2023 Texas Statutes › Tax Code › Title 2 - State Taxation › Subtitle F - Franchise Tax; Credits › Chapter 171 - Franchise Tax › Subchapter L. Tax Credit for Clean Energy Project › Section 171.602. Tax Credit for Clean Energy Project

Sec. 171.602. 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 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 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 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 total credit that a taxable entity may claim under this section for a report, including the amount of any carryforward credit, may not exceed the amount of franchise tax due by the taxable entity for the report after any applicable tax credits.  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 credit under this section before the later of:
(1)   the expiration of an agreement under former Subchapter B or C, Chapter 313, regarding the clean energy project for which the credit is issued; or
(2)  the expiration of an agreement under Subchapter T, Chapter 403, Government Code, regarding the clean energy project for which the credit is issued.
Added by Acts 2009, 81st Leg., R.S., Ch. 1109 (H.B. 469), Sec. 1, eff. September 1, 2009.
Transferred, redesignated and amended from Government Code, Subchapter H, Chapter 490 by Acts 2013, 83rd Leg., R.S., Ch. 1003 (H.B. 2446), Sec. 1, eff. June 14, 2013.
Redesignated from Tax Code, Section 171.652 by Acts 2015, 84th Leg., R.S., Ch. 1236 (S.B. 1296), Sec. 21.001(46), eff. September 1, 2015.
Amended by:
Acts 2023, 88th Leg., R.S., Ch. 377 (H.B. 5), Sec. 7, eff. January 1, 2024.
For expiration of this subchapter, see Section 171.665.