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Fossil Fuel Politics: How the New Congress Might Change the Mix

How the New Congress Might Change the Mix
Fortnightly Magazine - February 15 2003

fuel and technology choice for electric generation could be affected by electric industry restructuring policies and by environmental initiatives in individual states. In sum, while direct government intervention in fuel markets has waned, federal energy and environmental policies will continue to affect fuel and technology choice for electric generation.


  1. The House and Senate bills proposed extending the alternative fuels production tax credit and expanding the qualifying fuels. The Senate bill extended the credit by three years for new facilities and two years for older facilities that produce certain fuels from lignite. The House bill extended the credit by four years for new facilities and three years for older facilities. The Senate bill included as qualifying fuels refined coal that meets emissions reduction targets, heavy oil, and gas from a coal mine that will be mined for coal.
  2. The Senate bill would have expanded the list of qualifying facilities to include coal co-fired with closed-loop biomass, open-loop biomass, swine and bovine waste, geothermal, solar energy, small irrigation power facilities, municipal biosolids, and recycled sludge. The bill also would have extended the placed-in-service deadline from 2003 to 2006. The House bill would have expanded the list of qualifying renewables to open-loop biomass and landfill gas and extended the placed-in-service deadline to 2006. It is speculated that under the House bill, by 2020, the tax credit could result in an additional 4 GW of wind capacity, an additional 2 GW of dedicated biomass capacity, and an additional 1 GW of landfill gas capacity. at 14. The overall share of renewable generation capacity could increase from 2.2 percent to 3.4 percent. Id.
  3. The legislation would have created two clean coal technology (CCT) tax credits. In the House version, the first credit would have been a 10 percent investment tax credit for investments in selected types of advanced CCT. The Senate bill would have based the investment credit on a variable rate. The second credit would have been a production credit for electricity generated from either advanced CCTs, or existing retrofitted coal-fired steam generators. The House bill also would have authorized an annual appropriation of $200 million through 2011 toward the Clean Coal Power Initiative to advance efficiency, environmental compliance, and cost competitiveness.
  4. The House version would have treated 50 kilowatt systems as business energy projects, qualifying them for a 10 percent investment tax credit. The recovery period for such investments would be increased from 15 years to 22 years. The Senate bill mirrored the House version, but also allowed property using back-pressure steam turbines to qualify.
  5. The House bill would have created a 10 percent tax credit for investments in stationary fuel cells, subject to a maximum credit of $1,000/kW of capacity. The Senate version provided a tax credit for business use of fuel cells and for stationary microturbine power plants. The credit for fuel cells would have been either 30 percent of costs or $1,000/kW of capacity, whichever is less. For microturbine power plants, the credit amounts to 10 percent of costs, up to $200/kW of capacity.
  6. Mark Holt and Carol Glover, Congressional Research Service,