US Congress launches probe into multibillion-dollar clean coal tax credit
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.
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.
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)