Interesting article in this week’s Time on the tax credit for synthetic coal ("spray and pray"): A Magic Way to Make Billions: How Lobbyists Are Pulling Off a Synfuel Scheme with Help from Key Lawmakers — and You’ll Pay, by Donald L. Barlett & James B. Steele:
Buried in the huge budget-reconciliation bill, on which House and Senate conferees are putting the final touches right now, are a few paragraphs that accomplish an extraordinary feat. They roll back the price of a barrel of crude oil to what it sold for two years ago. They create this pretend price for the benefit of a small group of the politically well connected. You still won’t be able to buy gasoline for $1.73 per gal. as you did then, instead of today’s $2.28. You still won’t be able to buy home heating oil for $1.60 per gal., in place of today’s $2.39. But a select group of investors and companies will walk away with billions of dollars in tax subsidies, not from oil but from the marketing of a dubious concoction of synthetic fuel produced from coal and dependent on government tax credits tied to the price of oil….
The coal can look and burn like regular coal. The IRS rule for transforming coal into synfuel–and getting the tax credit–requires only that the substance be chemically altered in some way. The alchemy that satisfies the IRS is a simple process: some plants spray newly mined coal with diesel fuel, pine-tar resin, limestone, acid or other substances–a practice that industry critics call "spray and pray." Other operators mix coal-mining waste with chemicals, coat it with latex and blend it with untreated coal to form briquettes….
Once a few pioneers started reaping the tax credits, it wasn’t long before plants using various techniques sprouted next to coal-burning power plants, which buy the so-called synfuel and use it as they would any other coal. Those synfuel operations were a far cry from the state-of-the-art plants that Congress had envisioned as performing a more radical transformation. Instead, they were flimsy facilities that could be easily dismantled and moved to other locations.
