Full Text of HB3023 103rd General Assembly
HB3023 103RD GENERAL ASSEMBLY |
| | 103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024 HB3023 Introduced 2/16/2023, by Rep. Lawrence "Larry" Walsh, Jr. SYNOPSIS AS INTRODUCED: |
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Creates the Hydrogen Fuel Replacement Tax Credit Act. Creates an income tax credit in an amount equal to $1 per kilogram of eligible zero-carbon hydrogen used by the eligible taxpayer during the tax year for which a credit is sought. Provides that the credit shall be increased by $0.15 per kilogram of eligible zero-carbon hydrogen if the eligible taxpayer uses contractors or employs labor at a project location in an equity investment eligible community. Effective immediately.
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| | A BILL FOR |
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| 1 | | AN ACT concerning revenue.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 1. Short title. This Act may be cited as the | 5 | | Hydrogen Fuel Replacement Tax Credit Act. | 6 | | Section 5. Legislative findings; purpose. The General | 7 | | Assembly finds that: | 8 | | (1) the health, welfare, and prosperity of all | 9 | | Illinois citizens require that the State of Illinois act | 10 | | to reduce carbon emissions and other air pollutants in the | 11 | | State; | 12 | | (2) the State currently invests in a variety of | 13 | | strategies to reduce carbon emissions and other air | 14 | | pollutants, including, but not limited to, strategies that | 15 | | encourage the use of renewable energy, nuclear energy, | 16 | | energy efficient processes, and low-emission vehicles; | 17 | | (3) zero-carbon hydrogen can be produced through the | 18 | | electrolysis of water using electricity generated by | 19 | | emissions-free energy sources or through methods involving | 20 | | carbon capture and sequestration; and | 21 | | (4) replacing fossil fuels with zero-carbon hydrogen | 22 | | will reduce carbon emissions and other air pollutants and | 23 | | benefit the environment and public health of this State. |
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| 1 | | This Act is intended to encourage the replacement of | 2 | | fossil fuels with zero-carbon hydrogen, promote | 3 | | decarbonization, and encourage the production and use of | 4 | | zero-carbon hydrogen for the purpose of improving the State's | 5 | | air quality. | 6 | | Section 10. Definitions. As used in this Act: | 7 | | "Attestation" means a statement that is made under penalty | 8 | | of perjury by a producer under Section 13 and Section 30. | 9 | | "Department" means the Department of Revenue. | 10 | | "Eligible taxpayer" means a taxpayer that: | 11 | | (1) is subject to subsections (a) and (b) of Section | 12 | | 201 of the Illinois Income Tax Act; | 13 | | (2) has eligible zero-carbon hydrogen use for which | 14 | | the producer has provided an attestation under Section 13; | 15 | | (3) complies with subsection (e) of Section 15, if | 16 | | applicable; and | 17 | | (4) is allocated credits by the Department under | 18 | | Section 25. | 19 | | "Eligible zero-carbon hydrogen use" means the consumption, | 20 | | in Illinois, of zero-carbon hydrogen.
| 21 | | "Environmental attribute credit" means a renewable energy | 22 | | credit, zero-emission credit, or carbon mitigation credit, as | 23 | | those terms are defined in Sections 1-10 and 1-75 of the | 24 | | Illinois Power Agency Act, or any other environmental | 25 | | attribute credit tracked by the Generation Attribute Tracking |
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| 1 | | System run by PJM Interconnection, LLC. | 2 | | "Environmental justice community" has the meaning provided | 3 | | in the Illinois Power Agency's long-term renewable resources | 4 | | procurement plan. | 5 | | "Producer" means a zero-carbon hydrogen producer. | 6 | | "Renewable energy resource" has the same meaning as | 7 | | provided in Section 1-10 of the Illinois Power Agency Act as | 8 | | that Act exists on the effective date of this Act. | 9 | | "Zero-carbon hydrogen" means hydrogen that has a carbon | 10 | | intensity of 0.45 or below and complies with the rules of the | 11 | | hydrogen production tax credit available under 26 U.S.C. 45V. | 12 | | "Zero-emission facility" has the meaning provided in | 13 | | Section 1-10 of the Illinois Power Agency Act as that Act | 14 | | exists on the effective date of this Act. | 15 | | Section 15. Attestation required. Each taxpayer seeking | 16 | | credits under this Act shall submit with its application for | 17 | | credits under this Act an attestation from the producer, made | 18 | | under penalty of perjury, that the producer: | 19 | | (a) has achieved a carbon intensity of 0.45 or below; and | 20 | | (b) has complied with the rules of the hydrogen production | 21 | | tax credit available under 26 U.S.C. 45V in determining the | 22 | | carbon intensity. | 23 | | Section 20. Allowable credit. | 24 | | (a) For tax years ending on or after December 31, 2023, a |
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| 1 | | credit is allowed against the taxes imposed on an eligible | 2 | | taxpayer under subsections (a) and (b) of Section 201 of the | 3 | | Illinois Income Tax Act in an amount equal to $1 per kilogram | 4 | | of eligible zero-carbon hydrogen used by the eligible taxpayer | 5 | | during the tax year for which a credit is sought. | 6 | | (b) The allowable credit provided in subsection (a) of | 7 | | this Section shall be increased by $0.15 per kilogram of | 8 | | eligible zero-carbon hydrogen if the use of the zero-carbon | 9 | | hydrogen by the eligible taxpayer occurs in an environmental | 10 | | justice community. | 11 | | (c) The allowable credit provided in subsection (a) of | 12 | | this Section shall be increased by $0.15 per kilogram of | 13 | | eligible zero-carbon hydrogen if the eligible taxpayer uses | 14 | | contractors or employs labor at a project location in an | 15 | | equity investment eligible community, as defined in Section | 16 | | 5-5 of the Energy Transition Act on the effective date of this | 17 | | Act, to convert existing equipment or install new equipment to | 18 | | enable eligible zero-carbon hydrogen use for which a credit is | 19 | | claimed under this Act. | 20 | | (d) An eligible taxpayer may not earn tax credits for | 21 | | eligible zero-carbon hydrogen use in an amount that exceeds | 22 | | the amount of tax credit allocated to it under Section 25. The | 23 | | credit or credits may not reduce the taxpayer's liability to | 24 | | less than zero. An eligible taxpayer may carry forward any tax | 25 | | credit that has been earned but not used (or transferred | 26 | | pursuant to Section 35) for a period of up to 5 tax years after |
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| 1 | | the last tax year in which a credit was earned by that taxpayer | 2 | | for eligible zero-carbon hydrogen use. Unused credits that are | 3 | | not transferred pursuant to Section 35 shall expire at the end | 4 | | of this 5-year carryforward period. | 5 | | (e) Labor performed on or after the effective date of this | 6 | | Act to convert the eligible taxpayer's existing equipment or | 7 | | to install for the eligible taxpayer new equipment that will | 8 | | enable eligible zero-carbon hydrogen use for which a credit is | 9 | | claimed under this Act shall be performed by general | 10 | | contractors that enter into a project labor agreement, as | 11 | | defined by the Illinois Power Agency Act, prior to | 12 | | construction. The project labor agreement shall be filed with | 13 | | the Department. At a minimum, the project labor agreement must | 14 | | provide the names, addresses, and occupations of the owner of | 15 | | the facilities and the individuals representing the labor | 16 | | organization employees participating in the project labor | 17 | | agreement consistent with the Project Labor Agreements Act. | 18 | | The agreement must also specify the terms and conditions as | 19 | | defined by the Illinois Power Agency Act. Any information | 20 | | submitted pursuant to this subsection (e) shall be considered | 21 | | commercially sensitive information.
| 22 | | Section 25. Credit availability. Beginning with the State | 23 | | fiscal year ending June 30, 2024, and in each subsequent State | 24 | | fiscal year, the total amount of tax credits to be allocated by | 25 | | the Department to taxpayers for eligible zero-carbon hydrogen |
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| 1 | | use occurring in a tax year ending during that State fiscal | 2 | | year shall not exceed $100,000,000, plus the amount of tax | 3 | | credits that were available to be allocated for eligible | 4 | | zero-carbon hydrogen use in the tax year ending during the | 5 | | prior State fiscal year but were not allocated. | 6 | | Section 30. Credit allocation by the Department. | 7 | | (a) Taxpayers shall notify the Department, by January 1, | 8 | | 2023, of the dollar amount of credit the taxpayer estimates it | 9 | | will earn for eligible zero-carbon hydrogen use in tax years | 10 | | ending on or after December 31, 2023 and ending on or before | 11 | | June 30, 2024. For tax years ending on or after July 1, 2024, | 12 | | taxpayers shall notify the Department of the dollar amount of | 13 | | credit the taxpayer estimates it will earn for eligible | 14 | | zero-carbon hydrogen use by January 1 immediately preceding | 15 | | the first day of the fiscal year in which the tax year ends. | 16 | | (b) The Department shall notify each taxpayer of the | 17 | | dollar amount of credit allocated to that taxpayer for | 18 | | zero-carbon hydrogen use. That notification shall occur by | 19 | | March 1 following the date on which the taxpayer notifies the | 20 | | Department of its estimated zero-carbon hydrogen use under | 21 | | subsection (a). The taxpayer must notify the Department within | 22 | | 30 days after the notification by the Department under this | 23 | | subsection (b) if it wishes to surrender its allocation. | 24 | | (c) The Department shall not allocate any credit under | 25 | | this Act to a taxpayer for a tax year that ends on or after |
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| 1 | | December 31, 2032 if the taxpayer has not previously claimed a | 2 | | credit under this Act for eligible zero-carbon hydrogen use. | 3 | | (d) Notwithstanding any other provision of this Section or | 4 | | Section 30, the Department shall not allocate credits under | 5 | | this Act to a taxpayer for more than 10 years. | 6 | | (e) The amount of credit allocated to a taxpayer by the | 7 | | Department in subsection (b) of this Section shall be the | 8 | | maximum credit that the taxpayer is permitted to earn for the | 9 | | tax year ending in the State fiscal year for which credits are | 10 | | allocated. | 11 | | (f) In years when the total allocation of credits sought | 12 | | by taxpayers exceeds the available credits to be allocated to | 13 | | all taxpayers under Section 20, a taxpayer that fails to earn | 14 | | credit for eligible zero-carbon hydrogen use for at least 90% | 15 | | of the credit allocated to that taxpayer shall pay a penalty | 16 | | equal to the dollar amount of tax credit allocated but | 17 | | unearned. This subsection shall not apply if a taxpayer's | 18 | | failure to use its full allocation of credits is due to an | 19 | | extraordinary event that was unforeseen at the time of the | 20 | | requested allocation under subsection (a) of this Section or | 21 | | the 30-day surrender period in subsection (b) of this Section, | 22 | | such as an unexpected outage of the generator providing | 23 | | electricity used to produce zero-carbon hydrogen, an | 24 | | unexpected outage of the hydrogen production facility, or an | 25 | | unexpected outage of the taxpayer's facility using the | 26 | | zero-carbon hydrogen. |
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| 1 | | (g) Except as provided in Section 35, an allocation may | 2 | | not be transferred, sold, or otherwise conveyed, nor may an | 3 | | allocation be rolled forward to a subsequent year. | 4 | | Section 35. Prioritization of tax credit allocation. If | 5 | | the total amount of tax credits sought by taxpayers under | 6 | | Section 25 exceeds the total amount of tax credits that are | 7 | | allowed to be allocated under Section 20, the Department shall | 8 | | prioritize allocation as follows: | 9 | | (1) any credits shall be allocated to eligible | 10 | | taxpayers who previously received a credit allocation and | 11 | | who engaged in eligible zero-carbon hydrogen use in the | 12 | | prior calendar year, up to a maximum amount equal to their | 13 | | most recent allocation. If there are insufficient credits | 14 | | available, then each taxpayer's allocation shall be | 15 | | pro-rated by the same percentage reduction. | 16 | | (2) any remaining credits for the fiscal year shall be | 17 | | allocated to taxpayers in proportion to their requested | 18 | | allocation, excluding any amount already allocated to a | 19 | | taxpayer pursuant to subsections (1) of this Section. To | 20 | | the extent there are remaining credits available, any such | 21 | | allocation shall be conducted on a quarterly basis. | 22 | | (3) Any eligible taxpayer seeking an allocation under | 23 | | this section shall provide to the Department an | 24 | | attestation that such taxpayer has the intent and | 25 | | capability to use the entirety of any such allotment of |
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| 1 | | eligible zero-carbon hydrogen. | 2 | | (4) Report. On an annual basis, the Department shall | 3 | | publish a report describing the total aggregate | 4 | | allocations requested by all taxpayers, the total | 5 | | aggregate allocations granted by the Department, the total | 6 | | aggregate credits actually claimed by taxpayers and the | 7 | | total penalties due pursuant to Section 25f. | 8 | | Section 40. Transfer of credits. | 9 | | (a) Any eligible taxpayer earning tax credits under this | 10 | | Act (referred to in this Section as the assignor), which tax | 11 | | credits have been allocated and earned but not yet used by the | 12 | | eligible taxpayer against its tax liability for any tax year | 13 | | and which have not expired, may sell, assign, convey, or | 14 | | otherwise transfer such credits. The taxpayer acquiring the | 15 | | credits (referred to in this Section as the assignee) may use | 16 | | the amount of the acquired credits against the tax imposed | 17 | | under subsections (a) and (b) of Section 201 of the Illinois | 18 | | Income Tax Act for the tax year in which the assignee acquired | 19 | | the credit and may carry forward any unused credit for 5 tax | 20 | | years after the tax year in which the assignee acquired the | 21 | | credit. | 22 | | (b) The Department shall certify the eligibility of the | 23 | | credit to be transferred by the assignor upon assignor's | 24 | | application to the Department. The application shall set forth | 25 | | the hydrogen producer's name and attestation, the amount of |
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| 1 | | all credits earned and previously used by the assignor, the | 2 | | amount of all credits earned and unused by the assignor, the | 3 | | amount of credits proposed to be transferred, and the | 4 | | assignee's name and tax identification number. The Department | 5 | | shall thereafter certify whether the amount of credits | 6 | | proposed to be transferred to the assignee is available to the | 7 | | assignor. | 8 | | Section 45. Severability. If any provision of this Act or | 9 | | its application to any person or circumstance is held invalid, | 10 | | the invalidity of that provision or application does not | 11 | | affect other provisions or applications of this Act that can | 12 | | be given effect without the invalid provision or application. | 13 | | Section 900. The Illinois Income Tax Act is amended by | 14 | | adding Section 234 as follows: | 15 | | (35 ILCS 5/234 new) | 16 | | Sec. 234. Hydrogen Fuel Replacement Tax Credit Act. | 17 | | Taxpayers who are awarded a credit under the Hydrogen Fuel | 18 | | Replacement Tax Credit Act are entitled to a credit as | 19 | | provided in that Act.
| 20 | | Section 999. Effective date. This Act takes effect upon | 21 | | becoming law.
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