H.B. No. 2446
 
 
 
 
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.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 2446 was passed by the House on May 7,
  2013, by the following vote:  Yeas 120, Nays 11, 2 present, not
  voting.
 
  ______________________________
  Chief Clerk of the House   
 
 
         I certify that H.B. No. 2446 was passed by the Senate on May
  22, 2013, by the following vote:  Yeas 29, Nays 2.
 
  ______________________________
  Secretary of the Senate    
  APPROVED:  _____________________
                     Date          
   
            _____________________
                   Governor