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Grants

HB 1796 (2009) (Rep. Chisum/Sen. Watson): “NewTechnology Grant Program” initially proposed in SB 16(Sen. Averitt/Rep. Cook), funded by Texas EmissionReduction Program (TERP). “Advanced Clean EnergyProjects” specifically referenced as eligible for funding.

HB 4586 (2009) (Rep. Pitts/Sen. Ogden): Supplementalappropriation bill authorizing Governor’s office to awardemerging technology funds to ACEPs

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Liability/Ownership ClarificationSB 1387 (2009) (Sen. Seliger/Rep. Crownover): Anthropogeniccarbon dioxide stored in a geologic storage facility is considered to bethe property of the storage operator. Absent a final judgment ofwillful abandonment anthropogenic carbon dioxide stored in ageologic storage facility is not considered owned by the surface ormineral estate owner

Clear Regulatory FrameworkSB 1387 (2009): Railroad Commission of Texas: Wells completed inreservoirs (1) initially or currently productive of oil, gas, orgeothermal resources or (2) completed in reservoirs adjacent to same(conversion allowed)

SB 1387 (2009): Texas Commission on Environmental Quality: WaterCode reverts jurisdiction of all other injection wells back to TCEQe.g., storage projects in brine/nonproductive reservoirs)

Time-Certain PermittingHB 3732 (2007) (Rep. Hardcastle/Sen. Averitt): Technical Review is capped at 9 months; Hearing process is capped at 9 months; 3-month extension if TCEQ finds extraordinary burden on docket from multiple applications

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Franchise Tax Credits Up to 3 projects get $100 million franchisetax credit. Credit may not exceed in any yearthe amount of franchise tax attributable to theCEP that year. Railroad Commission certifieseligibility to Comptroller. Bureau ofEconomic Geology (BEG) verifiessequestration and must be paid fee forservices. Interconnection agreement with theElectric Reliability Council of Texas(ERCOT) required.

GrantsHB 1796 (2009) (Rep. Chisum/Sen. Watson): “New Technology Grant Program” initiallyproposed in SB 16 (Sen. Averitt/Rep. Cook),funded by Texas Emission Reduction Program(TERP). “Advanced Clean Energy Projects”specifically referenced as eligible for funding.

HB 4586 (2009) (Rep. Pitts/Sen. Ogden):Supplemental appropriation bill authorizingGovernor’s office to award emergingtechnology funds to ACEPs

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Sales Tax ExemptionsClarifies sales tax-exempt status of carbon capture, transportation &injection equipment. Applies only to CO2 captured from man-made“emissions” source. Requires CO2 to be sequestered using“permanence” standard of severance tax exemption. Implementsrecommendation in Governor’s Competitiveness Council/EnergyReport.

Property Tax AbatementLocal property tax abatements – Tax Code Chapter 312� HB 3896 (2009) (Rep. Oliveira/Sen. Seliger): Extends authority 10 years, until September 1, 2019; clarifies eligibility of property on leased land; clarifies that deferrals are available to better fit the timelines of longer, more complex projects like clean carbon facilities (similar to nuclear provisions).Local Property tax abatements – Tax Code Chapter 313 value cap agreements� HB 3732 (2007) & HB 2994 (2007) (Rep. Bonnen/Sen. Hegar): ACEPs and IGCC eligible for value cap agreements. � HB 3676 (2009) (Rep. Joe Heflin/Sen. Seliger): Extends Texas Economic Development Act until December 31, 2014; clarifies eligibility of property on leased land.

HB 3676 & HB 469 (2009) (Rep. King/Sen. Seliger 2009): Adjusts time periods for ACEPs to better fit the timelines of more complex projects like clean coal facilities

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Franchise Tax CreditsUp to 3 projects get $100 million franchise tax credit. Credit may not exceed in any year the amount offranchise tax attributable to the CEP that year. Railroad Commission certifies eligibility toComptroller. Bureau of Economic Geology (BEG) verifies sequestration and must be paid fee forservices. Interconnection agreement with the Electric Reliability Council of Texas (ERCOT) required.

Severance Tax ExemptionsHB 3732 (2007): Created a 75% tax exemption for oil recovered using man-made CO2-EOR.HB 469 (2009) (Rep. King/Sen. Seliger): Extended the term from 7 to 30 years for all projects. Willhelp spur early-mover CCS projects and establish transportation infrastructure projects

Gross Receipts Tax ExemptionsSales of electricity generated from ACEPs exempt from gross receipts tax. This will create a roughly 2% discount in the prices of power generated by these facilities. Texas utilities currently pay over $320 million per year in gross receipts tax.