Loan Guarantees: The Secretary of Energy may make loan guarantees of up to 80 percent of an energy project cost. Eligible projects “avoid, reduce or sequester air pollutants or anthropogenic emissions of greenhouse gases,” or those that “employ new or significantly improved technologies as compared to commercial technologies in service in the United States at the time the guarantee is issued.” The provision is aimed at helping develop the low-carbon energy industry in the U.S. and pays particular attention to gasification. The deadline for application for a loan guarantee was extended to February 26, 2009.
The Secretary of Energy may also provide loan guarantees for an amount up to 90 percent of the unpaid principal and interest due on any loan made to an Indian tribe for energy development. The Secretary is to give priority to any project that uses carbon capture and sequestration and other “new” technologies.
Western CCS: Federal assistance is authorized for a demonstration project to produce energy from a coal mined in the Western United States at an altitude of greater than 4,000 feet above sea level in an integrated gasification combined cycle plant that is carbon capture and sequestration “capable.”
Tax Credits: Section 1307 authorized $1.65 billion in tax credits for clean coal projects: $800 million worth of credit for Integrated Gasification Combined Cycle (IGCC) projects. $500 million for advanced coal electricity generation projects that utilize innovative technologies other than IGCC. $350 million for gasification projects that support activities other than electricity generation such as the production of gases used in chemical production.IGCC and industrial gasification projects are eligible for a 20 percent investment tax credit, while other advanced coal-based projects that produce electricity are eligible for a 15 percent credit.
Cost Sharing: Title IV - Coal, Subtitle A – Clean Coal Power Initiative (CCPI), Section 401. Authorization of Appropriations authorizes the expenditure of $200 million each fiscal year for FY2006-FY2014 for clean coal research in coal-based gasification and combustion technologies. At least 70 percent of the funds must be used ton fund projects on coal-based gasification technologies and 30 percent can be used on “other technologies.” All projects must remove specified amounts of several pollutants and hit thermal efficiency targets. To gain this funding, all demonstration and commercial applications projects require at least a 50 percent cost share from private industry. The Secretary of Energy must give priority to projects that include separation or capture of carbon dioxide or the reduction of the demand for natural gas if deployed.
Title IV – Coal, Subtitle C – Clean Air Coal Program, Section 421. Amendments to the Energy Policy Act of 1992 - This section authorizes $3 billion over seven years to provide loans, cost sharing and cooperative agreements for clean coal technology deployment programs. The gasification provisions authorize a total of $2.5 billion to be spent on gasification projects to include IGCC, gasification co-production, hybrid gasification/combustion, advanced coal projects including oxidation combustion and chemical looping techniques as well as ultrasupercritical boilers and fuel cells. Between 25 and 75 percent of the projects must be for the sole purposes of generating electricity. Financial assistance to the projects is to be determined by the Secretary and cost sharing shall not exceed 50 percent.
EXPERIENCE:
In November 2006, DOE and Treasury announced $1 billion in tax credit awards to nine clean coal and advanced gasification plants.
