Exclusive: U.S. Congress launches probe into multibillion-dollar 'clean
coal' tax credit
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[March 15, 2021]
By Tim McLaughlin
BOSTON (Reuters) - The U.S. Congress is
investigating a multibillion-dollar subsidy for chemically treated coal
that is meant to reduce smokestack pollution, after evidence emerged
that power plants using the fuel produced more smog not less.
The outcome of the probe could play a big role in whether lawmakers vote
to renew the subsidy, on track to expire at the end of this year.
The Government Accountability Office, the investigative arm of Congress,
is examining the refined coal tax credit program which generates at
least $1 billion a year for U.S. corporations, according to GAO analysts
that contacted Reuters requesting information.
Three U.S. Democratic senators called for the investigation after a
Reuters Special Report series in December 2018 revealed that many power
plants burning the fuel, which supporters call "clean coal", pumped out
more pollution than previously.
To read the stories click here https://www.reuters.com/article/us-usa-coal-pollution-specialreport/special-report-u-s-clean-coal-program-fails-to-deliver-on-smog-cuts-idUSKBN1O2171.
An independent nonprofit Resources for the Future later confirmed the
Reuters report, concluding that power plants using refined coal were not
cutting mercury, nitrogen oxide and sulfur dioxide pollution to levels
required by the tax credit program.
In 2019, Senators Sheldon Whitehouse of Rhode Island, Elizabeth Warren
of Massachusetts and Sherrod Brown of Ohio made a formal request for the
GAO to investigate the program.
Over the past decade, a who's who of American companies have reaped at
least several billion dollars in benefits from investing in refined coal
operations.
Just last year, some 150 million tons of refined coal was burned in the
United States, according to the U.S. Energy Information Administration.
Producers get a tax credit of $7.30 for each ton burned.
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A general view of the New Madrid Power in Conran, Missouri, U.S.,
February 27, 2020. Picture taken February 27, 2020. REUTERS/Tim
McLaughlin
Beneficiaries include global insurance brokerage Arthur J. Gallagher
& Co, Detroit utility DTE Energy Co, Boston-based Fidelity
Investments, Goldman Sachs Group Inc, JPMorgan Chase & Co Inc,
pharmaceutical giant Mylan NV and Waste Management Inc, according to
disclosures reviewed by Reuters.
The Internal Revenue Service, which oversees the tax credit program,
allows the companies to qualify by testing relatively small amounts
of refined coal in a laboratory once a year, in lieu of real-world
emissions measurements at power plants, the Reuters Special Report
found.
The tax credit is due to expire at the end of this year, but
Congress could vote to extend it.
Doug Howell, the chief financial officer of Arthur J. Gallagher, is
holding out hope that they will.
"I always think there's a chance," Howell said during a Jan. 28th
conference call with analysts and investors. "We hope that there are
some proposed legislative changes that would - that possibly could
make the extension happen."
His company has stockpiled about $1.5 billion in tax credits from
investing in refined coal activities. Of that amount, about $1
billion remain to be used in future years to offset federal tax
liabilities, according to the company's financial reports.
(Reporting By Tim McLaughlin; editing by Richard Valdmanis and David
Gregorio)
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