Congress investigating ‘clean coal’ tax credit

A congressional watchdog is investigating reports that some recipients of a tax credit for “clean coal” production increased rather than cut pollution, Reuters first reported Monday.

The multibillion-dollar subsidy has gone to numerous major firms over the years, including financial institutions like JPMorgan Chase and Goldman Sachs Group, drugmaker Mylan, and DTE Energy Co, the main utility for Detroit, according to Reuters. The IRS awards the subsidy based on lab results rather than real-world emissions, according to the news service.

The Government Accountability Office (GAO) has launched the investigation following a Reuters investigation indicating some firms awarded the subsidy saw higher levels of pollution. A GAO official confirmed to The Hill that it is investigating the subsidy based on a congressional request.

The environmental nonprofit Resources for the Future separately released a report in March 2020 indicating the tax subsidy resulted in some coal plants being retired more slowly, meaning more overall carbon dioxide emissions. Those increased emissions, they wrote, exceeded the benefits of reduced nitrogen oxide and mercury emissions.

Congress is set to vote on whether to reauthorize the tax credit at the end of 2021, when it is set to expire, and the outcome of the probe could play a major role in determining its fate.

Sens. Sheldon Whitehouse (D-R.I.), Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio), in a 2019 letter directed to the IRS responding to the reports, called for a reevaluation of how the tax credit is awarded.

“We have evidence to show that Wall Street is raking in hundreds of millions in tax credits each year for pollution reductions they aren’t coming close to delivering in the real world. That’s a massive boondoggle for taxpayers, a blow to air quality and American’s health, and a setback for our climate,” Whitehouse said in releasing the letter.