Rep. Strickland Urges Treasury Not to Spread Clean Coal Credit Too Thin

I am writing regarding the rules that the Treasury Department and the Internal Revenue Service are developing to implement the clean coal credit in Section 48A of the Internal Revenue Code, particularly, the credit for integrated gasification combined cycle (IGCC) facilities. I firmly believe that new power plants using IGCC technologies will demonstrate that we as a country can burn coal cleanly and efficiently and can find new ways to address environmental challenges like climate change. In fact, there currently are plans to construct an IGCC facility in southern Ohio, and I am committed to making sure that this plant is constructed.

As you know, Congress enacted a clean coal credit for IGCC facilities as part of the Energy Policy Act of 2005. The purpose of the credit is to facilitate the construction of new IGCC plants by providing a jump start for the first few plants through a reduction in higher costs associated with a not-yet-mature technology like IGCC. I understand that the Treasury Department and the IRS are now working on rules to implement this credit and to determine which IGCC facilities will be allocated credits. I hope that in developing these rules care will be taken to meet the intent of the legislation -- to get IGCC facilities up and running as soon as possible in order to advance the development of this technology into the market.

I encourage you to establish rules that allocate the credits only after applicants have provided significant evidence that they can and will construct an IGCC facility. Rushing to allocate credits is counterproductive if the credits are allocated to parties who cannot finance, construct and operate the facilities. To move forward this clean coal technology, credits should be allocated to plants with the best chance of being timely constructed, as evidenced by objective criteria based on tangible milestones.

Finally, the credits are intended to address a cost gap that exists between new innovative coal-based generation technology and today's conventional technologies. As a result, the credit for IGCC facilities should be allocated in a manner which ensures the amount of credits provided will support the advancement of the clean coal technology through meaningful coverage of the cost gap. Spreading the credits over too many facilities will not address the cost gap and will not assure that this cutting edge technology matures.

I urge you to consider these concerns as Treasury and the IRS work to implement the credit program for IGCC that will enable coal, our nation's most abundant and secure energy resource, to be used in a clean and economical manner. Thank you for your attention to this matter.