Hydrogen Tax Incentives Act

Summary

This model policy enacts refundable corporate and individual income tax credits for systems that produce hydrogen from renewable and nonrenewable sources. The tax credit is equal to $0.12 per kilogram of hydrogen produced during the taxable year.

Hydrogen Tax Incentives Act

Policy

Definitions

(a) “Renewable Hydrogen”, as defined as hydrogen that is produced from electricity from a
renewable energy source to create hydrogen gas from water, regardless of whether the
renewable energy source is at a separate facility or the same facility as the system of apparatus
and equipment; or

(ii) uses renewable natural gas to produce hydrogen gas.

Substantive Language

1. Renewable energy systems tax credits — Definitions — Certification — Rulemaking
authority.
As used in this section:

A. “Active solar system” means a system of equipment that is capable of:

a. collecting and converting incident solar radiation into thermal, mechanical, or electrical
energy; and
b. transferring a form of energy described in Subsection (1)(a)(i)(A) by a separate apparatus
to storage or to the point of use.
c. “Active solar system” includes water heating, space heating or cooling, and electrical or
mechanical energy generation.

B. “Biomass system” means a system of apparatus and equipment for use in:

a. converting material into biomass energy, as defined in Section _____; and
b. transporting the biomass energy by separate apparatus to the point of use or storage.

C. “Commercial energy system” means a system that is:

a. an active solar system;
b. a biomass system;
c. a direct use geothermal system;
d. a geothermal electricity system;
e. a geothermal heat pump system;
f. a hydroenergy system;
g. a passive solar system; or
h. a wind system;

(ii) located in the state; and
(iii) used:

i. (A) to supply energy to a commercial unit; or
j. (B) as a commercial enterprise.

D. “Commercial enterprise” means an entity, the purpose of which is to produce:

a. electrical, mechanical, or thermal energy for sale from a commercial energy system; or
b. hydrogen for sale from a hydrogen production system.

E. “Commercial unit” means a building or structure that an entity uses to transact business.

F. “Hydrogen production system” means a system of apparatus and equipment, located in this state, that uses:

a. electricity from a renewable energy source to create hydrogen gas from water, regardless of whether the renewable energy source is at a separate facility or the same facility as the system of apparatus and equipment; or
b. uses renewable natural gas to produce hydrogen gas.

(7) (a) A taxpayer may claim a refundable tax credit as provided in this Subsection (7)
If:

A. the taxpayer owns a hydrogen production system;
B. the hydrogen production system is completed and placed in service on or after January 1, 2022;
C. the taxpayer sells as a commercial enterprise, or supplies for the taxpayer’s own use in
commercial units, the hydrogen produced from the hydrogen production system;
D. the taxpayer has not claimed and will not claim a tax credit under Subsection (4),(5), or (6) or
Section 2 for electricity or hydrogen used to meet the requirements of this Subsection (7);
and (v) the taxpayer obtains a written certification from the office in accordance with Subsection (8).

(b) A tax credit under this Subsection (7) is equal to the product of:

a. (A) $0.12; and
b. (B) the number of kilograms of hydrogen produced during the taxable year.

(c) A taxpayer may not receive a tax credit under this Subsection (7) for more than 5,600 metric tons of
hydrogen per taxable year.

(d) A taxpayer is eligible to claim a tax credit under this Subsection (7) for production occurring during a
period of 48 months beginning with the month in which the hydrogen production system is placed in
commercial service.

2. Refundable tax credit for nonrenewable hydrogen production system.

(1) As used in this section:

A. “Commercial enterprise” means an entity, the purpose of which is to produce hydrogen for sale
from a hydrogen production system.
A. “Commercial unit” means a building or structure that an entity uses to transact business.
B. “Hydrogen production system” means a system of apparatus and equipment, located in this state,
that produces hydrogen from nonrenewable sources.
C. “Office” means the Office of Energy Development created in Section ____.

(2)

A. A taxpayer may claim a refundable credit under this section if:

a. the taxpayer owns a hydrogen production system;
b. the hydrogen production system is completed and placed in service on or after January 1,
2022;
c. the taxpayer sells as a commercial enterprise, or supplies for the taxpayer’s own use in
commercial units, the hydrogen produced from the hydrogen production system;
d. the taxpayer has not claimed and will not claim a tax credit under Section 1 for
electricity used to meet the requirements of this section; and
e. the taxpayer obtains a written certification from the office in accordance with Subsection (3).

B. (b) (i) Subject to Subsections (2)(b)(ii) and (iii), a tax credit under this section is equal to the
product of:

a. $0.12; and
b. the number of kilograms of hydrogen produced during the taxable year.

C. A taxpayer may not receive a tax credit under this section for more than 5,600 metric tons of
hydrogen per taxable year.

D. A taxpayer is eligible to claim a tax credit under this section for production occurring during a
period of 48 months beginning with the month in which the hydrogen production system is placed
in commercial service.

(3)
A. Before a taxpayer may claim a tax credit under this section, the taxpayer shall obtain a written
certification from the office.

B. The office shall issue a taxpayer a written certification if the office determines that:

a. the taxpayer meets the requirements of this section to receive a tax credit; and
b. the hydrogen production system with respect to which the taxpayer seeks to claim a tax
credit:

i. has been completely installed; and
ii. is safe, reliable, efficient, and technically feasible to ensure that the hydrogen
production system uses the state’s nonrenewable energy resources in an
appropriate and economic manner.

C. The office may make rules for determining whether a hydrogen production system meets the
requirements of Subsection (3)(b)(ii).

D. A taxpayer that obtains a written certification from the office shall retain the certification for the
same time period a person is required to keep books and records under

Section 3.
A. The office shall submit to the commission an electronic list that includes:

a. the name and identifying information of each taxpayer to which the office issues a written
certification; and
b. for each taxpayer:

i. the amount of the tax credit listed on the written certification; and
ii. the date the hydrogen production system was installed.

B. The commission may make rules to address the certification of a tax credit under this section.

C. A tax credit under this section is in addition to any tax credits provided under the laws or rules
and regulations of the United States.

D. (b) (i) Subject to Subsections (1)(b)(ii) and (iii), a tax credit under this Subsection (1) is equal to
the product of:

a. $0.12; and
b. the number of kilograms of hydrogen produced during the taxable year.

i. A taxpayer may not receive a tax credit under this Subsection (1) for more than
5,600 metric tons of hydrogen per taxable year.
ii. A taxpayer is eligible to claim a tax credit under this Subsection (1) for production
occurring during a period of 48 months beginning with the month in which the
hydrogen production system is placed in commercial service.

4. Refundable renewable energy systems tax credits — Definitions — Certification —
Rulemaking authority.

(1) As used in this section:

A. “Commercial energy system” means the same as that term is defined in Section 1.
B. “Commercial enterprise” means the same as that term is defined in Section 1.
C. “Commercial unit” means the same as that term is defined in Section 1.
D. “Hydrogen production system” means the same as that term is defined in Section 1.
E. “Office” means the Office of Energy Development created in Section
____.

(2) A claimant, estate, or trust may claim an energy system tax credit as provided in this section against a
tax due under this chapter for a taxable year.
(3) (a) Subject to the other provisions of this Subsection (3), a claimant, estate, or trust may claim a
refundable tax credit under this Subsection (3) with respect to a commercial energy system if:

A. the commercial energy system does not use:

a. (A) wind, geothermal electricity, solar, or biomass equipment capable of producing a total
of 660 or more kilowatts of electricity; or
b. (B) solar equipment capable of producing 2,000 or more kilowatts of electricity;

B. the claimant, estate, or trust purchases or participates in the financing of the commercial energy
system;

C. the commercial energy system supplies all or part of the energy required by commercial units
owned or used by the claimant, estate, or trust; or

a. the claimant, estate, or trust sells all or part of the energy produced by the commercial
energy system as a commercial enterprise;

D. the claimant, estate, or trust has not claimed and will not claim a tax credit under Subsection (6)
for hydrogen production using electricity for which the claimant, estate, or trust claims a tax credit
under this Subsection (3); and

a. the claimant, estate, or trust obtains a written certification from the office in accordance
with Subsection (7).

E. The tax credit is equal to 10% of the reasonable costs of the commercial energy system.

F. A tax credit under this Subsection (3) may include installation costs.

G. A claimant, estate, or trust is eligible to claim a tax credit under this Subsection (3) for the taxable year in which the commercial energy system is completed and placed in service.

H. The total amount of tax credit a claimant, estate, or trust may claim under this Subsection (3) may not exceed $50,000 per commercial unit.

I. A claimant, estate, or trust that is a lessee of a commercial energy system installed on a
commercial unit may claim a tax credit under this Subsection (3) if the claimant, estate, or trust
confirms that the lessor irrevocably elects not to claim the tax credit.

J. (ii) A claimant, estate, or trust may claim as a tax credit under this Subsection (3) only the
principal recovery portion of the lease payments.

K. (iii) A claimant, estate, or trust may claim a tax credit under this Subsection (3) for a period that
does not exceed seven taxable years after the day on which the lease begins, as stated in the
lease agreement.

 

(4) (a) Subject to the other provisions of this Subsection (4), a claimant, estate, or trust may claim a
refundable tax credit under this Subsection (4) with respect to a commercial energy system if:

A. the commercial energy system uses wind, geothermal electricity, or biomass equipment capable
of producing a total of 660 or more kilowatts of electricity;

B. the commercial energy system supplies all or part of the energy required by commercial units
owned or used by the claimant, estate, or trust; or

a. the claimant, estate, or trust sells all or part of the energy produced by the commercial
energy system as a commercial enterprise;

C. the claimant, estate, or trust has not claimed and will not claim a tax credit under Subsection (6)
for hydrogen production using electricity for which the claimant, estate, or trust claims a tax credit
under this Subsection (4); and

a. the claimant, estate, or trust obtains a written certification from the office in accordance
with Subsection (7).

D. A tax credit under this Subsection (4) is equal to the product of:

a. 0.35 cents; and
b. the kilowatt hours of electricity produced and used or sold during the taxable year.

E. A claimant, estate, or trust is eligible to claim a tax credit under this Subsection (4) for production occurring during a period of 48 months beginning with the month in which the commercial energy system is placed in commercial service.

F. A claimant, estate, or trust that is a lessee of a commercial energy system installed on a
commercial unit may claim a tax credit under this Subsection (4) if the claimant, estate, or trust
confirms that the lessor irrevocably elects not to claim the tax credit.

 

(5) (a) Subject to the other provisions of this Subsection (5), a claimant, estate, or trust
may claim a refundable tax credit as provided in this Subsection (5) if:

A. the claimant, estate, or trust owns a commercial energy system that uses solar equipment
capable of producing a total of 660 or more kilowatts of electricity;

B. the commercial energy system supplies all or part of the energy required by commercial units
owned or used by the claimant, estate, or trust; or

a. the claimant, estate, or trust sells all or part of the energy produced by the commercial
energy system as a commercial enterprise;

C. the claimant, estate, or trust does not claim a tax credit under Subsection (3);

D. the claimant, estate, or trust has not claimed and will not claim a tax credit under Subsection (6)
for hydrogen production using electricity for which a taxpayer claims a tax credit under this
Subsection (5); and

a. the claimant, estate, or trust obtains a written certification from the office in accordance
with Subsection (7).

(b) a tax credit under this Subsection (5) is equal to the product of:

b. 0.35 cents; and
c. the kilowatt hours of electricity produced and used or sold during the taxable year.

E. A claimant, estate, or trust is eligible to claim a tax credit under this Subsection (5) for production
occurring during a period of 48 months beginning with the month in which the commercial energy
system is placed in commercial service.

F. A claimant, estate, or trust that is a lessee of a commercial energy system installed on a
commercial unit may claim a tax credit under this Subsection (5) if the claimant, estate, or trust
confirms that the lessor irrevocably elects not to claim the tax credit.

(6) (a) A claimant, estate, or trust may claim a refundable tax credit as provided in this Subsection (6) if:

A. the claimant, estate, or trust owns a hydrogen production system;

B. the hydrogen production system is completed and placed in service on or after January 1, 2022;

C. the claimant, estate, or trust sells as a commercial enterprise, or supplies for the claimant’s,
estate’s, or trust’s own use in commercial units, the hydrogen produced from the hydrogen
production system;

D. the claimant, estate, or trust has not claimed and will not claim a tax credit under Subsection (3), (4), or (5) for electricity used to meet the requirements of this Subsection (6); and

E. the claimant, estate, or trust obtains a written certification from the office in accordance with
Subsection (7).

(b) (i) a tax credit under this Subsection (6) is equal to the product of:

A. $0.12; and
B. the number of kilograms of hydrogen produced during the taxable year.

A claimant, estate, or trust may not receive a tax credit under this Subsection (6) for more than 5,600
metric tons of hydrogen per taxable year.
A claimant, estate, or trust is eligible to claim a tax credit under this Subsection (6) for production
occurring during a period of 48 months beginning with the month in which the hydrogen production
system is placed in commercial service.

(7) (a) Before a claimant, estate, or trust may claim a tax credit under this section, the claimant, estate, or
trust shall obtain a written certification from the office.
(b) The office shall issue a claimant, estate, or trust a written certification if the office determines that:

A. the claimant, estate, or trust meets the requirements of this section to receive a tax credit; and
B. the commercial energy system or the hydrogen production system with respect to which the
claimant, estate, or trust seeks to claim a tax credit:

a. has been completely installed;
b. is a viable system for saving or producing energy from renewable resources; and
c. is safe, reliable, efficient, and technically feasible to ensure that the commercial energy
system or the hydrogen production system uses the state’s renewable and nonrenewable
resources in an appropriate and economic manner.

(c) The office may make rules:

A. for determining whether a commercial energy system or a hydrogen production system meets the
requirements of Subsection (7)(b)(ii); and
B. for purposes of a tax credit under Subsection (3), establishing the reasonable costs of a
commercial energy system, as an amount per unit of energy production.

(d) A claimant, estate, or trust that obtains a written certification from the office shall retain the certification
for the same time period a person is required to keep books and records under Section 3.
(e) The office shall submit to the commission an electronic list that includes:

A. the name and identifying information of each claimant, estate, or trust to which the office issues a written certification; and
B. for each claimant, estate, or trust:

a. the amount of the tax credit listed on the written certification; and

b. the date the commercial energy system or the hydrogen production system was installed.

(8) The commission may make rules to address the certification of a tax credit under this section.
(9) A tax credit under this section is in addition to any tax credits provided under the laws or rules and
regulations of the United States.
(10) A purchaser of one or more solar units that claims a tax credit under Section 59-10-1024 for the
purchase of the one or more solar units may not claim a tax credit under this section for that purchase.

5. Refundable tax credit for nonrenewable hydrogen production system.

(1) As used in this section:

A. “Commercial enterprise” means the same as that term is defined in Section 2.
B. “Commercial unit” means the same as that term is defined in Section 2.
C. “Hydrogen production system” means the same as that term is defined in Section 2.
D. “Office” means the Office of Energy Development created in Section ____.

(2) (a) A claimant, estate, or trust may claim a refundable credit under this section if:

A. the claimant, estate, or trust owns a hydrogen production system;
B. the hydrogen production system is completed and placed in service on or after January 1, 2022;
C. the claimant, estate, or trust sells as a commercial enterprise, or supplies for the claimant’s,
estate’s, or trust’s own use in commercial units, the hydrogen produced from the hydrogen
production system;
D. the claimant, estate, or trust has not claimed and will not claim a tax credit under Section
4 for electricity used to meet the requirements of this section; and
E. the taxpayer obtains a written certification from the office in accordance with Subsection (3).

(b) a tax credit under this section is equal to the product of:

a. $0.12; and
b. the number of kilograms of hydrogen produced during the taxable year.

F. (ii) A claimant, estate, or trust may not receive a tax credit under this section for more than 5,600
metric tons of hydrogen per taxable year.
G. (iii) A claimant, estate, or trust is eligible to claim a tax credit under this section for production
occurring during a period of 48 months beginning with the month in which the hydrogen
production system is placed in commercial service.

(3) (a) Before a claimant, estate, or trust may claim a tax credit under this section, the claimant, estate, or
trust shall obtain a written certification from the office.
(b) The office shall issue a claimant, estate, or trust a written certification if the office determines that:

A. the claimant, estate, or trust meets the requirements of this section to receive a tax credit; and
B. the hydrogen production system with respect to which the claimant, estate, or trust seeks to claim a tax credit:

a. has been completely installed;
b. is safe, reliable, efficient, and technically feasible to ensure that the hydrogen production
system uses the state’s nonrenewable energy resources in an appropriate and economic
manner.

(c) In accordance with _____, the office may make
rules for determining whether a hydrogen production system meets the requirements of this Subsection
(3)(b)(ii).
(d) A claimant, estate, or trust that obtains a written certification from the office shall retain the certification
for the same time period a person is required to keep books and records under Section 3.
(e) The office shall submit to the commission an electronic list that includes:

A. the name and identifying information of each claimant, estate, or trust to which the office issues a written certification; and
C. for each claimant, estate, or trust:

a. the amount of the tax credit listed on the written certification; and
b. the date the hydrogen production system was installed.

(4) In accordance with _____, the commission may
make rules to address the certification of a tax credit under this section.
(5) A tax credit under this section is in addition to any tax credits provided under the laws or rules and regulations of the United States.