Tax Cut Bill's Liquid Coal Subsidy Will Increase Coal Demand & Emissions


Image: House GOP Leader via flickr

The wealthiest Americans weren't the only ones to benefit from the tax cut bill passed on Friday. The energy industry got some breaks as well, including a subsidy for liquid coal. The subsidy, which was written in during negotiations between Obama and Senate Republicans, has a lot of people outraged, largely because the existing technology is so inefficient. Liquid coal produces at least twice the emissions of gasoline-based fuel.One justification for the credit (and the technology) is that it will move the U.S. away from foreign oil—but to displace even 10 percent of U.S. oil consumption would require a 42 percent increase in U.S. coal production, according to an NRDC report [PDF] that cites the industry's own numbers. That's 475 million more tons of coal every year.

The U.S. currently has no commercial liquid coal plants, and a plan that the Air Force had to build such a plant was dropped last year, though several states do have liquid coal proposals on the table. NRDC calls the provision "an environmental and financial time bomb."

McClatchy reports that the provision would revive a previous subsidy that expired at the end of 2009, and would give tax credits of 50 cents per gallon of the fuel until the end of next year. More from McClatchy:

Carbon capture and storage is still expensive and not commercially used. Even if it's developed, a 75 percent capture rate would still mean that emissions of greenhouse gases from liquid coal are higher than the emissions from gasoline production, said Alex Moore of Friends of the Earth, who campaigns against liquid coal...

Liquid coal is only expected to be cost-competitive in the U.S. if the price of oil increases.

"We're pleased that the Senate, at least, recognizes the potential to derive transportation fuels and a variety of other fuels from the world's biggest coal reserves, here in the United States," said Luke Popovich, a spokesman for the National Mining Association and its Coal-to-Liquids Coalition.


McClatchy quotes Lena Moffitt, a clean fuels campaigner at the Sierra Club, summarizing many environmentalists' reaction to the liquid coal tax break: "If you're going to get behind clean energy, you simply can't be incentivizing these kinds of dirty fuels."

More on liquid coal and "clean coal"
Methanol - The Official Chinese Liquid Transportation Fuel Of The Future
Increased Coal-to-Liquids Fuels Usage Will Accelerate Climate Breaking Point
US Coal-to-Liquid Fuel Facility Plan Dropped by Air Force
"Clean Coal" Has Prospered With Totalitarian Rule And Oil Shortage

Tags: Coal | Energy | Taxes