Committee Report

May 6, 2026

 

S. 556

 

Introduced by Senator Verdin

 

S. Printed 5/6/26--H.

Read the first time April 30, 2026

 

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The committee on House Ways and Means

To whom was referred a Bill (S. 556) to amend the South Carolina Code of Laws by adding Section 12-6-3830 so as to provide for a tax credit for renewable natural gas, etc., respectfully

Report:

That they have duly and carefully considered the same, and recommend that the same do pass:

 

B.W. BANNISTER for Committee.

 

 

statement of estimated fiscal impact

Explanation of Fiscal Impact

State Expenditure

This bill creates a tax credit for 25 percent of the costs incurred by a taxpayer for the purchase and installation of equipment used to produce RNG for commercial purposes. The tax credit may be claimed against corporate income or license taxes in the year in which the equipment is placed in service. The credit is available for tax years 2026 to 2031. A taxpayer must submit a request for the credit to the Energy Office, and within 30 days of receiving a request, the Office must notify the taxpayer whether the taxpayer qualifies for the credit and the amount allocated to the taxpayer. In order to qualify for the credit, costs incurred by a taxpayer must be certified by the Energy Office. DOR may require any documentation that it deems necessary to administer the credit.

The bill will not impact expenditures for the Energy Office or DOR as both entities will manage the new responsibilities with existing staff and resources. ORS notes that because the Energy Office operates solely with federal funding from the US Department of Energy, its ability to manage these responsibilities is contingent upon continuing to receive federal funding.

 

State Revenue

This bill creates a tax credit for 25 percent of the costs incurred by a taxpayer for the purchase and installation of equipment used to produce RNG for commercial purposes. The credit may be claimed in the year in which the equipment is placed in service and may be claimed for all expenditures incurred for the purchase and installation of the equipment, including those related to engineering, permitting, and other necessary services. A taxpayer may use up to 25 percent of the credit, or $5 million, whichever is less, in a single tax year. The credit is applicable for tax years 2026 through 2031. Unused credits earned prior to the end of 2028 may be carried forward for 15 years from the year earned.

The bill defines qualifying equipment as equipment and facilities used to collect and process landfill gas into RNG and transport and inject RNG into a natural gas transmission pipeline system. Equipment includes utility facilities owned by the taxpayer dedicated for use with an RNG production facility. RNG is defined as natural gas derived from landfill gas, also known as biomethane, which has been upgraded to a quality similar to fossil natural gas and has a methane concentration of 90 percent or greater.

The ORS Pipeline Safety division is responsible for monitoring natural gas pipeline operators. Based on their records, there are five natural gas operators that collect and transport landfill natural gas currently. ORS does not have information to determine if the gas produced by any of these operators would meet the requirements in the bill or the potential costs related to equipment installations to generate RNG.

Based on general information and discussions, the costs for landfill RNG projects vary by size and scope. The US Environmental Protection Agency reports that the typical capital costs for gas compression and treatment to convert landfill gas to RNG are $6,200 to $8,300 per standard cubic foot per minute. The capital costs for a pipeline are $600,000 for less than 1 mile or $1 million per mile for 1 mile or more.  RNG projects completed around the country that appear to be similar to the requirements in the bill varied greatly in size and cost. A project in Dane County, Wisconsin completed in 2019 cost approximately $28 million, which equates to approximately $37 million in 2026 after adjusting for inflation.  A facility in Prince William County, Virginia announced in 2021 was originally estimated to cost $60 million. A project in Temple, Texas opened in 2025 with a total cost of approximately $50 million. Waste Management recently invested over $100 million into the WM Simi Valley RNG Facility project in Southern California, which was completed in January 2026. The average cost of these projects is approximately $62 million.

Given that developing this type of facility would only be applicable to areas with viable landfill gas and in proximity to a natural gas line, RFA anticipates that the number of qualifying projects will be limited. The tax credit is for 25 percent of the total cost of the equipment and installation, and a taxpayer is limited to claiming 25 percent of the credit, or $5 million annually, whichever is less. Based on the potential range of investment from $37 million to $100 million, a taxpayer is likely to earn between $10 million and $25 million in tax credits. Since each taxpayer is limited to claiming the lesser of 25 percent of the credit or $5 million per year, the range of credit that could be claimed per taxpayer per year would be between $2.5 million and $5 million. Based on the average investment level of $62 million for the projects noted above, a taxpayer would likely earn $15.5 million in tax credits and claim an average of $3.875 million per year for four years. Based on the available information and assuming one project is undertaken next year, the bill will reduce corporate income and license taxes by an average of $3.875 million in FY 2026-27 and annually for three additional years. If additional projects are undertaken, the impact would increase for each additional project.

 

 

Frank A. Rainwater, Executive Director

Revenue and Fiscal Affairs Office

 

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A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ADDING SECTION 12-6-3830 SO AS TO PROVIDE FOR A TAX CREDIT FOR RENEWABLE NATURAL GAS.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  Article 25, Chapter 6, Title 12 of the S.C. Code is amended by adding:

 

    Section 12-6-3830. (A) For the purposes of this section:

       (1) "Commercial use" means a use intended for the purpose of generating a profit.

       (2) "Equipment" means equipment and facilities used to collect and process landfill gas into renewable natural gas and transport and inject renewable natural gas into a natural gas transmission pipeline system. Equipment includes utility facilities owned by the taxpayer dedicated for use with a renewable natural gas production facility.

       (3) "Renewable natural gas" means natural gas derived from landfill gas, also known as biomethane, which has been upgraded to a quality similar to fossil natural gas and has a methane concentration of ninety percent or greater.

    (B) For taxable years beginning after 2025 and ending before Taxable Year 2030, there is allowed a credit against the income tax imposed pursuant to Section 12-6-530 or license fees imposed pursuant to Section 12-20-50, or both, for twenty-five percent of the costs incurred by a taxpayer for the purchase and installation of equipment used to produce renewable natural gas for commercial purposes. Costs incurred by a taxpayer and qualifying for the credit allowed by this section must be certified as having been incurred by the State Energy Office. The credit may be claimed in the year in which the equipment is placed in service and may be claimed for all expenditures incurred for the purchase and installation of the equipment, including related engineering, permitting, and other necessary services.

    (C) A taxpayer may use up to twenty-five percent, or five million dollars, whichever is less, of credit for a single taxable year. The tax credit is nonrefundable, but unused credits earned prior to the end of 2030 may be carried forward for fifteen years from the year in which they were earned. The credit under this section may be transferred by the taxpayer to another person who is eligible to utilize the tax credit and who will then be subject to the same requirements within this section. Regardless of whether the credit is transferred, if a regulated utility receives this credit, the regulated utility must pass on the credit to the benefit of ratepayers through the utility's next rate proceeding, or as otherwise directed by the Public Service Commission.

    (D) A taxpayer must submit a request for the credit to the State Energy Office no later than January thirty-first for all qualifying equipment placed in service in the previous calendar year. Within thirty days of receiving a request for the credit, the State Energy Office must notify the taxpayer whether the taxpayer qualifies for the credit and, if so, the amount of credit allocated to the taxpayer. A taxpayer may claim the maximum amount of the credit for its taxable year that contains the December thirty-first of the previous calendar year. The Department of Revenue may require any documentation that it deems necessary to administer the credit.

 

SECTION 2.  This act takes effect upon approval by the Governor.

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