Texas 2009 - 81st Regular

Texas House Bill HB469 Compare Versions

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1	1	H.B. No. 469
2	2
3	3
4	4	AN ACT
5	5	relating to the establishment of incentives by this state for the
6	6	implementation of certain projects to capture and sequester carbon
7	7	dioxide that would otherwise be emitted into the atmosphere.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Chapter 490, Government Code, is amended by
10	10	adding Subchapter H to read as follows:
11	11	SUBCHAPTER H. FRANCHISE TAX CREDIT FOR CLEAN ENERGY PROJECT
12	12	Sec. 490.351. DEFINITION. In this subchapter, "clean
13	13	energy project" has the meaning assigned by Section 120.001,
14	14	Natural Resources Code.
15	15	Sec. 490.352. FRANCHISE TAX CREDIT FOR CLEAN ENERGY
16	16	PROJECT. (a) The comptroller shall adopt rules for issuing to an
17	17	entity implementing a clean energy project in this state a
18	18	franchise tax credit. A clean energy project is eligible for a
19	19	franchise tax credit only if the project is implemented in
20	20	connection with the construction of a new facility.
21	21	(b) The comptroller shall issue a franchise tax credit to an
22	22	entity operating a clean energy project after:
23	23	(1) the Railroad Commission of Texas has issued a
24	24	certificate of compliance for the project to the entity as provided
25	25	by Section 120.004, Natural Resources Code;
26	26	(2) the construction of the project has been
27	27	completed;
28	28	(3) the electric generating facility associated with
29	29	the project is fully operational;
30	30	(4) the Bureau of Economic Geology of The University
31	31	of Texas at Austin verifies to the comptroller that the electric
32	32	generating facility associated with the project is sequestering at
33	33	least 70 percent of the carbon dioxide resulting from or associated
34	34	with the generation of electricity by the facility; and
35	35	(5) the owner or operator of the project has entered
36	36	into an interconnection agreement relating to the project with the
37	37	Electric Reliability Council of Texas.
38	38	(c) The total amount of the franchise tax credit that may be
39	39	issued to the entity designated in the certificate of compliance
40	40	for a clean energy project is equal to the lesser of:
41	41	(1) 10 percent of the total capital cost of the
42	42	project, including the cost of designing, engineering, permitting,
43	43	constructing, and commissioning the project, the cost of procuring
44	44	land, water, and equipment for the project, and all fees, taxes, and
45	45	commissions paid and other payments made in connection with the
46	46	project but excluding the cost of financing the capital cost of the
47	47	project; or
48	48	(2) $100 million.
49	49	(d) The amount of the franchise tax credit for each report
50	50	year is calculated by determining the amount of franchise tax that
51	51	is due based on the taxable margin generated by a clean energy
52	52	project from the generation and sale of power and the sale of any
53	53	products that are produced by the electric generation facility.
54	54	The amount of the franchise tax credit claimed under this section
55	55	for a report year may not exceed the amount of franchise tax
56	56	attributable to the clean energy project for that report year.
57	57	(e) The comptroller may not issue a franchise tax credit
58	58	under this section before September 1, 2013. This subsection
59	59	expires September 2, 2013.
60	60	SECTION 2. Section 382.003(1-a), Health and Safety Code, is
61	61	amended to read as follows:
62	62	(1-a) "Advanced clean energy project" means a project
63	63	for which an application for a permit or for an authorization to use
64	64	a standard permit under this chapter is received by the commission
65	65	on or after January 1, 2008, and before January 1, 2020, and that:
66	66	(A) involves the use of coal, biomass, petroleum
67	67	coke, solid waste, or fuel cells using hydrogen derived from such
68	68	fuels, in the generation of electricity, or the creation of liquid
69	69	fuels outside of the existing fuel production infrastructure while
70	70	co-generating electricity, whether the project is implemented in
71	71	connection with the construction of a new facility or in connection
72	72	with the modification of an existing facility and whether the
73	73	project involves the entire emissions stream from the facility or
74	74	only a portion of the emissions stream from the facility;
75	75	(B) with regard to the portion of the emissions
76	76	stream from the facility that is associated with the project, is
77	77	capable of achieving:
78	78	(i) on an annual basis a 99 percent or
79	79	greater reduction of sulfur dioxide emissions or, if the project is
80	80	designed for the use of feedstock substantially all of which is
81	81	subbituminous coal, an emission rate of 0.04 pounds or less of
82	82	sulfur dioxide per million British thermal units as determined by a
83	83	30-day average;
84	84	(ii) on an annual basis [,] a 95 percent or
85	85	greater reduction of mercury emissions;
86	86	(iii) [, and] an annual average emission
87	87	rate for nitrogen oxides of:
88	88	(a) 0.05 pounds or less per million
89	89	British thermal units; or
90	90	(b) if the project uses gasification
91	91	technology, 0.034 pounds or less per million British thermal units;
92	92	and
93	93	(iv) an annual average emission rate for
94	94	filterable particulate matter of 0.015 pounds or less per million
95	95	British thermal units; and
96	96	(C) captures not less than 50 percent of the
97	97	[renders] carbon dioxide in the portion of the emissions stream
98	98	from the facility that is associated with the project and
99	99	sequesters that captured carbon dioxide by geologic storage or
100	100	other means [capable of capture, sequestration, or abatement if any
101	101	carbon dioxide is produced by the project].
102	102	SECTION 3. Subtitle D, Title 3, Natural Resources Code, is
103	103	amended by adding Chapter 120 to read as follows:
104	104	CHAPTER 120. VERIFICATION, MONITORING, AND CERTIFICATION OF CLEAN
105	105	ENERGY PROJECT
106	106	Sec. 120.001. DEFINITIONS. In this chapter:
107	107	(1) "Bureau" means the Bureau of Economic Geology of
108	108	The University of Texas at Austin.
109	109	(2) "Clean energy project" means a project to
110	110	construct a coal-fueled or petroleum coke-fueled electric
111	111	generating facility, including a facility in which the fuel is
112	112	gasified before combustion, that will:
113	113	(A) have a capacity of at least 200 megawatts;
114	114	(B) meet the emissions profile for an advanced
115	115	clean energy project under Section 382.003(1-a)(B), Health and
116	116	Safety Code;
117	117	(C) capture at least 70 percent of the carbon
118	118	dioxide resulting from or associated with the generation of
119	119	electricity by the facility;
120	120	(D) be capable of permanently sequestering in a
121	121	geological formation the carbon dioxide captured; and
122	122	(E) be capable of supplying the carbon dioxide
123	123	captured for purposes of an enhanced oil recovery project.
124	124	(3) "Commission" means the Railroad Commission of
125	125	Texas.
126	126	(4) "Sequester" means to inject carbon dioxide into a
127	127	geological formation in a manner and under conditions that create a
128	128	reasonable expectation that at least 99 percent of the carbon
129	129	dioxide injected will remain sequestered from the atmosphere for at
130	130	least 1,000 years.
131	131	Sec. 120.002. CERTIFICATION OF CLEAN ENERGY PROJECT. (a)
132	132	The commission is the authority responsible for certifying whether
133	133	a project has met the requirements for a clean energy project.
134	134	(b) An entity may apply to the commission for a
135	135	certification that a project operated by the entity meets the
136	136	requirements for a clean energy project. The application must be
137	137	accompanied by:
138	138	(1) a certificate from a qualified independent
139	139	engineer that the project is operational and meets the standards
140	140	provided by Sections 120.001(2)(A), (B), and (C); and
141	141	(2) a fee payable to the commission.
142	142	(c) The amount of the fee prescribed by Subsection (b)(2) is
143	143	$50,000 unless the commission by rule determines that a fee in a
144	144	greater amount is necessary to cover the commission's costs of
145	145	processing an application.
146	146	Sec. 120.003. MONITORING OF SEQUESTERED CARBON DIOXIDE.
147	147	(a) An entity that applies to the commission under Section 120.002
148	148	for a certification that a project operated by the entity meets the
149	149	requirements for a clean energy project is responsible for
150	150	conducting a monitoring, measuring, and verification process that
151	151	demonstrates that the project complies with the requirements of
152	152	Section 490.352(b)(4), Government Code.
153	153	(b) The entity shall contract with the bureau for the bureau
154	154	to:
155	155	(1) design initial protocols and standards for the
156	156	process described by Subsection (a);
157	157	(2) review the conduct of the process described by
158	158	Subsection (a) in order to make any necessary changes in the design
159	159	of the protocols and standards;
160	160	(3) evaluate the results of the process described by
161	161	Subsection (a);
162	162	(4) provide an evaluation of the results of the
163	163	process described by Subsection (a) to the commission; and
164	164	(5) determine whether to transmit to the comptroller
165	165	the verification described by Section 490.352(b)(4), Government
166	166	Code.
167	167	(c) Unless otherwise agreed by the entity and the bureau, a
168	168	contract required by Subsection (b) must require the entity to
169	169	compensate the bureau by paying an annual fee in accordance with the
170	170	following schedule:
171	171	Year Amount
172	172	One $700,000
173	173	Two $1,300,000
174	174	Three $1,800,000
175	175	Four $1,500,000
176	176	Five $1,200,000
177	177	Six $900,000
178	178	Seven $500,000
179	179	Eight $200,000
180	180	(d) The first payment under Subsection (c) is due not later
181	181	than 24 months before the date the entity first supplies carbon
182	182	dioxide captured by the project to an enhanced oil recovery
183	183	project.
184	184	Sec. 120.004. ISSUANCE OF CERTIFICATE OF COMPLIANCE. (a)
185	185	On verification that a project meets the requirements for
186	186	certification as a clean energy project, the commission shall issue
187	187	a certificate of compliance for the project to the entity operating
188	188	the project and shall provide a copy of the certificate to the
189	189	comptroller.
190	190	(b) The commission may not issue a certificate of compliance
191	191	for more than three clean energy projects.
192	192	SECTION 4. Subchapter H, Chapter 151, Tax Code, is amended
193	193	by adding Section 151.334 to read as follows:
194	194	Sec. 151.334. COMPONENTS OF TANGIBLE PERSONAL PROPERTY USED
195	195	IN CONNECTION WITH SEQUESTRATION OF CARBON DIOXIDE. Components of
196	196	tangible personal property used in connection with an advanced
197	197	clean energy project, as defined by Section 382.003, Health and
198	198	Safety Code, or a clean energy project, as defined by Section
199	199	120.001, Natural Resources Code, are exempted from the taxes
200	200	imposed by this chapter if:
201	201	(1) the components are installed to capture carbon
202	202	dioxide from an anthropogenic emission source, transport or inject
203	203	carbon dioxide from such a source, or prepare carbon dioxide from
204	204	such a source for transportation or injection; and
205	205	(2) the carbon dioxide is sequestered in this state:
206	206	(A) as part of an enhanced oil recovery project
207	207	that qualifies for a tax rate reduction under Section 202.0545, as
208	208	provided by Subsection (c) of that section; or
209	209	(B) in a manner and under conditions that create
210	210	a reasonable expectation that at least 99 percent of the carbon
211	211	dioxide will remain sequestered from the atmosphere for at least
212	212	1,000 years.
213	213	SECTION 5. Sections 202.0545(a) and (d), Tax Code, are
214	214	amended to read as follows:
215	215	(a) Subject to the limitations provided by this section,
216	216	until [the later of] the 30th [seventh] anniversary of the date that
217	217	the comptroller first approves an application for a tax rate
218	218	reduction under this section [or the effective date of a final rule
219	219	adopted by the United States Environmental Protection Agency
220	220	regulating carbon dioxide as a pollutant], the producer of oil
221	221	recovered through an enhanced oil recovery project that qualifies
222	222	under Section 202.054 for the recovered oil tax rate provided by
223	223	Section 202.052(b) is entitled to an additional 50 percent
224	224	reduction in that tax rate if in the recovery of the oil the
225	225	enhanced oil recovery project uses carbon dioxide that:
226	226	(1) is captured from an anthropogenic source in this
227	227	state;
228	228	(2) would otherwise be released into the atmosphere as
229	229	industrial emissions;
230	230	(3) is measurable at the source of capture; and
231	231	(4) is sequestered in one or more geological
232	232	formations in this state following the enhanced oil recovery
233	233	process.
234	234	(d) An agency to which an operator applies for a
235	235	certification under Subsection (c)(2) may issue the certification
236	236	only if the agency finds that, based on substantial evidence, there
237	237	is a reasonable expectation that:
238	238	(1) [the operator's planned sequestration program will
239	239	ensure that] at least 99 percent of the carbon dioxide sequestered
240	240	as required by Subsection (a)(4) will remain sequestered for at
241	241	least 1,000 years; and
242	242	(2) the operator's planned sequestration program will
243	243	include appropriately designed monitoring and verification
244	244	measures that will be employed for a period sufficient to
245	245	demonstrate whether the sequestration program is performing as
246	246	expected.
247	247	SECTION 6. Section 313.021(4), Tax Code, is amended to read
248	248	as follows:
249	249	(4) "Qualifying time period" means:
250	250	(A) the first two tax years that begin on or after
251	251	the date a person's application for a limitation on appraised value
252	252	under this subchapter is approved, except as provided by Paragraph
253	253	(B) or (C); [or]
254	254	(B) in connection with a nuclear electric power
255	255	generation facility, the first seven tax years that begin on or
256	256	after the third anniversary of the date the school district
257	257	approves the property owner's application for a limitation on
258	258	appraised value under this subchapter, unless a shorter time period
259	259	is agreed to by the governing body of the school district and the
260	260	property owner; or
261	261	(C) in connection with an advanced clean energy
262	262	project, as defined by Section 382.003, Health and Safety Code, the
263	263	first five tax years that begin on or after the third anniversary of
264	264	the date the school district approves the property owner's
265	265	application for a limitation on appraised value under this
266	266	subchapter, unless a shorter time period is agreed to by the
267	267	governing body of the school district and the property owner.
268	268	SECTION 7. (a) Not later than September 1, 2010, September
269	269	1, 2012, and September 1, 2016, the Texas Commission on
270	270	Environmental Quality shall make recommendations to the
271	271	legislature on whether the emissions profile set out in Sections
272	272	120.001(2)(B) and (C), Natural Resources Code, as added by this
273	273	Act, and Sections 382.003(1-a)(B) and (C), Health and Safety Code,
274	274	as amended by this Act, should be adjusted to increase or decrease
275	275	elements of the emissions profile. Before making its
276	276	recommendations, the commission shall determine whether any
277	277	commercially demonstrated electric generating facility operating
278	278	in the United States that meets the criteria and emissions profile
279	279	specified by Section 120.001(2), Natural Resources Code, as added
280	280	by this Act, is capturing and sequestering a greater percentage of
281	281	the carbon dioxide in the emissions stream from the facility than
282	282	would be required to meet the emissions profile set out in that
283	283	subdivision and whether any commercially demonstrated electric
284	284	generating facility operating in the United States that meets the
285	285	criteria and emissions profile specified by Sections
286	286	382.003(1-a)(A), (B), and (C), Health and Safety Code, as amended
287	287	by this Act, is capturing and sequestering a greater percentage of
288	288	the carbon dioxide in the emissions stream from the facility than
289	289	would be required to meet the emissions profile set out in those
290	290	paragraphs. If at least one such facility exists, the commission
291	291	shall recommend raising the minimum percentage of carbon dioxide in
292	292	the emissions stream from a facility that is required to be captured
293	293	and sequestered for the facility to qualify as a clean energy
294	294	project or advanced clean energy project to the highest percentage
295	295	of carbon dioxide that is being captured and sequestered by such a
296	296	facility.
297	297	(b) Factors that must be considered in the assessment of the
298	298	emissions profile include:
299	299	(1) the technical and economic feasibility of meeting
300	300	all of the elements of the emissions profile set out in Sections
301	301	120.001(2)(B) and (C), Natural Resources Code, as added by this
302	302	Act, or Sections 382.003(1-a)(A), (B), and (C), Health and Safety
303	303	Code, as amended by this Act, in a commercially viable project, as
304	304	documented by the United States Department of Energy;
305	305	(2) the technical and economic feasibility of projects
306	306	to meet all of the elements of the emissions profile and still use a
307	307	diverse range of fuels, including lignite; and
308	308	(3) the adequacy of the incentives provided by this
309	309	Act, or similar legislation that becomes law, to continue to
310	310	attract investment in and federal funding for clean energy projects
311	311	and advanced clean energy projects in this state.
312	312	(c) Any adjustments to the emissions profile implemented by
313	313	the legislature in response to a report required by this section do
314	314	not apply to an application considered administratively complete on
315	315	or before the date the adjustment takes effect.
316	316	SECTION 8. The comptroller shall adopt rules under Section
317	317	490.352, Government Code, as added by this Act, not later than
318	318	December 31, 2010.
319	319	SECTION 9. Not later than January 1, 2010, the Texas
320	320	Commission on Environmental Quality shall adopt rules as necessary
321	321	to implement Section 382.003, Health and Safety Code, as amended by
322	322	this Act.
323	323	SECTION 10. Section 151.334, Tax Code, as added by this Act,
324	324	does not affect taxes imposed before the effective date of this Act,
325	325	and the law in effect before the effective date of this Act is
326	326	continued in effect for purposes of the liability for and
327	327	collection of those taxes.
328	328	SECTION 11. The Railroad Commission of Texas may adopt
329	329	rules as necessary to implement Section 202.0545, Tax Code, as
330	330	amended by this Act.
331	331	SECTION 12. The comptroller of public accounts may adopt
332	332	rules as necessary to implement Section 202.0545, Tax Code, as
333	333	amended by this Act.
334	334	SECTION 13. This Act takes effect September 1, 2009.
335	335	______________________________ ______________________________
336	336	President of the Senate Speaker of the House
337	337	I certify that H.B. No. 469 was passed by the House on May 5,
338	338	2009, by the following vote: Yeas 140, Nays 3, 1 present, not
339	339	voting; that the House refused to concur in Senate amendments to
340	340	H.B. No. 469 on May 29, 2009, and requested the appointment of a
341	341	conference committee to consider the differences between the two
342	342	houses; and that the House adopted the conference committee report
343	343	on H.B. No. 469 on May 31, 2009, by the following vote: Yeas 141,
344	344	Nays 5, 1 present, not voting.
345	345	______________________________
346	346	Chief Clerk of the House
347	347	I certify that H.B. No. 469 was passed by the Senate, with
348	348	amendments, on May 27, 2009, by the following vote: Yeas 31, Nays
349	349	0; at the request of the House, the Senate appointed a conference
350	350	committee to consider the differences between the two houses; and
351	351	that the Senate adopted the conference committee report on H.B. No.
352	352	469 on May 31, 2009, by the following vote: Yeas 31, Nays 0.
353	353	______________________________
354	354	Secretary of the Senate
355	355	APPROVED: __________________
356	356	Date
357	357	__________________
358	358	Governor