Is there a green lining to the economic bailout package?


Photo courtesy of Gemma Kate Thorpe at Flickr.com.

The $700 Billion bailout bill has stirred up mixed emotions. On one hand, relieved sighs have been heard from Wall Street, but many people are spitting mad. In the aftermath of the bill’s passage, some key sections of the Emergency Economic Stabilization Act of 2008 have been overshadowed by chaos in the stock market.

From an environmental standpoint, the biggest news is that the bail out bill renews the tax credits for alternative energy. After the bailout bill was defeated, language from the recently defeated Energy Improvement and Extension Act of 2008 was added to the second version. It provides tax credits for wind, solar, fuel cell, micro turbines, co-generation, and geothermal systems and the benefits have been extended as far as January 1, 2017. Also, tax incentives were added for “marine and hydrokinetic renewable energy” (new technologies that capture energy from waves and tidal forces).

The bill contains a few other surprises. The ceilings were raised on just about every type of tax credit. For instance, the maximum incentive for fuel cells was raised from $500 to $1,500. Wind turbines that produce less than 100 kW are now eligible for up to $4,000 of credit (that means projects up to $13,333 are eligible for a full 30% tax credit). Heat pumps qualify for up to $2,000 of credit. And solar panels now have an unlimited credit. Here’s a concise summary of the new tax benefits and other impacts.

Also of interest – the Emergency Economic Stabilization Bill allows for up to $800,000,000 of Renewable Energy Bonds, with those bonds split between public energy providers, government bodies, and private energy providers. There are also tax breaks offered for “clean” coal, coal liquefication (for use as a gasoline substitute) and coal gasification (a process that improves burn efficiency within coal turbines). One of the biggest surprises is that the bill now rewards power companies and steel producers for capturing carbon emissions. There’s a requirement that 65-70% of carbon dioxide produced from coal must be captured and sequestered to receive credit, and the projects that sequester carbon better than their competitors are given the highest funding priority.

That’s right – the benefits offered to coal producers and consumers come with strings attached. The bill even gives a tax credit for carbon sequestering! From page 175 of the 451 page bill:

‘‘SEC. 45Q. CREDIT FOR CARBON DIOXIDE SEQUESTRATION.
(a) GENERAL RULE.—For purposes of section 38, the carbon dioxide sequestration credit for any taxable
year is an amount equal to the sum of—
(1) $20 per metric ton of qualified carbon dioxide which is—
(A) captured by the taxpayer at a qualified facility, and
(B) disposed of by the taxpayer in secure geological storage, and
(2) $10 per metric ton of qualified carbon doxide which is-
(A) captured by the taxpayer at a qualified facility, and
(B) used by the taxpayer as a tertiary injectant in a qualified enhanced oil or natural gas recovery project.

Since many oil companies are injecting CO2 into the ground already to boost production, it’s questionable whether the second half of this carbon credit will create any new benefits to the environment. There is also some concern that carbon dioxide injected into the ground can increase the acidity of groundwater and escape over time. But, if you have any great ideas about how to remove carbon dioxide from the atmosphere, now is the time to put them into practice. It may be a bit tricky to get financing though – despite the passage of the alternative energy friendly bill, many green companies are having trouble securing financing and now might not be the best time for an IPO.


Photo courtesy of Gemma Kate Thorpe’s at Flickr.com.

ecoreason October 13, 2008 at 6:43 am

The credits for small renewable energy systems that could take businesses, households and municipalities progressively off the grid are dwarfed by the credits awarded to industrial scale projects. One of the industrial projects in particular, large scale wind, has never displaced a single conventional power plant and actually increases regional electric costs, despite two generations of experience in Europe with high wind penetration, because it cannot provide dispatchable electricity. Why isn’t this a waste of money?

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