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Franchise Tax Credit for Clean Energy Projects

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Texas will begin issuing a franchise tax credit for up to three clean energy projects. The credit cannot be issued before the later of Sept. 1, 2018 or the expiration of an agreement under Chapter 313 of The Texas Economic Development Act regarding the clean energy project for which the credit is issued. The total amount of the credit to be issued to an entity is the lesser of $100 million or ten percent of the total capital cost of the project. The credit can be carried forward for no more than 20 consecutive years. The entity designated in the certificate of compliance for a clean energy project may assign the credit to one or more taxable entities. The credit cannot be reassigned to another taxable entity.

A clean energy project is defined in the Natural Resources Code section 120.001(2).

The entity must provide the following information to apply for the credit with the Comptroller’s office:

  • verification the project is complete and fully operational;
  • the certificate of compliance from the Texas Railroad Commission as provided in the Natural Resources Code section 120.004;
  • verification by the Bureau of Economic Geology of The University of Texas at Austin the electric generating facility associated with the project is sequestering at least 70 percent of the carbon dioxide resulting from or associated with the generation of electricity by the facility;
  • verification the owner or operator of the project has entered into an interconnection agreement relating to the project with the Electric Reliability Council of Texas; and
  • the total capital cost of the project.
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