The Wall Street bailout bill signed into law last week was sweetened with tax credits for renewable forms of energy as well as America's largest finite energy resource; coal.

Tax credits for carbon sequestration and converting coal into liquid fuels are key ingredients for securing Wyoming's coal and oil industries in a future of carbon controls, according to local officials.

The credits would add up to about $1.5 billion.

"The federal government has helped monetize, in some ways, actions for carbon sequestration," said Rep. Tom Lubnau, R-Gillette.

Lubnau is among a handful of Wyoming legislators who have worked to establish a legal framework for commercial-scale carbon sequestration in Wyoming. Separating carbon dioxide from coal both pre-combustion and at the smokestack will be essential in maintaining coal as an electrical feedstock under federal regulations to limit CO2 emissions.

Not only does Wyoming have the largest, most accessible coal field in the nation, but it also has underground geology that engineers and geologists believe will be favorable for storing man-made CO2 an activity essential to meeting future carbon regulations.

Lubnau said the bill includes a $20 per metric ton tax credit for "pure" sequestration activities, and a $10 per metric ton for carbon sequestered in enhanced oil recovery activities.

Wyoming produces about 450 million tons of coal annually most all of it for electrical generation. Every ton of coal burned generates two tons (molecular weight) of CO2. Lubnau said the $20 per ton tax credit could generate more than $1 billion annually in carbon credits, which fund carbon sequestration activities.

"In the near term, coal is going to be fine because there are not a lot of other alternatives right now," said Lubnau. "But in the long term, we need to protect those opportunities."

The bill also included a 50-cents per gallon tax credit for jet fuel derived from coal, mostly aimed at a Department of Defense effort to secure a domestic fuel feedstock. It's unclear whether this could be applied to DKRW Energy's pending Medicine Bow coal-to-liquids project in Carbon County.

So far, the developers plan to produce 13,000 barrels per day of ultra-low sulfur diesel for the Rocky Mountain Region market, according to DKRW. DKRW officials could not be reached for comment Thursday on this story.

Together, the carbon sequestration and coal liquefaction tax credits are a positive for Wyoming's coal and oil industries, said Brad Enzi, vice-president of governmental affairs for North American Power Group.

"It should help finance future coal technologies and hopefully make those more financially viable than they are right now," Enzi said.

The bill also included a provision extending the tax credit for commercial wind energy production, providing some certainty for an industry with big plans in Wyoming. Anticipating the extension, wind developers announced plans for more than 1,500 new wind turbines in the state in coming years.

Contact energy reporter Dustin Bleizeffer at (307) 577-6069 or dustin.bleizeffer@trib.com