H.B. 2414 78(R)    BILL ANALYSIS


H.B. 2414
By: McCall
Ways & Means
Committee Report (Unamended)



BACKGROUND AND PURPOSE 

The term "fuel cell" represents a family of technologies that generate
power chemically rather than through combustion, and, therefore, generate
power quietly, with near zero emissions of nitrous oxides (NOX), volatile
organic compounds (VOCs), or particulates, the primary causes of pollution
and ozone formation in our cities. A state commitment toward accelerating
the development of this clean energy technology will help Texas comply
with federal Clean Air Act standards in the years ahead, attract
significant federal and private industry funding for R&D, draw
manufacturers to the state, and create substantial job opportunities in
manufacturing, installation, and maintenance of systems.  Because of their
ultra-low emissions, fuel cells can be placed directly where they are
needed, thereby avoiding the need for costly new power lines, and reducing
the cost of transmission congestion on the electric grid (Cost last year
was over $250 million).  

The State Energy Conservation Office was directed by the 77th Legislature
to develop a plan to accelerate the commercialization of fuel cells in
Texas.  Among the report's findings were that a sales tax exemption would
be a case of "foregoing potential income to help kick-start a new industry
with tremendous economic potential  for the state." The report also found
that that fuel cells are not currently generating measurable sales tax
revenues. HB 2414 simply establishes a temporary sales tax exemption for
nonvehicular fuel cells. The exemption expires in 2011. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution. 

ANALYSIS

House Bill 2414 establishes a sales tax exemption for nonvehicular fuel
cells.  The exemption expires on January 1, 2011. 

EFFECTIVE DATE

September 1, 2003.