The National Rural Electric Cooperative Association (NRECA) hailed the introduction in both the House and Senate of federal legislation to spur the development of clean coal technology that will ease America’s transition to a carbon-constrained world.
Senators Orrin Hatch (R-Utah) and Kent Conrad (D-ND) introduced the bi-partisan bill in the Senate in June; Reps. Pomeroy (D-ND) and Lewis (R-KY) have introduced the bill in the House.
Founded on an industry-wide consensus that the U.S. must find ways to reduce carbon emissions from power generation using coal, The Carbon Reduction Technology Bridge Act of 2008 establishes tax incentives and a new bond program to promote increased efficiency as well as carbon capture and sequestration (CCS) technology.
“Given the carbon-reduction targets some in Congress have proposed for 2030 and beyond, lawmakers need to take some immediate steps to help deliver the technology needed to get us there,” said Glenn English, CEO of the National Rural Electric Cooperative Association (NRECA).
Electric cooperatives own about five percent of the nation’s electric generation, and must add over 22,000 MW of capacity to keep up with rising electricity demand over the next ten years. Advanced clean coal technology that helps to reduce CO2 emissions will be crucial for meeting those increased capacity needs affordably and reliably. Yet scientists agree that carbon capture and sequestration (CCS) will not be available until 2020 at the earliest – even with major investments in research and development. A significant technology “push” is needed to make environmental technologies like CCS commercially feasible.
Clean Coal Energy Bonds -- A clean coal bond, modeled on the Clean Renewable Energy Bonds program, is provided for electric cooperatives and public power systems under the bill. The Bonds act as low-interest loans. The co-op would sell the bond and then repay principal to the bondholder over the life of the bond. The federal government provides the bondholder with a tax credit in lieu of the co-op paying interest on the bond. $5 billion in bonding authority is available until expended.
Co-ops may utilize the bonds to finance any qualified projects described in the bill, including:
- Efficiency improvements to existing plants
- Closed-loop biomass facilities that co-fire with coal
- New efficient coal plants with carbon capture and storage
- Carbon capture and storage equipment on existing or new facilities
For investor-owned utilities, the bill offers tax incentives for these programs and, in addition, a “carbon reduction tax credit” to reward sequestration of CO2. The credit is $30 per metric ton of CO2 stored in a geological formation; $20 per metric ton if transferred to the U.S. Government and $15 per metric ton if injected in an oil and gas pipeline for enhanced oil recovery.