October 7, 2008
Bailout Contains Incentives for Coal Industry: ; Rockefeller Said More Than $1 Billion Would Result in Clean Coal Technology
By GEORGE HOHMANN
The financial rescue package approved by Congress and signed into law by President Bush last week contains more than a billion dollars in federal tax incentives for the coal industry.In a statement issued following Senate passage last Tuesday, Sen. Jay Rockefeller, D-W.Va., said the legislation is "the key vehicle by which we begin to invest in energy research, including carbon capture and sequestration and coal-to-liquids."
Rockefeller also said the legislation "will help protect our coal miners by encouraging increased investment in mine rescue teams and state-of-the-art safety technology, while also keeping the Black Lung Trust Fund solvent."
Steven Broderick, Rockefeller's press secretary, said Monday that the tax incentives are designed to result "in billions of dollars in investments in clean coal technology and clean coal uses. I think we can all agree that if we're serious about energy independence then it's about time we started doing some of these things.
"Sen. Rockefeller has fought hard to expand the use of clean West Virginia coal and help keep our coal miners safe," Broderick said. "This legislation was the absolute right vehicle to keep investments in coal headed in the right direction."
The financial rescue bill originally had a $700 billion price tag. According to The Wall Street Journal, the coal-specific provisions in the revised bill total about $1.5 billion.
Those additions plus other changes made the final legislation $110 billion more expensive. The coal provisions:
* Expand and extend tax credits for advanced clean coal technologies, such as Integrated Gasification Combined Cycle and other coal electricity projects, as well as for industrial gasification projects, including facilities that produce both electricity and liquid fuels from coal.
* Establish a carbon capture tax credit of $20 per ton for carbon dioxide stored in geologic formations and $10 per ton for carbon dioxide use to enhance oil well production.
* Extend an alternative fuels credit, including coal-to-liquids, for an additional three years. To get the credit, coal-fired power plants would have to capture 50 percent of their carbon dioxide output through 2010. The percentage rises to 75 percent after that date.
* Make jet fuel made from liquefied coal eligible for a 50-cents- a-gallon tax credit.
* Continue a tax credit of up to $10,000 to help coal companies train mine rescue teams.
* Extend a deduction coal companies can take when they purchase mine safety equipment.
* Restructure the Black Lung Disability Trust Fund. The bill extends the time coal companies will pay into the fund but lowers the charge.
* Create a new credit for companies that use coal waste sludge as an additive in the manufacture of coke for the steel industry.
* Refund the coal excise tax producers have paid on coal exports.
Bill Raney, president of the West Virginia Coal Association, said today, "It's very positive to have these kinds of things in a Congressional act. It shows confidence in the coal industry and demonstrates it is a big part of the energy picture of this country. You've got some looking-forward tax incentives and you've got recognition that companies are coming into compliance with safety regulations. When you have Congress look at it this way, it says coal is a very big part of the energy future of this country."
Hal Quinn, president and chief executive officer of the National Mining Association, issued a statement Friday praising Rockefeller and others who championed the measures.
Quinn said the legislation will "continue progress on the development and deployment of technologies that will result in cleaner electricity generated from coal" and will promote coal-to- liquid fuels, "which can help secure our energy future."
"These provisions also will create more family-wage jobs in U.S. mining and assist in our efforts to make mining even safer - our number one priority," Quinn said.
Melissa McHenry, spokeswoman for American Electric Power, said the main benefit of the financial rescue package is, "it will hopefully help maintain credit markets, which utilities are dependent on, just as we all are."
A provision that maintains renewable energy tax credits is beneficial "because it will help support increased development of renewable energy sources, which should bring down the cost of renewable energy," McHenry said. "AEP is a strong supporter of renewable energy where it is appropriate."
AEP has two projects that may directly benefit:
* The company has received approval from the West Virginia Public Service Commission to build an Integrated Gasification Combined Cycle power plant next to its Mountaineer Plant in Mason County, but the Virginia State Corporation Commission turned down a request to have AEP's Virginia customers share the construction cost. The Virginia regulator has said AEP's $2.23 billion estimated cost is unrealistically low. The project is in limbo.
* The company has a $70 million carbon sequestration pilot project underway at its Mountaineer Plant. The project will capture a slipstream of carbon dioxide off the plant's exhaust and bury it underground.
McHenry said the financial rescue bill's specifics are not yet entirely clear, "so it's difficult to say whether AEP's carbon- storage project in Mason County or its proposed gasification plant, also in Mason County, would benefit. We will seek to apply for any incentives that are available to support clean coal technologies."
An $800 million coal-to-gasoline plant Consol Energy Inc. and Synthesis Energy Systems Inc. plan to build at Benwood, Marshall County, also might benefit.
Paul Spurgeon, Consol's vice president of power development and coal conversion projects, did not return a call Monday seeking comment.
Contact writer George Hohmann at [email protected] or 304- 348-4836.
Originally published by DAILY MAIL BUSINESS EDITOR.
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