By taxing the coal industry in the same manner as oil and gas, Texas could receive a $ 100 million infusion in revenue, according to a study released Tuesday.
“Our state is getting a raw deal, we’re missing out on a huge chunk of income and giving an unfair advantage to coal over oil and gas,” said Karen Hadden, clean air coordinator of the Sustainable Energy and Economic Development Coalition, a Texas-based sustainable energy advocacy group.
According to the study, natural gas is taxed at 7.5 percent when extracted, yet no such severance tax exists for coal extraction. Applying such a tax to coal could generate $ 52.6 million annually, the study said. Additionally, since 47 percent of coal arrives from outside the state, tax-free, an additional $ 47 million could result from subjecting it to taxes.
Further, coal-powered plants pollute at a higher level than natural gas-powered plants and are a factor in health-related problems such as asthma, said Tom Smith, director of the Texas branch of Public Citizen, a consumer rights group formed by Ralph Nader in 1971.
Coal-powered plants produce nine times as much nitrogen oxides, or smog-producing chemicals, into the air than do gas-powered plants, he said. Additionally, they are the largest source of mercury poisoning Texas lakes, thus taxing coal companies would help offset the health injuries, he said.
Lawmakers have unsuccessfully proposed legislation in previous sessions to levy taxes on the coal industry. This session, legislation by Rep. Lon Burnam, D-Fort Worth, would levy taxes on the use and purchase of coal in Texas that would be on par with those of oil and gas. The bill will be heard Wednesday in the House Ways and Means Committee.
“It is past time for this industry to pay its fair share,” Burnam said.
While the coal industry would probably pass the increased cost to the consumer, Burnam said it would be an insignificant amount.
But Tom Faulkner, executive director of the Texas Mining and Reclamation Association, said although coal power plants are dirtier than natural gas plants, they aren’t causing the health problems that the critics contend.
“I would defy anyone to show me any data where anybody has gotten sick or hurt from the burning of coal of power plants,” he said.
Because of the stereotype of the blackened coal miner and the large size of coal-powered plants, coal serves as an easy target, he said, adding that improved technologies and stricter regulations have greatly reduced coal emissions.
Further, the Texas coal industry inhabits a different sphere of influence than that of Texas gas and oil and, therefore, shouldn’t be subject to efforts of parity, Faulkner said.
Texas oil and gas is exported all over the world, while coal is purely a Texas commodity mined and used only in the state. As such, a tax would only hurt the state’s economy and create higher electricity bills, he added.
“It’s not a question of being fair, it’s a question of economics,” Faulkner said.
He added that a diversity of fuels for power generation, such as coal and natural gas, is essential for a stable energy supply.
“You can’t put all your eggs in one basket,” he said.
Peggy Venable, state director of Texas Citizens for a Sound Economy, said severance taxes have already hurt the Texas oil and gas industry and would threaten the coal industry.
“We shouldn’t be taxing our energy resources,” she said. “Anything you tax, you’re going to get less of.”