Refined coal has made up nearly one-fifth of coal-fired power generation so far in 2017

The U.S. power sector consumption of coal is increasingly shifting to refined coal, even as coal-fired electricity generation decreases. Use of refined coal has increased from 17% of power sector coal consumption in 2016 to 19% so far in 2017, based on data through September. Refined coal has been processed to remove certain pollutants from raw, or feedstock, coal. Electricity generators fueled by refined coal can produce fewer emissions than those fueled by feedstock coal alone.

Refined coal is most commonly made by mixing proprietary additives to feedstock coal. These additives contain a mixture of halogens (for example, bromine or chlorine) and metals to increase the production of mercury oxides. Oxidized mercury can be captured by using mercury emission reduction technologies such as flue gas desulfurization scrubbers and particulate matter control systems. Oxidized mercury can also be adsorbed by powder activated carbon injection (ACI) and captured by particulate matter control systems.

EIA tracks the systems and control equipment that take advantage of the emission reductions afforded by refined coal use in the Power Plant Operations Report, which is published monthly. Based on year-to-date data through September 2017, 20% of subbituminous coal, 18% of bituminous coal, and 17% of lignite coal were refined before being used to generate electricity.

The use of refined coal was encouraged by the American Jobs Creation Act of 2004, which created a tax credit for the production of refined coal as long as the coal is refined by facilities unassociated with the consuming power plant. Nevertheless, many refined coal processing facilities are located on power plant property. The tax credit was designed to increase with inflation and was valued at $6.81 per short ton in 2016 and $6.91 per short ton in 2017. By comparison, the Internal Revenue Service 2016 reference price of feedstock coal was $53.74 per short ton, and the 2017 reference price was $51.09 per short ton.

To qualify for the refined coal tax credit, producers must have a qualified professional engineer demonstrate that burning the refined coal results in a 20% emissions reduction of nitrogen oxide and a 40% emissions reduction of either sulfur dioxide or mercury compared with the emissions that would result from burning feedstock coal.

The producer must demonstrate the achievable emissions reductions every six months to continue using the tax credit, and they can only qualify for the tax for the first 10 years the processing facility is in service. Any facilities currently claiming the refined coal tax credit must have been in service by December 2011.

Principal contributor: Kimberly Palacios