Bill Text: IL HB3023 | 2023-2024 | 103rd General Assembly | Introduced
Bill Title: 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.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2023-02-16 - Referred to Rules Committee [HB3023 Detail]
Download: Illinois-2023-HB3023-Introduced.html
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1 | AN ACT concerning revenue.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 1. Short title. This Act may be cited as the | |||||||||||||||||||||
5 | Hydrogen Fuel Replacement Tax Credit Act.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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13 | Section 900. The Illinois Income Tax Act is amended by | ||||||
14 | adding Section 234 as follows:
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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.
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20 | Section 999. Effective date. This Act takes effect upon | ||||||
21 | becoming law.
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