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� H.B.�No.�469
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AN ACT
� relating to the establishment of incentives by this state for the
� implementation of certain projects to capture and sequester carbon
� dioxide that would otherwise be emitted into the atmosphere.
� �������BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
� �������SECTION�1.��Chapter 490, Government Code, is amended by
� adding Subchapter H to read as follows:
� SUBCHAPTER H. FRANCHISE TAX CREDIT FOR CLEAN ENERGY PROJECT
� �������Sec.�490.351.��DEFINITION. In this subchapter, "clean
� energy project" has the meaning assigned by Section 120.001,
� Natural Resources Code.
� �������Sec.�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. 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 amount of the franchise tax credit claimed under this section
� for a report year may not exceed the amount of franchise tax
� attributable to the clean energy project for that report year.
� �������(e)��The comptroller may not issue a franchise tax credit
� under this section before September 1, 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, 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 99 percent or
� greater reduction of sulfur dioxide emissions 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;
� �������������������������(ii)��on an annual basis [,] a 95 percent or
� greater reduction of mercury emissions;
� �������������������������(iii)��[, and] 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;
� 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
� [renders] 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 [capable of capture, sequestration, or abatement if any
� carbon dioxide is produced by the project].
� �������SECTION�3.��Subtitle D, Title 3, Natural Resources Code, is
� amended by adding Chapter 120 to read as follows:
� CHAPTER 120. VERIFICATION, MONITORING, AND CERTIFICATION OF CLEAN
� ENERGY PROJECT
� �������Sec.�120.001.��DEFINITIONS. In this chapter:
� �������������(1)��"Bureau" means the Bureau of Economic Geology of
� The University of Texas at Austin.
� �������������(2)��"Clean energy project" means a project to
� construct a coal-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.
� �������������(3)��"Commission" means the Railroad Commission of
� Texas.
� �������������(4)��"Sequester" means to inject carbon dioxide into a
� geological formation in a manner and under conditions that create a
� reasonable expectation that at least 99 percent of the carbon
� dioxide injected will remain sequestered from the atmosphere for at
� least 1,000 years.
� �������Sec.�120.002.��CERTIFICATION OF CLEAN ENERGY PROJECT. (a)
� The commission is the authority responsible for certifying whether
� a project has met the requirements for a clean energy project.
� �������(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. 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.
� �������(c)��The amount of the fee prescribed by Subsection (b)(2) is
� $50,000 unless the commission by rule determines that a fee in a
� greater amount is necessary to cover the commission's costs of
� processing an application.
� �������Sec.�120.003.��MONITORING OF SEQUESTERED CARBON DIOXIDE.
� (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 490.352(b)(4), Government Code.
� �������(b)��The 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 490.352(b)(4), Government
� Code.
� �������(c)��Unless otherwise agreed by the entity and the bureau, a
� contract required by Subsection (b) must require the entity to
� compensate the bureau by paying an annual fee in accordance with the
� following schedule:
� �������Year�������������Amount
� �������One��������������$700,000
� �������Two��������������$1,300,000
� �������Three������������$1,800,000
� �������Four�������������$1,500,000
� �������Five�������������$1,200,000
� �������Six��������������$900,000
� �������Seven������������$500,000
� �������Eight������������$200,000
� �������(d)��The first payment under Subsection (c) is due not later
� than 24 months before the date the entity first supplies carbon
� dioxide captured by the project to an enhanced oil recovery
� project.
� �������Sec.�120.004.��ISSUANCE OF CERTIFICATE OF COMPLIANCE. (a)
� On verification that a project meets the requirements for
� certification as a clean energy project, the commission shall issue
� a certificate of compliance for the project to the entity operating
� the project and shall provide a copy of the certificate to the
� comptroller.
� �������(b)��The commission may not issue a certificate of compliance
� for more than three clean energy projects.
� �������SECTION�4.��Subchapter H, Chapter 151, Tax Code, is amended
� by adding Section 151.334 to read as follows:
� �������Sec.�151.334.��COMPONENTS OF TANGIBLE PERSONAL PROPERTY USED
� IN CONNECTION WITH SEQUESTRATION OF CARBON DIOXIDE. Components of
� tangible personal property used in connection with an advanced
� clean energy project, as defined by Section 382.003, Health and
� Safety Code, or a clean energy project, as defined by Section
� 120.001, Natural Resources Code, are exempted from the taxes
� imposed by this chapter if:
� �������������(1)��the components are installed to capture carbon
� dioxide from an anthropogenic emission source, transport or inject
� carbon dioxide from such a source, or prepare carbon dioxide from
� such a source for transportation or injection; and
� �������������(2)��the carbon dioxide is sequestered in this state:
� �������������������(A)��as part of an enhanced oil recovery project
� that qualifies for a tax rate reduction under Section 202.0545, as
� provided by Subsection (c) of that section; or
� �������������������(B)��in a manner and under conditions that create
� a reasonable expectation that at least 99 percent of the carbon
� dioxide will remain sequestered from the atmosphere for at least
� 1,000 years.
� �������SECTION�5.��Sections 202.0545(a) and (d), Tax Code, are
� amended to read as follows:
� �������(a)��Subject to the limitations provided by this section,
� until [the later of] the 30th [seventh] anniversary of the date that
� the comptroller first approves an application for a tax rate
� reduction under this section [or the effective date of a final rule
� adopted by the United States Environmental Protection Agency
� regulating carbon dioxide as a pollutant], the producer of oil
� recovered through an enhanced oil recovery project that qualifies
� under Section 202.054 for the recovered oil tax rate provided by
� Section 202.052(b) is entitled to an additional 50 percent
� reduction in that tax rate if in the recovery of the oil the
� enhanced oil recovery project uses carbon dioxide that:
� �������������(1)��is captured from an anthropogenic source in this
� state;
� �������������(2)��would otherwise be released into the atmosphere as
� industrial emissions;
� �������������(3)��is measurable at the source of capture; and
� �������������(4)��is sequestered in one or more geological
� formations in this state following the enhanced oil recovery
� process.
� �������(d)��An agency to which an operator applies for a
� certification under Subsection (c)(2) may issue the certification
� only if the agency finds that, based on substantial evidence, there
� is a reasonable expectation that:
� �������������(1)��[the operator's planned sequestration program will
� ensure that] at least 99 percent of the carbon dioxide sequestered
� as required by Subsection (a)(4) will remain sequestered for at
� least 1,000 years; and
� �������������(2)��the operator's planned sequestration program will
� include appropriately designed monitoring and verification
� measures that will be employed for a period sufficient to
� demonstrate whether the sequestration program is performing as
� expected.
� �������SECTION�6.��Section 313.021(4), Tax Code, is amended to read
� as follows:
� �������������(4)��"Qualifying time period" means:
� �������������������(A)��the first two tax years that begin on or after
� the date a person's application for a limitation on appraised value
� under this subchapter is approved, except as provided by Paragraph
� (B) or (C); [or]
� �������������������(B)��in connection with a nuclear electric power
� generation facility, the first seven tax years that begin on or
� after the third anniversary of the date the school district
� approves the property owner's application for a limitation on
� appraised value under this subchapter, unless a shorter time period
� is agreed to by the governing body of the school district and the
� property owner; or
� �������������������(C)��in connection with an advanced clean energy
� project, as defined by Section 382.003, Health and Safety Code, the
� first five tax years that begin on or after the third anniversary of
� the date the school district approves the property owner's
� application for a limitation on appraised value under this
� subchapter, unless a shorter time period is agreed to by the
� governing body of the school district and the property owner.
� �������SECTION�7.��(a) �Not later than September 1, 2010, September
� 1, 2012, and September 1, 2016, the Texas Commission on
� Environmental Quality shall make recommendations to the
� legislature on whether the emissions profile set out in Sections
� 120.001(2)(B) and (C), Natural Resources Code, as added by this
� Act, and Sections 382.003(1-a)(B) and (C), Health and Safety Code,
� as amended by this Act, should be adjusted to increase or decrease
� elements of the emissions profile. Before making its
� recommendations, the commission shall determine whether any
� commercially demonstrated electric generating facility operating
� in the United States that meets the criteria and emissions profile
� specified by Section 120.001(2), Natural Resources Code, as added
� by this Act, is capturing and sequestering a greater percentage of
� the carbon dioxide in the emissions stream from the facility than
� would be required to meet the emissions profile set out in that
� subdivision and whether any commercially demonstrated electric
� generating facility operating in the United States that meets the
� criteria and emissions profile specified by Sections
� 382.003(1-a)(A), (B), and (C), Health and Safety Code, as amended
� by this Act, is capturing and sequestering a greater percentage of
� the carbon dioxide in the emissions stream from the facility than
� would be required to meet the emissions profile set out in those
� paragraphs. If at least one such facility exists, the commission
� shall recommend raising the minimum percentage of carbon dioxide in
� the emissions stream from a facility that is required to be captured
� and sequestered for the facility to qualify as a clean energy
� project or advanced clean energy project to the highest percentage
� of carbon dioxide that is being captured and sequestered by such a
� facility.
� �������(b)��Factors that must be considered in the assessment of the
� emissions profile include:
� �������������(1)��the technical and economic feasibility of meeting
� all of the elements of the emissions profile set out in Sections
� 120.001(2)(B) and (C), Natural Resources Code, as added by this
� Act, or Sections 382.003(1-a)(A), (B), and (C), Health and Safety
� Code, as amended by this Act, in a commercially viable project, as
� documented by the United States Department of Energy;
� �������������(2)��the technical and economic feasibility of projects
� to meet all of the elements of the emissions profile and still use a
� diverse range of fuels, including lignite; and
� �������������(3)��the adequacy of the incentives provided by this
� Act, or similar legislation that becomes law, to continue to
� attract investment in and federal funding for clean energy projects
� and advanced clean energy projects in this state.
� �������(c)��Any adjustments to the emissions profile implemented by
� the legislature in response to a report required by this section do
� not apply to an application considered administratively complete on
� or before the date the adjustment takes effect.
� �������SECTION�8.��The comptroller shall adopt rules under Section
� 490.352, Government Code, as added by this Act, not later than
� December 31, 2010.
� �������SECTION�9.��Not later than January 1, 2010, the Texas
� Commission on Environmental Quality shall adopt rules as necessary
� to implement Section 382.003, Health and Safety Code, as amended by
� this Act.
� �������SECTION�10.��Section 151.334, Tax Code, as added by this Act,
� does not affect taxes imposed before the effective date of this Act,
� and the law in effect before the effective date of this Act is
� continued in effect for purposes of the liability for and
� collection of those taxes.
� �������SECTION�11.��The Railroad Commission of Texas may adopt
� rules as necessary to implement Section 202.0545, Tax Code, as
� amended by this Act.
� �������SECTION�12.��The comptroller of public accounts may adopt
� rules as necessary to implement Section 202.0545, Tax Code, as
� amended by this Act.
� �������SECTION�13.��This Act takes effect September 1, 2009.
�
�
� ______________________________ ______________________________
� ���President of the Senate Speaker of the House�����
�
�
� �������I certify that H.B. No. 469 was passed by the House on May 5,
� 2009, by the following vote:��Yeas 140, Nays 3, 1 present, not
� voting; that the House refused to concur in Senate amendments to
� H.B. No. 469 on May 29, 2009, and requested the appointment of a
� conference committee to consider the differences between the two
� houses; and that the House adopted the conference committee report
� on H.B. No. 469 on May 31, 2009, by the following vote:��Yeas 141,
� Nays 5, 1 present, not voting.
�
� ______________________________
� Chief Clerk of the House���
�
� �������I certify that H.B. No. 469 was passed by the Senate, with
� amendments, on May 27, 2009, by the following vote:��Yeas 31, Nays
� 0; at the request of the House, the Senate appointed a conference
� committee to consider the differences between the two houses; and
� that the Senate adopted the conference committee report on H.B. No.
� 469 on May 31, 2009, by the following vote:��Yeas 31, Nays 0.
�
� ______________________________
� Secretary of the Senate���
� APPROVED: __________________
� ����������������Date�������
� �
� �������� __________________
� ��������������Governor�������
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