By: Hughes H.B. No. 2201
A BILL TO BE ENTITLED
AN ACT
relating to implementing a clean coal project in Texas.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. LEGISLATIVE FINDINGS.
The legislature finds that:
(a) Texas is the largest producer and consumer of energy and
the largest consumer of coal in the country. Currently the PUCT
estimates that 37% of the electricity generated in Texas is
produced with coal. Low cost coal-fueled generation is the
foundation of affordable electricity in Texas. Texas must continue
to have a significant component of its electricity provided through
coal-fueled generation in order to maintain reliable and affordable
energy into the future.
(b) Energy production will play a significant role in
ensuring that Texas provides permanent, well-paid jobs for the
growing state population and provides income and revenue to ensure
Texas continues to provide a high standard of services to its
residents and businesses.
(c) The U.S. Department of Energy has outlined an integrated
carbon sequestration and hydrogen research (a.k.a. "FutureGen")
proposal that provides for eight hundred million dollars in federal
funding with the remaining two hundred million dollars to be funded
by private industry and other nations. Securing the U.S.
Department of Energy's FutureGen project for Texas is a top
priority. Securing the FutureGen project will assist Texas in
becoming a world leader in innovative energy technologies and is
expected to create over eleven thousand new jobs with labor
compensation of over 374.3 million dollars, generate 98 million
dollars in tax revenue and result in 1.2042 billion dollars in total
economic benefit to Texas.
(d) FutureGen will provide the opportunity for meeting
Texas' energy demands while further lowering emissions and these
technologies should be encouraged for use in existing in future
power generation.
(e) Texas is in a unique position to secure the FutureGen
project since it has a ready source of coal and lignite to fuel the
project, the right geology for storing the carbon dioxide, a market
for the energy that will be produced, and a transmission grid
capable of carrying the increased power load. Texas had 31 billion
barrels of oil in depleted oil fields that could be recovered
through carbon dioxide enhanced recovery. Carbon dioxide from
FutureGen would be used to recover 3 billion barrels of oil and
generate $4 billion in taxes for the state, and hydrogen generated
by the facility would be used for fuel cells and the manufacture of
other products by the state's petrochemical industry.
(f) Facilitating the construction of one or more components
of the FutureGen project at a new or existing electric generating,
steam production, or industrial products facility is in the best
interest of all of the citizens of Texas.
(g) Agencies and departments of the state shall facilitate
the financing, construction and operation of one or more components
of the FutureGen project by streamlining regulatory and permitting
processes associated with such projects. Streamlining procedural
processes is necessary to ensure predictability in the regulatory
process to improve the state's position for federal funding while
preserving the environmental protectiveness of current substantive
standards.
SECTION 2. Subchapter A, Section 5.001, Water Code, is
amended to read as follows:
(1) "Board" means the Texas Water Development Board.
(2) "Clean coal project" means the construction of electric
generating, steam production, or industrial production facilities,
the modification of existing facilities, or other projects that
install one or more component of the coal-based integrated
sequestration and hydrogen research project to be built in
partnership with the United States Department of Energy, commonly
referred to as the FutureGen project.
(3) "Coal" means all forms of coal and includes lignite.
SECTION 3. Subchapter M, Water Code, is amended to add
section 5.558 to read as follows:
Sec. 5.558 CLEAN COAL PROJECT PERMITTING
(a) As authorized by federal law, the commission shall
implement streamlined processes for issuing permits required to
construct a clean coal project. Notwithstanding other provisions
of this Code or the Health and Safety Code, the permit processes
authorized by this section shall not be subject to Chapter 2001,
Government Code.
SECTION 4. Subchapter C, Section 16.053, Water Code, is
amended by adding Subsection (f-1) as follows:
(f-1) No later than September 1, 2006, the board shall adopt
rules to incorporate the maximum amount of flexibility possible to
allow for the timely amendment of regional water plans, the
approval of such amended regional water plans by the board, and the
amendment of the state water plan, so as to facilitate planning for
water supplies, including water supplies needed to meet the demands
of a clean coal project. In addition to other provisions allowing
for flexibility in amending such plans, the rules shall allow for
amendments to regional water plans without notice or public meeting
or hearing as otherwise required by Subsection (h) of this Section
if:
(1) the amendment does not represent a significant
change to the regional water plan, as determined by the board; or
(2) the amendment does not adversely affect other
water management strategies in the regional water plan.
SECTION 5. Subchapter C, Chapter 27, Texas Water Code, is
amended by adding Section 27.037 and Section 27.038 to read as
follows:
Sec. 27.037. JURISDICTION OVER INJECTION OF CARBON DIOXIDE
IN RESERVOIRS PRODUCTIVE OF OIL, GAS, OR GEOTHERMAL RESOURCES
(a) The railroad commission has jurisdiction over injection
of carbon dioxide produced by clean coal projects into reservoirs
productive of oil, gas, or geothermal resources in a Class II
injection well, or Class I injection well if required by federal
law, if the applicant for the permit meets all applicable statutory
and regulatory requirements.
Sec. 27.038. JURISDICTION OVER INJECTION OF CARBON DIOXIDE
INTO ZONES NOT PRODUCTIVE OF OIL, GAS, OR GEOTHERMAL RESOURCES.
(a) The commission has jurisdiction over injection of
carbon dioxide produced by clean coal projects into zones not
productive of oil, gas, or geothermal resources and below the base
of usable quality water in a Class I or Class II injection well, as
authorized by federal law, if the applicant for the permit meets all
the statutory and regulatory requirements.
SECTION 6. Section 134.004, Natural Resources Code, is
amended to read as follows:
(5) "Clean coal project" means the construction of
electric generating, steam production, or industrial production
facilities, the modification of existing facilities, or other
projects that install one or more component of the coal-based
integrated sequestration and hydrogen research project to be built
in partnership with the United States Department of Energy,
commonly referred to as the FutureGen project.
SECTION 7. Subchapter A, Section 2305.002, Government Code,
is amended to read as follows:
(4) "Clean coal project" means the construction of electric
generating, steam production, or industrial production facilities,
the modification of existing facilities, or other projects that
install one or more component of the coal-based integrated
sequestration and hydrogen research project to be built in
partnership with the United States Department of Energy, commonly
referred to as the FutureGen project.
(5) "Coal" means all forms of coal and includes lignite.
SECTION 8. Subchapter D, Section 2305.037, Government Code,
is amended to read as follows:
Sec. 2305.037. INNOVATIVE RENEWABLE ENERGY DEMONSTRATION
PROGRAM.
(a) The energy office is the supervising state agency of the
innovative renewable energy demonstration program and shall
distribute grant money under the program for demonstration projects
that develop innovative sustainable and renewable energy
resources, including sustainable, renewable, and low-emission
energy resources, including:
(1) photovoltaic, biomass, wind, and solar
applications; and
(2) a clean coal project; and
(3) (2) other appropriate low-emission, renewable and
sustainable energy applications.
(b) The energy office shall distribute fifty cents of grant
money out of the Innovative Technology Fund [INSERT CITE TO
APPROPRIATIONS RIDER, WHEN AVAILABLE] for every dollar invested by
individuals or companies for the promotion and development in Texas
of the coal-based integrated sequestration and hydrogen research
project to be built in partnership with the United States
Department of Energy, commonly referred to as the FutureGen
project. The energy office shall not distribute grant funds under
this subsection in excess of twenty million dollars.
SECTION 9. Subchapter B, Section 313.024, Tax Code, is
amended to read as follows:
(b) To be eligible for a limitation on appraised value under
this subchapter, the corporation or limited liability company must
use the property in connection with:
(1) manufacturing;
(2) research and development; or
(3) renewable energy electric generation.; or
(4) a clean coal project.
(e) In this section:
(4) "Clean coal project" means the construction of
electric generating, steam production, or industrial production
facilities, the modification of existing facilities, or other
projects that install one or more component of the coal-based
integrated sequestration and hydrogen research project to be built
in partnership with the United States Department of Energy,
commonly referred to as the FutureGen project.
SECTION 10. Chapter 171, Tax Code, is amended to add Section
171.108 to read as follows:
Sec. 171.108. DEDUCTION OF COST OF A CLEAN COAL PROJECT FROM
TAXABLE CAPITAL OR TAXABLE EARNED SURPLUS APPORTIONED TO THIS
STATE.
(a) In this section, "clean coal project" means the
construction of electric generating, steam production, or
industrial production facilities, the modification of existing
facilities, or other projects that install one or more component of
the coal-based integrated sequestration and hyrogen research
project to be built in partnership with the United States
Department of Energy, commonly referred to as the FutureGen
project.
(b) A corporation may deduct from its apportioned taxable
capital the amortized cost of equipment used in a clean coal project
or from its apportioned taxable earned surplus 10 percent of the
amortized cost of the equipment if:
(1) the equipment is acquired by the corporation for
use in the generation of electricity, the production of process
steam, or industrial production;
(2) the equipment is used in this state by the
corporation;
(3) the cost of the equipment is amortized in
accordance with Subsection (c) of this section;
(c) The amortization of the cost of equipment used in a
clean coal project must:
(1) be for a period of at least 60 months;
(2) provide for equal monthly amounts;
(3) begin on the month in which the equipment is placed
in service in this state; and
(4) cover only a period in which the equipment is in
use in this state.
(d) A corporation that makes a deduction under this section
shall file with the comptroller an amortization schedule showing
the period in which a deduction is to be made. On the request of the
comptroller, the corporation shall file with the comptroller proof
of the cost of the equipment used in a clean coal project or proof of
the equipment's operation in this state.
(e) A corporation may elect to make the deduction authorized
by this section either from apportioned taxable capital or
apportioned taxable earned surplus for each separate regular annual
period. An election for an initial period applies to the second tax
period and to the first regular annual period.
SECTION 11. APPLICABILITY
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, 2005.