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$10.6 billion yearly: the cost to USA taxpayers of the subsidy plan for coal and nuclear plants

Subsidy plan for coal and nuclear plants ‘will cost US taxpayers $10.6bn a year’

Non-partisan analysis reveals the cost of energy secretary Rick Perry’s proposal to give handouts to some of the country’s oldest and dirtiest power plants, Guardian, Oliver Milman, 27 Oct 17, A Trump administration plan to subsidize coal and nuclear energy would cost US taxpayers about $10.6bn a year and prop up some of the oldest and dirtiest power plants in the country, a new analysis has found.

The Department of Energy has proposed that coal and nuclear plants be compensated not only for the electricity they produce but also for the reliability they provide to the grid. The new rule would provide payments to facilities that store fuel on-site for 90 days or more because they are “indispensable for our economic and national security”.

Rick Perry, the energy secretary, said the subsidies were needed to avoid power outages “in times of supply stress such as recent natural disasters”.

The plan would provide a lifeline to many ageing coal and nuclear plants that would otherwise go out of business, primarily due to the abundance of cheap natural gas and the plummeting cost of renewables.

The Department of Energy noted 531 coal-generating units were retired between 2002 and 2016, while eight nuclear reactors have announced retirement plans in the past year.

 Donald Trump has vowed to arrest this decline and end the “war” on mining communities by repealing various environmental regulations put in place during the Obama administration.

Perry’s pro-coal market intervention would cost taxpayers as much as $10.6bn a year over the next decade, according to a joint analysis by the non-partisan groups Climate Policy Initiative and Energy Innovation. Just a handful of companies, operating about 90 plants on the eastern seaboard and the midwest, would benefit from the subsidies, the report found.

“The irony of putting costs on consumers for resources that are no longer competitive is really striking,” said Brendan Pierpoint, energy finance consultant at Climate Policy Initiative. “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.”

The Trump administration has raised concerns that the growth of intermittent wind and solar energy could undermine the so-called “baseload” power provided by coal and nuclear, pointing to power outages during the Polar Vortex cold wave that swept over North America in 2014.

However, recent studies of the grid have found that it has not been weakened by the loss of coal and nuclear plants and is barely affected by power outages. Also, coal-fired plants are not immune to natural disasters, with facilities going offline during the Polar Vortex and Hurricane Harvey, which hit Texas this year.

An unlikely alliance of renewable energy advocates and the American Petroleum Institute has complained that Perry’s plan tips the scales in favor of a failing coal industry and has vowed to fight the proposal. The rule would also jar with the supposed free market principles of an administration that has attacked subsidies for wind and solar, as well as intervention in healthcare insurance markets.

“Perry’s obsession with propping up these expensive, dirty facilities will cost Americans real money,” said Mary Anne Hitt, a campaigner at the Sierra Club.

“These ageing coal plants are making Americans sick, and now Secretary Perry wants to force us to pay tens of billions of dollars to Wall Street to keep them running, so they can continue polluting our air and water.”

Perry’s plan has to be approved by the Federal Energy Regulatory Commission (FERC), which is housed within the Department of Energy but is an independent agency. Two of FERC’s three commissioners were appointed by Trump, with one,Neil Chatterjee, already voicing support for subsidizing coal and nuclear. Perry has asked for a ruling on his request by 27 November.

The aggressively pro-fossil fuels stance of the Trump administration has been advanced elsewhere this week, with the House of Representatives approving a budget plan that would open the way for oil drilling in a vast Arctic wildlife refuge in Alaska.

Meanwhile, the interior department has released a plan to sweep away the regulatory “burdens” that slow down or prevent mining and drilling on public lands.


October 28, 2017 - Posted by | politics, USA

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