Kentucky lawmaker floats tax break for burning local coal

Dive Brief:

  • Kentucky utilities burning Kentucky coal would be eligible for a tax credit of $2/short ton used to generate electricity under a bill introduced in the state's legislature last week, Platts reports. 
  • Republican Rep. Jim DuPlessis has sponsored the bill, which mirrors a similar credit that Platts reports came off the books in 2009.
  • Kentucky is the third-largest coal-mining state, and the fuel still produces almost 90% of its power, according to the U.S. Environmental Protection Agency.

Dive Insight:

The bulk of Kentucky's power, some 87%, comes from coal plants. But out-of-state producers have been eating into profit margins, leading DuPlessis to file his proposal.

According to the bill text, the amount of the allowable credit will be $2 "per each incentive ton of coal purchased that is subject to tax" under state law.

In addition to coal-on-coal competition, gas has risen from 3% of the state's generation to 7%. Additionally, "increasing amounts of customer-sited solar photovoltaic capacity have been installed across Kentucky," EIA said.

Kentucky is still very much coal country, but plant retirements have been helping it reduce emissionseven if those closures are the results of energy markets rather than environmental policy. By some 2015 reports, an estimated 3,900 MW of the state's 18,000 MW of coal capacity had been retired. That pace could put the state on track to meet an 18% reduction in greenhouse gasses by 2030, according to some analysis. 

Coal has long been the chief fuel in the United States, but in April 2015, the balance shifted since the gas has been staking its claim. EIA believes coal will generate 31% of the country's power this year, compared with 30% in 2016. Gas will decline from 34% last year to about 33% in 2017, as prices rise.

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