Rescue deal has a break for coal

GILLETTE, Wyo. (AP) — The $700 billion federal bailout package includes tax credits for carbon sequestration, the use of carbon dioxide in oil and gas recovery and the production of jet fuel derived from coal — all of which could benefit the energy economy in states such as Wyoming and Utah.

"It's a wonderful financial opportunity to people," said Rep. Tom Lubnau, R-Gillette. "I think it was buried in the legislation and nobody knows except for the industry, but there is lots and lots of interest."

The federal bailout offers tax credits of $20 per ton of carbon dioxide captured or sequestered and $10 per each ton of carbon dioxide used in enhanced recovery of oil or natural gas. CO2 is thought by some to be a major contributor to global warming, and coal-burning power plants are a major source of the pollutant.

Capturing and storing the CO2 underground, known as carbon sequestration, is the focus of research to keep it out of the atmosphere.

Wyoming has been working on establishing regulatory oversight of commercial-scale carbon sequestration.

Lubnau said the tax credits are a "free ticket to money" and appear aimed at trying to speed up involvement of the energy companies in the CO2 issue.

It will take the industry some time to discover the potential of the federal bill, but it certainly will boost the development of the CO2 sequestration technology, he said.

"There's going to be so many demands for the tax credit that people will pressure the government to speed up their programs," Lubnau said.

While the technology for CO2 capture and sequestration on a commercial scale is still being developed, the use of CO2 in enhanced oil recovery is well established and widely used.

The bailout also includes a 50-cents per gallon tax credit for jet fuel derived from coal, mostly aimed at a Department of Defense effort to secure a domestic fuel feedstock. It's unclear whether this could be applied to DKRW Energy's proposed coal-to-liquids project in Carbon County.

The tax credits are a positive for Wyoming's coal and oil industries, said Brad Enzi, vice president of governmental affairs for North American Power Group, which is developing a coal power plant near Wright.

"It should help finance future coal technologies and hopefully make those more financially viable than they are right now," Enzi said.