By: King of Parker, et al. (Senate Sponsor - Seliger) H.B. No. 469
(In the Senate - Received from the House May 6, 2009;
May 7, 2009, read first time and referred to Committee on Natural
Resources; May 25, 2009, reported adversely, with favorable
Committee Substitute by the following vote: Yeas 8, Nays 0;
May 25, 2009, sent to printer.)
COMMITTEE SUBSTITUTE FOR H.B. No. 469 By: Seliger
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 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 electric
generating facility associated with the project is sequestering at
least 70 percent of the carbon dioxide resulting from or associated
with 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 electric generation facility. 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.
(e) The comptroller may not issue a franchise tax credit
under this section before September 1, 2013. This subsection
expires September 2, 2013.
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 coal-fueled or petroleum coke-fueled electric
generating facility, including a facility in which the fuel is
gasified before combustion, that will:
(A) have a capacity of at least 200 megawatts;
(B) meet the emissions profile for an advanced
clean energy project under Section 382.003(1-a)(B), Health and
Safety Code, except that a unit designed for the use of feedstock
substantially all of which is subbituminous coal must be capable of
achieving:
(i) on an annual basis a 99 percent or
greater reduction of sulfur dioxide emissions; or
(ii) an emission rate of 0.04 pounds or less
of sulfur dioxide per million British thermal units as determined
by a 30-day average;
(C) capture at least 70 percent of the carbon
dioxide resulting from or associated with 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 to inject 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 that applies to the commission under Section 120.002
for a certification that a project operated by the entity meets the
requirements for a clean energy project is responsible for
conducting a monitoring, measuring, and verification process that
demonstrates that the project complies with the requirements of
Section 490.305(b)(4), Government Code.
(b) The entity shall contract with the bureau for the bureau
to:
(1) design initial protocols and standards for the
process described by Subsection (a);
(2) review the conduct of the process described by
Subsection (a) in order to make any necessary changes in the design
of the protocols and standards;
(3) evaluate the results of the process described by
Subsection (a);
(4) provide an evaluation of the results of the
process described by Subsection (a) to the commission; and
(5) determine whether to transmit to the comptroller
the verification described by Section 490.305(b)(4), Government
Code.
(c) Unless otherwise agreed by the entity and the bureau, a
contract required by Subsection (b) must require the entity to
compensate the bureau by paying an annual fee in accordance with the
following schedule:
Year Amount
One $700,000
Two $1,300,000
Three $1,800,000
Four $1,500,000
Five $1,200,000
Six $900,000
Seven $500,000
Eight $200,000
(d) The first payment under Subsection (c) is due not later
than 24 months before the date the entity first supplies carbon
dioxide captured by the project to an enhanced oil recovery
project.
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. Subchapter H, Chapter 151, Tax Code, is amended
by adding Section 151.334 to read as follows:
Sec. 151.334. COMPONENTS OF TANGIBLE PERSONAL PROPERTY USED
IN CONNECTION WITH GEOLOGIC SEQUESTRATION OF CARBON DIOXIDE.
Components of tangible personal property used in connection with an
advanced clean energy project, as defined by Section 382.003,
Health and Safety Code, or a clean energy project, as defined by
Section 120.001, Natural Resources Code, are exempted from the
taxes imposed by this chapter if:
(1) the components are installed to capture carbon
dioxide from an anthropogenic emission source, transport or inject
carbon dioxide from such a source, or prepare carbon dioxide from
such a source for transportation or injection; and
(2) the carbon dioxide is geologically sequestered in
this state:
(A) as part of an enhanced oil recovery project
that qualifies for a tax rate reduction under Section 202.0545, as
provided by Subsection (c) of that section; or
(B) 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.
SECTION 7. 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 8. The comptroller shall adopt rules under Section
490.305, Government Code, as added by this Act, not later than
December 31, 2010.
SECTION 9. Section 151.334, Tax Code, as added by this Act,
does not affect taxes imposed before the effective date of this Act,
and the law in effect before the effective date of this Act is
continued in effect for purposes of the liability for and
collection of those taxes.
SECTION 10. This Act takes effect September 1, 2009.
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