U.S. to allocate coal tax credits on carbon capture

Coal is mixed in a coal mix hall at the Prosper II mine in Bottrop, Germany, January 30, 2007. The Bush administration on Thursday said tax credits of $650 million for advanced coal and gasification projects would be allocated under a new ranking system favoring projects that capture and sequester carbon dioxide emissions.

WASHINGTON (Reuters) - The Bush administration on Thursday said tax credits of $650 million for advanced coal and gasification projects would be allocated under a new ranking system favoring projects that capture and sequester carbon dioxide emissions.

The Treasury Department and Department of Energy said the deadline for new project applications under the 2007-2008 tax credit application round were due October 31.

The Department of Energy will allocate the credits based on the rankings of the certified project applications received, the Treasury said in a statement.

"The modified allocation method will substantially favor projects that capture and sequester carbon dioxide emissions and will favor to a lesser extent projects optimized for future carbon dioxide capture," the Treasury said.

President George W. Bush last week announced a new greenhouse gas strategy that seeks to persuade the world's top emitters of carbon dioxide and other heat-trapping gases, including rapidly developing China and India, to agree on voluntary goals on reducing output of emissions.