Pennsylvania enacted a new tax credit to encourage projects to make synthetic fuels from coal.

A synthetic fuel is a fuel that differs chemically from the underlying coal used as feedstock. The tax credit is 15% of the capital cost of the project. The credit is claimed when the project is placed in service and applies only to new projects and then only to equipment that is acquired or constructed during the period 2000 through 2012. Total credits for all projects under the program cannot exceed $18 million a year. The developer must sign a contract with the state promising to repay part of the subsidy over time.