Dirty Fuels and the Bailout
As Dayo noted earlier, the final version of the bailout bill was sprinkled with goodies for renewable energy—including tax credits for solar investments and a one-year renewal of the production tax credit for wind power. Unfortunately, clean energy wasn't the only kind of energy to get a tax break. The bill also contains some sizeable tax giveaways intended to promote what may well be the dirtiest energy sources in existence: oil shale, tar sands, and liquefied coal.
Taking low-grade fossil fuels—like oil shale, tar sands, or coal—and processing them into liquid fuels for use in transportation is an old idea that's been enjoying a resurgence in popularity, thanks to politicians looking for an alternative to imported petroleum. But according to a recent RAND report, these unconventional fossil fuels would come at a high environmental cost. Fuels derived from tar sands are about 20 percent more carbon-intensive than fuels derived from oil, mostly because of the energy required to cook useable fuel out of the tar sands. Liquid fuels derived from coal are about twice as carbon-intensive as regular fuels, because the chemical process used to convert coal into a liquid releases large amounts of carbon dioxide. And that's not counting the local—and not-so-local—environmental damage caused by digging the raw materials out of the ground, often through strip mining.
Liquefied coal was once—like "clean coal"—an environmentally questionable idea that enjoyed the support of both Barack Obama and John McCain. But after being criticized by environmental groups at the beginning of the primary season, Obama changed his mind, declaring that he would support liquefied coal only if it emitted 20 percent less carbon over its life cycle than conventional fuels. That's something that could conceivably happen, though only in a liquefaction plant that processed biomass as well as coal, and only if it permanently sequestered all of the carbon produced in the liquefaction process. And, while carbon sequestration would make coal-derived fuels more environmentally acceptable, it would also drive up their price—likely to the point where they couldn't compete with regular petroleum-based fuels. That's why their bailout-bill tax break is looking like a lousy investment.
http://blogs.tnr.com/tnr/blogs/environmentandenergy/archive/2008/10/14/d...
