Tax Credit Programs Promote Coal-Based Power Generation Technologies

Category: Energy
Type: News
Source: NETL
Date: Monday, August 14th, 2006

Energy Department Assists Internal Revenue Service in Plan Selection

WASHINGTON, DC - Legislation designed to advance cleaner coal-based power generation and gasification technologies has received a strong response from the coal community, according to the D.O.E.'s Office of Fossil Energy. The expected result: increased energy security and improved environmental performance from our Nation's most abundant energy resource.

The response flows from the Energy Policy Act of 2005 (EPAct), the 1st overhaul of America's energy policy since 1992. Passed on July 29, 2005, by the U.S. Congress and signed into law by President Bush on August 8, 2005, the Act focuses on clean energy, efficient energy use, energy conservation, and advanced technologies.

In signing the Act, the President said EPAct "launches an energy strategy for the 21st century" and "will allow America to make cleaner and more productive use of our domestic energy resources, including coal, and nuclear power, and oil and natural gas. By using these reliable sources to supply more of our energy, we'll reduce our reliance on energy from foreign countries."

EPAct initiated a wide range of actions, including the authorization of tax credits and incentives. Those authorizations included $1.6 billion in tax credits to spur investment in advanced clean coal facilities and $350 million in tax credits for advanced gasification projects.

In February 2006, the Treasury Department and the Internal Revenue Service (IRS) issued guidance for tax credit programs under 2 separate IRS notices: Qualifying Advanced Coal Plan Plan and Qualifying Gasification Plan Program. The response, said Assistant Secretary for Fossil Energy Jeffrey Jarrett, has been "tremendous."

"The number and range of suggested plans demonstrates industry's willingness to embrace tomorrow's technologies today. The combination of government incentives and private-sector innovation will harness America's technological strength to ensure secure, affordable, and reliable energy," Jarrett said.

One year after EPAct became law, DOE's Countrywide Energy Technology Lab (NETL) is partnering with the IRS to evaluate suggested plans for technical and economic feasibility and for consistency with energy policy goals. Once NETL's review is complete, successful plans will be certified and recommended to the IRS. The IRS will then select plans for receipt of tax credits.

A total of 49 applications have been received from 29 states proposing plans worth $57.7 billion and $5 billion in tax credits. Of the 49 applications:

Twenty-two applications were received under the coal-based program, representing $27.7 billion in suggested plans and request $2.3 billion in tax credits. Of these, 18 request credits for integrated gasification combined cycle plants and four for advanced coal-based generation plants. Applications include plans using bituminous, subbituminous, and lignite coals to be built in 19 states: Arizona, Connecticut, Delaware, Florida, Illinois, Indiana, Kentucky, Michigan, Minnesota, Missouri, Mississippi, North Carolina, New York, Ohio, Oregon, South Dakota, Utah, West Virginia, and Wyoming.
Twenty-seven applications were received under the gasification technology program, representing $30 billion in suggested plans and requesting $2.7 billion in tax credits. Plan are suggested in 17 states: Arizona, California, Florida, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, New York, Ohio, Oregon, Pennsylvania, Tennessee, Texas, and Washington.

The IRS expects to make final selection by November 30, with Plan applicants receiving their notice for eligibility of the tax credit by the IRS shortly thereafter.

Total Plan Value by Major Area Rev1 [PDF-20KB]

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