HB1864 – Provides funds to help recruit or retain researchers or instructors with skills to further clean energy innovation at public academic and research institutions; provides a credit against B&O taxes for research and development spending on innovations in clean technology.
Prime Sponsor – Representative Boehnke (R; 8th District; Tri-Cities)
Current status – Had a hearing in the House Committee on Finance January 27th. Amended and passed out of committee February 17th. Referred to Rules.
Next step would be – Action by the Rules Committee.
Legislative tracking page for the bill.

Comments –
The bill doesn’t specify a funding source for the Technology Leadership Account it would create. It also declares the Legislature’s intention to extend the tax credit if more businesses are claiming it over time; that would be a very poor basis for concluding that the credit was actually contributing to that growth, rather than other factors.

Summary –
Substitute –
The substitute adds clean electrolytic hydrogen storage; marine renewable energy; solar and wind energy; sustainable aviation fuel; low carbon advanced manufacturing; transmission and distribution grid modernization technologies; zero carbon and energy efficient building technologies; energy grid cyber security; electric and zero carbon transportation technologies; recycling; and earth-abundant materials technologies to the definition of qualified clean technology R&D. It drops grid-scale electricity storage, zero carbon steel, zero carbon fertilizer, underground electricity transmission, and zero carbon alternatives to palm oil. It rephrases “clean hydrogen that is produced without emitting carbon” as “clean, electrolytic hydrogen production”; “plant and cell-based meat and dairy” and “drought and flood-tolerant food crops” as “advanced agriculture and food technology”; and “coolants that do not contain F-gases” as “technologies that allow transition from hydrofluorocarbons.” It adds investments in laboratory build-out and equipment to qualified R&D expenditures.

Original bill –
The bill would create an Advanced Technology Leadership and Security Strategic Reserve Account dedicated to providing funding to support recruiting or retaining a researcher or instructor with skills needed to assist in clean technology innovation at a Washington State academic institution, state laboratory or national laboratory. The Director of the Department of Commerce would be able to authorize expenditures from the account in response to a request from the President of one of these organizations including a signed declaration and supporting materials to be specified by the Director. The Department could also draw on the account to provide assistance with the analysis and decision making for awards requested by an academic institution or deemed necessary for due diligence by the Director. The Director would be required to develop factual findings establishing the connection between the amount awarded and furthering advanced technology leadership and security for Washington’s economy, and the Department would report each year to the Legislature’s economic development committees on awards and the findings to support them.

The bill would create a credit against the business and occupation tax for each “person” with research and development spending on innovations in clean technology during the year more than 0.92% of taxable income. That would include research on clean hydrogen produced without emitting carbon, next generation nuclear fission, nuclear fusion, grid-scale electricity storage, electrofuels, advanced biofuels, zero carbon steel, plant and cell-based meat and dairy, zero carbon fertilizer, carbon capture, underground electricity transmission, zero carbon plastics, geothermal energy, pumped hydropower, thermal storage, drought and flood-tolerant food crops, zero carbon alternatives to palm oil, and coolants that do not
contain F-gases. Operating expenses directly incurred in qualified clean technology research and development by a person claiming the credit, including wages, compensation of a proprietor or a partner in a partnership, benefits, supplies, and computer expenses  would count as spending in calculating the credit. Up to 80% of payments to a “person” other than a public educational or research institution to conduct qualified clean technology research would also count.  Payments to a “person” other than a public educational or research institution; capital costs; and overhead such as expenses for land, structures, or depreciable property would not count.

The credit would be the greater of the person’s qualified clean technology research and development expenditures or 80% percent of the amounts received by a person other than a public educational or research institution in compensation for the conduct of qualified research and development; minus 0.92% of the person’s taxable amount for that, multiplied by 1.50%. It would be limited to the lesser of $900,000 a year or the tax due. An organization receiving the credit could assign part or all of it to the person contracting for the performance of the qualified research and development.

The credit would expire at the end of 2022, but the bill declares the Legislature’s intention to renew it if there’s growth in the clean technology industry in Washington, as measured by the number of businesses claiming the credit.