Federal coal subsidies

From Global Energy Monitor

Federal coal subsidies are forms of financial assistance paid by federal taxpayers to the coal and power industry. Such subsidies include direct spending, tax breaks and exemptions, low-interest loans, loan guarantees, loan forgiveness, grants, lost government revenue such as discounted royalty fees to mine federal lands, and federally-subsidized external costs, such as health care expenses and environmental clean-up due to the negative effects of coal use. External costs of coal include the loss or degradation of valuable ecosystems and community health.

According to research by GigaOm analyst Adam Lesser, buried in a 2011 report from the International Energy Agency is the fact that fossil fuels currently receive subsidies via "at least 250 mechanisms."[1]

In June 2010, the U.S. Energy Information Administration (EIA) said $557 billion was spent to subsidize fossil fuels globally in 2008, compared to $43 billion in support of renewable energy. In a July 2011 EIA report on federal fossil fuel subsidies, coal was estimated to have tax expenditures (provisions in the federal tax code that reduce the tax liability of firms) with an estimated value of $561 million in FY 2010, down from $3.3 billion in FY 2007.[2]

Government Funding and Loans for Coal Plants and Infrastructure

A 2010 report by Synapse Energy Economics, "Phasing Out Federal Subsidies for Coal" found the U.S. federal government provides billions of dollars in subsidies for the coal industry. The report was written by Lucy Johnston (Synapse Energy Economics), Lisa Hamilton (Rockefeller Family Fund), Mark Kresowik (Sierra Club), Tom Sanzillo (TR Rose Associates), and David Schlissel (Schlissel Technical Consulting) and was released on April 13, 2010.

The report identifies four major areas where taxpayer money continues to fund the construction, expansion, and life extension of coal-fired power plants, thus acting as federal coal subsidies:

  1. Financial support for the World Bank and other international financial institutions that finance fossil fuel use and extraction;
  2. U.S. Treasury Department’s backing of tax exempt bonds and Build America Bonds for use in the electric sector;
  3. U.S. Department of Agriculture’s Rural Utilities Service provision of loans, loan guarantees and lien accommodations to power companies that are investing in new or existing coal plants;
  4. Tax credits, loans and loan guarantees through the U.S. Department of Energy.

The World Bank and other International Finance Institutions

The United States is the largest contributor to the World Bank and a major supporter of other international financial institutions such as the Inter-American Development Bank and the African Development Bank. The United States also provides subsidized financing internationally through the Overseas Private Investment Corporation and the U.S. Export Import Bank. International financial institutions have helped finance 88 new and expanded coal plants since the United Nations Framework Convention on Climate Change (UNFCCC) came into effect in 1994, providing more than $137 billion in direct and indirect financial support for new coal-fired power plants.

Examples of World Bank Funding

Two recent examples of World Bank support for new coal plants include:

  • The 4,000 MW Tata Ultra Mega Power Project in India, with construction funded by the World Bank and the Asian Development Bank. It is scheduled to be completed by 2012.
  • South African power company Eskom’s proposed 4,800 MW Medupi Power Station, one of the largest in the world. The World Bank has approved more than $3 billion and the African Development Bank also provided more than $500 million in financial support for the project.

U.S. Treasury Department: Tax-exempt and Build America Bonds

The Treasury Department’s financial policies currently result in subsidies to owners and developers of coal-fired power plants, particularly tax-exempt financing and interest subsidies for certain bonds that place millions of taxpayer dollars in coal plant investments. Tax-exempt financing is a federal tool used by states and local public authorities to provide billions of dollars in subsidies to build new coal plants and extend the life of existing coal plants: the federal government provides financial assistance to eligible utilities that operate coal-fired power plants through tax-exempt financing, commonly referred to as tax-exempt bonds or municipal bonds. Under Internal Revenue Code (Section 103(a)) the interest earned on any state or local bonds is not included in gross income and is therefore exempt from federal income tax. States, local governments, and Rural Electric Cooperatives use tax-exempt bonds to finance a variety of investments, including investments in power plants and transmission lines.

Examples of U.S. Treasury Department Funding

Examples of new or proposed coal-fired power plants that are funded in part by tax-exempt debt include the following:

  • The Prairie State Energy Campus Project in Illinois is a mine-mouth 1600 MW supercritical steam turbine power plant without carbon capture technology. The more than $4 billion plant has several participating partners, with one partner, the Northern Illinois Municipal Power Agency (NIMPA), buying 120 MW of the 800 MW plant with $303 of its $318 million investment portion financed with tax-exempt debt.
  • The Longleaf Energy Station in Georgia is a proposed 1200 MW pulverized coal fired power plant supported by the Early County (Georgia) Development Authority with federally backed local development bonds.
  • The Two Elk coal plant in Wyoming is a proposed coal plant that purports to use so-called “waste coal” and has received hundreds of millions of dollars in tax-exempt debt authority since it was classified as a solid waste recycling facility. Approval for the tax-exempt financing is currently being audited by the Internal Revenue Service.
  • The Taylorville Energy Center got a $417 million government tax credit in July 2010. The money is from federal stimulus funds approved in 2009, and comes from the Department of Energy and the Treasury Department. Adding the $2.58 billion loan guarantee from the U.S. Energy Department, total federal support for the project is now $3 billion.[3]

Build America Bonds: Additional Source of Funding

A new program under the American Recovery and Reinvestment Act, Build American Bonds (BABs), expands the U.S. Treasury’s use of financing tools to subsidize coal-fired power plants. Under the program, issuers of the taxable bonds are provided a 35% direct pay interest subsidy to reduce the costs of borrowing. Power companies are eligible for these federally subsidized taxable bonds funding under BABs: American Municipal Power Ohio used the tax-exempt bond market to finance the construction of the Prairie State Energy Campus in Illinois and, after the 2009 financial crisis began, issued through the BABs program nearly $500 million dollars of federally subsidized taxable bonds to finance the last phases of construction. The bonds have also been used for scrubbers at existing plants.

The report argues that, traditionally, federal tax-exempt funding has been reserved for low risk activities, but given calls for increased regulation of coal waste and coal ash, the decreasing cost of renewable energy, uncertain coal reserves, and potential cap and trade and carbon tax policies, coal-fired power plants are no longer low-risk investments. The report argues that, due to the risks inherent in coal plant investments, the Federal Government should ensure that disclosure of the financial risks associated with investment in coal-fired power generation is robust and sufficient to permit informed investment and mitigate bond market impacts. Since these risks are not disclosed in a transparent fashion to investors who buy tax-exempt bonds or the federally subsidized taxable BABs, there is misalignment between federal funding and federal energy goals.

U.S. Department of Agriculture’s Rural Utilities Service

The United States Department of Agriculture (USDA) provides assistance to rural electric utilities through the Rural Utilities Service (RUS), which provides direct loans and loan guarantees to rural utilities for the construction or retrofit of electrical transmission, distribution, or generation facilities. The RUS has halted its direct loans for coal-fired power plants; however, it still provides financial assistance to its clients to assist borrowers in obtaining financing from other lenders, and provides loans and loan guarantees to electric cooperatives for purposes other than developing coal-fired power plants.

Lien Accommodation

RUS has recently approved a lien accommodation for the East Kentucky Power Cooperative, Inc. The approval allows the cooperative to move forward with a loan of more than $900 million to construct a new coal-fired power plant. The lien arrangement places other lenders ahead of RUS in receiving reimbursement, if any, in the event of default or foreclosure of the loan, and also gives RUS the option of releasing a lien outright instead of accommodating or subordinating it, placing taxpayer dollars at risk because of the financial vulnerability of RUS borrowers. Borrowers who had high costs, and were unable to raise rates because of regulatory and/or market constraints posed a particular risk of loss to the federal government.

Rural cooperatives are particularly vulnerable since they do not retain profit, and thus have low cash reserves. In 1996, about $982 million of loans were written off and forgiven because a cooperative had invested in an uneconomical nuclear plant and couldn’t sell its electricity at a price sufficient to service its RUS loans. In 1997, RUS wrote-off and forgave loans of about $502 million because a borrower couldn’t recover costs for a coal-fired generating plant when anticipated demand did not materialize.

Funding for Retrofitting Old Coal Plants

Retrofits to existing coal plants, such as scrubbers to comply with the Clean Air Act, may qualify for RUS funding but may not be the best use of such funding: while a retrofit to address a given regulatory requirement may appear cost effective, comprehensive analysis of investment in the plant considering all possible cost sources (regulation of greenhouse gasses, criteria air pollutants, hazardous materials, and coal waste) could reveal that the plant itself is no longer cost effective under existing or likely conditions.

The report therefore calls for RUS to (1) permanently halt granting loans and loan guarantees for the construction of new coal-fired power plants, (2) review its policies for loans and loan guarantees for coal-fired power plant retrofits, (3) develop a prudence standard for lien accommodations, lien subordinations and lien releases, (4) require electric cooperatives to plan and take action to reduce their emissions of carbon dioxide and other greenhouse gases, and (5) suspend lien accommodation or subordination for coal plants using the same financial risk analysis it has adopted to stop funding new plants.

U.S. Department of Energy Tax Credits, Loans, and Loan Guarantees

Title XVII of the Energy Policy Act of 2005 (EPAct 2005) established a loan guarantee program within the Department of Energy (DOE) to foster "innovative technologies." In a federal loan guarantee program, the government guarantees that it will pay lenders if a borrower defaults on a loan, helping borrowers obtain credit on more favorable terms than would be available in private lending markets. The new DOE loan guarantee program targets energy projects that meet three criteria: (1) avoid, reduce or sequester air pollutants or greenhouse gases, such as carbon capture; (2) employ new or significantly improved technologies; and (3) have a reasonable likelihood of repayment.

In 2007 DOE invited 16 projects to submit applications for loan guarantees. Two of the projects are Integrated Gasification Combined Cycle (IGCC) coal-fired power plants and one would use IGCC technology to produce synthetic gas from coal for chemical feedstocks. In 2008, DOE issued solicitations for $6 billion in loan guarantees for projects that incorporate carbon capture and sequestration (CCS) or other emissions-reducing carbon technologies into retrofitted and new coal plants, or industrial gasification activities, and $2 billion for loan guarantees for advanced coal gasification projects.

Examples of Department of Energy Funding

In 2009, the DOE selected several projects for final loan guarantee negotiation. These projects included:

Government subsidies for railroads

In 2009, coal accounted for 47 percent of tonnage and 25 percent of revenue for U.S. railroads, according to the Association of American Railroads. U.S. railroads get loans and loan guarantees from government agencies including the Department of Transportation/Federal Railroad Administration, and receive numerous tax incentives for investments in new infrastructure.

According to Climate Progress: "The relationship between coal and railroads becomes more important when considering coal exports. On Tuesday, the Associated Press reported that American coal exports have “surged” to the highest levels since 1991. A large portion of these exports are going to Asian countries, where coal use has exploded. This begs the question: are American taxpayers subsidizing the coal boom in countries like China, thus helping accelerate global warming at an even faster rate?"[4]

Lost Government Revenue

Fossil fuel subsidies fall roughly into two categories:[5]

  1. foregone revenues, such as a) provisions in the U.S. Tax Code that reduce the tax liabilities of particular entities, and b) lost government revenue from leasing of federal lands through the under-collection of royalty payments from coal, oil, and gas;
  2. direct spending, in the form of expenditures on research, development, and other programs.

Tax breaks

A 2011 analysis by Citizens for Tax Justice and the Institute on Taxation and Economic Policy, "Corporate Taxpayers & Corporate Tax Dodgers: 2008-10" found dozens of companies, including fossil fuels, used tax breaks and various tax dodging methods to have a negative tax balance between 2008 and 2010, while making billions in profits. The utilities/electric industry were found to take in 14% of the federal subsidies, the second highest of any sector behind only finance: Utilities reported a $100 billion profit from 2008 to 2010, but the industry as a whole paid only a 3.7% tax rate.[6]

The study found 32 companies in the fossil-fuel industry -- such as Peabody Energy, ConEd, and PG&E -- transformed a tax responsibility of $17.3 billion on $49.4 billion in pretax profits into a tax benefit of $6.5 billion, for a net gain of $24 billion.[7]

The companies that paid no tax for at least one year between 2008 and 2010 are the utilities Ameren, American Electric Power, CenterPoint Energy, CMS Energy, Consolidated Edison, DTE Energy, Duke Energy, Entergy, FirstEnergy, Integrys, NextEra Energy, NiSource, Pepco, PG&E, PPL, Progress Energy, Sempra Energy, Wisconsin Energy and Xcel Energy.[8]

Lost government revenues from coal leases

A 2012 report by Tom Sanzillo of the Institute for Energy Economics and Financial Analysis concluded that, since 1982, the Fair Market Value (FMV) lease process administered by the Bureau of Land Management (BLM) provided a $28.9 billion subsidy to coal producers and utilities in lost royalties and bonuses. The bids by coal companies for federal coal leases did not match the estimated market value of the reserves, which the report attributes to the increasing privatization of the federal leasing system and lack of government oversight. In total, nine billion tons of coal were mined, with 12 billion more tons slated to be mined between 2011 and 2035.

Foregone revenues and direct spending

The study U.S. Government Subsidies for Energy Sources 2002-2008 was released in September 2009 by the Environmental Law Institute. The report was authored by Adenike Adeyeye, James Barrett, Jordan Diamond, Lisa Goldman, John Pendergrass, and Daniel Schramm, and funded by the Energy Foundation.[9]

The report calculated lost government revenues by each fossil fuel sector:

All fossil fuels

The study included the following major conclusions:

  • The vast majority of federal subsidies for fossil fuels and renewable energy supported energy sources that emit high levels of greenhouse gases when used as fuel.
  • The federal government provided substantially larger subsidies to fossil fuels than to renewables. Subsidies to fossil fuels—a mature, developed industry that has enjoyed government support for many years—totaled approximately $72 billion over the study period, representing a direct cost to taxpayers.
  • Subsidies for renewable fuels, a relatively young and developing industry, totaled $29 billion over the same period (almost half of which went to biofuels).
  • Subsidies to fossil fuels generally increased over the study period (though they decreased in 2008), while funding for renewables increased but saw a precipitous drop in 2006-07 (though they increased in 2008).
  • Most of the largest subsidies to fossil fuels were written into the U.S. Tax Code as permanent provisions. By comparison, many subsidies for renewables are time-limited initiatives implemented through energy bills, with expiration dates that limit their usefulness to the renewables industry.
  • The vast majority of subsidy dollars to fossil fuels can be attributed to just a handful of tax breaks, such as the Foreign Tax Credit ($15.3 billion) and the Credit for Production of Nonconventional Fuels ($14.1 billion). The largest of these, the Foreign Tax Credit, applies to the overseas production of oil through an obscure provision of the Tax Code, which allows energy companies to claim a tax credit for payments that would normally receive less-beneficial tax treatment.
  • Almost half of the subsidies for renewables are attributable to corn-based ethanol, the use of which, while decreasing American reliance on foreign oil, raises considerable questions about effects on climate.


The study singled out the following major subsidies benefiting the coal industry:

  • Credit for Production of Nonconventional Fuels (annual subsidy: $14 billion)- IRC Section 45K. This provision provides a tax credit for the production of certain fuels. Qualifying fuels include: oil from shale, tar sands; gas from geopressurized brine, Devonian shale, coal seams, tight formations, biomass, and coal-based synthetic fuels. This credit has historically primarily benefited coal producers.
  • Characterizing Coal Royalty Payments as Capital Gains (annual subsidy: $986 million) - IRC Section 631(c). Income from the sale of coal under royalty contract may be treated as a capital gain rather than ordinary income for qualifying individuals. (The 2011 report, "What Would Jefferson Do?: The Historical Role of Federal Subsidies in Shaping America’s Energy Future" calculated this subsidy totaled over $1.3 billion in government tax expenditures from 2000 – 2009.)
  • Exclusion of Benefit Payments to Disabled Miners (annual subsidy: $438 million) - 30 U.S.C. 922(c). Disability payments out of the Black Lung Disability Trust Fund are not treated as income to the recipients.
  • Exclusion of Alternative Fuels from Fuel Excise Tax (annual subsiy: $343 million) - IRC Section 6426(d). This section applies to liquified petroleum gas (LPG), P-series fuels (defined at 42 U.S.C. 13211(2)), compressed natural gas (CNG), liquefied natural gas (LNG), liquefied hydrogen,3 liquid coal, and liquid hydrocarbon from biomass.
  • Other-Fuel Exploration & Development Expensing (annual subsidy: $342 million) - IRC Section 617. Identical provisions as applied to oil and gas (above). Including, for example, the costs of surface stripping, and construction of shafts and tunnels.
  • Other-Fuel Excess of Percentage over Cost Depletion (annual subsidy: $323 million)- IRC Section 613. Taxpayers may deduct 10 percent of gross income from coal production.
  • Credit for Clean Coal Investment ($186 million)- IRC Sections 48A and 48B. Available for 20 percent of the basis of integrated gasification combined cycle property and 15 percent of the basis for other advanced coal-based generation technologies.
  • Special Rules for Mining Reclamation Reserves ($159) - IRC Section 468. This deduction is available for early payments into reserve trusts, with eligibility determined by the Surface Mining Control and Reclamation Act and the Solid Waste Management Act. The amounts attributable to mines rather than solid-waste facilities are conservatively assumed to be one-half of the total.
  • The Low Income Home Energy Assistance Program ($6.3 billion) - The main structure of the program is to provide low-income households with the means to make their utility payments, the vast majority of which is energy generated by fossil fuels. The U.S. Department of Health and Human Services has tabulated the percentage of households using fossil versus non-fossil heating fuels in 2001, and ELI used the percentage as a proxy for fossil versus non-fossil expenditures for 2002-2008.
  • Black Lung Disability Trust Fund ($1 billion) - pays health benefits to coal miners afflicted with pneumoconiosis, a long-term degenerative disease from constant inhalation of coal dust, also known as “black lung.” Created in 1978, it is funded through an excise tax on coal to support a trust fund covering health costs of affected workers, however the tax is not sufficient to cover all costs, and the BLDTF was given “indefinite authority to borrow” from the U.S. General Fund. By the end of FY 2008, the BLDTF had accrued nearly $13 billion in debt. In 2008, Congress partially “bailed out” the BLDTF, which ELI tabulated as a subsidy to coal.

A 2012 Treasury Department report estimates that eliminating three federal government tax preferences for coal would save $2.6 billion between 2013-2022: 1. Expensing of exploration and development costs; 2. Percentage Depletion for Hard Mineral Fossil Fuels; and 3. Capital Gains Treatment for Royalties.[10]

External Costs

In economics, an external cost, or externality, is a negative effect of an economic activity on a third party. When coal is mined and used to generate power, external costs include the impacts of water pollution, solid waste streams, and especially air pollution on human health, and the long-term damage to natural systems and human society caused by global warming. These can end up as federal subsidies if taxpayers have to pay the costs of these harms, such as health care expenses and environmental clean-up, as well as the loss or degradation of valuable ecosystem and community services.

External costs of coal mining and power generation include the following:[11]

  • Reduction in life expectancy (particulates, sulfur dioxide, ozone, heavy metal, benzene, radionuclides, etc.)
  • Respiratory hospital admissions (particulates, ozone, sulfur dioxide)
  • Congrestive heart failure (particulates and carbon monoxide)
  • Non-fatal cancer, osteroporosia, ataxia, renal dysfunction (benzene, radionuclines, heavy metal, etc.)
  • Chronic bronchitis, asthma attacks, etc. (particulates, ozone)
  • Loss of IQ (mercury)
  • Degradation and soiling of buildings (sulfur dioxide, acid deposition, particulates)
  • Reduction of crop yields (NOx, sulfur dioxide, ozone, acid deposition); some emissions may also have a fertilizing effect (nitrogen and sulfur deposition)
  • Global warming (carbon dioxide, methane, nitrous oxide)
  • Ecosystem loss and degradation

2009 National Research Council Report on External Costs

In 2009 the National Research Council released a report on “external effects” caused by various energy sources over their entire life cycle, from extraction to production to use and emissions, effects not factored into the market cost of the fuels. The report Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use was released in October 2009. Requested by Congress, the report was sponsored by the U.S. Department of the Treasury, National Academy of Sciences, National Academy of Engineering, Institute of Medicine, and National Research Council make up the National Academies. Putting together a diverse committee of experts including scientists, economists, and geologists, the committee estimated the use of fossil fuels had a hidden cost to the U.S. public of $120 billion in 2005, a number that reflects primarily health damages from air pollution associated with electricity generation and motor vehicle transportation. The estimate was derived from monetizing the damage of major air pollutants -- sulfur dioxide, nitrogen oxides, ozone, and particulate matter – on human health, grain crops and timber yields, buildings, and recreation.

The figure does not include damages from climate change, harm to ecosystems, effects of some air pollutants such as mercury, and risks to national security, which the report examines but does not monetize.

The committee also separately derived a range of values for damages from climate change, and found that each ton of CO2 emissions will be far worse in 2030 than now: “even if the total amount of annual emissions remains steady, the damages caused by each ton would increase 50 percent to 80 percent.”

External Costs of Coal Plants

According to the National Research Council report, in 2005 the total annual external damages from sulfur dioxide, nitrogen oxides, and particulate matter created by burning coal at 406 coal-fired power plants (which produce 95 percent of the nation's coal-generated electricity), were about $62 billion. A relatively small number of plants -- 10 percent of the total number -- accounted for 43 percent of the damages. Further, coal-fired power plants are the single largest source of greenhouse gases in the U.S., emitting on average about a ton of CO2 per megawatt-hour of electricity produced, creating climate-related monetary damages range from 0.1 cents to 10 cents per kilowatt-hour, based on modeling studies.

The report also found that burning natural gas generated far less damage than coal, although still significant: a sample of 498 natural gas fueled plants (71 percent of gas-generated electricity) produced $740 million in total nonclimate damages in 2005. The life-cycle damages of wind power, which produces just over 1 percent of U.S. electricity, were found to be small when compared with those from coal and natural gas.

2010 report: Most coal mine reclamation funds paid by taxpayers

In January 2010, the AP Press reported that $395 million was available for abandoned coal mine reclamation funds provided by the U.S. Department of the Interior. Recipients can apply to the Interior Department's Office of Surface Mining Reclamation and Enforcement for funding for specific projects. Part of the money - $150 million - comes from fees based on U.S. coal production. The remaining $245 million comes from the U.S. Treasury, or taxpayers. Since 1977, the program has provided more than $7 billion to clean up more than 285,000 acres.[12]

2011 Harvard report: external costs of coal up to $500 billion annually

A Feb. 2011 report by associate director of the Center for Health and the Global Environment at Harvard Medical School Dr. Paul Epstein, "Mining Coal, Mounting Costs: the Life Cycle Consequences of Coal", found that accounting for the full costs of coal would double to triple its price. The study, to be released in the Annals of the New York Academy of Sciences, tallies the economic, health and environmental costs associated with each stage in the life cycle of coal – extraction, transportation, processing, and combustion - and estimates the costs to be between $175 billion to $500 billion dollars annually, costs that are directly passed on to the public.[13]

In terms of human health, the report estimates $74.6 billion a year in public health burdens in Appalachian communities, with a majority of the impact resulting from increased healthcare costs, injury and death. Emissions of air pollution and coal account for $187.5 billion, mercury impacts as high as $29.3 billion, and climate contributions from combustion between $61.7 and $205.8 billion. Heavy metal toxins and carcinogens released during processing pollute water and food sources and are linked to long-term health problems. Mining, transportation, and combustion of coal contribute to poor air quality and respiratory disease, while the risky nature of mining coal results in death and injury for workers.[13]

The study concluded: "Our comprehensive review finds that the best estimate for the total economically quantifiable costs, based on a conservative weighting of many of the study findings, amount to some $345.3 billion, adding close to 17.8¢/kWh of electricity generated from coal. The low estimate is $175 billion, or over 9¢/kWh, while the true monetizable costs could be as much as the upper bounds of $523.3 billion, adding close to 26.89¢/kWh. These and the more difficult to quantify externalities are borne by the general public." The average residential price of electricity at the time of the report is 12¢/kWh.[13]

The study notes that even these numbers are certainly underestimates of the full cost of coal:[13]

"Still these figures do not represent the full societal and environmental burden of coal. In quantifying the damages, we have omitted the impacts of toxic chemicals and heavy metals on ecological systems and diverse plants and animals; some ill-health endpoints (morbidity) aside from mortality related to air pollutants released through coal combustion that are still not captured; the direct risks and hazards posed by coal sludge, coal slurry, and coal waste impoundments; the full contributions of nitrogen deposition to eutrophication of fresh and coastal sea water; the prolonged impacts of acid rain and acid mine drainage; many of the long-term impacts on the physical and mental health of those living in coal-field regions and nearby MTR sites; some of the health impacts and climate forcing due to increased tropospheric ozone formation; and the full assessment of impacts due to an increasingly unstable climate."[13]

"Clean Coal"

According to the U.S. Energy Information Administration (EIA), in FY 2007, refined coal (chemically enhanced to reduce certain emissions) received about $2.4 billion in subsidies.[14]

The Clean Coal Power Initiative

According to the U.S. Department of Energy:

"The Clean Coal Power Initiative (CCPI) is a 10-year, $2 billion program designed to support the Clean Coal Technology Roadmap milestones with the government providing up to 50 percent of the cost of demonstrating a range of promising technologies. CCPI is implemented through a series of five solicitations over the 10-year period, two of which have already been issued and selections made. CCPI provides the means to demonstrate those technologies proven through R&D to have commercial potential. Demonstrations are at a commercial scale in actual operating environments, which is essential to moving them to the threshold of commercialization."[15]

As of April, 2008, 8 projects were active and 4 had been withdrawn.[16]

According Department of Energy Fact Sheet, the multi-year Clean Coal Power Initiative (CCPI), "is driven by private-sector-proposed projects in response to a government solicitation. Potential applicants include technology developers, service corporations, R&D firms, energy producers, software developers, academia, and other interested parties. The private sector cost share must be at least 50 percent. Funding is awarded to applicants, selected as a result of these open competitions, who can rapidly move promising new concepts to a point where private-sector decisions on deployment can be made." [17]

Round I participants:[18]

  • Great River Energy, Underwood, ND - Increasing Power Plant Efficiency–Lignite Fuel Enhancement
  • NeuCo, Inc., Boston, MA - Demonstration of Integrated Optimization Software at the Baldwin Energy Complex
  • University of Kentucky Research Foundation, Lexington, KY - Advanced Multi-Product Coal Utilization By-Product Processing Plant
  • WMPI PTY., LLC, Gilberton, PA - Gilberton Coal-to-Clean Fuels and Power Co-Production Project
  • Western Greenbrier Co-Generation, LLC, Lewisburg, WV - Western Greenbrier Co-Production Demonstration Project
  • Wisconsin Electric Power Co., Milwaukee, WI - TOXECON Retrofit for Mercury and Multi-Pollutant Control on Three 90 MW Coal-Fired Boilers

Round II participants:[19]

  • Excelsior Energy, Inc., Minnetonka, MN - Mesaba Energy Project
  • Pegasus Technologies, Incorporated, Chardon, OH - Mercury Specie and Multi-Pollutant Control
  • Southern Company Services, Birmingham, AL - Demonstration of a 285-MW Coal-Based Transport Gasifier


In August 2010, the Obama Administration awarded $1 billion to FutureGen, a "clean coal" power plant in Illinois.[20]

2011 US DOE funding

On Sep. 13, 2011, the U.S. Department of Energy (DOE) awarded $14 million to six projects aimed at being integrated gasification combined cycle (IGCC) coal-fired power plants using carbon capture: Electric Power Research Institute Inc. (Palo Alto, Calif.); TDA Research, Inc. (Wheat Ridge, Colo.); two for projects by General Electric (Houston, Texas); Air Products and Chemicals Inc. (Allentown, Pa.); and Reaction Engineering International (REI) (Salt Lake City, Utah).[21]

Articles and Resources


  1. "Today in Green IT: The fossil fuel subsidy game" GigaOm, January 3, 2012.
  2. Alex Morales, "Fossil Fuel Subsidies Are Twelve Times Renewables Support" Bloomberg, July 29, 2010.
  3. Bill Lambrecht, "Illinois clean-coal project gets record federal tax credit" stltoday.com, July 27, 2010.
  4. "Top Three Ways That American Taxpayers Subsidize Dirty Coal Development," Think Progress, Apr 13, 2012.
  5. Adenike Adeyeye, James Barrett, Jordan Diamond, Lisa Goldman, John Pendergrass, and Daniel Schramm, U.S. Government Subsidies to Energy Sources 2002-2008, Environmental Law Foundation, September 2009
  6. Robert S. McIntyre, Matthew Gardner, Rebecca J. Wilkins, Richard Phillips, "Corporate Taxpayers & Corporate Tax Dodgers: 2008-10" Citizens for Tax Justice and the Institute on Taxation and Economic Policy, November 2011 Report.
  7. Brad Johnson, "Corporate Welfare For Energy Companies Means We Paid $24 Billion In Taxes To Them," Think Progress, Nov. 7, 2011.
  8. Robert S. McIntyre, Matthew Gardner, Rebecca J. Wilkins, Richard Phillips, "Corporate Taxpayers & Corporate Tax Dodgers: 2008-10" Citizens for Tax Justice and the Institute on Taxation and Economic Policy, November 2011 Report.
  9. Adenike Adeyeye, James Barrett, Jordan Diamond, Lisa Goldman, John Pendergrass, and Daniel Schramm, U.S. Government Subsidies to Energy Sources 2002-2008, Environmental Law Foundation, September 2009
  10. Jessica Goad and Stephen Lacey, "Top Three Ways That American Taxpayers Subsidize Dirty Coal Development," Climate Progress, April 13, 2012.
  11. "Damages assessed," ExternE website, accessed March 2009
  12. "W.Va. starts spending $51M in reclamation funds" PhillyBurbs, Jan. 3, 2010.
  13. 13.0 13.1 13.2 13.3 13.4 "Life-cycle study: Accounting for total harm from coal would add 'close to 17.8¢/kWh of electricity generated'” Climate Progress, Feb. 16, 2011.
  14. "How much does the Federal Government spend on energy-specific subsidies and support?" Energy Information Administration, September 8, 2008.
  15. "Clean Coal Power Initiative," National Energy Technology Laboratory website, accessed April 2008
  16. "Clean Coal Power Initiative," National Energy Technology Laboratory website, accessed April 2008
  17. "Program Facts," Department of Energy fact sheet, accessed April 2008 (PDF File)
  18. "Program Facts," Department of Energy fact sheet, accessed April 2008 (PDF File)
  19. "Program Facts," Department of Energy fact sheet, accessed April 2008 (PDF File)
  20. "New Federal Funding Pushes Clean-Coal Project Ahead" Wall Street Journal, August 5, 2010.
  21. "Clean coal power projects awarded $14 million from DOE" Power Engineering, Sep. 13, 2011.

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