 How clean is “refined coal”? An empirical assessment of a billion-dollar tax creditBrian Prest and Alan Krupnick Energy Economics, 2021, vol. 97, issue C Abstract: US tax law provides nearly $1 billion annually in tax credits for “refined coal”, which is supposed to reduce local air pollution. Eligibility for the credit requires firms to demonstrate legally specified emissions reductions for three pollutants. Firms typically demonstrate eligibility through laboratory tests, but results from the lab can differ from those in practice. Using a nationally comprehensive boiler-level panel dataset, we find that emission reductions in practice are only about half of the levels required, and even then only arise when certain pollution controls are installed. We also show that the policy reduces social welfare, resulting in costs more than seven times the benefits, in part because of a “rebound” effect in which the subsidy increases coal use by extending the operational life of some coal plants. Because the tax credit is up for reauthorization in 2021, our work has immediate policy relevance. Keywords: Coal; Electricity; Air pollution; Taxes and subsidies (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:97:y:2021:i:c:s0140988320303637 DOI: 10.1016/j.eneco.2020.105023 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
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