Both loan guarantees and tax incentives have been available to the private sector for clean coal activities following enactment of the Energy Policy Act of 2005 (EPACT05, P.L. 109-58 ). At issue for Congress is the extent to which the private sector has used these financial tools—and whether they are the right tools—to develop the technology needed for reducing carbon dioxide (CO 2 ) emissions from fossil fuel power plants while continuing to use available domestic coal reserves for electricity generation. Coal represents a major energy resource for the United States. Coal-fired power plants provided approximately 37% of U.S. generated electricity (about 1.5 billion megawatt-hours) in 2012, while consuming over 800 million tons of coal. Power plants that use coal are also a major source of greenhouse gas emissions in the United States. The use of coal for electricity generation complicates policy efforts to reduce U.S. greenhouse gas emissions. Mitigating CO 2 emissions has become the primary focus of U.S. Department of Energy efforts within the clean coal research and development program (now Coal R&D) within its Office of Fossil Energy. 16511-16514) authorized the Secretary of Energy to make loan guarantees for projects that (1) avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases; and (2) employ new or significantly improved technologies as compared to commercial technologies in service in the United States at the time. Projects Awarded Loan Guarantees

No loan guarantees have been issued to clean coal projects since enactment of EPACT05. Tax Incentives

Clean coal investment tax credits were first authorized in EPACT05. Additional tax incentives for clean coal were provided in P.L. 110-343 , the Emergency Economic Stabilization Act of 2008 (EESA). Investment Tax Credits

EPACT05 codified two new sections in the Internal Revenue Code (IRC). IRC Section 48A provides tax credits for investment in qualifying advanced coal projects. The second clean coal investment tax credit established under EPACT05, IRC Section 48B, provides tax credits for investment in qualifying gasification projects. Under Section 45Q, taxpayers may claim a $20 per metric ton credit ($21.51 in 2014, adjusted for inflation) for qualifying domestic carbon dioxide that is captured and sequestered. Loan Guarantees

A question for Congress to consider is why no loan guarantees have been issued for clean coal projects, despite several authorizations of appropriations and two solicitations. Yet, only two Section 1703 projects, both nuclear power-related, have received or are on the path to obtaining loan guarantees since enactment of EPACT05 nearly 10 years ago. Tax Incentives

When it comes to tax incentives for clean coal and carbon capture and sequestration, there are several options for Congress to consider. One option is to maintain the status quo, which would essentially allow existing tax incentives to phase out. A second option is for Congress to authorize additional funding for investment tax credits under Sections 48A and 48B.
Coal represents a major energy resource for the United States. Coal-fired power plants provided approximately 37% of U.S. generated electricity (about 1.5 billion megawatt-hours) in 2012, while consuming over 800 million tons of coal. Power plants that use coal are also a major source of greenhouse gas emissions in the United States, contributing approximately 28% of total U.S. CO2 emissions in 2012.
As part of federal efforts to reduce greenhouse gas emissions, loan guarantees and tax incentives have been made available to support private sector investment in "clean coal." Both loan guarantees and tax incentives were included in the Energy Policy Act of 2005 (EPACT05, P.L. 109-58). Mitigating CO2 emissions has also become the primary focus of U.S. Department of Energy (DOE) efforts within the clean coal research and development program (now Coal R&D) within its Office of Fossil Energy. At issue for Congress is the extent to which the private sector has used the financial incentive tools available, and whether they are the right tools for promoting the development of technology to reduce CO2 emissions from fossil fuel power plants.
No loan guarantees have been issued to clean coal projects since enactment of Section 1703 of EPACT05. This legislation authorized the Secretary of Energy to make loan guarantees for projects that (1) avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases; and (2) employ new or significantly improved technologies as compared to commercial technologies in service in the United States at the time. Only two projects, both nuclear power-related, have obtained or are on track to obtain loan guarantees under Section 1703. A question for Congress to consider is why no loan guarantees have been issued for clean coal projects under Section 1703, despite several authorizations of appropriations and two solicitations for proposals since enactment of EPACT05.
Tax incentives for clean coal were first authorized in EPACT05. EPACT05 codified two new sections in the Internal Revenue Code: Section 48A was added to provide tax credits for qualifying advanced coal projects; and Section 48B provides tax credits to qualifying gasification projects. Additional tax incentives for clean coal were included in P.L. 110-343, the Emergency Economic Stabilization Act of 2008 (EESA). EESA provided additional funding for clean coal investment tax credits. EESA also included the Section 45Q CO2 sequestration credit, under which taxpayers may claim up to a $20 per metric ton credit for qualifying domestic CO2 that is captured and sequestered.
Regarding tax incentives, Congress might consider several options: (1) maintain the status quo, which would allow existing tax incentives to phase out; (2) authorize additional funding for existing tax incentives; or (3) redesign tax incentives for clean coal or carbon capture and sequestration related technologies. Several projects that were previously allocated tax credits have been cancelled. A question for Congress is whether there is demand for tax benefits in their current form. Further, are tax incentives an effective tool for encouraging investment in clean coal technologies?