Renewable Energy Scores Some Key Victories in 2009 Texas Legislative Session, Despite Solar Setbacks
By:
Mike Nasi and Travis Wussow
Renewable energy and alternative fuels scored critical victories in the final days of the Texas Legislative Session this year despite the much-reported failure of key solar energy legislation. The passage of bills that extended key local property tax abatement programs, created new electricity storage incentives, and brightened the future of alternative fuels should not be underestimated when assessing how renewable energy fared during the 81st Texas Legislature.
Extension of Key Local Property Tax Abatement Programs
Chapters 312 and 313 of the Texas Tax Code could be fairly characterized as the most important state law provisions outside of the Renewable Portfolio Standard. The local property tax abatements made available by Chapters 312 and 313 of the Tax Code are critical to the financial viability of many renewable energy projects in Texas. Many cite these tax programs as a central element in the early success of the Texas wind energy industry. Yet, early in this year's legislative session, both programs were at grave risk of being severely limited, if not terminated. In the end, key legislation passed that extended and, in many respects, improved these programs.
- HB 3676 (Rep. Joe Heflin/Sen. Kel Seliger) extends the successful school tax limitation program also known as the Texas Economic Development Act (TEDA) by three years. Among other provisions, the legislation clarifies that lessees, like most wind energy developers, qualify for the program.
- HB 3896 (Rep. Rene Oliviera/Sen. Kel Seliger) extends the authority of cities, counties, and other taxing jurisdiction more freedom to attract major economic development, including renewable energy projects. Without this legislation, this authority would have expired in September 2009. The bill also clarifies that lessees, like most wind energy developers, qualify for the program.
Electricity Storage Incentives
HB 1796 (Rep. Warren Chisum/Sen. Kirk Watson), as finally passed, contains a key element of Senator Averitt's omnibus clean air legislation—a grant program for electricity storage projects related to renewable energy. The funding for this grant program was included in the budget for the Texas Commission on Environmental Quality (TCEQ) in the general appropriations act. These electricity storage projects could pave the way for utility-scale solar energy projects and further expansion of Texas wind power.
Incentives for Alternative Fuel-Powered Vehicles
- State fleet requirement: The Texas legislature passed HB 432 (Rep. Eddie Lucio/Sen. Craig Estes), which creates a mandatory requirement that all state vehicle fleets use alternative fuels, including biodiesel, electricity, propane, or natural gas. A big win for the alternative fuel industry, this legislation will expand the market for these alternate fuels.
- TERP funding for commercial fleets: In addition, SB 1759 (Sen. Kirk Watson/Rep. Joseph Pickett) allows Texas businesses to tap into the Texas Emissions Reduction Plan (TERP) funding to subsidize the cost of new, clean commercial fleets run on alternate fuels. Vehicles that run on biofuels are eligible for this funding, another big win for the renewable fuels industry.
Biodiesel & Cellulosic Ethanol Provisions in the Texas Department of Agriculture (TDA) Sunset Bill
SB 1016 (Sen. Craig Estes/Rep. Dan Flynn) included three new provisions that will assist in the development of the biodiesel and cellulosic ethanol industries in Texas:
- Bioenergy Policy and Research Councils: SB 1016 creates a Governor-appointed Bioenergy Policy Council charged with advising the Governor's Office on the development of the bioenergy industry in Texas. The Policy Council is directed to appoint a Bioenergy Research Council which will advise the Policy Council on technical issues. The biodiesel industry was awarded its own seat on both councils, which will help ensure that the nation-leading Texas biodiesel industry remains strong and develops sustainable feedstocks to fuel the industry for decades to come.
- Federal coordination provision: The Council is instructed to coordinate with state agencies regarding the implementation and impact of federal bioenergy policies. The TCEQ is specifically instructed to pursue better guidance from the U.S. Environmental Protection Agency about how to harmonize federal environmental mandates with the agency's programs designed to ensure that Texas meets federal air quality regulatory standards.
- TAFA financing authority: New provisions extend and expand the Texas Agricultural Finance Authority (TAFA) to finance young farmers and alternative agricultural products, including sustainable feedstocks for biodiesel.
Collectively, these measures will ensure that Texas remains a leader in the development and deployment of clean energy technology, including renewable energy and alternative fuels like biodiesel. While there is still room to grow in the area of solar energy, the renewable energy industry remains alive and well in Texas. If you have any questions on this legislation or are interested in taking advantage of any of these new incentives, please contact Mike Nasi at 512.263.2216 or mnasi@jw.com.
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