Energy bill tax breaks raise a few eyebrows

A bill that would give a tax break to wind parks and biomass facilities is raising eyebrows at the Utah Legislature, in particular regarding a provision that also would grant exemptions to facilities that burn tires and waste coal.

The draft legislation encourages the building of renewable energy projects, such as wind parks, by waiving the sales and use tax on energy-related equipment and machinery.

Yet the bill also provides for so-called "waste energy facilities," like plants that generate electricity through the burning of waste materials such as tires, waste coal and oil shale.

On Wednesday, Rep. Ty McCartney, D-Salt Lake City, told members of the Legislature's Public Utilities and Technology Interim Committee that the provision — extending a sales tax exemption to such facilities under the guise of renewable energies — caused him "great concern."

"Clearly burning tires and other waste is not renewable energy," McCartney told the Deseret Morning News. "I think it should be in a separate bill."

But Sen. Leonard Blackham, R-Moroni, co-chair of the committee and sponsor of the bill, said the incentive could prove valuable in turning

waste products into electricity and helping to ease pressure on expanding landfills.

Sen. Mike Dmitrich, D-Price, added that the incentive would help to eliminate millions of tons of low-grade coal while producing electricity.

"It costs companies a lot of money to store that stuff," Dmitrich said. "But it also costs money to reclaim it. The bill will help develop the technology to burn this stuff."

That technology, called fluidized bed combustion, has been around for about 50 years, according to a manager in Canada's Department of Natural Resources who asked not to be identified.

He said the technology is used in Canada to burn coal that has a high sulfur content.

The system also can handle waste coal and tires as fuel. And nitrous oxides and sulfur oxides emissions are lower in fluidized combustion systems compared to more traditional coal-fired plants.

"It certainly isn't an unknown technology," the analyst said. "It will work. It is known. It will reduce emissions. You just have to spend a little more money to get there."

However, if Utah offers a sales tax credit, fluidized combustion systems could become more attractive.

Michael Peterson, executive director of the Utah Rural Electric Association, said the bill's sales tax exemption for waste facilities was inserted at the urging of his organization.

"It's a clean coal technology," Peterson said. "What we're talking about is coal that is being landfilled."

With fluidized combustion systems, Peterson said, Utah would be home to some of the cleanest coal plants in the country.

"If you look at the renewable energy portion, that's not going to carry the state of Utah," Peterson said. "If we rely on gas we've got volatility up and down. And if you build a standard coal plant you've got all the emissions."

Christine Watson, energy engineer for the Utah Energy Office, said she supports the sales tax exemption provision for waste coal facilities if it can be shown to have lower emissions of nitrous oxides, sulfur oxides and mercury.

"In a perfect world," Watson said, "I think we would like to see them in two separate bills."

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E-mail: danderton@desnews.com

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