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Trump's Coal Subsidy Will Cost Taxpayers Billions

| by Robert Fowler
Coal

An independent analysis has found that the Trump administration's proposed subsidies to coal and nuclear companies will cost U.S. taxpayers more than $10 billion a year.

On Sept. 29, U.S. Secretary of Energy Rick Perry announced a proposal to provide subsidies to coal and nuclear plants that store fuel for 90 days or more. Perry asserted that these facilities needed to be boosted because they could serve as reliable sources of energy for the U.S. electrical grid.

"A reliable and resilient electrical grid is critical not only to our national and economic security, but also to the everyday lives of American families," Perry said in a statement, according to The Hill.

Perry requested that the independent Federal Energy Regulatory Commission decide whether to institute the subsidies by Nov. 27, The Guardian reports.

"My proposal will strengthen American energy security by ensuring adequate reserve resource supply and I look forward to the commission acting swiftly on it," Perry added, according to The Hill.

On Oct. 27, an analysis of Perry's proposal conducted jointly by the non-partisan Climate Policy Initiative and Energy Innovation found that the subsidies would only benefit approximately 90 plants nationwide and would costs American taxpayers roughly $10.6 billion annually over the next decade, The Guardian reports.

Energy finance consultant Brendan Pierpont of the Climate Policy Initiative concluded that the proposed subsidies would require taxpayers to help prop up energy resources that are being marginalized by market forces.

"The irony of putting costs on consumers for resources that are no longer competitive is really striking," Pierpont said. “It would serve to keep a lot of uneconomic plants in the market that currently can’t compete with the changing dynamics of cheap gas and the falling cost of renewables.”

On April 14, Perry commissioned the U.S. Department of Energy to perform a study on the reliability of coal and nuclear plants, Bloomberg reports. In August, the DOE released its findings and concluded that coal and nuclear power were no more reliable than alternative resources, like solar and wind.

Environmentalists have blasted the proposal, accusing the Trump administration of attempting to undermine the success of alternative energy in the resource market.

"This is being driven entirely by a political agenda to bail out coal," staff attorney Miles Farmer of the Natural Resources Defense Council told the Times Union. "They had their goal first, and they came with the rationale later."

On Oct. 19, eight former FERC members jointly signed a letter urging the agency to reject Perry's proposal, asserting that the subsidies would hurt the free market, according to The Washington Post.

"Subsidizing resources so they do not retire would fundamentally distort markets," the letter stated. "The subsidized resources would inevitably drive out the unsubsidized resources, and the subsidies would inevitably raise prices to customers ... Investor confidence would evaporate and markets would tend to collapse."

Former FERC chairwoman Elizabeth Moler noted in an interview that coal plants were no longer competitive in the modern energy markets, asserting that Perry was "effectively proposing to subsidize them and put a tax on consumers in doing so.

"It's going to cost customers more money to run dirty old coal plants," she added.

Should FERC approve these subsidies?
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