March 4, 2008, Introduced by Senators KUIPERS, KAHN, BROWN, HARDIMAN, BARCIA, PAPPAGEORGE and RICHARDVILLE and referred to the Committee on Energy Policy and Public Utilities.
A bill to amend 2007 PA 36, entitled
"Michigan business tax act,"
(MCL 208.1101 to 208.1601) by adding section 451.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 451. (1) A qualified taxpayer may claim a credit against
the tax imposed by this act equal to 1 or both of the following:
(a) The number of tons of eligible reductions in emissions of
carbon dioxide multiplied by the per ton market price for commodity
carbon dioxide.
(b) The annual capacity in tons of critical carbon dioxide
sequestration infrastructure including, but not limited to, carbon
dioxide pipelines and other related equipment developed by the
taxpayer multiplied by the per ton market price for commodity
carbon dioxide.
(2) A qualified taxpayer shall apply to the department for a
credit under this subsection. An application under this subsection
shall state the amount of eligible reductions the qualified
taxpayer will make in the tax year and the corresponding amount of
a credit for which the qualified taxpayer is applying. The
department shall approve or deny an application under this
subsection not more than 45 days after receipt of the application.
If the department does not approve or deny an application within 45
days after the application is received by the department, the
application is considered approved as written. If the department
approves an application for a credit under this section, the
department shall issue an approval letter that states that the
taxpayer is a qualified taxpayer and the maximum total credit the
qualified taxpayer is eligible to claim in the tax year. If an
application is denied under this subsection, a taxpayer is not
prohibited from subsequently applying for a credit under this
section for another tax year. Approval letters shall be issued to
qualified taxpayers in the order in which the applications are
received until the maximum total amount of credits for the calendar
year has been approved.
(3) The maximum total amount of a credit for any 1 tax year
for each qualified taxpayer is $20,000,000.00 per qualified
facility.
(4) The department shall approve a maximum total amount of all
credits under this section equal to $250,000,000.00 each calendar
year. Of the total amount available each calendar year, 10% shall
be approved for critical carbon dioxide sequestration
infrastructure, including, but not limited to, carbon dioxide
pipelines and other related equipment.
(5) The credit allowed under this section shall be calculated
after the application of all other credits allowed under this act.
(6) If the credit allowed under this section for the tax year
and any unused carryforward of the credit allowed under this
section exceed the tax liability of the taxpayer for the tax year,
the excess shall not be refunded, but may be carried forward as an
offset to the tax liability in subsequent tax years for 3 tax years
or until the excess credit is used up, whichever occurs first.
(7) The department shall develop policies and procedures to
implement this section not later than March 7, 2008. The policies
and procedures shall address all of the following:
(a) Monitoring, reporting, and independent third party
verification of the capture and geologic sequestration of carbon
dioxide in this state.
(b) Review and approval of application for credits under this
section including, but not limited to, criteria for all of the
following:
(i) Volume of carbon dioxide sequestered.
(ii) Sequestration reservoir and formation type.
(iii) Sequestration zone depth.
(iv) Seal characteristics and quality.
(v) Well density.
(vi) Carbon dioxide injection rate per injection well.
(c) Development of a database for tracking emission reductions
and geologic sequestration of carbon dioxide in this state.
(8) The department shall evaluate the market pricing structure
for commodity carbon dioxide once every 2 years beginning in 2010
and make adjustments to reflect future developments in carbon
dioxide markets in this state, in the United States, and
internationally.
(9) The department shall report to the legislature on the
status of carbon dioxide geologic sequestration in this state.
(10) As used in this section:
(a) "Direct emission reductions" means emission reductions
achieved at a qualified facility.
(b) "Eligible reductions in emissions of carbon dioxide" means
the voluntary reductions in emissions of carbon dioxide that are
sequestered within this state in the tax year if the department
determines that the voluntary reductions in emissions of carbon
dioxide that are sequestered within this state are real,
verifiable, permanent, and documented. Voluntary reductions in
emissions of carbon dioxide that are sequestered within this state
include both direct emission reductions and indirect emission
reductions.
(c) "Indirect emission reductions" means emission reductions
that are not achieved at a qualified facility but are acquired by
the taxpayer by contract. Indirect emission reductions include
sequestered carbon dioxide emissions and reductions in emissions of
carbon dioxide achieved at the qualified facility of a qualified
taxpayer that is not the facility of the qualified taxpayer that is
using the reduction in emissions of carbon dioxide to calculate a
credit under this section.
(d) "Per ton market price for commodity carbon dioxide" means,
except as otherwise provided in this subdivision, the closing price
for 1 allowance in the European Union emissions trading system
equivalent to 1 metric ton of carbon dioxide on December 31 or
$50.00 per metric ton of carbon dioxide, whichever is greater. For
a qualified facility that has a classification with a North
American industrial classification system (NAICS) of 3361 or 3363,
per ton market price for commodity carbon dioxide means twice the
closing price for 1 allowance in the European Union emissions
trading system on December 31 or $100.00 per metric ton of carbon
dioxide, whichever amount is greater.
(e) "Qualified facility" means a fee-subject facility as that
term is defined in section 5501 of the natural resources and
environmental protection act, 1994 PA 451, MCL 324.5501.
(f) "Qualified taxpayer" means a taxpayer that meets either of
the following criteria:
(i) Owns or operates a qualified facility that annually emits
at least 10,000 metric tons of carbon dioxide.
(ii) Owns or operates an industrial facility that voluntarily
achieves at least 10,000 metric tons of eligible reductions in
emissions of carbon dioxide.
(g) "Sequestered carbon dioxide emissions" means the injection
of carbon dioxide into geologic formations, including, but not
limited to, oil reservoirs, coal seams, natural gas reservoirs, or
other formations.
Enacting section 1. This amendatory act takes effect January
1, 2008.