E3: Refined coal and the environmental implications of a billion dollar tax credit

Despite an overall decline in U.S. coal consumption, refined coal has accounted for an increasing portion of U.S. coal consumption in recent years, reaching nearly 20% in 2018. A federal tax credit has incentivized the use of refined coal since the mid-2000s with subsidies totaling nearly $1 billion annually. The additives used for refining, typically halogens and cement kiln dust, are applied with the intended purpose of reducing nitrogen oxides (NOx) by at least 20% and sulfur dioxide (SO2) or mercury (Hg) by at least 40% compared to standard coal on a thermal energy basis. Firms typically demonstrate tax credit eligibility through a laboratory test, which can diverge from actual operational conditions. A recent analysis using boiler-level power plant emissions data in a panel regression framework suggests that the purported reductions are not achieved in practice. In addition to questionable benefits for air quality, increased use of refined coal in the electric power sector is increasing uncertainty in the effects of wastewater discharges from flue gas desulfurization (FGD) units on downstream drinking water quality. This wastewater contains residual halogens from the refining, and these chemicals alter the formation of carcinogenic disinfection byproducts in drinking water. This session has immediate policy- and decision-maker relevance since the tax credit is up for reauthorization in 2021 and since the EPA is currently revisiting the effluent limitations guidelines and standards (ELGs) for FGD wastewater.

Presenters

  • Kelly Good, Ph.D., P.E., Visiting Assistant Professor, Villanova University
  • Jeanne VanBriesen, Vice Provost for Faculty, Duquesne Light Company Professor, Carnegie Mellon University
  • Brian Prest, Economist, Resources for the Future
  • Alan Krupnick, Senior Fellow, Resources for the Future
  • Dan Dudis, Environmental Counsel, Staff-U.S. Senator Sheldon Whitehouse