eligible taxpayer's existing equipment or
182	182	7 to install for the eligible taxpayer new equipment that will
183	183	8 enable eligible zero-carbon hydrogen use for which a credit is
184	184	9 claimed under this Act shall be performed by general
185	185	10 contractors that enter into a project labor agreement, as
186	186	11 defined by the Illinois Power Agency Act, prior to
187	187	12 construction. The project labor agreement shall be filed with
188	188	13 the Department. At a minimum, the project labor agreement must
189	189	14 provide the names, addresses, and occupations of the owner of
190	190	15 the facilities and the individuals representing the labor
191	191	16 organization employees participating in the project labor
192	192	17 agreement consistent with the Project Labor Agreements Act.
193	193	18 The agreement must also specify the terms and conditions as
194	194	19 defined by the Illinois Power Agency Act. Any information
195	195	20 submitted pursuant to this subsection (e) shall be considered
196	196	21 commercially sensitive information.
197	197	22 Section 25. Credit availability. Beginning with the State
198	198	23 fiscal year ending June 30, 2024, and in each subsequent State
199	199	24 fiscal year, the total amount of tax credits to be allocated by
200	200	25 the Department to taxpayers for eligible zero-carbon hydrogen
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211	211	1 use occurring in a tax year ending during that State fiscal
212	212	2 year shall not exceed $100,000,000, plus the amount of tax
213	213	3 credits that were available to be allocated for eligible
214	214	4 zero-carbon hydrogen use in the tax year ending during the
215	215	5 prior State fiscal year but were not allocated.
216	216	6 Section 30. Credit allocation by the Department.
217	217	7 (a) Taxpayers shall notify the Department, by January 1,
218	218	8 2023, of the dollar amount of credit the taxpayer estimates it
219	219	9 will earn for eligible zero-carbon hydrogen use in tax years
220	220	10 ending on or after December 31, 2023 and ending on or before
221	221	11 June 30, 2024. For tax years ending on or after July 1, 2024,
222	222	12 taxpayers shall notify the Department of the dollar amount of
223	223	13 credit the taxpayer estimates it will earn for eligible
224	224	14 zero-carbon hydrogen use by January 1 immediately preceding
225	225	15 the first day of the fiscal year in which the tax year ends.
226	226	16 (b) The Department shall notify each taxpayer of the
227	227	17 dollar amount of credit allocated to that taxpayer for
228	228	18 zero-carbon hydrogen use. That notification shall occur by
229	229	19 March 1 following the date on which the taxpayer notifies the
230	230	20 Department of its estimated zero-carbon hydrogen use under
231	231	21 subsection (a). The taxpayer must notify the Department within
232	232	22 30 days after the notification by the Department under this
233	233	23 subsection (b) if it wishes to surrender its allocation.
234	234	24 (c) The Department shall not allocate any credit under
235	235	25 this Act to a taxpayer for a tax year that ends on or after
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246	246	1 December 31, 2032 if the taxpayer has not previously claimed a
247	247	2 credit under this Act for eligible zero-carbon hydrogen use.
248	248	3 (d) Notwithstanding any other provision of this Section or
249	249	4 Section 30, the Department shall not allocate credits under
250	250	5 this Act to a taxpayer for more than 10 years.
251	251	6 (e) The amount of credit allocated to a taxpayer by the
252	252	7 Department in subsection (b) of this Section shall be the
253	253	8 maximum credit that the taxpayer is permitted to earn for the
254	254	9 tax year ending in the State fiscal year for which credits are
255	255	10 allocated.
256	256	11 (f) In years when the total allocation of credits sought
257	257	12 by taxpayers exceeds the available credits to be allocated to
258	258	13 all taxpayers under Section 20, a taxpayer that fails to earn
259	259	14 credit for eligible zero-carbon hydrogen use for at least 90%
260	260	15 of the credit allocated to that taxpayer shall pay a penalty
261	261	16 equal to the dollar amount of tax credit allocated but
262	262	17 unearned. This subsection shall not apply if a taxpayer's
263	263	18 failure to use its full allocation of credits is due to an
264	264	19 extraordinary event that was unforeseen at the time of the
265	265	20 requested allocation under subsection (a) of this Section or
266	266	21 the 30-day surrender period in subsection (b) of this Section,
267	267	22 such as an unexpected outage of the generator providing
268	268	23 electricity used to produce zero-carbon hydrogen, an
269	269	24 unexpected outage of the hydrogen production facility, or an
270	270	25 unexpected outage of the taxpayer's facility using the
271	271	26 zero-carbon hydrogen.
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282	282	1 (g) Except as provided in Section 35, an allocation may
283	283	2 not be transferred, sold, or otherwise conveyed, nor may an
284	284	3 allocation be rolled forward to a subsequent year.
285	285	4 Section 35. Prioritization of tax credit allocation. If
286	286	5 the total amount of tax credits sought by taxpayers under
287	287	6 Section 25 exceeds the total amount of tax credits that are
288	288	7 allowed to be allocated under Section 20, the Department shall
289	289	8 prioritize allocation as follows:
290	290	9 (1) any credits shall be allocated to eligible
291	291	10 taxpayers who previously received a credit allocation and
292	292	11 who engaged in eligible zero-carbon hydrogen use in the
293	293	12 prior calendar year, up to a maximum amount equal to their
294	294	13 most recent allocation. If there are insufficient credits
295	295	14 available, then each taxpayer's allocation shall be
296	296	15 pro-rated by the same percentage reduction.
297	297	16 (2) any remaining credits for the fiscal year shall be
298	298	17 allocated to taxpayers in proportion to their requested
299	299	18 allocation, excluding any amount already allocated to a
300	300	19 taxpayer pursuant to subsections (1) of this Section. To
301	301	20 the extent there are remaining credits available, any such
302	302	21 allocation shall be conducted on a quarterly basis.
303	303	22 (3) Any eligible taxpayer seeking an allocation under
304	304	23 this section shall provide to the Department an
305	305	24 attestation that such taxpayer has the intent and
306	306	25 capability to use the entirety of any such allotment of
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317	317	1 eligible zero-carbon hydrogen.
318	318	2 (4) Report. On an annual basis, the Department shall
319	319	3 publish a report describing the total aggregate
320	320	4 allocations requested by all taxpayers, the total
321	321	5 aggregate allocations granted by the Department, the total
322	322	6 aggregate credits actually claimed by taxpayers and the
323	323	7 total penalties due pursuant to Section 25f.
324	324	8 Section 40. Transfer of credits.
325	325	9 (a) Any eligible taxpayer earning tax credits under this
326	326	10 Act (referred to in this Section as the assignor), which tax
327	327	11 credits have been allocated and earned but not yet used by the
328	328	12 eligible taxpayer against its tax liability for any tax year
329	329	13 and which have not expired, may sell, assign, convey, or
330	330	14 otherwise transfer such credits. The taxpayer acquiring the
331	331	15 credits (referred to in this Section as the assignee) may use
332	332	16 the amount of the acquired credits against the tax imposed
333	333	17 under subsections (a) and (b) of Section 201 of the Illinois
334	334	18 Income Tax Act for the tax year in which the assignee acquired
335	335	19 the credit and may carry forward any unused credit for 5 tax
336	336	20 years after the tax year in which the assignee acquired the
337	337	21 credit.
338	338	22 (b) The Department shall certify the eligibility of the
339	339	23 credit to be transferred by the assignor upon assignor's
340	340	24 application to the Department. The application shall set forth
341	341	25 the hydrogen producer's name and attestation, the amount of
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352	352	1 all credits earned and previously used by the assignor, the
353	353	2 amount of all credits earned and unused by the assignor, the
354	354	3 amount of credits proposed to be transferred, and the
355	355	4 assignee's name and tax identification number. The Department
356	356	5 shall thereafter certify whether the amount of credits
357	357	6 proposed to be transferred to the assignee is available to the
358	358	7 assignor.
359	359	8 Section 45. Severability. If any provision of this Act or
360	360	9 its application to any person or circumstance is held invalid,
361	361	10 the invalidity of that provision or application does not
362	362	11 affect other provisions or applications of this Act that can
363	363	12 be given effect without the invalid provision or application.
364	364	13 Section 900. The Illinois Income Tax Act is amended by
365	365	14 adding Section 234 as follows:
366	366	15 (35 ILCS 5/234 new)
367	367	16 Sec. 234. Hydrogen Fuel Replacement Tax Credit Act.
368	368	17 Taxpayers who are awarded a credit under the Hydrogen Fuel
369	369	18 Replacement Tax Credit Act are entitled to a credit as
370	370	19 provided in that Act.
371	371	20 Section 999. Effective date. This Act takes effect upon
372	372	21 becoming law.
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