81R23197 E
By: King of Parker, Anchia, Hughes, Lewis, H.B. No. 469
et al.
Substitute the following for H.B. No. 469:
By: Farabee C.S.H.B. No. 469
A BILL TO BE ENTITLED
AN ACT
relating to the establishment of incentives by this state for the
implementation of certain projects to capture and sequester in
geological formations carbon dioxide that would otherwise be
emitted into the atmosphere.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Subchapter G, Chapter 490,
Government Code, is amended to read as follows:
SUBCHAPTER G. CLEAN COAL PROJECTS AND CLEAN ENERGY PROJECTS
SECTION 2. Section 490.301, Government Code, is amended to
read as follows:
Sec. 490.301. DEFINITIONS [DEFINITION]. In this
subchapter:
(1) "Clean [, "clean] coal project" has the meaning
assigned by Section 5.001, Water Code.
(2) "Clean energy project" has the meaning assigned by
Section 120.001, Natural Resources Code.
SECTION 3. The heading to Section 490.304, Government Code,
is amended to read as follows:
Sec. 490.304. CONTRACTING AUTHORITY RELATED TO
IMPLEMENTING CLEAN COAL PROJECT; FRANCHISE TAX CREDIT.
SECTION 4. Subchapter G, Chapter 490, Government Code, is
amended by adding Section 490.305 to read as follows:
Sec. 490.305. FRANCHISE TAX CREDIT FOR CLEAN ENERGY
PROJECT. (a) The comptroller shall adopt rules for issuing to an
entity implementing a clean energy project in this state a
franchise tax credit.
(b) The comptroller shall issue a franchise tax credit to an
entity operating a clean energy project after:
(1) the Railroad Commission of Texas has issued a
certificate of compliance for the project to the entity as provided
by Section 120.004, Natural Resources Code;
(2) the construction of the project has been
completed;
(3) the carbon-fueled electric generating facility
associated with the project is fully operational; and
(4) the Bureau of Economic Geology of The University
of Texas at Austin verifies to the comptroller that the
carbon-fueled electric generating facility associated with the
project is sequestering at least 70 percent of the carbon dioxide
resulting from the generation of electricity by the facility.
(c) The total amount of the franchise tax credit that may be
issued to the entity designated in the certificate of compliance
for a clean energy project is equal to the lesser of:
(1) 10 percent of the total capital cost of the
project, including the cost of designing, engineering, permitting,
constructing, and commissioning the project, the cost of procuring
land, water, and equipment for the project, and all fees, taxes, and
commissions paid and other payments made in connection with the
project but excluding the cost of financing the capital cost of the
project; or
(2) $100 million.
(d) The franchise tax credit is a credit against any
franchise taxes that may be assessed against the income generated
by a clean energy project from the generation and sale of power and
the sale of any products that are produced directly or indirectly by
the carbon-fueled process. The entity designated in the
certificate of compliance for the project may assign the franchise
tax credit to any other entity that has or acquires an interest in
the income generated by the project.
SECTION 5. Subtitle D, Title 3, Natural Resources Code, is
amended by adding Chapter 120 to read as follows:
CHAPTER 120. VERIFICATION, MONITORING, AND CERTIFICATION OF CLEAN
ENERGY PROJECT
Sec. 120.001. DEFINITIONS. In this chapter:
(1) "Bureau" means the Bureau of Economic Geology of
The University of Texas at Austin.
(2) "Clean energy project" means a project to
construct a carbon-fueled electric generating facility that will:
(A) have a capacity of at least 200 megawatts;
(B) use integrated gasification combined cycle
or other pre-combustion technology;
(C) capture at least 70 percent of the carbon
dioxide resulting from the generation of electricity by the
facility;
(D) be capable of permanently sequestering in a
geological formation the carbon dioxide captured; and
(E) be capable of supplying the carbon dioxide
captured for purposes of an enhanced oil recovery project.
(3) "Commission" means the Railroad Commission of
Texas.
(4) "Sequester" means the injection of carbon dioxide
into a geological formation in a manner and under conditions that
create a reasonable expectation that at least 99 percent of the
carbon dioxide injected will remain sequestered from the atmosphere
for at least 1,000 years.
Sec. 120.002. CERTIFICATION OF CLEAN ENERGY PROJECT. (a)
The commission is the authority responsible for certifying whether
a project has met the requirements for a clean energy project.
(b) An entity may apply to the commission for a
certification that a project operated by the entity meets the
requirements for a clean energy project. The application must be
accompanied by:
(1) a certificate from a qualified independent
engineer that the project is operational and meets the standards
provided by Sections 120.001(2)(A), (B), and (C); and
(2) a fee payable to the commission.
(c) The amount of the fee prescribed by Subsection (b)(2) is
$50,000 unless the commission by rule determines that a fee in a
greater amount is necessary to cover the commission's costs of
processing an application.
Sec. 120.003. MONITORING OF SEQUESTERED CARBON DIOXIDE. (a)
An entity operating a facility seeking a certification from the
Railroad Commission of Texas pursuant to Section 120.002 above
shall be responsible for conducting a monitoring, measuring, and
verification process that demonstrates that the project has
complied with the requirements of Section 490.305(b)(4),
Government Code. The entity shall contract for the Bureau of
Economic Geology of The University of Texas at Austin to: design
initial protocols and standards for such a process; review the
conduct of the process in order to make any necessary changes in the
design of protocols and standards; evaluate the results of the
process; provide an evaluation of such results to the Railroad
Commission of Texas; and determine whether to transmit to the
comptroller the verification described in Section 490.305(b)(4),
Government Code.
(b) Unless otherwise agreed by the applying entity and the
Bureau of Economic Geology of The University of Texas at Austin, the
contract required by Subsection (a) of this section shall provide
that the entity shall compensate the Bureau of Economic Geology at
The University of Texas at Austin by paying eight annual fees, the
first of which shall be due at least 24 months prior to the date that
the entity first supplies carbon dioxide to an enhanced oil
recovery project, according to the following schedule: a fee of
$700,000 in year one; a fee of $1,300,000 in year two; a fee of
$1,800,000 in year three; a fee of $1,500,000 in year four; a fee of
$1,200,000 in year five; a fee of $900,000 in year six; a fee of
$500,000 in year seven; and a fee of $200,000 in year eight.
Sec. 120.004. ISSUANCE OF CERTIFICATE OF COMPLIANCE. (a)
On verification that a project meets the requirements for
certification as a clean energy project, the commission shall issue
a certificate of compliance for the project to the entity operating
the project and shall provide a copy of the certificate to the
comptroller.
(b) The commission may not issue a certificate of compliance
for more than three clean energy projects.
SECTION 6. Section 202.0545, Tax Code, is amended by adding
Subsection (i) to read as follows:
(i) Notwithstanding Subsection (a), the producer of oil
recovered through an enhanced oil recovery project that uses carbon
dioxide that is generated by a clean energy project as defined by
Section 120.001, Natural Resources Code, is entitled to a tax rate
reduction under this section until the 30th anniversary of the date
the comptroller first approves an application for a tax rate
reduction under this section if the producer otherwise qualifies
for the tax rate reduction.
SECTION 7. The comptroller shall adopt rules under Section
490.305, Government Code, as added by this Act, not later than
December 31, 2010.
SECTION 8. This Act takes effect September 1, 2009.