HB5600 - Relating to incentives for the development of the clean hydrogen industry in this state, including tax benefits, loans, and grants for clean hydrogen projects, clean hydrogen workforce development, hydrogen powered motor vehicles, and certain items used to produce clean hydrogen.

  89R29674 E     By: McLaughlin H.B. No. 5600     Substitute the following for H.B. No. 5600:     By:  Darby C.S.H.B. No. 5600       A BILL TO BE ENTITLED   AN ACT   relating to incentives for the development of the clean hydrogen   industry in this state, including tax benefits, loans, and grants   for clean hydrogen projects, clean hydrogen workforce development,   hydrogen powered motor vehicles, and certain items used to produce   clean hydrogen.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subtitle F, Title 4, Government Code, is amended   by adding Chapter 490J to read as follows:   CHAPTER 490J. CLEAN HYDROGEN DEVELOPMENT FUND           Sec. 490J.0101.  DEFINITIONS. In this chapter:                 (1)     "Clean hydrogen" means hydrogen produced through   methods that substantially reduce lifecycle greenhouse gas   emissions as compared to conventional hydrogen production methods,   including:                       (A)     electrolysis using electricity from   renewable or nonrenewable sources, provided that overall lifecycle   emissions are substantially reduced;                       (B)     natural gas reforming combined with carbon   capture, utilization, or sequestration;                       (C)  nuclear energy-based hydrogen production; or                       (D)     any other method meeting applicable federal   standards for low-carbon hydrogen production.                 (2)     "Clean hydrogen project" means a project located   in this state that is:                       (A)  a facility that produces clean hydrogen;                       (B)     a facility that uses hydrogen as a feedstock   to produce fuels derived from hydrogen, including electro-fuels or   e-fuels;                         (C)     infrastructure for the storage,   transportation, distribution, purchase, or sale of hydrogen or   fuels derived from hydrogen; or                       (D)     equipment used to capture, process, or   utilize carbon dioxide in conjunction with hydrogen production or   the production of fuels derived from hydrogen.                 (3)     "Electro-fuel" or "e-fuel" means a type of fuel   derived from hydrogen that specifically uses hydrogen produced   through electrolysis, including:                       (A)  electro-ammonia or e-ammonia;                         (B)  electro-methane or e-methane; and                       (C)  electro-methanol or e-methanol.                 (4)     "Fuel derived from hydrogen" means a fuel or   chemical product manufactured using hydrogen as a primary   feedstock, including:                       (A)  electro-fuels or e-fuels;                       (B)  sustainable aviation fuel; and                         (C)     other synthetic fuels that use hydrogen as a   primary feedstock.                 (5)     "Fund" means the clean hydrogen development fund   established under this chapter.                 (6)     "Sustainable aviation fuel" means aviation fuel   produced from hydrogen and carbon sources with significantly lower   lifecycle greenhouse gas emissions than conventional aviation   fuel.           Sec.   490J.0102.     CLEAN HYDROGEN DEVELOPMENT FUND. (a)   The   clean hydrogen development fund is a special fund in the state   treasury outside the general revenue fund to be administered by the   comptroller in consultation with the Texas Commission on   Environmental Quality and the Railroad Commission of Texas.           (b)  The fund consists of:                 (1)     money the legislature appropriates for deposit to   the credit of the fund for purposes of this chapter;                 (2)     gifts, donations, and grants to the fund,   including federal grants;                 (3)     interest earned on the investment of money in the   fund; and                 (4)     money from any other source designated for deposit   into the fund.           (c)     Money in the fund may be appropriated to the comptroller   only to provide low-interest loans and grants for:                 (1)     clean hydrogen projects, including projects in the   development or pre-operations stage;                 (2)     the development of a trading system located in   this state that enables the sale, purchase, and export of hydrogen   or fuel derived from hydrogen; and                 (3)     the manufacture of hydrogen electrolyzers and   related technologies in this state.           (d)     A person must apply for a loan or grant from the fund in   the manner prescribed by the comptroller. In awarding a loan or   grant using money from the fund, the comptroller shall:                 (1)     consider, for the project that is the subject of   the application:                       (A)     the potential economic impact of the project,   including the effect on the number of jobs in this state;                       (B)     the emissions reduction benefits of the   project;                       (C)     the technological innovation encouraged by   the project;                       (D)     the project's contribution to grid stability   and energy security; and                       (E)     the ability of the state and local   governments to leverage federal funding or tax credits for the   project;                 (2)     consider the length of time the applicant has been   in business as of the date of the application; and                 (3)     prioritize applicants that are start-up or   pre-revenue generating entities or are relocating to this state.           (e)     The comptroller may not prioritize an energy source or   technology used to produce hydrogen when awarding a loan or grant   using money in the fund.           (f)     The comptroller shall establish eligibility   requirements for the award of a loan or grant using money in the   fund.          SECTION 2.  Chapter 302, Labor Code, is amended by adding   Subchapter J to read as follows:   SUBCHAPTER J. CLEAN HYDROGEN WORKFORCE DEVELOPMENT GRANT PROGRAM           Sec. 302.301.  DEFINITIONS.  In this subchapter:                 (1)     "Clean hydrogen" and "fuel derived from hydrogen"   have the meanings assigned by Section 490J.0101, Government Code.                 (2)     "Institution of higher education" has the meaning   assigned by Section 61.003, Education Code.                 (3)     "Program" means the clean hydrogen workforce   development grant program established under this subchapter.           Sec.   302.302.     PROGRAM ESTABLISHMENT AND ADMINISTRATION.     The commission shall establish and administer the clean hydrogen   workforce development grant program under which the commission may   award grants to institutions of higher education to:                 (1)     provide workforce training for and higher   education programs related to clean hydrogen jobs and the   production, handling, and use of hydrogen and fuels derived from   hydrogen; or                 (2)     develop curriculum or certification programs for   hydrogen technology.           Sec.   302.303.     GRANT ELIGIBILITY.   To be eligible for a grant   under the program established under Section 302.302, an institution   of higher education must:                 (1)     apply to the commission in the manner prescribed   by commission rule; and                 (2)     satisfy any other relevant criteria prescribed by   commission rule.          SECTION 3.  Section 151.317, Tax Code, is amended by adding   Subsection (f) to read as follows:           (f)     For the purposes of Subsection (a)(9), "gas" includes   hydrogen.          SECTION 4.  Subchapter E, Chapter 152, Tax Code, is amended   by adding Section 152.094 to read as follows:           Sec.   152.094.     TEMPORARY EXEMPTION FOR HYDROGEN MOTOR   VEHICLES. (a)   In this section, "hydrogen motor vehicle" means a   motor vehicle powered by:                 (1)     hydrogen, including a hydrogen internal   combustion engine vehicle or hydrogen fuel cell vehicle;                 (2)     a fuel derived from hydrogen, as that term is   defined by Section 490J.0101, Government Code; or                 (3)     compressed natural gas, if the vehicle is   certified to operate on renewable methane or electro-methane.           (b)     The taxes imposed by this chapter do not apply to the   sale, use, or rental of a hydrogen motor vehicle.           (c)  This section expires September 1, 2035.          SECTION 5.  Subchapter B, Chapter 171, Tax Code, is amended   by adding Section 171.089 to read as follows:           Sec.   171.089.     EXEMPTION FOR LIMITED PERIOD--HYDROGEN   ELECTROLYZER MANUFACTURER. (a) Subject to Subsection (b), an   entity that is engaged in the business of manufacturing hydrogen   electrolyzers is exempted from the franchise tax if the entity   relocates to this state from another state in the United States.           (b)     An exemption under this section terminates on the 10th   anniversary of the entity's beginning date.          SECTION 6.  Chapter 171, [Text truncated for display. Full text available on Congress.gov.]