New Jersey-2022-A2234-Introduced

An Act concerning the purchase and use of low embodied carbon concrete and supplementing Titles 13 and 54 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. For privilege periods beginning on or after January 1 next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), a taxpayer that is a producer of concrete and that meets the requirements of this section shall be allowed a credit against the tax due pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), in an amount as provided in subsection c. of this section.

b. In order to qualify for a tax credit pursuant to subsection a. of this section, a concrete producer shall:

(1) deliver, pursuant to a contract with a State agency or with a private contracting firm that has been contracted by the State, low embodied carbon concrete or concrete that incorporates carbon capture, utilization, and storage technology, which concrete is used by a construction or improvement project that requires the purchase of 50 cubic yards or more of concrete; and

(2) submit to the department a global warming potential value for the delivered concrete in the form of a certified environmental product declaration. For contracts that include multiple concrete mixes, the global warming potential of all the mixes shall be proportionally weighted into a single global warming potential score that will serve as the basis for the amount of the tax credit.

c. (1) For the delivery of low embodied carbon concrete, a taxpayer may claim a tax credit in an amount calculated using the formula promulgated by the department pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), which shall not exceed five percent of the costs of the concrete delivered.

(2) For the delivery of concrete that incorporates carbon capture, utilization, and storage technology, a taxpayer may claim a tax credit in an amount calculated using the formula promulgated by the department pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), which shall not exceed three percent of the costs of the concrete delivered.

(3) Concrete that is low embodied carbon concrete and concrete that incorporates carbon capture, utilization, and storage technology may qualify for both tax credits authorized pursuant to paragraphs (1) and (2) of this subsection, in which case the amount of the tax credits shall not exceed eight percent of the costs of the concrete delivered.

d. (1) In order to receive the tax credit allowed pursuant to this section, a taxpayer shall apply to the department for a certification that provides: (a) that each claimed concrete delivery meets the requirements of this section; (b) approval of the certified environmental product declaration submitted pursuant to paragraph (2) of subsection b. of this section; and (c) the amount of the tax credit calculated pursuant to subsection c. of this section. The application shall include a copy of the contract pursuant to which concrete was delivered, and any other information as determined relevant by the department. Upon certification, the department shall submit a copy thereof to the taxpayer and the director. The department may approve an application and issue a certification to a taxpayer that has previously been allowed a tax credit under this section. When filing a tax return that includes a claim for a credit pursuant to this section, the taxpayer shall include a copy of the certification issued by the department.

(2) The department shall not approve an application or issue a certification to a taxpayer for a tax credit in excess of $1 million.

e. The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for a privilege period shall be as prescribed by the director. The amount of the credit applied pursuant to this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), shall not reduce a taxpayer's tax liability for a privilege period to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5). Any credit shall be valid in the privilege period in which the certification is approved and any unused portion thereof may be carried forward into the next seven privilege periods or until depleted, whichever is earlier.

f. The amount of tax credits that may be issued pursuant to this section shall not in the aggregate exceed $10 million in any year. The department shall issue certifications for the tax credit pursuant to this section on a first-come, first-serve basis.

g. (1) In preparing the specifications for any contract for the purchase of 50 cubic yards or more of concrete, or for any construction or improvement project that requires the use 50 cubic yards or more of concrete, the Director of the Division of Purchase and Property, the Director of the Division of Property Management and Construction, and any State agency having authority to contract for the purchase of goods or services shall include in the invitation to bid, where relevant, a statement that any response to the invitation that proposes or calls for the use low embodied carbon concrete or concrete that utilizes carbon capture, utilization, and storage technology shall be eligible for a tax credit pursuant to subsection a. of this section. If the agency makes a determination to purchase or use low embodied carbon concrete or concrete that uses carbon capture, utilization, and storage technology in the construction project, the agency shall include in the invitation to bid a predetermined bid allowance price for the concrete, which shall be used by all bidders in the public bidding process.

(2) Whenever any agency or department of State government purchases 50 cubic yards or more of concrete, or undertakes any construction or improvement project that requires the use 50 cubic yards or more of concrete, the agency or department shall follow the rules, regulations, and guidelines established by department pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).

h. Nothing in this section shall be construed to impose any liability upon, or to give rise to a cause of action against, a concrete producer.

i. Nothing in this section shall be construed to exempt any entity from complying with any applicable law, rule, standard, or specification, including, but not limited to, those regarding the use of concrete in construction projects.

j. The director, in consultation with the Department of Environmental Protection, may adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations necessary to carry out the provisions of this section.

k. As used in this section:

"Carbon capture, utilization, and storage technology" means technologies or methods to remove carbon dioxide generated by the concrete manufacturing process from the flue gas or the atmosphere, and to recycle the carbon dioxide either through utilization of the captured carbon dioxide in the concrete manufacturing process, or through safe and permanent storage of the captured carbon dioxide.

"Concrete" means structural and non-structural masonry, and pre-cast and ready-mix concrete building products.

"Department" means the Department of Environmental Protection.

"Director" means Director of the Division of Taxation in the Department of the Treasury.

"Embodied carbon emissions" means carbon emissions generated as a result of a material's production, including mining, refining, manufacturing, and shipping.

"Environmental product declaration" means a product-specific Type III environmental product declaration that conforms to ISO Standard 14025, assesses the numeric global warming potential of the product, and allows for environmental impact comparisons between concrete mixes fulfilling the same functions.

"Global warming potential" means a numeric value that measures the total contribution to global warming from the emission of greenhouse gases, or the elimination of greenhouse gas sinks, that results from the production or utilization of concrete.

"Low embodied carbon concrete" means concrete that has been certified to embody lower carbon emissions, as measured by a global warming potential metric, than the baseline embodied carbon emissions of conventional concrete made with Portland cement. Low embodied carbon emissions may be achieved through any combination of: (1) higher energy efficiency at the level of the concrete or cement plant; (2) low carbon fuel substitution at the level of the concrete or cement plant; (3) local production of, and use of locally sourced material in, the concrete, resulting in reduced concrete delivery miles and reduced emissions from transportation; (4) the reduction of clinker content in the cement component of concrete, or the substitution of clinker content with lower carbon-intensive alternative materials such as ground, granulated blast furnace slag, fly ash, or recycled ground-glass pozzolan; (5) the capture and storage of point source carbon dioxide emissions during the cement or concrete production process; or (6) the utilization and storage of carbon in concrete materials.

"Portland cement" means hydraulic cement produced by pulverizing clinkers in combination with one or more of the forms of calcium sulfate.

2. a. (1) For privilege periods beginning on or after January 1 next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), a taxpayer that is a producer of concrete, or a producer of a major component of concrete including cement or aggregate, shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), to be calculated as provided in paragraph (2) of this subsection, to compensate the taxpayer for costs incurred as a result of conducting an environmental product declaration analysis to determine the product-based embodied carbon emissions of concrete produced at a production facility that the taxpayer owns or operates.

(2) The amount of the credit authorized pursuant to this section shall not exceed the lesser of: (a) the full cost incurred for an environmental product declaration analysis of a single concrete, cement, aggregate, or related production facility, or (b) $3,000. A taxpayer may claim the credit authorized pursuant to this section for the cost of completing environmental product declaration analyses at up to eight production facilities owned or operated by the same taxpayer in a single privilege period.

b. The order of priority of the application of the tax credit allowed pursuant to this section, and any other credits allowed against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for a privilege period, shall be as prescribed by the director. The amount of the credit applied pursuant to this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) shall not reduce a taxpayer's tax liability to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5). The amount of the tax credit otherwise allowable under this section which cannot be applied for the privilege period due to the limitations of this subsection or under other provisions of P.L.1945, c.162 (C.54:10A-1 et seq.) may be carried forward, if necessary, to the seven privilege periods following the privilege period for which the tax credit was allowed.

c. The director, in consultation with the Department of Environmental Protection, shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations as are necessary to implement the provisions of this section. The director may require the submission of any information the director deems necessary to award a tax credit pursuant to this section.

d. As used in this section:

"Concrete" means the same as the term is defined in section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Embodied carbon emissions" means the same as the term is defined in section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Environmental product declaration" means the same as the term is defined in section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Global warming potential" means the same as the term is defined in section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

3. a. The Commissioner of Environmental Protection, in consultation with the director, shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations necessary to implement the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill). The rules and regulations shall include, but need not be limited to:

(1) global warming potential baselines for concrete mixes supplied pursuant to contracts with State agencies;

(2) thresholds for low embodied carbon concrete and concrete that incorporates carbon capture, utilization, and storage technology to qualify for a tax credit pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), which the commissioner may review and modify pursuant to advancements in low carbon concrete technology or future State laws, regulations, and orders pertaining to the reduction of greenhouse gas emissions;

(3) formulae for the tax credits issued pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) for (1) low embodied carbon concrete and (2) concrete that incorporates carbon capture, utilization, and storage technology. The formulae shall provide that the amount of each tax credit is proportional to the reduction in greenhouse gas emissions below the baseline that is achieved by the concrete;

(4) a uniform process for concrete producers to certify that concrete is low embodied carbon concrete, or that it utilizes carbon capture, utilization, and storage technology, and for determining the global warming potential value of concrete;

(5) guidelines for training State contracting personnel to implement the requirements of P.L. , c. (C. ) (pending before the Legislature as this bill); and

(6) a mechanism for monitoring contractor compliance with the requirements of P.L. , c. (C. ) (pending before the Legislature as this bill).

b. No later than two years after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the Commissioner of Environmental Protection, in consultation with the State Treasurer, shall prepare and submit a report to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), the Legislature, containing a cost-benefit analysis of the tax credits established pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), in order to quantify the budgetary impact of the program relative to its carbon reduction impact. The report shall recommend whether the program should be continued, modified, or repealed, and include any recommendations for legislative or regulatory action to improve the program.

c. As used in this section:

"Carbon capture, utilization, and storage technology" means the same as the term is defined in section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Global warming potential" means the same as the term is defined in section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Low embodied carbon concrete" means the same as the term is defined in section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

4. This act shall take effect immediately.

STATEMENT

This bill would provide a corporation business tax (CBT) credit to concrete producers that deliver certain forms of concrete associated with reduced greenhouse gas emissions, pursuant to a contract (or subcontract) with a State Agency, which is used by a construction or improvement project that requires the purchase of 50 cubic yards or more of concrete . The bill would also provide a CBT credit to taxpayers that produce concrete or a major component of concrete for the costs of conducting environmental production declaration analyses.

Specifically, the bill would authorize a CBT credit for the delivery of low embodied carbon concrete of up to five percent of the cost of the concrete, and a CBT credit for the delivery of concrete that incorporates carbon capture, utilization, and storage technology of up to three percent of the cost of the concrete. Concrete that meets both criteria could receive a tax credit of up to eight percent of the cost of the concrete. The actual amount of the CBT credit would be determined using a formula to be developed by the Department of Environmental Protection (DEP) pursuant to section 3 of the bill, which would make the tax credit proportional to the greenhouse gas emissions reduction achieved by the specific type of concrete used.

In order to qualify for the CBT credit, the concrete producer would be required to submit a certified environmental product declaration to the DEP that provides a global warming potential score for the concrete used. The bill would also establish certain additional requirements to receive the credit, as enumerated in subsection d. of section 1 of the bill. A concrete producer could not receive a CBT credit greater than $1 million annually. In addition, the Statewide amount of the tax credit would be capped at $10 million annually.

In preparing the specifications for any contract for the purchase of 50 cubic yards or more of concrete, or for any construction or improvement project that requires the use of concrete, a State agency would be required to include in the invitation to bid, where relevant, a statement that any response to the invitation that proposes or calls for the use low embodied carbon concrete or that utilizes carbon capture, utilization, and storage technology is eligible for the CBT credit established by the bill. If the agency makes a determination to purchase or use low embodied carbon concrete or concrete that uses carbon capture, utilization, and storage technology in the construction project, the agency would be required to include in the invitation to bid a predetermined bid allowance price for the concrete, which would be used by all bidders. The bill would also require any agency or department of State government that purchases 50 cubic yards or more of concrete, or undertakes any construction or improvement project that requires the use 50 cubic yards or more of concrete, to follow the rules, regulations, and guidelines established by DEP pursuant to section 3 of the bill.

The bill would also provide a CBT credit to compensate a taxpayer that produces concrete or a major component of concrete for costs incurred as a result of conducting an environmental product declaration analysis to determine the product-based embodied carbon emissions of concrete produced at one or more production facilities that the taxpayer owns or operates. The amount of the tax credit would not exceed the lesser of: (1) the full cost incurred for an environmental product declaration analysis of a single concrete, cement, aggregate, or related production facility, or (2) $3,000. However, a taxpayer may claim the credit authorized under the bill for the cost of completing environmental product declaration analyses at up to eight production facilities owned or operated by the same taxpayer in a single privilege period.

The bill would require the DEP, in consultation with the State Treasurer, to adopt rules and regulations to implement the bill. The bill would establish certain minimum contents for the rules and regulations, as enumerated in subsection a. of section 3 of the bill, including guidelines to assist concrete producers and State agencies to comply with the bill.

As used in the bill, "low embodied carbon concrete" means concrete that has been certified to embody lower carbon emissions, as measured by a global warming potential metric, than the baseline embodied carbon emissions of conventional concrete made with Portland cement. Low embodied carbon emissions may be achieved through a variety of methods described in the bill. "Carbon capture, utilization, and storage technology" means technologies or methods to remove carbon dioxide generated from the concrete manufacturing process from the flue gas or from the atmosphere, and the recycling of the carbon dioxide either through utilization of the captured carbon dioxide in the concrete manufacturing process, or safe and permanent storage of the captured carbon dioxide. An "environmental product declaration" is a product-specific Type III environmental product declaration that conforms to ISO Standard 14025 and enables the numeric global warming potential and environmental impact comparisons between concrete mixes fulfilling the same functions.