Phasing Out Federal Subsidies for Coal

The purpose of this report is to urge consistency in the development and implementation of federal administrative policies. Even as President Obama has pledged to phase out fossil fuel subsidies, the Federal Government prepares to establish limits on greenhouse gas emissions, and the Administration fosters a transition to a low carbon economy, some Federal agencies continue to have policies and programs that provide substantial subsidies for the construction, expansion, and life extension of one of the largest sources of greenhouse gas emissions in the U.S. - coal-fired power plants.

Federal administrative financial policy details and implementation, and the use of taxpayer dollars, are not yet consistent with President Obama’s pledges to the G-20 or the Administration’s efforts to move away from carbon intensive technologies. Nor do these federal policies minimize taxpayer exposure to risks associated with carbon intensive technologies.

There are four primary areas where federal financial practice provides billions of dollars to the coal industry and fossil fuels beyond the tax breaks already slated for reduction in the President’s budget, in  contradiction to emerging federal policy on reducing carbon emissions:

1) Financial support for the World Bank and other international financial institutions that finance fossil fuel use and extraction;

2) U.S. Treasury Department’s backing of tax-exempt bonds and federally subsidized taxable Build America Bonds for use in the electric sector;

3) U.S. Department of Agriculture’s Rural Utilities Service provision of loans, loan guarantees, and lien accommodations to public power companies that are investing in new or existing coal plants; and

4) Tax credits, loans, and loan guarantees through the U.S. Department of Energy.