By: Hancock, West S.B. No. 2203
A BILL TO BE ENTITLED
AN ACT
relating to the franchise tax credit for certain clean energy
projects.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 120.001(2), Natural Resources Code, is
amended to read as follows:
(2) "Clean energy project" means a project that:
(A) uses storage technology for the primary purpose of
capturing, storing, sequestering, using, or reusing carbon dioxide
emissions to prevent carbon dioxide from entering the atmosphere;
and
(B) is constructed as part of, or is located adjacent
to, a power generation facility, including a coal-fired generation
facility, natural gas-fired power system, hydrogen-powered
facility, or ammonia-powered system[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 2. 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 [รท
[(1)] a certificate from a qualified independent engineer
that the project is operational and meets the standards provided by
Section 120.001(2) [Sections 120.001(2)(A), (B), and (C); and
[(2) a fee payable to the commission].
SECTION 3. Section 120.003(b), Natural Resources Code, is
amended to read as follows:
(b) The Texas Commission on Environmental Quality [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 171.602(b)(4), Tax Code.
SECTION 4. Section 171.602, Tax Code, is amended by amending
Subsections (a), (b), (c), and (f) and adding Subsections (c-1) and
(c-2) to read as follows:
(a) The comptroller shall adopt rules for issuing to an
entity implementing a clean energy project in this state a credit
against the tax imposed under this chapter. [A clean energy project
is eligible for a credit only if the project is implemented in
connection with the construction of a new facility.]
(b) The comptroller shall issue a 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 Texas Commission on Environmental Quality
[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 capturing, storing, sequestering,
using, or reusing carbon dioxide in a manner that prevents at least
90 [70] percent of the carbon dioxide resulting from or associated
with the generation of electricity by the facility from entering
the atmosphere; 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) Subject to Subsections (c-1), the [The] total amount of
the 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) 25 [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.
(c-1) The comptroller by rule shall prescribe procedures that
provide that credits are allocated and issued to taxable entities
on a first-come, first-served basis according to the date the
requirements of Subsection (b) are satisfied.
(d) The comptroller may not issue a credit under this section
after December 31, 2033 [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].
SECTION 5. Sections 120.001(1), 120.002(c), 120.003(c),
120.003(d), and 120.004(b), Natural Resources Code, are repealed.
SECTION 6. A taxable entity may apply for a credit under
Subchapter L, Chapter 171, Tax Code, as amended by this Act, only
for capital costs incurred on or after the effective date of this
Act.
SECTION 7. (a) Except as provided by Subsection (b) of this
section, this Act applies only to a report originally due on or
after the effective date of this Act.
(b) The changes in law made by this Act do not affect a
franchise tax credit issued before the effective date of this Act,
including carryforward of the credit. The credit is governed by the
law in effect when the credit was issued, the former law is
continued in effect for that purpose, and a taxable entity may claim
the credit on a report originally due on or after the effective date
of this Act.
SECTION 8. This Act takes effect January 1, 2024.