Tax Credit Glitch Gives Wrong Signals and Fuels IGCC vs. PC Debate
Although we just highlighted the problem with the selection process used by DOE to award Phase I tax credits under EPAct 2005, I wanted bring your attention to this news report out of Sioux Falls SD.
The news is on Basin Electric Coop's failure to secure a tax credit for their project, and shows just how something like this can give the wrong signals, and add fuel the debate over whether IGCC is the way to go for clean coal projects.
Just take a look at this article and see how the proponents of the Big Stone II coal plant twists the news around to show how "failure of Basin's tax credit application vindicates the decision to use conventional coal."
Let's hope that the right forces come into play over the next few months so that the 99% sulfur removal rule is modified for low sulfur coals so that good projects using sub-bituminous coal get a chance to get their share of the Phase II awards due out in June.
South Dakota coal-gas plant on hold after not getting a tax credit
By Ben Shouse
Argus Leader, Sioux Falls SD
Dec. 6, 2006
Cleaner coal technology hit a speed bump Tuesday in South Dakota, as a major power supplier announced it did not receive a key federal tax credit.
Basin Electric Power Cooperative had proposed a plant near Huron or Mobridge to use integrated gasification combined cycle, or IGCC.
The technology converts coal to a gas before burning, which greatly reduces air pollution and could some day allow the capture of carbon dioxide, the gas most responsible for global warming.
But the project might not be economical without a federal tax credit, said spokesman Daryl Hill in Bismarck, N.D.
"That doesn't mean we're abandoning work on that, but you're right, it does slow that timetable of working with IGCC," Hill said.
Basin sells electricity to rural cooperatives in South Dakota and eight other states. Hill said Basin will decide on a site and a technology in 2007.
A major obstacle to building an IGCC plant in South Dakota is the type of coal it would use. The best source is the Powder River Basin in Wyoming.
The 2005 energy bill, which created the coal tax credit, required plants to reduce sulfur dioxide emissions by 99 percent. But Powder River coal is already low in sulfur. Energy Secretary Samuel Bodman acknowledged that when he announced the credit recipients Thursday and said he is working to resolve it.
Seven power companies are planning to build a separate coal plant near Milbank, to be called Big Stone II. Ward Uggerud, vice president of Otter Tail Power Co., said the failure of Basin's tax credit application vindicates the decision to use conventional coal.
"What this underscores is that IGCC is not necessarily there yet for people to proceed with on a commercial application," he said.
Reach Ben Shouse at firstname.lastname@example.org