Senate Passes Bill to Address Fiscal Crisis and Includes Energy Provisions Supporting Clean Coal and Carbon Sequestration
Late last night, the Senate passed the ‘‘Emergency Economic Stabilization Act of 2008,” a 450-page Bill designed to stabilize the highly-publicized crisis within domestic financial markets. Largely lost in the mass of financial stabilization provisions, the Bill also breathed new life into several clean energy provisions that had appeared moribund after public concern about a potential financial meltdown tabled movement on a comprehensive energy bill.
Following the highly publicized “financial rescue” portions of the stabilization bill is a new “Division B” entitled the “Energy Improvement and Extension Act of 2008.” Division B comprises 140 pages addressing energy production incentives (Title I), transportation and domestic fuel security provisions (Title II), and energy conservation and efficiency provisions (Title III). Clean coal advocates will recognize several of the provisions from the energy bill that had passed in the House in mid-September, including expanded tax credits for certain investments in coal gasification and carbon sequestration technologies (the Senate economic recovery bill replicates all five sections from the “Carbon Mitigation” subtitle of the draft energy bill).
More notably, however, the Bill contains a new tax credit provision for carbon sequestration. Section 115 would provide a $20 dollar tax credit for each ton of carbon captured and sequestered using long-term geological storage from qualifying projects located in the United States. The bill would provide a $10 dollar tax credit for each ton of carbon captured and then used for enhanced oil or gas recover efforts. Section 115 uses tax credits to address a challenge that has hindered serious investment in carbon capture and sequestration (CCS) technology to date - the lack of a market price for carbon. Both EPA’s Clean Air Act Advisory Committee (CAAAC) and the Government Accountability Office have cited the lack of a market price for carbon emissions as a significant impediment to clean coal investment.
Another impediment to widespread CCS investment has been the regulatory and legal uncertainty that investors face in evaluating CCS projects. EPA is already taking steps to address this uncertainty under its existing Safe Drinking Water Act authority, but that Act’s focus on ground and surface water protection is not an ideal fit for a regulatory program focused more on atmospheric resource and climate protection. EPA has also acknowledged that its current SDWA authority may not provide legal authority needed to address long-term liability considerations raised by thousand-year geologic sequestration projects. Section 115 of the Senate Bill directs the Department of Energy to work with EPA to “establish regulations for determining adequate security measures for the geological storage of carbon dioxide . . . such that the carbon dioxide does not escape into the atmosphere.” This additional authority could provide the additional regulatory flexibility and jurisdiction needed to address these regulatory uncertainties .
The structure of the financial rescue legislation that ultimately passes remains unknown. Still, in a year when many thought that further movement on energy and climate-related legislation was impossible, the Senate Bill offers some positive incentives for clean-coal development.
October 2nd, 2008 at 11:41 AM
I hope the Treasury of Secretary gets a good price for the securities. He is part of government so I doubt it. They should not pay more than 36% of the Face Value. The face value is principal and all the interest for the life of the loan is paid in full. nomedals.blogspot.com