According to the Connecticut Center for Advanced Technology Inc., Connecticut’s fuel cell industry employs 2,100 people and generates $29 million in state tax revenue. However, the private business sector in Connecticut has been hesitant to invest in fuel cell technology because of the high cost of manufacturing.

The recent bailout passed last week could end up helping Connecticut’s fuel cell industry, as one provision in the law triples the income tax credit for businesses that install fuel cells. The credits, which were originally set to expire this year, will now be available until 2016, according to an article by the Hartford Courant.

This new incentive will offer $3,000 per kilowatt, with a cap equal to 30 percent of the project’s cost. It’s designed to reduce the high cost of fuel cells, which use hydrogen and oxygen to produce electricity, heat and water. Businesses and utilities that install fuel cells will be able to deduct the expense of fuel cells, within certain limits, from their federal income taxes.

House Minority Leader Lawrence F. Cafero Jr., R-Norwalk, proposed a bill in March to issue $200 million worth of state bonds to pay for fuel cell buses and fuel cell-generated power for Bradley International Airport. He thinks the federal credit is a step in the right direction.

“What better way to kick-start this industry than partnering with private enterprise?” Cafero said in the article. “We have 20 percent of the fuel cell industry right in our backyard, and frankly, we don’t have much to show for it.”

Other state level efforts to transform fuel cells into a more competitive power source have previously failed. In October 2007, a report by the Connecticut Academy of Science and Engineering concluded that fuel cells would not be a good choice to power Metro-North trains on the New Haven line. Two months later, state regulators approved three fuel cell electricity generation projects for power contracts, but rejected three larger projects that were proposed.

Many fuel cell companies say the federal credit will help. The new federal law also renewed tax credits for solar energy, biodiesel and other renewable energy sources.