Twelve years ago, a hurricane barreled through the Houston area and opened the door for companies near the Texas Gulf Coast to use a little-known financial instrument to help rebuild after the disaster.

Back then, a New Jersey-based firm called NRG Energy took advantage of this tax-free tool, called private-activity bonds (PABs), to build the nation’s first large-scale “clean coal” facility just outside Houston.

…

“Private power plants faced big obligations under the Clean Air Act,” said Dan Reicher, executive director of the Steyer-Taylor Center for Energy Policy and Finance at Stanford, who has helped draft recent carbon-capture proposal in Congress. “So they pushed to get access to this very attractive financing tool.”

Read More