BILL REQ. #:  S-1756.3 

READ FIRST TIME 02/26/07.   

     AN ACT Relating to creating a tax credit against the public utility tax for eligible light and power businesses that purchase and retire renewable energy credits from a facility that generates electricity from methane gas derived from the anaerobic decomposition of organic matter obtained from dairy cows in the state; adding a new section to chapter 82.16 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The legislature finds that methane (CH₄) is a potent greenhouse gas that is twenty times more effective than carbon dioxide in trapping heat in the atmosphere. Reducing methane emissions, therefore, is an effective means to reduce climate warming. The legislature also finds that nearly sixty percent of global methane emissions are from human-influenced sources, such as dairy farms. While the legislature cannot control all sources of human-influenced methane, it can begin by encouraging the use of innovative mechanisms to control methane from dairy farms located in the state.
     The legislature declares that the state should encourage utilities to purchase renewable energy credits from dairy farmers in the state as an incentive for farmers to pursue appropriate measures to control dairy nutrients and limit the level of their concomitant methane emissions from being released into the environment. Renewable energy credits include the carbon benefits that come from displacing other potential fossil fuel resources through electricity generation but do not include the carbon benefits related to the removal of methane from the atmosphere. By offering this financial incentive, the state may enable dairy farmers to finance the development of anaerobic digesters and to produce electricity at a price that may meet the avoided cost of local utilities, thus benefiting dairy operations, the environment, and the need for cost-effective electricity.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.16 RCW to read as follows:
     (1) Subject to the limitations in this section, an eligible light and power business may claim a credit against the tax imposed under this chapter.
     (2) The amount of credit is equal to the amount of renewable energy credit purchases made at market price and retired in any fiscal year by an eligible light and power business, where the purchases are from a facility that generates electricity from methane gas derived from the anaerobic decomposition of organic matter obtained from dairy cows in the state.
     (3) The credit under this section may not exceed eighty thousand dollars per fiscal year per eligible light and power business.
     (4) The credit under this section must be claimed against taxes due for the same fiscal year in which purchases and retiring of renewable energy credits are made by the eligible light and power business. The credit claimed for each reporting period may not exceed the amount of tax otherwise due under this chapter for the reporting period. Credit earned in any fiscal year may not be carried forward or backward and claimed against taxes due for prior or subsequent fiscal years. Refunds may not be granted in the place of a credit. Any unused credit expires.
     (5) "Eligible light and power business" means a light and power business that purchases and retires renewable energy credits from a facility described in subsection (2) of this section.
     (6) "Renewable energy credit" has the same meaning as found in RCW 19.285.030(17). A renewable energy credit includes the carbon benefits that come from displacing other potential fossil fuel resources through electricity generation but does not include the carbon benefits related to the removal of methane from the atmosphere.