By Steve Blankinship
The bill passed by Congress last week to bolster the nation's financial infrastructure proved an efficient vehicle for getting a number of provisions that have languished for months signed into law. By the time congressional staffs and lobbyists managed to get all sorts of provisions into the economic rescue package, the Emergency Economic Stabilization Act of 2008 had more tags than a college freshman's textbook the night before finals.
A number of them relate to the power sector. On the coal side, a provision was included providing $1.5 billion in new tax credits for the creation of advanced coal electricity projects and certain coal gasification projects that demonstrate the greatest potential for carbon capture and sequestration technology.
These tax credits will be awarded by the U.S. Department of the Treasury through an application process, with applicants that demonstrate the greatest CO2 sequestration percentage receiving the highest priority. The act also clarifies that gasification projects producing transportation grade liquid fuels are eligible for the credits.
The act provides a $10 credit per ton for the first 75 million metric tons of CO2 captured and transported from an industrial source and stored or used in the United States for use in enhanced oil recovery and a $20/ton credit for CO2 captured and transported from an industrial source for permanent storage in a geologic formation. Qualifying facilities must capture at least 500,000 metric tons of CO2 per year.
In addition to the financial rescue package, the contains tax provisions derived from the House-passed H.R. 6049 – the Renewable Energy and Job Creation Act of 2008 – including a number of tax incentives for renewable energy.
The clean-energy tax provisions in the act, which total approximately $18 billion, provide tax incentives for energy production and conservation, extend expiring tax provisions relating to such incentives, and extend tax benefits to individual and business taxpayers. They include tax credits for solar, wind and other alternative energy activities. Extension and modification of the production tax credit (PTC) allows up to 1.5 cents (adjusted for inflation) for each kWh of electricity produced in the United States by wind, solar and specific other alternative energy facilities during the first 10 years the facility is in service. The previous PTL was 1.9 cents.
The act also expands the types of facilities qualifying for the credit to new biomass facilities and to those that generate electricity from marine renewables, meaning tidal power. The PTL for solar was extended eight years while the PTL for wind was extended just one a year. Recent extensions of the PTL have been for two years.
The act also includes a long-term extension and modification of energy tax credit for the cost of new property used to produce alternative energy, including equipment that uses solar energy to generate electricity to heat or cool a structure. The act extends the 30 percent investment tax credit for solar energy property and qualified fuel cell property, as well as the 10 percent investment tax credit for microturbines through 2016.
And the law increases the $500 per half kW of capacity cap for qualified fuel cells to $1,500 per half kW of capacity, and adds small commercial wind as a category of qualified investment. It also provides a new 10 percent investment tax credit for combined heat and power systems and geothermal pumps, allowing those these credits to be used to offset the alternative minimum tax.