Champions of coal say the superabundant fossil fuel can be made environmentally friendlier by refining it with chemicals – a “clean coal” technology backed by a billion dollars in U.S. government tax subsidies annually.

But refined coal has a dirty secret. It regularly fails to deliver on its environmental promises, as electric giant Duke Energy Corp found.

Duke began using refined coal at two of its North Carolina power plants in August 2012. The decision let the company tap a lucrative federal subsidy designed to help the American coal industry reduce emissions of nitrogen oxides – also known as NOx, the main contributor to smog and acid rain – along with other pollutants.

In nearly three years of burning the treated coal, the Duke power plants collected several million dollars in federal subsidies. But the plants also pumped out more NOx, not less, according to data from the U.S. Environmental Protection Agency analyzed by Reuters.

The NOx emission rate at Duke’s Marshall Steam Station power plant in Sherrills Ford, North Carolina, for example, was between 33 percent and 76 percent higher in the three years from 2012 to 2014 than in 2011, the year before Marshall started burning refined coal, the EPA data shows.

The utility also discovered that one of the chemicals used to refine the coal, calcium bromide, had reached a nearby river and lakes – raising levels of carcinogens in the water supply for more than a million people in greater Charlotte.

Duke stopped using refined coal at the plants in May 2015 because of the water pollution problems, said spokeswoman Erin Culbert. Bromide levels in the region’s drinking water dropped sharply several months later, said Barry Gullett, the city’s water director, in a 2015 memo.

Duke’s experience reflects a fundamental problem with the U.S. clean coal incentive program, a Reuters examination has found. Refined coal shows few signs of reducing NOx emissions as lawmakers intended, according to regulatory documents, a Reuters analysis of EPA emissions data, and interviews with power plant owners, scientists and state environmental regulators.

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