CORRECTIVE REPRINT
PRIOR PRINTER'S NO. 1291
PRINTER'S NO. 1372
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1215
Session of
2023
INTRODUCED BY VITALI, MADDEN, FREEMAN, KHAN, SANCHEZ, KINSEY,
D. WILLIAMS, HOHENSTEIN, WEBSTER, FLEMING, PIELLI, HADDOCK,
STEELE, HILL-EVANS, GUENST, FRANKEL AND KRAJEWSKI,
MAY 23, 2023
REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY,
MAY 23, 2023
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," in regional clean hydrogen hubs, further
providing for definitions, for eligibility and for
application and approval of tax credit, providing for
qualifying clean hydrogen uses and further providing for
guidelines and regulations.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 1751-L of the act of March 4, 1971
(P.L.6, No.2), known as the Tax Reform Code of 1971, is amended
by adding definitions to read:
Section 1751-L. Definitions.
The following words and phrases when used in this subarticle
shall have the meanings given to them in this section unless the
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context clearly indicates otherwise:
"Carbon intensity ratio." The number of kilograms of carbon
dioxide equivalent emitted per kilogram of hydrogen produced.
The following shall apply:
(1) Carbon dioxide equivalent emissions shall include
all well to gate emission for the production of clean
hydrogen, including any leakage and all inputs used to
produce hydrogen, including electricity and natural gas.
(2) Chemicals included in the calculation of carbon
dioxide equivalent emissions shall include methane, carbon
dioxide and any other greenhouse gas emitted during the
hydrogen production process.
* * *
"Qualifying clean hydrogen production method." A method of
clean hydrogen production that meets at least one of the
following conditions:
(1) The clean hydrogen is produced within the carbon
intensity ratios, including any carbon dioxide equivalent
emissions offset using carbon capture and storage as
described in section 1753-L(a)(1) if using natural gas as
feedstock.
(2) The clean hydrogen is produced using electricity
from a zero-emission facility and meets the following
requirements:
(i) The electricity generated by the zero-emission
facility is generated in the same one-hour period as the
clean hydrogen is produced, as verified by hourly
renewable energy credits from the regional transmission
organization.
(ii) The zero-emission facility became operational
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no earlier than 12 months prior to the start of operation
of the hydrogen production facility.
(iii) The zero-emission facility and the
electrolyzer are located within the same load balancing
area.
"Qualifying clean hydrogen use." A use of hydrogen at a
project facility in accordance with section 1753.1-L, as
determined by the Department of Environmental Protection.
"Zero-emission facility." A Tier I alternative energy source
as defined in section 2 of the act of November 30, 2004
(P.L.1672, No.213), known as the Alternative Energy Portfolio
Standards Act, except for biologically derived methane gas,
biomass energy and coal mine methane.
Section 2. Section 1752-L(a) of the act is amended by adding
paragraphs to read:
Section 1752-L. Eligibility.
(a) Demonstration.--In order to be eligible to receive a tax
credit, a company shall demonstrate the following:
* * *
(3) The end use of the clean hydrogen is a qualifying
clean hydrogen use.
(4) The clean hydrogen has been produced using a
qualifying clean hydrogen production method.
* * *
Section 3. Section 1753-L(a), (b) and (c) of the act, added
November 3, 2022 (P.L.1695, No.108), are amended to read:
Section 1753-L. Application and approval of tax credit.
(a) Rate.--The tax credit shall be equal to [any] one [or
more] of the following:
(1) $0.81 per kilogram of clean hydrogen produced with a
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carbon intensity ratio of 2.5 or less purchased from a
Regional Clean Hydrogen Hub within this Commonwealth and used
in manufacturing at the project facility by a qualified
taxpayer[.]; or
[(2) $0.47 per unit of natural gas that is purchased and
used in manufacturing at the project facility by a qualified
taxpayer.]
(3) $1.00 per kilogram of clean hydrogen produced with a
carbon intensity ratio of .45 or less purchased from a
Regional Clean Hydrogen Hub within this Commonwealth and used
in manufacturing at the project facility by a qualified
taxpayer.
(b) Application.--
(1) A qualified taxpayer may apply to the department for
a tax credit under this section.
(2) The application must be submitted to the department
by March 1 for the tax credit claimed for clean hydrogen or
natural gas purchased and used in manufacturing by the
qualified taxpayer at the project facility during the prior
calendar year.
(2.1) The application shall include documentation that
the following requirements have been met:
(i) The clean hydrogen was produced using a
qualifying clean hydrogen production method.
(ii) The end use of the clean hydrogen is a
qualifying clean hydrogen use.
(3) The application must be on a form required by the
department which shall include the following:
[(i) information required by the department to
document the amount of natural gas purchased and used in
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manufacturing at the project facility;]
(ii) information required by the department to
document the amount of clean hydrogen to be purchased
from sources within the Regional Clean Hydrogen Hub in
this Commonwealth and used in manufacturing at the
project facility;
(iii) information required by the department to
verify that the applicant is a qualified taxpayer; [and]
(iii.1) certification from the Department of
Environmental Protection that the application meets the
requirements of this paragraph; and
(iv) any other information as the department deems
appropriate.
(c) Review and approval.--
(1) The department shall review the applications and
shall issue an approval or disapproval by May 1.
[(2) Upon approval, the department shall issue a
certificate stating the amount of the tax credit granted for
natural gas purchased and used in manufacturing at the
project facility in the prior calendar year.]
(3) Upon approval, the department shall issue a
certificate stating the amount of the tax credit granted for
clean hydrogen purchased from sources located in a Regional
Clean Hydrogen Hub located in this Commonwealth and used in
manufacturing at the project facility in the prior calendar
year.
* * *
Section 4. The act is amended by adding a section to read:
Section 1753.1-L. Qualifying clean hydrogen uses.
(a) Initial qualifying uses.--As of the effective date of
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this section, the following shall constitute a qualifying clean
hydrogen use:
(1) clean hydrogen that is replacing the use of hydrogen
produced by a method other than a qualifying clean hydrogen
production method;
(2) as a feedstock for:
(i) fertilizer; or
(ii) low-carbon fuels to be used in aviation or
shipping;
(3) for use in a sector for which electrification is not
feasible, as determined by the Department of Environmental
Protection; or
(4) long-duration energy storage, if the clean hydrogen
achieves the carbon intensity ratio in section 1753-L(a)(3).
(b) Qualifying use determination.--No more than six months
following the effective date of this section and no less than
every two years thereafter, the Department of Environmental
Protection shall determine whether any additional uses meet the
definition of qualifying clean hydrogen use and promulgate
regulations accordingly.
(c) Prohibited uses.--The following shall not be considered
a qualifying clean hydrogen use:
(1) Any use of hydrogen, if the hydrogen is blended into
or distributed through natural gas distribution networks.
(2) Fuel for use in class 1 through class 7 vehicles as
class is defined under 40 CFR 1037.801 (relating to
definitions).
Section 5. Section 1760-L of the act, added November 3, 2022
(P.L.1695, No.108), is amended to read:
Section 1760-L. Guidelines and regulations.
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[The department] (a) General rule.--The department shall
develop written guidelines for the implementation of this
subarticle. [The guidelines shall be in effect until the
department promulgates regulations for the implementation of the
provisions of this subarticle.]
(b) Contents.--The Environmental Quality Board shall
promulgate regulations that include:
(1) The determination and certification of qualifying
clean hydrogen production methods, including calculating the
carbon intensity ratio for clean hydrogen produced under this
subarticle.
(2) Criteria for the determination of what constitutes a
qualifying clean hydrogen use and a list of qualifying uses.
(3) Other regulations as necessary to implement this
subarticle.
Section 6. This act shall take effect in 60 days.
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