HB5461 103RD GENERAL ASSEMBLY

LRB103 37548 JAG 67672 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB5461

Introduced 2/9/2024, by Rep. Daniel Didech

SYNOPSIS AS INTRODUCED:

New Act
35 ILCS 5/241 new

Creates the Concrete Carbon Utilization, Reduction, and Removal Breakthrough Act. Establishes a performance-based tax credit for concrete producers to incentivize the use of materials and methods for State-funded projects that reduce the embodied carbon generated in the production of concrete, and support the removal of carbon in the atmosphere and its permanent storage in concrete. Establishes a tax credit for concrete producers to defray the cost of implementing environmental product declaration technology at plants. Requires the implementation of performance-based specification standards for concrete. Directs the Department of Transportation to assess and propose opportunities to accelerate testing and evaluation of new decarbonization materials and methods for concrete by the Materials Bureau. Amends the Illinois Income Tax Act to make conforming changes.

A BILL FOR

AN ACT concerning safety.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Concrete Carbon Utilization, Reduction, and Removal Breakthrough Act.

Section 5. Findings. The General Assembly finds that:

(1) Embodied carbon emissions, which result from the production of products, as distinct from operational carbon, which results from the use of products, is a major source of overall emissions contributing to climate change.

(2) Portland cement, a fundamental component of concrete, is a leading source of industrial carbon dioxide emissions, the main greenhouse gas contributing to climate change. Portland cement emissions are also among the most difficult to rapidly and economically abate.

(3) Successful efforts to reduce overall carbon dioxide emissions must include measures to reduce carbon emissions resulting from the production and use of Portland cement.

(4) Most Portland cement is used for the production of concrete, serving as the principal binding agent that gives concrete many of its advantageous performance and strength characteristics.

(5) Concrete is an essential, indispensable material for construction, is foundational to the modern built environment, and is the most used construction material in the world. As a result of increased urbanization and infrastructure replacement and renewal, the use of concrete is projected to significantly increase in the coming decades.

(6) The public sector in the United States, including national, State, and local governments, is a major procurer of concrete, amounting to over 30% of all purchases and uses. Government agencies also regulate standards and materials related to concrete specification and use.

(7) Through its procurement and regulatory choices, the State can play an important role in attaining emission reductions in concrete and catalyzing a market for lower carbon concrete.

(8) Because Portland cement-based concrete is a high embodied carbon material, because concrete is an indispensable material that cannot be replaced in a timeframe meaningful for effective, science-based climate action, and because concrete production is projected to increase, rather than decline, in the future, innovation in the materials and methods related to concrete is critical to reducing emissions associated with its production and use.

(9) Concrete possesses the unique physical capacity to durably store carbon dioxide that was formerly in the atmosphere for time periods that are effectively permanent. Consequently, combining embodied carbon reduction in concrete with carbon removal and storage in concrete has the potential to dramatically eliminate the net emissions of the material and result in the eventual attainment of carbon negativity, which means removing, through a process or product, more carbon dioxide from the atmosphere than that process or product emits or generates.

(10) In recent years a variety of innovations that both reduce concrete's embodied carbon and enable carbon removal and storage to occur in different components of concrete have been identified, tested, improved, and commercialized.

(11) The State should:

(A) establish a program that incentivizes private concrete producers who hold contracts with State departments, agencies, and authorities to specify materials and use methods in the production of concrete for public projects that reduce the embodied carbon of concrete, and enable the storage of carbon dioxide formerly in the atmosphere in the projects; and

(B) adapt existing standards used by State agencies related to the specification of concrete, and the approval of materials permitted for specification, to promote the acceptance and use of materials and methods that reduce or remove and store carbon dioxide in concrete, while ensuring at a minimum that quality, performance, cost, and public safety are not adversely affected or compromised in anyway, and, optimally, are improved relative to current practice.

Section 10. Definitions. As used in this Act:

"Agency" means the Environmental Protection Agency.

"Carbon removal" means the direct removal of carbon dioxide from the atmosphere using different technologies and methods.

"Concrete-enabled carbon removal and storage" means the use of technologies or methods that remove carbon dioxide from the atmosphere, that recycle the carbon dioxide through its use in the concrete manufacturing process or parallel processes related to agricultural, industrial, or construction activities, and that results in the durable, irreversible storage of the removed carbon dioxide in mineral or stable organic forms.

"Concrete" means structural and nonstructural masonry, and precast and ready-mix concrete building products.

"Department" means the Department of Commerce and Economic Opportunity.

"Durable carbon storage" means the storage of carbon dioxide that has been removed from the atmosphere via chemical, mineral, or biological processes in one or more materials, such as concrete or other media, over a time a period that has been assessed to be either permanent or no less than 1,000 years, based on assessment and verification criteria that have been approved by the Agency.

"Embodied carbon emissions" means carbon emissions generated as a result of a material's production, including mining, refining, manufacturing, and shipping.

"Environmental product declaration" means a product-specific Type III environmental product declaration that conforms to ISO Standard 14025, assesses the numeric global warming potential of the product, and allows for environmental impact comparisons between concrete mixes fulfilling the same functions.

"Global warming potential" means a numeric value, quantified in kilograms of carbon dioxide per ton of material, that measures the total contribution to global warming from the emission of greenhouse gasses or the elimination of greenhouse gas sinks, as a result of the production or use of concrete.

"Global warming potential baseline" means the numeric global warming potential value that determines whether a producer is eligible to receive the tax credit defined in this Section.

"Low embodied carbon concrete" means concrete that has been certified to embody lower carbon emissions, as measured by a global warming potential metric, than the baseline embodied carbon emissions of conventional concrete made with Portland cement. Low embodied carbon emissions may be achieved through any combination of:

(1) emissions reductions realized during the concrete production process resulting from: (A) the reduction of clinker content in the cement component of concrete; (B) the substitution of clinker content with lower carbon-intensive alternative materials such as ground, granulated blast furnace slag, fly ash, silica fume, natural pozzolans, calcined clay, recycled ground-glass pozzolan, or biochar; (C) improved energy efficiency in plant operations; and (D) low carbon electricity or heat utilization in plant operations;

(2) the utilization and permanent storage of carbon dioxide in concrete materials, including cementitious materials, aggregates, and admixtures, in the form of mineralized carbonates or pyrolyzed biological matter; or

(3) the application of alkaline waste or recycled concrete material in agricultural, industrial, and construction applications to permanently mineralize carbon through chemical processes.

"Performance-based specification" means a contract provision that requires that a structural material achieve specified performance outcomes from the use of the structural material, including, but not limited to, outcomes related to the strength, durability, permeability, or other attributes related to the function of the building material for applied uses, as opposed to requiring that a structural material be produced using a specific prescribed manufacturing process, design features, technologies, or proportions of constituent materials.

"Portland cement" means hydraulic cement produced by pulverizing clinkers in combination with one or more of the forms of calcium sulfate.

Section 15. Producer tax credits.

(a) For taxable years beginning on or after January 1, 2025, a taxpayer that is a producer of concrete and meets the requirements of this Section shall be allowed a credit against the tax imposed by subsections (a) and (b) of Section 201 of the Illinois Income Tax Act as provided in subsection (c).

(b) In order to qualify for a tax credit, a concrete producer shall:

(1) deliver, pursuant to a contract with a State agency, authority, or department with a private contracting firm that has been contracted by the State, concrete that is used in a construction or improvement project requiring the purchase of 50 cubic yards or more of concrete and that is low embodied carbon concrete or concrete that incorporates carbon removal, utilization, and storage technology; and

(2) submit to the Department a global warming potential value for the delivered concrete in the form of a certified environmental product declaration; for contracts that include multiple concrete mixes, the global warming potential of all the mixes shall be proportionally weighted into a single global warming potential score that serves as the basis for the amount of the tax credit.

(c) The Department shall, by rule and in consultation with the Agency, develop a formula for determining the amount of the credit award under this Section, which, except as provided in subsection (d), shall not exceed 10% of the material costs of the concrete delivered.

(d) If the taxpayer receives credits under this both this Section and Section 25, the total amount of the both tax credits may not exceed 8% of the costs of the concrete delivered.

(e) In order to receive the tax credit allowed under this Section, a taxpayer shall apply to the Department for a certification that:

(1) certifies that each claimed concrete delivery meets the requirements of this Section;

(2) provides that the certified environmental product declaration submitted under paragraph (2) of subsection (b) has been approved by the Department; and

(3) sets forth the amount of the tax credit calculated under this Section.

The application shall include a copy of the contract pursuant to which concrete was delivered and any other information determined relevant by the Department. Upon certification, the Department shall submit a copy of the contract to the taxpayer and the Department of Revenue.

(f) The Department may approve an application and issue a certification to a taxpayer that has previously been allowed a tax credit under this Section. When filing a tax return that includes a claim for a credit pursuant to this Section, the taxpayer shall include a copy of the certification issued by the Department.

(g) The Department may not approve an application or issue a certification to a taxpayer for tax credits under this Section in excess of $1,000,000.

(h) The order of priority of the application of the credit allowed under this Section shall be as prescribed by the Department. The amount of the credit under this Section shall not reduce a taxpayer's tax liability under the Illinois Income Tax Act to less than zero. Any credit shall be valid in the taxable year in which the certification is approved, and any unused portion of the credit may be carried forward to the next 7 taxable years or until the credit amount is depleted, whichever is earlier.

(i) The amount of tax credits that may be issued pursuant to this Section may not in the aggregate exceed $10,000,000 in any year. The Department shall issue certifications for the tax credit pursuant to this Section on a first-come, first-serve basis.

Section 20. Department guidelines.

(a) Whenever a State agency or department purchases 50 cubic yards or more of concrete or undertakes any construction or improvement project that requires the use 50 cubic yards or more of concrete, the agency or department shall follow the rules established by the Department under Section 40.

(b) In preparing the specifications for any contract for the purchase of 50 cubic yards or more of concrete, or for any construction or improvement project that requires the use 50 cubic yards or more of concrete, the Director of Central Management Services or any other State agency having the authority to contract for the purchase of goods or services shall include in the invitation to bid, where relevant, a statement that any response to the invitation that proposes or calls for the use low embodied carbon concrete or concrete that utilizes carbon removal, utilization, and storage technology shall be eligible for tax credits pursuant to this Act. If the Department of Central Management Services or other contracting State agency makes a determination to purchase or use low embodied carbon concrete or concrete that uses carbon removal, utilization, and storage technology in the construction project, the Department of Central Management Services shall include in the invitation to bid a predetermined bid allowance price for the concrete, which shall be used by all bidders in the public bidding process.

(c) Nothing in this Section shall be construed to impose any liability upon, or to give rise to a cause of action against, a concrete producer.

(d) Nothing in this Section shall be construed to exempt any entity from complying with any applicable law, rule, standard, or specification, including, but not limited to, those regarding the use of concrete in construction projects.

Section 25. Establish producer tax credit to defray the cost of implementing environmental product declaration technologies.

(a) For taxable years beginning on or after January 1, 2025, a taxpayer that is a producer of concrete or a producer of a major component of concrete, including cement or aggregate, shall be allowed a credit against the tax imposed pursuant to subsections (a) and (b) of Section 201 to compensate the taxpayer for costs incurred as a result of implementing environmental product declaration technologies to determine the product-based embodied carbon emissions of concrete produced at a production facility that the taxpayer owns or operates.

(b) The amount of the credit authorized pursuant to this Section shall not exceed the lesser of: (i) the full cost incurred for an environmental product declaration analysis of a single concrete, cement, aggregate, or related production facility or (ii) $3,000. A taxpayer may claim the credit authorized under this Section for the cost of completing environmental product declaration analyses at up to 8 production facilities owned or operated by the same taxpayer in a single taxable year.

(c) The order of priority of the application of the tax credit allowed pursuant to this Section, and any other credits allowed against the tax imposed pursuant to the Department of Commerce and Economic Opportunity Law of the Civil Administrative Code of Illinois, for a privilege period, shall be as prescribed by the Director. The amount of the credit applied under this Section against the tax imposed pursuant to the Department of Commerce and Economic Opportunity Law of the Civil Administrative Code of Illinois, shall not reduce a taxpayer's tax liability to an amount less than the statutory minimum. The amount of the tax credit otherwise allowable under this Section which cannot be applied for the privilege period due to the limitations of this subsection or under other provisions of the Civil Administrative Code of Illinois, may be carried forward, if necessary, to the 7 privilege periods following the privilege period for which the tax credit was allowed.

Section 30. Performance-based standards for the specification of concrete. The Department of Central Management Services and the Department of Transportation shall be directed to develop and implement performance-based specifications for concrete for use in buildings as well as horizontal roadways and infrastructure, including modular units, such as concrete masonry units and concrete brick, by no later than January 1, 2025. The performance-based specifications shall include global warming potential thresholds equal to the maximum global warming potential thresholds established for approved low carbon concrete green procurement specifications.

Section 35. Expedited review process of low carbon concrete materials and methods. The Department of Transportation shall be directed to prepare a plan by no later than the effective date of this Act, to enable the Materials Bureau to implement an expedited evaluation protocol for low embodied carbon concrete products, materials and methods submitted for evaluation by private manufacturers and suppliers for inclusion in the Department's approved materials list. The plan will include an assessment of all necessary technical and staff resources required to effectively evaluate and test new materials and methods in a comprehensive and timely manner. The plan will be reviewed by the Governor and the General Assembly to determine what fiscal resources would be required to implement the plan, and what budgetary actions should be taken to fund it.

Section 40. Administrative authority and rulemaking.

(a) The Agency shall adopt rules to implement the provisions of this Act, except that the Department shall adopt rules concerning the tax credits provided in Sections 15 and 25. The Agency's rules shall include, but not be limited to:

(1) global warming potential baselines for concrete mixes supplied pursuant to contracts with State agencies;

(2) thresholds for low embodied carbon concrete and concrete that incorporates carbon removal, utilization, and storage technology to qualify for a tax credit under Section 15;

(3) a uniform process for concrete producers to certify that concrete is low embodied carbon concrete, or that it utilizes carbon removal, utilization, and storage technology, and for determining the global warming potential value of concrete;

(4) guidelines for training State contracting personnel to implement the requirements of this Act; and

(5) a mechanism for monitoring contractor compliance with the requirements of this Act.

(b) The Department shall adopt rules concerning the tax credits provided in Sections 15 and 25.

(c) No later than 2 years after the effective date of this Act, the Director, in consultation with the State Treasurer, shall prepare and submit a report to the Governor and the General Assembly, containing a cost-benefit analysis of the tax credits established in Section 15 in order to quantify the budgetary impact of the program relative to its carbon reduction impact. The report shall recommend whether the program should be continued, modified, or repealed, and include any recommendations for legislative or regulatory action to improve the program.

Section 900. The Illinois Income Tax Act is amended by adding Section 241 as follows:

(35 ILCS 5/241 new)

Sec. 241. Concrete Carbon Utilization, Reduction, and Removal Breakthrough Act. For taxable years beginning on or after January 1, 2025, each taxpayer that is awarded a credit under the Concrete Carbon Utilization, Reduction, and Removal Breakthrough Act is entitled to a credit against the taxes imposed by subsections (a) and (b) of Section 201 as provided in that Act.