HB 1556 — An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in Pennsylvania Economic Development for a Growing Economy (PA EDGE) tax credits, providing for an advanced clean manufacturing project and further providing for definitions.

PRINTER'S NO.   1951

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 1556
                                                  Session of
                                                    2025

     INTRODUCED BY FIEDLER, KRAJEWSKI, INGLIS, WEBSTER, HILL-EVANS,
        FREEMAN, SCHLOSSBERG, CIRESI, SANCHEZ, WAXMAN, MERSKI,
        RIVERA, McNEILL, CEPEDA-FREYTIZ, D. WILLIAMS, DEASY AND
        GUZMAN, JUNE 16, 2025

     REFERRED TO COMMITTEE ON FINANCE, JUNE 17, 2025


                                       AN ACT
 1   Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
 2      act relating to tax reform and State taxation by codifying
 3      and enumerating certain subjects of taxation and imposing
 4      taxes thereon; providing procedures for the payment,
 5      collection, administration and enforcement thereof; providing
 6      for tax credits in certain cases; conferring powers and
 7      imposing duties upon the Department of Revenue, certain
 8      employers, fiduciaries, individuals, persons, corporations
 9      and other entities; prescribing crimes, offenses and
10      penalties," in Pennsylvania Economic Development for a
11      Growing Economy (PA EDGE) tax credits, providing for an
12      advanced clean manufacturing project and further providing
13      for definitions.
14      The General Assembly of the Commonwealth of Pennsylvania
15   hereby enacts as follows:
16      Section 1.     Article XVII-L of the act of March 4, 1971
17   (P.L.6, No.2), known as the Tax Reform Code of 1971, is amended
18   by adding a subarticle to read:
19                               SUBARTICLE E.3
20                    ADVANCED CLEAN MANUFACTURING PROJECT
21   Section 1790-L.    Definitions.
22      The following words and phrases when used in this subarticle
 1   shall have the meanings given to them in this section unless the
 2   context clearly indicates otherwise:
 3      "Advanced clean manufacturing project facility."   A facility
 4   located in this Commonwealth that is owned and operated by a
 5   qualified taxpayer and where clean steel, clean aluminum, clean
 6   cement, clean glass, electric grid modernization equipment,
 7   energy-efficient heat pumps, energy-efficient turbines or
 8   hydrogen electrolyzers are produced.
 9      "Clean steel, clean aluminum, clean cement or clean glass."
10   Steel produced using recycled scrap or direct reduced iron, or
11   aluminum produced using recycled aluminum or inert anodes, or
12   cement produced using low-carbon precursors, or glass produced
13   using recycled glass, which is also produced using energy from:
14          (1)   electric arc furnaces or other thermal energy
15      generation or storage systems powered by electricity derived
16      from renewable sources, including any type or category of
17      facility in Table 1 of Revenue Procedure 2025-14 published by
18      the Internal Revenue Service in 2025-7 Internal Revenue
19      Bulletin 770-771 or any successor table published in the
20      Internal Revenue Bulletin, or a source defined as a Tier I
21      alternative energy source under the act of November 30, 2004
22      (P.L.1672, No.213), known as the Alternative Energy Portfolio
23      Standards Act, or any source defined similarly under a
24      successor standard;
25          (2)   hydrogen produced through a process that results in
26      a life cycle greenhouse gas emissions rate of less than 4
27      kilograms of CO2e per kilogram of hydrogen, as described
28      under 26 CFR 1.45V-1(a)(13) (relating to credit for
29      production of clean hydrogen); or
30          (3)   any other production process such that the carbon

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 1      dioxide emissions generated during the process of producing
 2      steel is at least 75% below the national industry average, as
 3      determined by the secretary.
 4      "Credit."    The qualified advanced clean manufacturing tax
 5   credit established under this subarticle.
 6      "Department."    The Department of Revenue of the Commonwealth.
 7      "Electric grid modernization equipment."      The term includes:
 8          (1)     Distribution transformers, as defined under 42
 9      U.S.C. § 6291(35) (relating to definitions).
10          (2)     Batteries, including thermal batteries, battery
11      energy storage systems, fuel cells or any technology defined
12      as "energy storage technology" in 26 U.S.C. § 48E(c)(2)
13      (relating to clean electricity investment credit), including
14      26 CFR 1.48E-2(g)(6) (relating to qualified investments in
15      qualified facilities and EST for purposes of section 48E).
16      "Energy-efficient heat pumps."       Any electric or natural gas
17   heat pump which meets or exceeds the highest efficiency tier,
18   not including any advanced tier, established by the Consortium
19   for Energy Efficiency which is in effect as of the beginning of
20   the calendar year in which the qualified advanced clean
21   manufacturing project commences construction.
22      "Energy-efficient turbines."     A turbine designed for use in a
23   combined-cycle power plant and capable of achieving a combined-
24   cycle efficiency of at least 65%, or a turbine designed for use
25   in a hydroelectric facility and capable of achieving an
26   efficiency of at least 90%.
27      "Hydrogen electrolyzer."    An industrial, commercial or
28   utility-scale device, apparatus or system that produces gaseous
29   hydrogen by performing electrolysis.
30      "Qualified advanced clean manufacturing project."      A project

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 1   which either:
 2          (1)   Re-equips, expands or establishes an industrial or
 3      manufacturing facility for the production of:
 4                (i)    clean steel, clean aluminum, clean cement or
 5          clean glass;
 6                (ii)    electric grid modernization equipment; or
 7                (iii)    energy-efficient heat pumps, energy-efficient
 8          turbines or hydrogen electrolyzers.
 9          (2)   Otherwise re-equips an industrial or manufacturing
10      facility for the production of clean steel, clean aluminum,
11      clean cement or clean glass with equipment designed to reduce
12      greenhouse gas emissions at the facility by at least 75%.
13      "Qualified production costs."         Expenditures made by a
14   qualified taxpayer that are directly attributable to the
15   production of clean steel, clean aluminum, clean cement, clean
16   glass, electric grid modernization equipment, energy-efficient
17   heat pumps, energy-efficient turbines or hydrogen electrolyzers,
18   including, but not limited to, capital investment, operating
19   costs, labor and raw materials, tangible property used as an
20   integral part of the qualified advanced clean manufacturing
21   project facility or any other tangible property necessary for
22   re-equipping, expanding or establishing a qualified advanced
23   clean manufacturing project facility. The term includes a pilot
24   or commercial demonstration project's start-up expenditures
25   under 26 U.S.C. § 195 (relating to start-up expenditures) and
26   costs, including operational costs, associated with the
27   construction, fabrication or building of a pre-commercial
28   production line.
29      "Qualified taxpayer."     An entity subject to tax under Article
30   III, IV or VI that owns or operates a qualified advanced clean

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 1   manufacturing project facility located in this Commonwealth.
 2      "Secretary."     The Secretary of Environmental Protection of
 3   the Commonwealth.
 4   Section 1790.1-L.     Qualified advanced clean manufacturing tax
 5               credit.
 6      For purposes of this subarticle, the qualified advanced clean
 7   manufacturing tax credit for any taxable year shall be an amount
 8   equal to 30% of the qualified production costs for the taxable
 9   year with respect to any qualified advanced clean manufacturing
10   project of the taxpayer.
11   Section 1790.2-L.     Tax credit authorized.
12      A qualified taxpayer shall be allowed a credit against the
13   tax imposed under Article III, IV or VI for qualified production
14   costs incurred in a taxable year.
15   Section 1790.3-L.     Credit amount.
16      The credit shall be equal to 30% of a qualified taxpayer's
17   qualified production costs, not to exceed $10,000,000 per
18   taxable year.
19   Section 1790.4-L.     Qualified advanced clean manufacturing tax
20               credit program.
21      (a)   Program.--Not later than 180 days after the effective
22   date of this section, the secretary, in consultation with the
23   Department of Community and Economic Development and the
24   department, shall establish a qualified advanced clean
25   manufacturing tax credit program to consider and award
26   certifications of credit for qualified production costs eligible
27   for credits under this subarticle to qualified taxpayers. The
28   secretary shall, not later than 120 days following the effective
29   date of this section, set procedures for calculating and
30   verifying greenhouse gas emission reductions of a qualified

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 1   advanced clean manufacturing project.
 2      (b)   Application.--The application for a credit under this
 3   subarticle shall include documentation verifying the taxpayer's
 4   status as a qualified taxpayer and the amount of qualified
 5   production costs incurred.
 6      (c)   Annual cap.--The total amount of tax credits awarded
 7   under this subarticle shall not exceed $50,000,000 in any fiscal
 8   year.
 9   Section 1790.5-L.    Certification.
10      (a)   Application period.--Each applicant for certification
11   under this section shall submit an application containing
12   information the secretary may require during the two-year period
13   beginning on the date the secretary establishes the program
14   under section 1790.4-L(a).
15      (b)   Deadline for certification.--Each applicant for
16   certification shall have one year from the date of acceptance by
17   the secretary of the application to provide to the secretary
18   evidence that the requirements of the certification have been
19   met.
20      (c)   Period of issuance.--An applicant which receives a
21   certification shall have three years from the date of issuance
22   of the certification to place the project in service. If the
23   project is not placed in service by the end of the time period,
24   the certification shall no longer be valid.
25      (d)   Criteria.--In determining which qualified advanced clean
26   manufacturing projects to certify under this section, the
27   secretary shall take into consideration only the projects that
28   have a reasonable expectation of commercial viability and:
29            (1)   will provide the greatest direct and indirect job
30      creation within the Commonwealth during the credit period;

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 1          (2)   will provide the greatest net impact in avoiding or
 2      reducing air pollutants or anthropogenic emissions of
 3      greenhouse gases;
 4          (3)   have the greatest potential for technological
 5      innovation and commercial deployment;
 6          (4)   have the lowest levelized cost of generated or
 7      stored energy, or of measured reduction in energy consumption
 8      or greenhouse gas emissions based on costs of the full supply
 9      chain; and
10          (5)   have the shortest project time from certification to
11      completion.
12   Section 1790.6-L.   Carry forward.
13      If a qualified taxpayer does not utilize the entire amount of
14   the credit in the year in which it is approved, the unused
15   portion may be carried forward for a period not to exceed five
16   taxable years.
17   Section 1790.7-L.   Recapture.
18      If the department determines that a qualified taxpayer has
19   received the credit through fraud or misrepresentation, or has
20   failed to maintain clean steel, clean aluminum, clean cement or
21   clean glass production standards for two consecutive taxable
22   years, the credit shall be subject to recapture, along with
23   applicable interest and penalties.
24   Section 1790.8-L.   Redistribution.
25      The secretary may reallocate credits awarded under this
26   section if the secretary determines that:
27          (1)   there is an insufficient quantity of pending
28      qualifying applications for certification under section
29      1790.5-L at the time of the review;
30          (2)   any certification made under section 1790.5-L has

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 1      been revoked under this subarticle because the project
 2      subject to the certification has been delayed as a result of
 3      third-party opposition or litigation to the proposed project;
 4      or
 5           (3)   the credit has been recaptured under section 1790.7-
 6      L.
 7   Section 1790.9-L.    Public disclosure.
 8      The secretary shall, upon making a certification under this
 9   section, publicly disclose the identity of an applicant under
10   section 1790.5-L and the amount of the credit with respect to
11   the applicant.
12   Section 1790.10-L.    Expiration.
13      No credits shall be approved under this subarticle for
14   taxable years beginning after December 31, 2035, unless
15   reauthorized by the General Assembly.
16      Section 2.     Section 1791-L of the act is amended to read:
17   Section 1791-L.    Definitions.
18      The following words and phrases when used in this subarticle
19   shall have the meanings given to them in this section unless the
20   context clearly indicates otherwise:
21      "Qualified project facility."          Any of the following:
22           (1)   A project facility as defined in section 1711-L.
23           (2)   A project facility as defined in section 1731-L.
24           (3)   A project facility as defined in section 1751-L.
25           (4)   A project facility as defined in section 1771-L.
26           (5)   An advanced clean manufacturing project facility as
27      defined in section 1790-L.
28      "Qualified tax credit recipient."          Any of the following who
29   have been awarded a tax credit:
30           (1)   A qualified taxpayer as defined in section 1711-L.

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1         (2)   A qualified taxpayer as defined in section 1731-L.
2         (3)   A qualified taxpayer as defined in section 1751-L.
3         (4)   A qualified taxpayer as defined in section 1771-L.
4         (5)   A qualified taxpayer as defined in section 1790-L.
5     Section 3.    This act shall take effect in 60 days.




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