S0556 creates a new South Carolina income tax and license fee credit for investments in renewable natural gas production equipment. The bill defines renewable natural gas as biomethane derived from landfill gas that has been upgraded to a methane concentration of 90% or greater, and it limits qualifying equipment to on-site collection, processing, and transport systems used to produce that gas for commercial purposes. The credit applies to taxable years beginning after 2025 and before 2030.
Under the bill, a taxpayer may claim a credit equal to 25% of qualifying purchase and installation costs, including related engineering and permitting expenses, subject to a maximum of $5 million in any single taxable year. The credit is nonrefundable, may be carried forward for 15 years if unused, and may be transferred to another eligible taxpayer. If a regulated utility claims the credit, it must pass the benefit through to ratepayers in its next rate proceeding or as otherwise directed by the Public Service Commission. The State Energy Office must certify qualifying costs, and the Department of Revenue may require documentation to administer the credit. If the facility stops operating, fails to maintain commercial production, or removes the equipment from service within five years, a prorated portion of the credit must be repaid.
Impact
The bill would add Section 12-6-3830 to Title 12 of the South Carolina Code, creating a new tax incentive tied to renewable natural gas projects. It affects the state income tax under Section 12-6-530 and the license fee under Section 12-20-50 by allowing eligible taxpayers to offset those liabilities with the new credit. It also assigns administrative responsibilities to the State Energy Office and the Department of Revenue, and it creates a ratepayer-protection requirement for regulated utilities that benefit from the credit.
Sentiment
The available voting history suggests broad overall support for the bill. It passed the Senate 41-1 and later passed the House 93-13, indicating strong bipartisan approval with a smaller group of dissenting members. No committee transcript was provided, so there is no recorded discussion to indicate detailed debate or amendments beyond the bill text itself.
Contention
The main points of potential contention are the use of state tax credits to subsidize private energy infrastructure and the size and transferability of the benefit. Opponents may be concerned about revenue loss, the $5 million annual cap, and whether the incentive sufficiently targets public benefits. Supporters likely emphasize landfill gas capture, renewable energy development, and the requirement that regulated utilities pass benefits through to ratepayers. The repayment provision and State Energy Office certification appear designed to address concerns about misuse or underperformance.