By: Crownover, et al. (Senate Sponsor - Estes) H.B. No. 2446
(In the Senate - Received from the House May 8, 2013;
May 9, 2013, read first time and referred to Committee on Natural
Resources; May 15, 2013, reported favorably by the following vote:
Yeas 11, Nays 0; May 15, 2013, sent to printer.)
A BILL TO BE ENTITLED
AN ACT
relating to the definitions of advanced clean energy projects and
clean energy projects and to franchise tax credits for certain of
those projects.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter H, Chapter 490, Government Code, is
transferred to Chapter 171, Tax Code, redesignated as Subchapter L,
Chapter 171, Tax Code, and amended to read as follows:
SUBCHAPTER L. [H. FRANCHISE] TAX CREDIT FOR CLEAN ENERGY PROJECT
Sec. 171.651 [490.351]. DEFINITION. In this subchapter,
"clean energy project" has the meaning assigned by Section 120.001,
Natural Resources Code.
Sec. 171.652. [490.352. 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 against the tax imposed under this chapter.
A clean energy project is eligible for a [franchise tax] credit
only if the project is implemented in connection with the
construction of a new facility.
(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;
(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; and
(5) the owner or operator of the project has entered
into an interconnection agreement relating to the project with the
Electric Reliability Council of Texas.
(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 amount of the franchise tax credit for each report
year is calculated by determining the amount of franchise tax that
is due based on the taxable margin generated by a clean energy
project from the generation and sale of power and the sale of any
products that are produced by the electric generation facility.]
The total [amount of the franchise tax] credit that a taxable entity
may claim [claimed] under this section for a report, including the
amount of any carryforward credit, [year] may not exceed the amount
of franchise tax due by the taxable entity for the report after any
applicable tax credits [attributable to the clean energy project
for that report year]. If a taxable entity is eligible to claim a
credit that exceeds the limitation of this subsection, the taxable
entity may carry the unused credit forward for not more than 20
consecutive reports. A carryforward is considered the remaining
portion of the credit that the taxable entity does not claim in the
current year because of the limitation.
(e) The entity designated in the certificate of compliance
for a clean energy project may assign the credit to one or more
taxable entities. A taxable entity to which the credit is assigned
may claim the credit against the tax imposed under this chapter
subject to the conditions and limitations of this subchapter.
(f) The comptroller may not issue a [franchise tax] credit
under this section before the later of:
(1) September 1, 2018; or
(2) the expiration of an agreement under Chapter 313
regarding the clean energy project for which the credit is issued
[2013. This subsection expires September 2, 2013].
SECTION 2. Section 382.003(1-a), Health and Safety Code, is
amended to read as follows:
(1-a) "Advanced clean energy project" means a project
for which an application for a permit or for an authorization to use
a standard permit under this chapter is received by the commission
on or after January 1, 2008, and before January 1, 2020, and that:
(A) involves the use of coal, biomass, petroleum
coke, solid waste, natural gas, or fuel cells using hydrogen
derived from such fuels, in the generation of electricity, or the
creation of liquid fuels outside of the existing fuel production
infrastructure while co-generating electricity, whether the
project is implemented in connection with the construction of a new
facility or in connection with the modification of an existing
facility and whether the project involves the entire emissions
stream from the facility or only a portion of the emissions stream
from the facility;
(B) with regard to the portion of the emissions
stream from the facility that is associated with the project, is
capable of achieving:
(i) on an annual basis:
(a) a 99 percent or greater reduction
of sulfur dioxide emissions;
(b) [or,] if the project is designed
for the use of feedstock, substantially all of which is
subbituminous coal, an emission rate of 0.04 pounds or less of
sulfur dioxide per million British thermal units as determined by a
30-day average; or
(c) if the project is designed for the
use of one or more combustion turbines that burn natural gas, a
sulfur dioxide emission rate that meets best available control
technology requirements as determined by the commission;
(ii) on an annual basis:
(a) a 95 percent or greater reduction
of mercury emissions; or
(b) if the project is designed for the
use of one or more combustion turbines that burn natural gas, a
mercury emission rate that complies with applicable federal
requirements;
(iii) an annual average emission rate for
nitrogen oxides of:
(a) 0.05 pounds or less per million
British thermal units; [or]
(b) if the project uses gasification
technology, 0.034 pounds or less per million British thermal units;
or
(c) if the project is designed for the
use of one or more combustion turbines that burn natural gas, two
parts per million by volume; and
(iv) an annual average emission rate for
filterable particulate matter of 0.015 pounds or less per million
British thermal units; and
(C) captures not less than 50 percent of the
carbon dioxide in the portion of the emissions stream from the
facility that is associated with the project and sequesters that
captured carbon dioxide by geologic storage or other means.
SECTION 3. Section 120.001(2), Natural Resources Code, is
amended to read as follows:
(2) "Clean energy project" means a project to
construct a coal-fueled, natural gas-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;
(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.
SECTION 4. Section 120.002(b), Natural Resources Code, is
amended to read as follows:
(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. An entity may not submit
an application under this section before September 1, 2018. 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.
SECTION 5. Section 120.003(a), Natural Resources Code, is
amended to read as follows:
(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 171.652(b)(4), Tax [490.352(b)(4), Government] Code.
SECTION 6. Section 120.004(b), Natural Resources Code, is
amended to read as follows:
(b) The commission may not issue a certificate of compliance
for more than three clean energy projects. Not more than one of the
clean energy projects may be a natural gas project.
SECTION 7. Not later than January 1, 2014, the comptroller
of public accounts shall adopt rules necessary to implement
Subchapter L, Chapter 171, Tax Code, as redesignated and amended by
this Act.
SECTION 8. Not later than January 1, 2014, the Texas
Commission on Environmental Quality shall adopt rules as necessary
to implement the change in law made by this Act to Section 382.003,
Health and Safety Code.
SECTION 9. The Railroad Commission of Texas may adopt rules
as necessary to implement the change in law made by this Act to
Section 120.001, Natural Resources Code.
SECTION 10. The changes in law made by this Act do not apply
to a clean energy project that includes a precombustion integrated
gasification combined cycle technology with carbon capture and was
selected by the United States Department of Energy for a Clean Coal
Power Initiative award before February 1, 2010. A clean energy
project that includes a precombustion integrated gasification
combined cycle technology with carbon capture and was selected by
the United States Department of Energy for a Clean Coal Power
Initiative award before February 1, 2010, is governed by the law in
effect immediately before the effective date of this Act, and the
former law is continued in effect for that purpose.
SECTION 11. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2013.
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