Energy Improvement and Extension Act of 2008 and coal
In September, 2008, the US Congress passed a $700 billion financial bailout package, H.R. 1424, entitled the Emergency Economic Stabilization Act of 2008. Folded into the final version of the bill was a previously separate piece of legislation known as the Energy Improvement and Extension Act of 2008, which included $10.8 billion in energy incentives, of which $2.8 billion represented tax breaks for the coal industry.
Sen. Jay Rockefeller, D-W.Va. was one of the leading advocates of the tax breaks for coal. The provisions include incentives for carbon capture and storage technology and for coal-to-liquids technology.
The bill also extends tax breaks for renewable energy and energy efficiency:
- Extends the Renewable Energy Production Tax Credit through 2009 for wind and 2010 for other renewables.
- Extends the Investment Tax Credit for solar and fuel cell technologies through 2016, removes the $2,000 cap, and expands it to include small wind, geothermal and combined heat and power.
- Extends the Biodiesel Production Tax Credit through 2009 and closes the “splash and dash” loophole, under which biodiesel that is imported then exported is eligible for the tax credit.
- Authorizes $800 million in new Clean Renewable Energy Bonds for state, local and tribal governments’ public power providers and electric cooperatives.
- Extends the Tax Credits for Energy Efficient Homes through 2009.
- Extends the Tax Deduction for Energy Efficient Commercial Buildings through 2013.
- Extends the Manufacturer Tax Incentives for Efficient Appliances through 2010.
- Creates a new tax credit of up to $7,500 for Plug-In Electric Vehicles.
Coal provisions include:
- $1.4 billion in tax breaks over 10 years to power projects that will capture and store at least 65 percent of their total carbon dioxide emissions;
- $1.1 billion for a $20 per ton tax credit for carbon capture and storage.
The coal investment credit will cost $389 million in the first year of implementation, according to the Congressional Budget Office.
Coal industry reaction
The incentives included in the bailout package are so favorable to the coal industry, that the National Mining Association issued a press release praising the legislation:
"The U.S. Congress this week took important steps to continue progress on the development and deployment of technologies that will result in cleaner electricity generated from coal—America’s most abundant energy resource—and coal-to-liquid (CTL) 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.
NMA thanks all members of the House and Senate who championed these measures, particularly Sens. Max Baucus (D-Mont.), Mitch McConnell (R-Ky.), and Jay Rockefeller (D-W.Va.) and Reps. Roy Blunt (R-Mo.) and Artur Davis (D-Ala.) for their leadership and assistance."
The president of the West Virginia Coal Assocation, Bill Raney, also lauded the legislation:
"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."
Details on Provisions
The energy-related contents are as follows:
- TITLE I—ENERGY PRODUCTION INCENTIVES
- Subtitle A—Renewable Energy Incentives
- Sec. 101. Renewable energy credit.
- Sec. 102. Production credit for electricity produced from marine renewables.
- Sec. 103. Energy credit.
- Sec. 104. Energy credit for small wind property.
- Sec. 105. Energy credit for geothermal heat pump systems.
- Sec. 106. Credit for residential energy efficient property.
- Sec. 107. New clean renewable energy bonds.
- Sec. 108. Credit for steel industry fuel.
- Sec. 109. Special rule to implement FERC and State electric restructuring policy.
- Subtitle B—Carbon Mitigation and Coal Provisions
- Sec. 111. Expansion and modification of advanced coal project investment credit.
- Sec. 112. Expansion and modification of coal gasification investment credit.
- Sec. 113. Temporary increase in coal excise tax; funding of Black Lung Disability Trust Fund.
- Sec. 114. Special rules for refund of the coal excise tax to certain coal producers and exporters.
- Sec. 115. Tax credit for carbon dioxide sequestration.
- Sec. 116. Certain income and gains relating to industrial source carbon dioxide treated as qualifying income for publicly traded partnerships.
- Sec. 117. Carbon audit of the tax code.
- TITLE II—TRANSPORTATION AND DOMESTIC FUEL SECURITY PROVISIONS
- Sec. 201. Inclusion of cellulosic biofuel in bonus depreciation for biomass ethanol plant property.
- Sec. 202. Credits for biodiesel and renewable diesel.
- Sec. 203. Clarification that credits for fuel are designed to provide an incentive for United States production.
- Sec. 204. Extension and modification of alternative fuel credit.
- Sec. 205. Credit for new qualified plug-in electric drive motor vehicles.
- Sec. 206. Exclusion from heavy truck tax for idling reduction units and advanced insulation.
- Sec. 207. Alternative fuel vehicle refueling property credit.
- Sec. 208. Certain income and gains relating to alcohol fuels and mixtures, biodiesel fuels and mixtures, and alternative fuels and mixtures treated as qualifying income for publicly traded partnerships.
- Sec. 209. Extension and modification of election to expense certain refineries.
- Sec. 210. Extension of suspension of taxable income limit on percentage depletion for oil and natural gas produced from marginal properties.
- Sec. 211. Transportation fringe benefit to bicycle commuters.
- TITLE III—ENERGY CONSERVATION AND EFFICIENCY PROVISIONS
- Sec. 301. Qualified energy conservation bonds.
- Sec. 302. Credit for nonbusiness energy property.
- Sec. 303. Energy efficient commercial buildings deduction.
- Sec. 304. New energy efficient home credit.
- Sec. 305. Modifications of energy efficient appliance credit for appliances produced after 2007.
- Sec. 306. Accelerated recovery period for depreciation of smart meters and smart grid systems.
- Sec. 307. Qualified green building and sustainable design projects.
- Sec. 308. Special depreciation allowance for certain reuse and recycling property.
- TITLE IV—REVENUE PROVISIONS
- Sec. 401. Limitation of deduction for income attributable to domestic production of oil, gas, or primary products thereof.
- Sec. 402. Elimination of the different treatment of foreign oil and gas extraction income and foreign oil related income for purposes of the foreign tax credit.
- Sec. 403. Broker reporting of customer’s basis in securities transactions.
- Sec. 404. 0.2 percent FUTA surtax.
- Sec. 405. Increase and extension of Oil Spill Liability Trust Fund tax.
Articles and Resources
- Ken Ward, Jr., "Coal gets help in financial bailout" Charleston Gazette, October 7, 2008.
- Julie Cart, "'Dirty fuels' profit by bailout bill's tax breaks for renewable energy", Los Angeles Times, 10/4/08
- "NMA Supports Congressional Action on Important Energy Matters," National Mining Association, October 3, 2008.
- George Hohmann, "Bailout legislation contains millions for coal," Charleston Daily Mail, October 7, 2008.
- Text of H. R. 1424
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