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 [÷
         [(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.