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Transportation and Fuel Components of the Bailout Bill

The Emergency Economic Stabilization Act of 2008 (EESA 2008), a rework of the “Wall Street bailout bill” by the US Senate, was passed by the US House on Friday and shortly thereafter signed into law by President Bush. During the past week, EESA 2008 rapidly became more than only a bill directed at stabilizing the financial sector: the final legislation consists of three main parts (divisions).

The first is the stabilization component, the actual Emergency Economic Stabilization Act of 2008, which provides the $700 billion for dealing with “troubled assets.” The second is the Energy Improvement and Extension Act of 2008 (EIEA 2008), which provides a large number of tax incentives related to energy and fuel production and energy conservation. The third is the Tax Extensions and Alternative Minimum Tax Relief, a broad amalgam of tax policies ranging from extensions of the alternative minimum tax credit; to disaster relief; to specific elements such as income averaging for amounts received in connection with the Exxon Valdez litigation and providing special relief for “certain wooden arrows designed for use by children”.

The Congressional Budget Office (CBO), in an analysis of the bill on Wednesday, concluded that Division B (the division specifically related to energy) would reduce Federal revenues by $6.8 billion, increase outlays by about $0.2 billion, and increase projected deficits by about $7 billion. It concluded that Division C would reduce revenues by about $105.2 billion, increase outlays by $7.1 billion, and increase projected deficits by about $112.3 billion.

The Energy Improvement and Extension Act

The Energy Improvement and Extension Act (Division II of the EESA 2008 bill) makes changes to the Internal Revenue Code of 1986 and is subdivided into four main sections (Titles):

  • Title I: Energy Production Incentives, subdivided into renewable energy incentives and carbon mitigation and coal provisions;

  • Title II: Transportation and Domestic Fuel Security Provisions;

  • Title III: Energy Conservation and Efficiency Provisions; and

  • Title IV: Revenue Provisions.

Title II transportation and fuel provisions in the bill include:

  • Expanding the category of cellulosic biomass ethanol to the broader category of cellulosic biofuel for the calculation of bonus depreciation for ethanol plant property.

  • Increasing the income tax credit and excise tax credits for biodiesel and renewable diesel.

  • Broadening the definition of “renewable diesel” (currently defined as a diesel fuel produced by a thermal depolymerization process), with the exception of renewable diesel co-produced with petroleum feedstock. The expanded definition of renewable diesel now also includes aviation fuel produce from biomass that meets DoD specs for military jet fuel or ASTM specs for aviation turbine fuel.

  • No credits are to applied to any alcohol fuel or biodiesel produced outside the US for use in the US.

  • Extension of the alternative fuel credit, and modification to include compress or liquefied biogas. Credit is now also allowed for aviation use of qualifying alternative fuel. To be eligible for credits under this section, coal-to-liquids fuels must be produced by a gasification facility that captures and stores at least 50% of the CO2 emissions up to 30 December 2009, and 75% for fuel produced after 30 December 2009.

  • Tax credits for the purchase of plug-in hybrid electric vehicles. (Earlier post.) The credit is a base $2,500 plus $417 for each kWh of battery pack capacity in excess of 4 kWh, to a maximum of $7,500 for light-duty vehicles; $10,000 for vehicles with gross vehicle weights of more than 10,000 but less than 14,000 pounds; $12,500 for vehicles with a GVW of more than 14,000 but less than 26,000 pounds; and $15,000 for any vehicle with a GVW of more than 26,000 pounds.

    Phaseout of the credit is to begin after the total number of qualified PHEVs in the US sold after 31 December 2008 is at least 250,000. Qualifying vehicles must have a battery pack with at least 4 kWh of capacity—a provision that will preclude the inclusion of the first generation of Toyota PHEVs as well, potentially, as other lower all-electric range plug-ins.

  • Exclusion of idling reduction units and advanced insulation from the heavy-duty truck tax.

  • Extension of the alternative fuel vehicle refueling property credit, and the inclusion of electricity as a “clean-burning fuel” in this category.

  • Extension of the time period to expense certain refineries, and the inclusion of fuel derived from shale and oil sands.

  • Extension of the suspension of the taxable income limit on percentage depletion for oil and natural gas produced from marginal properties.

  • Inclusion of bicycle commuting as a qualified transportation fringe benefit eligible for exclusion from gross income for the calculation of income tax.

Title I renewable energy production incentives include:

  • Extended periods of tax credit for both renewable (wind, solar, biomass, hydropower,) and coal-based power generation from “refined coal.” “Refined coal” is defined by the IRS tax code as liquid, gaseous, or solid fuel produced from coal used to produce steam. The original tax code required that the refined coal project increase the market value of the refined coal by at least 50% to be eligible for a tax credit. The new law strikes that provision. The new law increases the required reduction in NOx emissions from 20% to 40%. The bill also adds a new category of renewable power generation eligible for credits: marine and hydrokinetic power systems with a nameplate capacity of at least 150 kW.

  • Extended periods of credit for fuel cell, microturbine, and combined heat and power systems.

  • Providing credit to “small wind energy properties” using wind turbine with a maximum nameplate capacity of 100 kW and geothermal heat pump systems.

  • Extending credit for residential energy efficiency properties, including solar, small wind, and geothermal heat pump systems.

  • Support for the issuance of new renewable energy bonds.

  • Applying a credit to refined coal used as feedstock for the manufacture of coke for steelmaking.

Carbon mitigation and coal provisions in Title I include:

  • Expansion of the aggregate credit for advanced coal projects—e.g., integrated gasification combined cycle (IGCC) power generation—from $1.3 billion to $2.55 billion. The bill adds a requirement for sequestration of at least 65% of the total CO2 emissions. Priority is to be given to projects with the highest percentage of carbon capture and storage. There is also a provision for the government “recapturing the benefit” of any credit allowed to a project that fails to attain or maintain its capture and storage requirements.

  • Credit amounts for coal gasification projects are bumped up to 30% from 20%, with a not-to-exceed limit of $3350 million, plus another $250 million for gasification projects that capture and store at least 75% of the project CO2 emissions.

    Eligible projects in this category now include those that produce transportation grade liquid fuels (e.g., Fischer-Tropsch CTL).

  • The bill defers a decrease in the excise tax on coal for five years

  • Adding a new credit to the tax code for carbon dioxide sequestration. The credit is $20/tonne of CO2 which is captured at secured in geological storage, and $10/tonne of CO2 which is used in an enhanced oil or natural gas recovery project.

  • The bill directs the Secretary of the Treasury to commission the National Academy of Sciences to review the tax code to identify both the types of as well as specific tax provisions that have the largest effects on carbon and other greenhouse gas emissions and to estimate the magnitude of those effects. A report is due in two years.



Finally, the production tax credits and other incentives to keep new renewable energy projects moving forward has passed for another year.


Some business people were asked if they would go into renewable energy if there were incentives. Many said no, because you could not count on them staying there long enough for them to get the business going.


This bill will kick start a race for getting range extended EVs and pure EVs (I think EVs qualify as well as long as they can be plugged) out of the lap an into the car dealers. Combine this with the 25 billion dollar loan program for retooling of old factories and this is a very powerful cocktail to speed up the deployment of truly green vehicles that does 100 mpg or much more.

Very good the wind energy program was extended. This will almost guarantee that 10000 MW will be installed in 2009 up from an expected 7500 MW this year. Last year they did a bit over 5000 MW or 30% of all new electric capacity installed in the US. Indeed, we a very close to the day were wind power is capable of doing 100% of all new electric capacity needed in both the US and Europe.

The subsidies for coal are not just a waste of money. It is outright destructive. It compares to giving people money for smoking more. That industry is going to die because it is dirty no matter what is done that and the sooner this is realized the more money we save in the long term. This clean coal branding is like the days when people were given the impression that if they smoked light cigarettes with less nicotine they would be safe.



Good point but it will not stop everybody from pursuing EVs. For instance, they only did the wind program for one or two years in the US and abroad but it still is a mayor success both for the US and globally. Once the lithium battery is proved to work in cars like the Tesla, Volt and Fisker’s Carma everybody else will follow and legislation requiring more mpg and less CO2 emissions will force vehicle producers into this kind of designs. I am sure it is not the last sort of legislation that will make life harder for producers of pure ICE powered vehicles.

Kit P


You should hope that your pet projects like wind and EVs do not get incentives based on environmental benefits or economic benefits. I will be happy to review your claims about coal but it looks pretty good in my backyard. You can keep your windmills and EV in your backyard.


Henrick raises an interesting question. If 2009 sees 10GW of wind installed and some method to store that energy can be utilized (e.g. heat in geo-formations) - just how do we stand for baseload over the next twenty years? Henrick's numbers give us 22.5GW wind power installed in three years 2007-9. That's a lot of added capacity. The next step IMO is to offload portions of the grid to distributed generation utilizing new alternatives across local grids.

All in all this is a BIG win for renewable energy. Clearly, energy is the single most divisive political influence on the planet today. I'd say Congress (in spite of the coal give aways) has done a good job in kick starting the energy independence movement in the U.S. Hopefully other nations will follow.

Kit P

@NRG Nut

The present renewable energy resurgence goes back to 1998 with the RPS in the state of Texas that Governor Bush signed. State RPS are tailored to the resources of each state and many states now have them.

Bush has pushed renewable energy hard. The present congress and leadership deserves no credit. Who have a complaint against coal calling it a give away.

NRG Nut where do you live? Where you live is a problem. Most of the wind PTC are going to Texas. The present Texas governor is against ethanol. Those evil farmers in Iowa are doing good for a change.

The 2005 Energy Bill was very comprehensive. It has something fro everybody. I really liked what was in there for biomass. Everything that I looked at closely were very cost effective incentives.

Is it unfair to say, NRG Nut, that you have never bother to research what you call coal give ways?



10,000MW = 1% of US installed base.

1 Trillion Watts as our current capacity.
1,000 GW.
1 Million MW

The electricty generating capacity of a 1GW coal plant is not equal to 1GW of windmills. Windmill and solar are usually quoted in peak (max) output, but unfortunately, they don't run all of the time.

But, 10,000MW of wind capacity installed per year is a very good start. If it continues to grow, in 20yrs we'll have a lot of wind power, not even counting what solar will do.

Now on to the storage problem!

Henry Gibson

The cheapest way to store electricity from windmills is to not do it at all. Cheap natural gas powered engines or if Capstone ever figures out how to build a one moving part turbine cheaper than a hundred plus moving part engine, turbines should be always ready to generate the electricity that the windmills do not. The costs, including CO2, for operating windmills must include the capital and fuel cost of these replacement power machines.

All wind machines should feed into a Direct Current cable grid of 3000 volts or more. Mass production of converters for the voltage selected can also make this the standard for power grids everywhere. The grid itself will store some energy and flywheel generators can store much more. ZEBRA batteries are the only low maintenance batteries that can deal with this high of voltage. The voltage range can be very flexible because of the availability of modern electronics for converters for each user.

Very slight modifications in the design would allow even a desktop computer power supply to operate at 1000 volts. In the future power should be delivered to each home at 240 volts DC, but with a wide range below this value. Power converters can use this supply to make a reliable 50Hz or 60Hz supply for standard devices.

Cogeneration units including solar and wind would be allowed to feed power into this 240 volt cable until the voltage dropped to 180 volts, so that there is far more flexibility of operation, but safety remains. Many lights, including electronic ballast fluorescents and CFLs can operate directly from these voltages.

Variable frequency drives, that are becomming very popular, can also be easily made to operate on DC. DC transmission can now be higher efficiency than AC transmission. The losses of running AC through metal conduit are not often mentioned. If mass produced in large quantities, electronic drives for all new motors could save energy and eliminate the need for three phase wiring and controls. Simple switches can activate the largest motors. Two of some of the largest electric motors on earth now operate on DC through two pairs of undersea cables.


Bush has been nothing but an obstacle to wind power during his time. Every single time the subsidy 1 to 2 year program for wind power has been up for an extension he has been against it. It is hard pressure and intelligent lobbying from other more environmentally oriented GOPs and DEMs that has forced these bills through against the will of Bush. To say he has supported wind power is either a joke or simply a lack of awareness of what is happening in Washington.

A president that would back wind power 100% would initiate a long-term program that could ensure the continued growth of that industry at 30% to 40% per year in the coming years. To mention a few issues on the wish list:

1) Make a 5 years extension of the program.
2) Require electric utilities to install intelligent meters within 2016 at all their customers from industry to residential that in addition to electricity consumption also inform the customer about the current price per kWh with hourly updates. We a talking $200 devises and they can potentially eliminate most needs for grid upgrades. They are needed in order for electricity consumers to be able to increase and decrease their consumption whenever the price goes down or up. In any grid where renewable electricity is important the price of electricity fluctuates much more than in a classic grid based on power from non-renewable. To be sure in Denmark with 20% from wind power the price of a kWh often go from 1 cent to 30 cents kWh in a day or two depending on how the weather is (30 cents is no wind and 1 cent is strong wind).
3) Commission a group to plan long-term extensions of the US grid to deal with intermittency from alternative energy. To be sure, Denmark has increased wind power to 20% of total electricity production without having to invest importantly in grid infrastructure. However, the grid will need to be seriously upgraded in order to reach 50% from wind power. Since the US is at 1 or 2% today you have lots of time to plan this expansion.

These three issues would be the dream bill for wind energy in the US and in any other country that is serious about cutting the use of non-renewable energy without increasing electricity costs.

Kit P


What planet do you live on, where do you live? Bush has never opposed renewable energy. Denmark does not generate 20% of its electricity with wind. US wind generation is less than 1% and mostly where not very many live.

The problem with Henrik is that he is focused on the insignificant and wrong about it at the same time. Henrik does not understand while the rest of us look at improving the 99%.


" looks pretty good in my backyard.."

"...while the rest of us..."

I would be careful with terms like "rest of us". When it comes to the atmosphere and global warming, there are no "my backyards". It is convenient to think that you are on the side of right and only you see the real truth. It is also unbalanced and can lead to misleading yourself.


I think wind power in US is very good option for time being. Significant natural resources are available - why waist it? Technology in place as well. Just go!!!!

P.S. Load regulation and storage not relevant until significant capacity would be reached (20%). Due to vastness of US territory it might be not relevant at all (wind always blows in some places).


It is my understanding that Denmark's total electricity generating capacity gets ~20% from wind.

They do not consume that 20%, but only 10% according to science friday on NPR.

The other 10% goes to a neighboring country (Norway?) who actually gets 100% from hydroelectric. They buy the wind power to pump water back up over the dam.


A fluctuating cost of from $.01-.30 cents for energy is a serious detriment. For larger customers these fluctuations will play havoc with budgeting, projections and deliverables. If that is the price of wind energy it is doomed. Better to get to work on large scale economic storage for both wind and solar.

With the introduction of Residential Power Units, the amount of energy required from the old grid will drop significantly. Trying to meet future demand with old school design is stepping down the road to energy monopolization. We are just now breaking a century of that with oil.


What the hell? Bush has backed renewables and wind in particular all along. He was and still is BIG on wind he was the govenor when texas went big on wind and HE WAS THE REASON IT DID. He just also happens to be big on nuke power and hydrogen so many forget hes very pro wind and other renewables.

Kit P


When I was developing renewable energy project; I wished my state had the incentives as Texas. What was interesting is that once the economics were proved, wind farms stated going up. After the fact, my state legislature mandated a RPS to match what was already built. Leadership is not doing what is already proven.

I find it interesting that Bush national policy is much broader than what was done in Texas but he did not call for a one size fits all national RPS for electricity.


I do understand AGW. Don’t make me explain again why your leaders in your backyard have misled you. Unlike sjc, I have read California’s energy plan.


Bush has pushed for ethanol to replace more gasoline and I fully support his policy on this renewable. However, he is not and has never been a supporter of wind. He did zero for wind power when he was Texas’s Governor. It has all been done by Rick Perry his successor in Texas which I like a lot more than Bush who will be mainly regarded as a failure as a president for the US and as a world leader. Bush has succeeded with very few things in his term with the ethanol industry being one of his few successes IMO. Others would also say that this program is a failure among them Rick Perry who believe it has increased corn prices that many of his constituencies use for cattle feed which may explain his public stance on this issue. Bush is the primary person responsible for ruining the American economy. Remember he took over a historic huge budget surplus and a booming economy and he leaves with a historic large deficit and an economy that is surely heading for recession and unemployment. His vendetta in Iraq has cost 4000 good men and women their lives and crippled many more and wasted well over a trillion dollar. There were no weapons of mass destruction, Saddam did horrible and unforgivable things but he had the country in control and prevented Al Qaida from gaining any influence. In addition under his rule women and other religions had rights that are now gone.

I guess my point is that things are never pure black or pure white it is always something in between.

PS Denmark import and export electricity from Norway, Sweden and Germany. It may be 10% in total from all countries that sounds likely. Whether 10% import and export is especially much for such a small country like Denmark I don’t think. It may be a little more because the wind power motivated price fluctuations make such trade more profitable (5.4 million people and 43000 square km).

Kit P

So Henrik, George Bush was not governor of Texas in 1998? It is interesting to compare the energy policies of California under Davis and Texas under Bush.

Maybe Henrik should be reminded who was president when natural gas went from cheapest in the world to the most expensive. Maybe Henrik would like to ask aluminum and ammonia workers in the PNW what they think about Clinton. Those jobs are gone and the economy was not booming when Bush took office. Bush did develop an energy policy within just a few months.

It sound like Henrik has forgotten about 9/11. Henrik is too young to remember Jimmy Carter if he claims Bush has ruined the economy. I am thankful that Bush was president when he was.

John Maszka

This bailout is just one more example of the indivisible handjob stroking irresponsible CEOs and CFOs with billions so that they can run the American economy even further into the ground. So much for Keynesian economics. If the goal is to stimulate the economy, why not give the money directly to the American taxpayers? The government could do twice as much good for the economy by returning half as much money (as the bailout requires) directly to the hardworking American taxpayers. A bird in the hand is worth two in the bush administration.


Do the posters here really BELIEVE in claptrap politics? Does anyone here honestly think that the figureheads holding these political offices are anything more than Shakespearean "Poor players?" (i.e. puppets) They are not. To lay blame for one action over another is embarrassingly juvenile. If there is one thing the global warming fiasco has taught us it is that computer simulations are just that - simulations of reality. And not reality.

You want different politics - elect better actors.


"This bailout is just one more example of the indivisible handjob stroking irresponsible CEOs and CFOs with billions so that they can run the American economy even further into the ground."

Hmmmm - Warren Buffett one of the smartest investors piles 2 billion into Goldman Sachs at the height of crisis becoming the white knight.

Hmmmmmmmmmmmmm - Paulson the person with absolute discretionary power over the 700 billion is a Goldman Sachs man.

I wonder which company will get preferential treatment and who will get rich from it?

BTW wasn't 700 billion about the figure that would give Americans the evil socialist universal healthcare? Seems like a health crisis for the poor does not compare to a financial crisis for the rich.

KitP - "It sound like Henrik has forgotten about 9/11. Henrik is too young to remember Jimmy Carter if he claims Bush has ruined the economy. I am thankful that Bush was president when he was."

ROTFL - Yes Bush really prevented 9/11 despite several chances to. What a response when it happened too! Reading to children about a pet goat - boy what a leader. Then his puppet masters (the neocons - how is Pearl lately BTW?) managed to invade the wrong country twice and bankrupted the US morally (Abu Graib and Gitmo), politically (US distrusted everywhere) and financially (nothing need to be said). Not bad in 8 years.


>>>special relief for “certain wooden arrows designed for use by children”<<<

Does every bill that goes through the US Senate have to have pork paperclipped to it?


sulleny - "You want different politics - elect better actors. "

Or lizards - politics will make sense to you after reading this:

"After a long, heart-stopping moment of internal crashes and grumbles of rending machinery, there marched from it, down the ramp, an immense silver robot, a hundred feet tall.
It held up a hand.

``I come in peace,'' it said, adding after a long moment of further grinding, ``take me to your Lizard.''

Ford Prefect, of course, had an explanation for this, as he sat with Arthur...

``It comes from a very ancient democracy, you see ...''

``You mean, it comes from a world of lizards?''

``No,'' said Ford, ``nothing so simple. Nothing anything like so straightforward. On its world, the people are people. The leaders are lizards. The people hate the lizards and the lizards rule the people.''

``Odd,'' said Arthur, ``I thought you said it was a democracy.''

``I did,'' said Ford. ``It is.''

``So,'' said Arthur, hoping he wasn't sounding ridiculously obtuse, ``why don't people get rid of the lizards?''

``It honestly doesn't occur to them,'' said Ford.
``They've all got the vote, so they all pretty much assume that the government they've voted in more or less approximates to the government they want.''

``You mean they actually vote for the lizards?''

``Oh yes,'' said Ford with a shrug, ``of course.''

``But,'' said Arthur, going for the big one again,

``Because if they didn't vote for a lizard,'' said Ford, ``the wrong lizard might get in. Got any gin?''


``I said,'' said Ford, with an increasing air of urgency creeping into his voice, ``have you got any gin?''

``I'll look. Tell me about the lizards.''
Ford shrugged again.
``Some people say that the lizards are the best thing that ever happened to them,'' he said. ``They're completely wrong of course, completely and utterly wrong, but someone's got to say it.''

``But that's terrible,'' said Arthur.

``Listen, bud,'' said Ford, ``if I had one Altairan dollar for every time I heard one bit of the Universe look at another bit of the Universe and say `That's terrible' I wouldn't be sitting here like a lemon looking for a gin. But I haven't and I am...''

From Hitch Hikers Guide to the Galaxy

Kit P


It sound like you are more interested finger pointing that getting to the root cause of a problem and solving it.

On the morning of 9/11, I was focused on renewable energy development. They were debating energy on capital hill. The energy crisis on occurred in California under a dem governor and dem president who failed to provide any leadership.

Another important issue in the US was education the morning of 9/11. There is an epidemic of children with perfectly good minds who can not read well or do simple math. On the morning of 9/11, George Bush was doing the business of the county.

Yes, the most powerful man in the world was reading to school children.

Ender has a bad case of selective moral outrage.

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