Legislators Plead for Mercy on Obscure Coal Subsidy
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March 18, 2011 -- I have to blink and rub my eyes every time I read of heartfelt pleas to prolong this tax break or that subsidy for mature fossil fuels. This week it's coal in Maryland. -- Energy Priorities
March 18, 2011 -- http://energypriorities.com/ --
I have to blink and rub my eyes every time I read of heartfelt pleas to prolong this tax break or that subsidy for mature fossil fuels. This week it's coal in Maryland.
Maryland Governor Martin O'Malley is trying again to retire a $3 per ton tax credit that benefits the state's coal industry, and local legislators are fighting the move, McClatchy-Tribune News reports.
Delegate Wendell Beitzel and Sen. George Edwards have taken the lead in fighting the elimination of the credit, which they say is an important incentive for the local industry.
Incentive? It's like giving Georgia restaurants a per-drink tax credit for serving Coke instead of Pepsi because Coca-Cola is based there.
Except that Coca-Cola doesn't strip-mine its secret elixir. Maryland has 16 active coal mines in two counties, and only two of the mines are below ground.
If the coal subsidy is retired, it doesn't seem economically likely that power generators would suddenly start shipping large amounts of coal in from other states.
More than half the state's electricity comes from burning coal, a heavy commodity that is expensive to ship. The cost of shipping a ton of coal 300 miles exceeds the amount of the subsidy, so how well exactly does this tax break work?
It's been working just fine for Maryland's coal producers. When coal buyers receive their $3 per ton credit for purchasing Maryland-produced coal, they rebate part of it back to coal companies, Delegate Beitzel told Matthew Bieniek for the Cumberland Times-News. The result is a higher price for local coal companies.
The tax break for Maryland companies buying Maryland coal would have expired in 2021; terminating it early is estimated to save the state's coffers about $34.5 million in that time. The proposal to eliminate the credit is contained in Gov. O'Malley's budget reconciliation bill.
By Denis Du Bois at Energy Priorities