Establishes Fusion Energy and Technology Incentive Program in EDA to encourage use of power plants for fusion energy and technology purposes; authorizes funds in Global Warming Solutions Fund to support fusion energy and technology facilities.

S3623

SENATE, No. 3623

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED FEBRUARY 19, 2026

Sponsored by:

Senator� ANDREW ZWICKER

District 16 (Hunterdon, Mercer, Middlesex and Somerset)

SYNOPSIS

���� Establishes Fusion Energy and Technology Incentive
Program in EDA to encourage use of power plants for fusion energy and
technology purposes; authorizes funds in Global Warming Solutions Fund to
support fusion energy and technology facilities.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
providing financial assistance to encourage the
development of fusion energy and technology facilities, supplementing P.L.1974,
c.80 (C.34:1B-1 et seq.), and amending P.L.2007, c.340.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� As used in sections 1
through 5 of P.L. ,
c. (C. )
(pending before the Legislature as this bill):

���� �Authority� means the New
Jersey Economic Development Authority, established by section 4 of P.L.1974,
c.80 (C.34:1B-4).

����� �Capital
investment� means expenses that are incurred for: (1) the site preparation and
construction, renovation, improvement, equipping of, or obtaining and
installing fixtures and machinery, apparatus or equipment in, a newly
constructed, renovated, or improved building or structure that is located on
the site of a power plant and is intended to be used for the operation of a
fusion energy or fusion technology facility; and (2) obtaining and installing
fixtures and machinery, apparatus, or equipment in a building or structure that
is located on the site of a power plant and is intended to be used for the
operation of a fusion energy or fusion technology facility; provided, however,
that �capital investment� shall not include soft costs, including, but not
limited to, financing and design, furniture, or decorative items, such as
artwork, plants, or office equipment.

����� �Director�
means the Director of the Division of Taxation in the Department of the
Treasury.

����� �Eligible
property owners� means any individual or business entity that owns a power
plant.

����� �Fusion
energy� means a form of power generation that generates electricity either
directly or, including, but not limited to, by using heat from nuclear fusion
reactions.

����� �Fusion
energy facility� means a facility that is used to generate electricity using
fusion energy.

����� �Fusion
energy or fusion technology company� or �company� means a corporation or other
entity that has its headquarters or base of operations in this State; that
owns, has filed for, or has a valid license to use protected, proprietary
intellectual property; and that employs some combination of the following: highly
educated or trained managers and workers, or both, employed in this State who
use sophisticated scientific research service or production equipment,
processes, or knowledge to discover, develop, test, transfer, or manufacture a
product or service related to fusion energy or fusion technology.

����� �Fusion
technology� means a technology that is developed to permit the production of
fusion energy or a technology developed to create nuclear fusion reactions.

����� �Fusion
technology facility� means a facility that is used for the testing or
development of fusion technology.

����� �Incentive
program� means the Fusion Energy and Technology Incentive Program established
pursuant to
section 2 of P.L. ,
c. (C. ) (pending
before the Legislature as this bill).

����� �Power plant� includes any
facility that is used for the generation of electricity, including any
decommissioned power plant and any operational power plant; and any site that
is capable of hosting a fusion energy facility or fusion technology facility.

���� 2.��� a. The authority shall
establish and administer the Fusion Energy and Technology Incentive Program to
provide tax credits to encourage the use and development of power plants by
fusion energy or fusion technology companies.

���� b.��� The incentive program
shall consist of two program components, including:

���� (1)�� the issuance of tax
credits to eligible property owners that lease space on the site of a power
plant for use by one or more fusion energy or fusion technology companies,
subject to the provisions of section 3 of P.L. ,
c. (C. )
(pending before the Legislature as this bill); and

���� (2)�� the issuance of tax
credits to fusion energy or fusion technology companies that operate, or seek
to operate, one or more fusion energy or fusion technology facilities on the
site of a power plant, subject to the provisions of section 4 of
P.L. , c.
(C. ) (pending before the
Legislature as this bill).

���� 3.��� a. The incentive program
shall include the issuance of tax credits to eligible property owners that
lease space on the site of a power plant for use by one or more fusion energy
or fusion technology companies.

���� b.��� To qualify for the
incentive program, an eligible property owner shall demonstrate to the
authority that the eligible property owner:

���� (1)�� owns property that
contains the site of a power plant that is in compliance with all requirements
of federal and State law;

���� (2)�� leases space on the site
of the power plant to one or more fusion energy or fusion technology companies;
and

���� (3)�� meets any other
eligibility criteria that the authority deems appropriate.

���� c.���� An eligible property
owner that seeks assistance under the incentive program shall submit an
application to the authority in a form and manner prescribed by the authority.�
In addition to any other information that the authority may deem appropriate,
the application shall require the applicant to submit information:

���� (1)�� demonstrating that the eligible
property owner meets the eligibility criteria established pursuant to
subsection b. of this section;

���� (2)�� documenting the amount
of rent paid to the eligible property owner, during the 12-month period
immediately preceding the date of application, by each fusion energy or fusion
technology company that leases space on the site of the power plant; and

���� (3)�� documenting any capital
investments incurred by the eligible property owner prior to the date of
application, if applicable, which capital investments were necessary to enable
the site of the power plant to be leased and used by a fusion energy or fusion
technology company.

���� d.��� (1) The authority shall
review and approve applications submitted pursuant to this section on a
rolling-basis, subject to the limitations set forth in subsection e. of this
section.� Upon approval of each application, the authority shall issue tax
credits to the eligible property owner in an amount equal to the sum of:

���� (a)�� 15 percent of the rent
paid to the eligible property owner by fusion energy or fusion technology
companies, as documented pursuant to paragraph (2) of subsection c. of this
section and approved by the authority; and

���� (b)�� 35 percent of the
capital investments incurred by the eligible property owner prior to the date
of application, as documented pursuant to paragraph (3) of subsection c. of
this section and approved by the authority.

���� (2)�� Upon approval of any
application for tax credits pursuant to this section, and upon the satisfaction
of such additional requirements as the authority deems appropriate, the authority
shall provide the eligible property owner and the director with a certificate
of compliance indicating the amount of tax credits that the eligible property
owner may apply against the person�s tax liability, subject to the provisions
of section 5 of P.L. ,
c. (C. )
(pending before the Legislature as this bill).

���� e.���� The authority shall
approve the issuance of no more than $5,000,000 in tax credits pursuant to this
section during any calendar year.

���� 4.��� a. The incentive program
shall include the issuance of tax credits to fusion energy or fusion technology
companies that operate, or seeks to operate, one or more fusion energy or
fusion technology facilities at the site of a power plant.

���� b.��� To qualify for the
incentive program, a fusion energy or fusion technology company shall
demonstrate to the authority, at the time of application, that the company:

���� (1)�� leases or owns property
at the site of a power plant;

���� (2)�� is actively engaged, or
intends to be engaged, in the operation of one or more fusion energy or fusion
technology facilities at the site of a power plant; and

���� (3)�� meets any other
eligibility criteria that the authority deems appropriate.

���� c.���� A fusion energy or
fusion technology company that seeks tax credits under the incentive program
shall submit an application to the authority in a form and manner prescribed by
the authority.� In addition to any other information that the authority may deem
appropriate, the application shall require the applicant to submit:

���� (1)�� information
demonstrating that the fusion energy or fusion technology company meets the
eligibility criteria established pursuant to subsection b. of this section; and

���� (2)�� (a) if the fusion energy
or fusion technology company is actively engaged in the operation of one or
more fusion energy or fusion technology facilities at the site of a power plant
on or before the date of application, information documenting any capital investments
incurred by the company prior to the date of application; or

���� (b)�� if the fusion energy or
fusion technology company seeks to operate one or more fusion energy or fusion
technology facilities at the site of a power plant after the date of
application, information outlining any anticipated capital investments to be
incurred by the company after the date of application, but before the date of
completion of the facilities.

���� d.��� (1) The authority shall
review and approve applications submitted pursuant to this section on a
rolling-basis, subject to the limitations set forth in subsection e. of this
section.� Upon approval of each application, the authority shall issue tax
credits to the fusion energy or fusion technology company in an amount equal to
35 percent of the capital investments incurred by the company, as documented
pursuant to paragraph (2) of subsection c. of this section and approved by the
authority, subject to the provisions of paragraphs (2) and (3) of this
subsection.

���� (2)�� Upon approval of tax
credits for any fusion energy or fusion technology company that is actively
engaged in the operation of a fusion energy or fusion technology facility at
the site of a power plant on or before the date of application, and upon the
satisfaction of such additional requirements as the authority deems
appropriate, the authority shall provide the company and the director with a
certificate of compliance indicating the amount of tax credits that the company
may apply against the company�s tax liability, subject to the provisions of
section 5 of P.L. ,
c. (C. )
(pending before the Legislature as this bill).

���� (3)�� Upon approval of tax
credits for any fusion energy or fusion technology company that seeks to
operate a fusion energy or fusion technology facility at the site of a power
plant after the date of application, the authority shall enter into an
incentive award agreement with the company, which agreement shall specify the
terms and conditions for the issuance of tax credits to the company.� In
addition to any other terms and conditions that the authority may deem
appropriate, the incentive award agreement shall provide that tax credits shall
not be issued until after the company is actively engaged in the operation of
each fusion energy or fusion technology facility, at which time the authority
shall review and verify the amount of all capital investments incurred by the
company for which the tax credits shall be issued.� Thereafter, upon the
satisfaction of the authority that all other terms and conditions have been
satisfied, the authority shall provide the company and the director with a
certificate of compliance indicating the amount of tax credits that the company
may apply against the company�s tax liability, subject to the provisions of
section 5 of P.L. ,
c. (C. )
(pending before the Legislature as this bill).

���� e.���� The authority shall
approve the issuance of no more than $10,000,000 in tax credits pursuant to
this section during any calendar year.

���� 5.��� a. The tax credits
issued by the authority pursuant to P.L. ,
c. (C. )
(pending before the Legislature as this bill) may be applied against a
recipient�s tax liability under the "Corporation Business Tax Act (1945),"
P.L.1945, c.162 (C.54:10A-1 et seq.), the "New Jersey Gross Income Tax
Act," N.J.S.54A:1-1 et seq., sections 2 and 3 of P.L.1945, c.132
(C.54:18A-2 and C.54:18A-3), section 1 of P.L.1950, c.231 (C.17:32-15), or
N.J.S.17B:23-5.� To claim the tax credit amount for any taxable period, the
recipient shall submit to the director the certificate of compliance issued by
the authority pursuant to subsection d. of section 3 of
P.L. ,
c. (C. )
(pending before the Legislature as this bill) or subsection d. of section 4 of
P.L. ,
c. (C. )
(pending before the Legislature as this bill), as applicable.

���� b.��� (1) (a) The director
shall prescribe the order of priority of the application of the tax credit
allowed under this section, together with any other credits allowed by law,
against the tax imposed under section 5 of P.L.1945, c.162 (C.54:10A-5) for a
privilege period.� The amount of the tax credit applied under this section
against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5)
for a privilege period, together with any other credits allowed by law, shall
not reduce the tax liability to an amount less than the statutory minimum
provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5).

���� (b)�� The director shall
prescribe the order of priority of the application of the tax credit allowed
under this section, together with any other credits allowed by law, against the
tax imposed under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1
et seq., for a taxable year.� The amount of the tax credit applied under this
section against the tax imposed pursuant to N.J.S.54A:1-1 et seq. for a taxable
year, together with any other credits allowed by law, shall not reduce the tax
liability to an amount less than zero.

���� (2)�� A tax credit recipient
may carry forward any unused tax credit resulting from the limitations of
paragraph (1) of this subsection or from the insufficiency of a tax liability,
as applicable, for use in the five privilege periods or taxable years, as applicable,
next following the taxable period for which the credits are awarded.

����
c.���� (1) A business
entity that is classified as a partnership for federal income tax purposes
shall not be allowed the tax credit directly under N.J.S.54A:1-1 et seq., but
the amount of credit of the taxpayer in respect of a distributive share of
partnership income shall be determined by allocating to the taxpayer that
proportion of the credit acquired by the partnership that is equal to the
taxpayer's share, whether or not distributed, of the total distributive income
or gain of the partnership for its taxable year ending within or with the
taxpayer's taxable year.

���� (2)�� A business entity that
is a New Jersey S corporation shall not be allowed the tax credit directly
under N.J.S.54A:1-1 et seq., but the amount of credit of a taxpayer in respect
of a pro-rata share of S corporation income shall be determined by allocating
to the taxpayer that proportion of the credit acquired by the New Jersey S
corporation that is equal to the taxpayer's share, whether or not distributed,
of the total pro-rata share of S corporation income of the New Jersey S
corporation for its privilege period ending within or with the taxpayer's
taxable year.

���� d.��� (1) A tax credit
recipient may apply to the director and the authority for a tax credit transfer
certificate, covering one or more years, in lieu of the recipient being allowed
any amount of the credit against the tax liability of the recipient.� An application
for a tax credit transfer certificate shall not be approved unless the
authority affirmatively determines, based on such considerations as the
authority deems appropriate, that the sale or assignment of the tax credit
transfer certificate is socially beneficial to the State.

���� (2)�� Upon approval of an
application for a tax credit transfer certificate, and upon receipt thereof by
the recipient from the director and the authority, the tax credit transfer
certificate may be sold or assigned, in full or in part, for an amount not less
than $25,000, in the taxable period during which the tax credit transfer
certificate is sold or assigned by the initial recipient to another person, who
may apply the credit against a tax liability under the "Corporation
Business Tax Act (1945)," P.L.1945, c.162 (C.54:10A-1 et seq.), the
"New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., sections 2
and 3 of P.L.1945, c.132 (C.54:18A-2 and C.54:18A-3), section 1 of P.L.1950,
c.231 (C.17:32-15), or N.J.S.17B:23-5, subject to the carry-forward
authorizations set forth in paragraph (2) of subsection b. of this section.�
The certificate provided to the initial recipient shall include a statement
waiving the recipient�s right to claim the amount of the tax credit that the
recipient has elected to sell or assign against the recipient's tax liability.

���� (3)�� The initial recipient
shall not sell or assign, including a collateral assignment, a tax credit
transfer certificate allowed under this section for consideration received by
the recipient of less than 85 percent of the transferred credit amount before
considering any further discounting to present value that shall be permitted.

���� (4)�� A purchaser or assignee
of a tax credit transfer certificate pursuant to this section shall not make
any subsequent transfers, assignments, or sales of the tax credit transfer
certificate.

���� 6.��� The authority, in
consultation with the director, may adopt rules and regulations, in accordance
with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1
et seq.), as necessary to implement the provisions of sections 1 through 5 of P.L. ,
c. (C. )
(pending before the Legislature as this bill).

���� 7.��� Section 7 of P.L.2007,
c.340 (C.26:2C-51) is amended to read as follows:

���� 7.��� a. The agencies
administering programs established pursuant to this section shall maximize
coordination in the administration of the programs to avoid overlap between the
uses of the fund prescribed in this section.

���� b.��� Moneys in the fund,
after appropriation annually for payment of administrative costs authorized
pursuant to subsection c. of this section, shall be annually appropriated and
used for the following purposes:

���� (1)��
[
Sixty
]

60

percent shall be allocated to the New Jersey Economic Development Authority to
provide grants and other forms of financial assistance to commercial,
institutional, and industrial entities to support
:
end-use energy
efficiency projects
; fusion energy facilities and fusion technology
facilities, as defined in section 1 of P.L. ,
c. (C. )
(pending before the Legislature as this bill);
and new, efficient electric
generation facilities that are state of the art, as determined by the department,
including but not limited to energy efficiency and renewable energy
applications, to develop combined heat and power production and other high
efficiency electric generation facilities, to stimulate or reward investment in
the development of innovative carbon emissions abatement technologies with
significant carbon emissions reduction or avoidance potential, to develop
qualified offshore wind projects pursuant to section 3 of P.L.2010, c.57
(C.48:3-87.1), and to provide financial assistance to manufacturers of
equipment associated with qualified offshore wind projects.� The authority, in
consultation with the board and the department, shall determine:� (a) the
appropriate level of grants or other forms of financial assistance to be
awarded to individual commercial, institutional, and industrial sectors and to
individual projects within each of these sectors; (b) the evaluation criteria
for selecting projects to be awarded grants or other forms of financial
assistance, which criteria shall include the ability of the project to result
in a measurable reduction of the emission of greenhouse gases or a measurable
reduction in energy demand, provided, however, that neither the development of
a new combined heat and power production facility, nor an increase in the
electrical and thermal output of an existing combined heat and power production
facility, shall be subject to the requirement to demonstrate such a measurable
reduction; and (c) the process by which grants or other forms of financial
assistance can be applied for and awarded including, if applicable, the payment
terms and conditions for authority investments in certain projects with
commercial viability;

���� (2)��
[
Twenty
]

20

percent shall be allocated to the board to support programs that are designed
to reduce electricity demand or costs to electricity customers in the
low-income and moderate-income residential sector with a focus on urban areas,
including efforts to address heat island effect and reduce impacts on
ratepayers attributable to the implementation of P.L.2007, c.340 (C.26:2C-45 et
al.) or to support the light duty plug-in electric vehicle incentive program
and the incentive program for in-home electric vehicle service equipment
established pursuant to sections 4 and 6 of P.L.2019, c.362 (C.48:25-4 and
C.48:25-6).� For the purposes of this paragraph, the board, in consultation
with the authority and the department, shall determine the types of programs to
be supported and the mechanism by which to quantify benefits to ensure that the
supported programs result in a measurable reduction in energy demand or
accomplishment of the plug-in electric vehicle goals established pursuant to
section 3 of P.L.2019, c.362 (C.48:25-3);

���� (3)��
[
Ten
]

10

percent shall be allocated to the department to support programs designed to
promote local government efforts to plan, develop and implement measures to
reduce greenhouse gas emissions, including but not limited to technical
assistance to local governments, and the awarding of grants and other forms of
assistance to local governments to conduct and implement energy efficiency,
renewable energy, and distributed energy programs and land use planning where
the grant or assistance results in a measurable reduction of the emission of
greenhouse gases or a measurable reduction in energy demand. For the purpose of
conducting any program pursuant to this paragraph, the department, in
consultation with the authority and the board, shall determine:� (a) the
appropriate level of grants or other forms of financial assistance to be
awarded to local governments; (b) the evaluation criteria for selecting
projects to be awarded grants or other forms of financial assistance; (c) the
process by which grants or other forms of financial assistance can be applied
for and awarded; and (d) a mechanism by which to quantify benefits; and

���� (4)��
[
Ten
]

10

percent shall be allocated to the department to support programs that enhance
the stewardship and restoration of the State's forests and tidal marshes that
provide important opportunities to sequester or reduce greenhouse gases.

���� c.���� (1) The department may
use up to four percent of the total amount in the fund each year to pay for
administrative costs justifiable and approved in the annual budget process,
incurred by the department in administering the provisions of P.L.2007, c.340 (C.26:2C-45
et al.) and in administering programs to reduce the emissions of greenhouse
gases including any obligations that may arise under subsection a. of section
11 of P.L.2007, c.340 (C.26:2C-55).

���� (2)�� The board may use up to
two percent of the total amount in the fund each year to pay for administrative
costs justifiable and approved in the annual budget process, incurred by the
board in administering the provisions of P.L.2007, c.340 (C.26:2C-45 et al.)
and in administering programs to reduce the emissions of greenhouse gases
including any obligations that may arise under subsection a. of section 11 of
P.L.2007, c.340 (C.26:2C-55).

���� (3)�� The New Jersey Economic
Development Authority may use up to two percent of the total amount in the fund
each year to pay for administrative costs justifiable and approved in the
annual budget process, incurred by the authority in administering the provisions
of P.L.2007, c.340 (C.26:2C-45 et al.) and in administering programs to reduce
the emissions of greenhouse gases.

���� d.��� The State Comptroller
shall conduct or supervise independent audit and fiscal oversight functions of
the fund and its uses.

(cf: P.L.2019, c.362, s.12)

���� 8.��� This act shall take
effect immediately.

STATEMENT

���� This bill establishes the
Fusion Energy and Technology Incentive Program (program) within the New Jersey
Economic Development Authority (EDA) to encourage the use and development of
power plants by fusion energy or fusion technology companies.

���� Under the bill, the program
consists of two distinct components, including the issuance of tax credits to:
(1) eligible property owners that lease space on the site of a power plant for
use by one or more fusion energy or fusion technology companies; and (2) fusion
energy or fusion technology companies that operate, or seek to operate, one or
more fusion energy or fusion technology facilities on the site of a power
plant.

���� The bill allows the EDA to
issue up to $5 million in tax credits annually to eligible property owners that
lease space on the site of a power plant to fusion energy or fusion technology
companies.� Specifically, an eligible property owner may apply to the EDA to
receive tax credits in an amount equal to the sum of: (1) 15 percent of the
rent paid to the eligible property owner by any fusion energy or fusion
technology companies leasing space on the site of the power plant; and (2) 35
percent of the capital investments incurred by the eligible property owner,
prior to the date of application, provided that the capital investments were
necessary to enable the site of the power plant to be leased and used by a
fusion energy or fusion technology company.� The bill defines an �eligible
property owner� to mean any individual or business entity that owns a power
plant.

���� Additionally, the bill
authorizes the EDA to issue up to $10 million in tax credits annually to fusion
energy or fusion technology companies that operate, or seek to operate, one or
more fusion energy or fusion technology facilities at the site of a power
plant.� Specifically, a fusion energy or fusion technology company may apply to
the EDA to receive tax credits in an amount equal to 35 percent of the capital
investments incurred by the company related to the preparation, construction,
or improvement of any fusion energy or fusion technology facility that is
actively operated by the company on the site of the power plant.� If a fusion
energy or fusion technology company applies for the tax credits before it is
actively engaged in the operation of a fusion energy or fusion technology
facility, the EDA is not permitted to issue tax credits to the company until
after the facility is actively operated by the company.� Thereafter, the EDA is
required to review and verify the actual amount of capital investments incurred
by the company, for which the tax credits are to be issued.

���� The bill defines �fusion
energy or fusion technology company� to include any business entity that: (1)
has its headquarters or base of operations in this State; (2) owns, has filed
for, or has a valid license to use protected, proprietary intellectual property;
and (3) employs some combination of the following: highly educated or trained
managers and workers, or both, employed in this State who use sophisticated
scientific research service or production equipment, processes, or knowledge to
discover, develop, test, transfer, or manufacture a product or service related
to fusion energy or fusion technology.� The bill also defines the term �power
plant� to include: (1) any facility that is used for the generation of
electricity, including any decommissioned power plant and any operational power
plant; and (2) any site that is capable of hosting a fusion energy facility or
fusion technology facility.

���� Under the bill, the EDA is
permitted to prescribe the form and manner in which applications are submitted
for both program components.� The bill also permits the EDA to approve
applications on a rolling basis, subject to the annual limitations in tax credit
issuances for each program component.

���� Additionally, the bill
authorizes the EDA to use moneys in the "Global Warming Solutions
Fund" to provide grants or other financial assistance to commercial,
institutional, and industrial entities to support fusion energy facilities or
fusion technology facilities.� Notably, the fund serves as the repository for
moneys received from electric power generation facilities pursuant to New
Jersey's participation in the Regional Greenhouse Gas Initiative.