Assembly Commerce and Economic Development Committee Statement to Assembly, No. 733 (March 8, 2021)

Summary

Statement to Assembly No. 733 with committee amendments, State of New Jersey, dated March 8, 2021, in which the Assembly Commerce and Economic Development Committee reports Assembly Bill No. 733 favorably. As amended, the bill provides a sales and use tax exemption for sales of fuel cell devices and systems and of tangible personal property powered by fuel cells. It also exempts sales of hydrogen, propane, natural gas and utility service used as a fuel in a fuel cell device or system, and sales of electricity generated by a fuel cell. The statement says the bill takes effect immediately upon enactment, with the exemptions applying from the first day of the fourth month next following enactment. The committee amendments provide that sales of hydrogen for fueling a fuel cell device or system are exempt.

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ASSEMBLY COMMERCE AND ECONOMIC DEVELOPMENT
                COMMITTEE

                          STATEMENT TO

                      ASSEMBLY, No. 733
                        with committee amendments



       STATE OF NEW JERSEY
                           DATED: MARCH 8, 2021

         The Assembly Commerce and Economic Development Committee
      reports favorably and with committee amendments Assembly Bill No.
      733.
         This bill, as amended, provides an exemption from the sales and
      use tax for sales of fuel cell devices and systems, and sales of
      tangible personal property powered by fuel cells. The bill, as
      amended, also exempts from the tax: sales of hydrogen, propane;
      and natural gas and utility service that are used as a fuel in a fuel
      cell device or system; and sales of electricity generated by a fuel
      cell.
         In general, fuel cells use a source of energy or another fuel (such
      as hydrogen) and an oxidant to generate electricity through an
      electrochemical reaction without combustion.          The electricity
      generated by fuel cells is clean, safe, and reliable, and can be
      depended upon to provide electrical power for a wide variety of
      residential, industrial, and commercial applications, including
      vehicles and material handling equipment, back-up or emergency
      electricity generation units, and off-grid power stations for homes,
      businesses, and utilities.
         This bill provides an exemption under the sales and use tax to
      recognize these benefits and encourage the continued deployment of
      fuel cell technologies in this State. Under the bill, the current
      exemption for solar energy devices and systems is expanded to
      exempt sales of fuel cell devices and systems designed to provide
      heating or cooling, or electrical or mechanical power by converting
      the chemical energy of a fuel and an oxidant into electricity through
      a non-combustive electrochemical process. In doing so, the bill
      exempts from tax sales of mechanical or chemical devices used to
      store fuel cell-generated energy.
         The bill also provides a stand-alone exemption from the sales
      and use tax for sales of tangible personal property powered directly
      and exclusively by a fuel cell device or system that is designed to
      provide heating or cooling, or electrical or mechanical power to the
      tangible personal property as an integrated, component part of the
                                 2

tangible personal property. Under the bill, this exemption is
included to ensure vehicles and material handling equipment (not
already exempt from tax under the exemption for sales of zero-
emission vehicles), electronic devices, and other consumer and
commercial products that rely on an embedded fuel cell for
electrical power are permitted to be sold tax free.
   In addition, as amended, the bill amends the sales and use tax to
exempt from the tax: sales of hydrogen, propane; natural gas and
utility service that are used as a fuel in a fuel cell device or system;
and sales of electricity generated by a fuel cell. Hydrogen, the fuel
most commonly used in fuel cells, may be created from propane and
natural gas.
   The bill takes effect immediately upon enactment and provides
for the sales and use tax exemptions to apply to sales made, uses
occurring, and billing periods starting on or after the first day of the
fourth month next following the date of enactment.
    This bill was pre-filed for introduction in the 2020-2021 session
pending technical review. As reported, the bill includes the changes
required by technical review, which has been performed.

COMMITTEE AMENDMENTS:
    The committee amendments provide that sales of hydrogen for
the purpose of fueling a fuel cell device or system would be exempt
from the sales and use tax.


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