Hydrogen Utilization and Sustainability Act

II 117TH CONGRESS 1ST SESSION S. 1266 To amend the Internal Revenue Code of 1986 to expand the renewable electricity production credit to include electricity produced from hydrogen. IN THE SENATE OF THE UNITED STATES APRIL 21, 2021 Mr. YOUNG (for himself and Mr. WHITEHOUSE) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to expand the renewable electricity production credit to include elec- tricity produced from hydrogen. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Hydrogen Utilization 4 and Sustainability Act’’. 5 SEC. 2. EXPANSION OF RENEWABLE ELECTRICITY PRODUC- 6 TION CREDIT TO INCLUDE ELECTRICITY PRO- 7 DUCED FROM HYDROGEN. 8 (a) IN GENERAL.—Section 45 of the Internal Rev- 9 enue Code of 1986 is amended— 10 VerDate Sep 11 2014 23:25 May 14, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1266.IS S1266 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 1266 IS (1) in subsection (c)— 1 (A) in paragraph (1)— 2 (i) in subparagraph (H), by striking 3 ‘‘and’’ at the end; 4 (ii) in subparagraph (I), by striking 5 the period at the end and inserting ‘‘, 6 and’’; and 7 (iii) by adding at the end the fol- 8 lowing new subparagraph: 9 ‘‘(J) qualified hydrogen.’’; and 10 (B) by adding at the end the following new 11 paragraph: 12 ‘‘(11) QUALIFIED HYDROGEN.—The term 13 ‘qualified hydrogen’ means, with respect to any tax- 14 able year, hydrogen fuel which has been certified 15 prior to such year by the Secretary of Energy (in 16 consultation with the Secretary) as having a carbon 17 intensity of not greater than 75 grams of CO2e per 18 kilowatt hour of electricity produced, as determined 19 based on a lifecycle analysis.’’; and 20 (2) in subsection (d), by adding at the end the 21 following new paragraph: 22 ‘‘(12) HYDROGEN FACILITY.— 23 ‘‘(A) IN GENERAL.—In the case of a facil- 24 ity using qualified hydrogen to produce elec- 25 VerDate Sep 11 2014 23:25 May 14, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1266.IS S1266 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 1266 IS tricity, the term ‘qualified facility’ means any 1 facility owned by the taxpayer— 2 ‘‘(i) for which not less than 70 per- 3 cent of the electricity produced at such fa- 4 cility during any taxable year is attrib- 5 utable to the use of qualified hydrogen, 6 and 7 ‘‘(ii)(I) the construction of which be- 8 gins before January 1, 2024, or 9 ‘‘(II) which— 10 ‘‘(aa) was originally placed in 11 service before the date of enactment 12 of this paragraph and, prior to the 13 modification described in item (bb), 14 did not use hydrogen to produce elec- 15 tricity, and 16 ‘‘(bb) before January 1, 2024, is 17 modified to use qualified hydrogen to 18 produce electricity. 19 ‘‘(B) MODIFICATION.—For purposes of 20 subparagraph (A)(ii)(II)(bb), a facility shall be 21 treated as modified before January 1, 2024, if 22 the construction of such modification begins be- 23 fore such date. 24 VerDate Sep 11 2014 23:25 May 14, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1266.IS S1266 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 1266 IS ‘‘(C) ELECTION.—If the owner of the facil- 1 ity described in subparagraph (A) makes an 2 election under this subparagraph in such time 3 and manner as the Secretary may prescribe by 4 regulations, the credit under this section— 5 ‘‘(i) shall be allowable to the person 6 that leases and operates such facility, and 7 ‘‘(ii) shall not be allowable to the 8 owner of such facility. 9 ‘‘(D) SPECIAL RULES.— 10 ‘‘(i) EXCLUSION OF ELECTRICITY NOT 11 PRODUCED FROM QUALIFIED HYDRO- 12 GEN.—For purposes of subsection (a)(2), 13 the total amount of kilowatt hours of elec- 14 tricity produced by the taxpayer at a quali- 15 fied facility described in subparagraph (A) 16 for any taxable year shall be equal to the 17 product of— 18 ‘‘(I) the total amount of kilowatt 19 hours of electricity produced by the 20 taxpayer at such facility for such tax- 21 able year, multiplied by 22 ‘‘(II) an amount equal to the 23 quotient of— 24 VerDate Sep 11 2014 23:25 May 14, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1266.IS S1266 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 1266 IS ‘‘(aa) the amount of quali- 1 fied hydrogen used at such facil- 2 ity to produce such electricity (as 3 determined on the basis of Btu 4 content), divided by 5 ‘‘(bb) the total amount of 6 fuel used at such facility to 7 produce such electricity (as deter- 8 mined on the basis of Btu con- 9 tent). 10 ‘‘(ii) ADJUSTMENT FOR NEGATIVE 11 CARBON INTENSITY.— 12 ‘‘(I) IN GENERAL.—For purposes 13 of subsection (a)(2), the total amount 14 of kilowatt hours of electricity pro- 15 duced by the taxpayer at a qualified 16 facility described in subparagraph (A) 17 for any taxable year (as determined 18 after application of clause (i)) shall be 19 increased by an amount equal to the 20 applicable percentage of such total 21 amount. 22 ‘‘(II) APPLICABLE PERCENT- 23 AGE.—For purposes of subclause (I), 24 the applicable percentage for a quali- 25 VerDate Sep 11 2014 23:25 May 14, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1266.IS S1266 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 1266 IS fied facility for any taxable year is the 1 amount (expressed as a percentage) 2 equal to the product of— 3 ‘‘(aa) 1 percentage point, 4 multiplied by 5 ‘‘(bb) an amount equal to 6 the quotient of— 7 ‘‘(AA) the total amount 8 of carbon dioxide (expressed 9 in metric tons) which is re- 10 moved from the atmosphere 11 during such taxable year 12 through the use of qualified 13 hydrogen (as determined 14 pursuant to a certification of 15 negative carbon intensity for 16 such hydrogen under sub- 17 section (c)(11)) at such 18 qualified facility, divided by 19 ‘‘(BB) 1,000.’’. 20 (b) EFFECTIVE DATE.—The amendments made by 21 this section shall take effect on the date of enactment of 22 this Act. 23 Æ VerDate Sep 11 2014 23:25 May 14, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\S1266.IS S1266 pamtmann on DSKBC07HB2PROD with BILLS