From December 15 to December 30, Today in Energy will feature some of our favorite articles from 2022. Today’s article was originally published on July 20.
Refined coal production in the United States dropped to nearly zero during the first quarter of 2022 as refined coal consumers used their remaining small stockpiles. Refined coal is most commonly made by mixing proprietary additives to feedstock coal. At the end of 2021, the refined coal production tax credit (created by the American Jobs Creation Act of 2004) expired, which could be affecting refined coal production and consumption.
Additives are used in refined coal to help capture emissions when the coal is burned. For example, these additives increase mercury oxides, which technologies—such as flue gas desulfurization scrubbers and particulate matter control systems—can then capture. Without these additives, ash would not capture much of the elemental mercury in coal, which would instead be released into the environment.
The production tax credit helped coal-fired electric power plants reduce these emissions. Refined coal production facilities could claim the tax credit for up to 10 years, but they had to meet certain conditions, including:
The tax credit was designed to increase with inflation. In 2021, the tax credit value was $7.38 per short ton, an increase from $4.38 per short ton in 2012. By comparison, the IRS’s reference price of feedstock coal was $45.64 per short ton during 2021, a decrease from $55.80 per short ton during 2012. According to a U.S. Government Accountability Office audit report, refined coal producers claimed approximately $8.9 billion in tax credits between 2010 and 2020.
Annual refined coal consumption in the United States peaked in 2021 at 162 million short tons. That year, refined coal accounted for 31% of coal-fired electricity generation. During the first quarter of 2022, refined coal held a share of U.S. coal-fired electricity generation below 10%, which we mostly attribute to the expiration of the refined coal production tax credit.
We began collecting data on refined coal consumption in 2016, and we improved data collection on refined coal production in 2017. Information on refined coal is included in our Quarterly Coal Report and Power Plant Operations Report.
Principal contributor: Rosalyn Berry