OIL SHALE TAX CREDIT MAKES WAY IN TO RESCUE PACKAGE
A federal financial bailout signed into law Friday includes a tax credit for oil shale development, environmental groups say.
They immediately criticized several fossil-fuel measures in the bill as pork-laden bailouts for “Big Oil.”
“In the wee hours of the night, a bailout originally intended to rescue us from the credit crisis now contains billions in subsidies for oil shale, liquid coal, and unproven schemes to store carbon dioxide from coal and oil,” John Passacantando, executive director of Greenpeace USA, said in a prepared statement.
No industry representatives familiar with the oil shale provision could be reached for comment Friday.
Bobby McEnaney, a staff advocate for the Natural Resources Defense Council, said subsidies for oil shale and tar sands were included in a Senate version of the bailout bill. The House on Friday passed the Senate bill without amendments and President Bush signed it.
McEnaney said the council appreciates bailout bill provisions that extend existing tax credits for investments in renewable energies such as wind and solar. But he said taxpayers also are now on the hook to provide more than $2 billion in subsidies for oil shale and tar sands development over the next 10 years.
McEnaney said the measure will provide a tax credit of 50 percent for a company’s first year of capital investment in an oil shale refinery. He said it’s not yet clear whether the definition of a refinery would include industry-proposed methods of freeing up oil from shale underground through means such as heating it and then pumping it to the surface. But that’s “entirely possible,” he said.
McEnaney worries that such a tax credit could serve as a lure to get investors interested in oil shale. That could create another oil shale development “bubble” like the one that went bust in the early 1980s in western Colorado, he said.
“I think it might accelerate investment into refineries that aren’t quite ready for prime time,” McEnaney said.
He believes the move toward oil shale development is occurring too quickly.
“I think we have to make sure it’s done in an environmentally sustainable way,” McEnaney said.
The bailout bill also expands and modifies a tax credit for coal gasification projects. Environmentalists say oil shale, tar sands and liquid coal development all would contribute to global warming more than conventional oil does.