No evidence $10 bln U.S. tax credit for cutting coal pollution worked -GAO

A mound of coal waiting to be loaded at a coal transfer facility in Totz
A mound of coal waiting to be loaded at a coal transfer facility in Totz, Kentucky, U.S. August 13, 2019. Picture taken on August 13, 2019. REUTERS/Charles Mostoller/File Photo

BOSTON, Dec 16 (Reuters) - There is no evidence that a multibillion-dollar tax subsidy for cutting smokestack pollution at U.S. coal plants actually worked, the investigative arm of Congress has found, confirming revelations in a 2018 Reuters Special Report.

The non-partisan Government Accountability Office launched the investigation after the Reuters series revealed that many power plants burning chemically treated coal pumped out more pollution than previously. Over the past decade, a who's who of American companies have reaped tax credit benefits approaching $10 billion from investing in so-called refined coal operations.

The program is set to expire this year unless Congress extends the tax credit.

But the GAO found that federal agencies, including the Internal Revenue Service, "do not have a good understanding of the credit’s effectiveness in reducing emissions of certain harmful pollutants," according to a GAO report released on Wednesday.

The GAO investigation found problems with how companies qualified for subsidies by testing relatively small amounts of refined coal in a laboratory once a year, in lieu of real-world emissions measurements at power plants. That pilot testing, allowed by the IRS, was revealed in the Reuters Special Report

"Based on our interviews with federal officials and industry representatives, producers’ use of pilot-scale testing limits the federal government’s understanding of actual emissions reductions achieved at full scale in the field," the GAO investigation found.

In 2019, about $1.6 billion in tax credits were claimed from burning chemically treated coal that was supposed to cut smog pollution. Investors in refined coal operations have received a tax credit of more than $7 for each ton burned.

Beneficiaries of the tax credit program 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.

Reporting By Tim McLaughlin; Editing by Dan Grebler

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