Bill Text: CA AB2797 | 2021-2022 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Decarbonizing Fuels Incentive.

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2022-05-19 - In committee: Held under submission. [AB2797 Detail]

Download: California-2021-AB2797-Amended.html

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Amended  IN  Assembly  March 24, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill

No. 2797

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Introduced by Assembly Member Petrie-Norris

February 18, 2022

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An act to amend Section 23453 of add Chapter 10 (commencing with Section 9360) to Part 3 of Division 2 of the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL'S DIGEST

AB 2797, as amended, Petrie-Norris. Corporation Tax Law: minimum tax credit. Decarbonizing Fuels Incentive.

Existing law, the Use Fuel Tax Law (UFTL), imposes a state excise tax on the use of fuel, as defined, at specified rates.

This bill would establish in the state treasury the Carbon Neutrality Fund, and would require, for taxable years beginning on or after January 1, 2023, and before January 1, 2029, the California Department of Tax and Fee Administration to pay annually from the fund an incentive payment to a qualified taxpayer on a first-come-first-served basis, as prescribed. The bill would, among other things, require the incentive payment for a taxable year to be an amount equal to the applicable amount, as determined based on the carbon intensity of a transportation fuel, multiplied by the number of diesel gallons equivalent or gasoline gallons equivalent of qualified liquid or gaseous transportation fuel sold by the qualified taxpayer during a taxable year, reported as prescribed. The bill would prohibit the incentive payment in a taxable year from exceeding the amount of tax paid by the qualified taxpayer pursuant to the UFTL in that taxable year and would prohibit the aggregate amount of incentive payments in a taxable year from exceeding $500,000,000.

Existing law, the Corporation Tax Law, allows various credits against the tax imposed by that law, including a credit in an amount equal to the minimum tax credit, as defined.

This bill would make nonsubstantive changes to that provision.

Digest Key

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 The Legislature finds and declares all of the following:

(a) Development of low-carbon transportation fuels is an integral element of California’s greenhouse gas reduction policy. Increasing the supply of those fuels is vital to achieving California’s greenhouse gas reduction goals.

(b) The scientific community has made it clear that we must make the necessary investments in climate action now to avert a major climate catastrophe in the near future. California is already grappling with drought, extreme heat, wildfires, and health problems from air pollution.

(c) California, the United States, and nations around the world are experiencing firsthand unprecedented climate-fueled disasters, and the United Nations has issued a “code red for humanity.”

(d) California established the Low Carbon Fuel Standard to reduce carbon emissions and accelerate adoption of very low carbon transportation fuels in transportation to displace carbon-intensive fuels, including diesel fuel.

(e) Despite California’s efforts to accelerate the use of low-carbon transportation fuels, diesel fuel remains the dominant fuel in the medium- and heavy-duty transportation sector requiring further investments in the production of very low carbon and carbon-negative transportation fuels.

(f) It is the intent of the Legislature that California continue to exercise a global leadership role in the development of very low-carbon and carbon-negative transportation fuels. Existing incentives for the development of low-carbon transportation fuels can be enhanced if California policy reflects the values of our climate change goals.

SEC. 2.

 Chapter 10 (commencing with Section 9360) is added to Part 3 of Division 2 of the Revenue and Taxation Code, to read:

CHAPTER  10. Decarbonizing Fuels Incentive

9360.

 As used in this chapter:

(a) (1) “Carbon intensity” means carbon intensity of the fuel or blend stock determined by a CA-GREET pathway and approved under the Low Carbon Fuel Standard.

(2) “Carbon intensity” includes the indirect land use change emission, if an agricultural commodity that is a food product is used as a feedstock for the production of the transportation fuel.

(b) “Carbon-neutral fuel” means a liquid or gaseous transportation fuel that has a carbon intensity equal to zero, as measured pursuant to the Low Carbon Fuel Standard.

(c) “Low Carbon Fuel Standard” means Subarticle 7 (commencing with Section 95480) of Article 4 of Subchapter 10 of Chapter 1 of Division 3 of Title 17 of the California Code of Regulations.

(d) “Net negative carbon fuel” means a liquid or gaseous transportation fuel that has a negative carbon intensity, as measured pursuant to the Low Carbon Fuel Standard.

(e) “Producer” means an entity that made or prepared a certain fuel.

(f) “Qualified taxpayer” means a person subject to the taxes imposed by this part who meets both of the following criteria:

(1) The person is a producer.

(2) The person is a vendor that sells liquid or gaseous transportation fuels in the state.

(g) “Very low carbon fuel” means a liquid or gaseous transportation fuel having no greater than 40 percent of the carbon intensity of the closest comparable petroleum fuel in a certain year, as measured pursuant to the Low Carbon Fuel Standard.

9361.

 (a) There is hereby established in the state treasury the Carbon Neutrality Fund.

(b) Moneys in the fund shall be available only upon appropriation by the Legislature for the purposes of this chapter.

9362.

 (a) (1) For taxable years beginning on or after January 1, 2023, and before January 1, 2029, the department shall pay annually from the Carbon Neutrality Fund an incentive payment to a qualified taxpayer on a first-come-first-served basis.

(2) The incentive payment in a taxable year shall not exceed the amount of tax paid by the qualified taxpayer pursuant to this part in that taxable year.

(b) The incentive payment for a taxable year shall be an amount equal to the applicable amount determined pursuant to Section 9363 multiplied by the number of diesel gallons equivalent or gasoline gallons equivalent of qualified liquid or gaseous transportation fuel sold by the qualified taxpayer during a taxable year as reported pursuant to Section 95491 of Title 17 of the California Code of Regulations.

9363.

 The applicable amount shall be determined pursuant to the following:

(a) For a very low carbon fuel, the applicable amount for a taxable year is five cents ($0.05).

(b) For a carbon-neutral fuel or a net negative carbon fuel, the applicable amount for a taxable year is ten cents ($0.10).

9364.

 (a) The department may adopt regulations necessary to accomplish the purposes of this chapter.

(b) The volumes and carbon intensity of the fuels described in this chapter may be calculated using data reported by the qualified taxpayer to the Low Carbon Fuel Standard Reporting Tool and Credit Bank and Transfer System during the relevant taxable year.

9365.

 The aggregate amount of incentive payments paid pursuant to this chapter in a taxable year shall not exceed five hundred million dollars ($500,000,000).

SECTION 1.Section 23453 of the Revenue and Taxation Code is amended to read:

23453.

(a)There shall be allowed as a credit against the regular tax, as defined by subdivision (c) of Section 23455, for each taxable year, an amount equal to the minimum tax credit for that taxable year.

(b)For purposes of subdivision (a), the minimum tax credit shall be determined in accordance with Section 53 of the Internal Revenue Code, except as otherwise provided in this part.

(c)For purposes of this chapter, the amount determined under Section 53(c)(1) of the Internal Revenue Code shall be the regular tax, as defined by subdivision (c) of Section 23455, reduced by the sum of the credits allowable under this part other than any credit which reduces the tax below the tentative minimum tax, as described in Section 23455.