Quote:It's uncommon for a dry, data-heavy research paper to make the news, but researchers at the International Monetary Fund and the University of California, Davis, bucked the trend. Their analysis of fossil fuel subsidies has been covered in news and science outlets across the world. In the paper they determine that more than $5 trillion dollars was spent in 2015 by governments in subsidies to fossil fuels.

To put that in perspective, that's 6.5 percent of global GDP, which means more than one out of every 20 dollars in the world was handed to fossil fuel interests by the world's various governments. Considering the challenges climate change presents, and the relationship between fossil fuel use and climate change, it's a mind-boggling practice. The research also estimates the costs to society from fossil fuel subsidies and what could be gained by ending them, but it misses something vital in its calculations.

Quote:If the GOP tax agenda were remotely serious about closing loopholes to lower overall rates, the fossil fuel industry would rightly have a lot to fear. The billions worth of goodies that have kept their taxes artificially low for the better part of a century would suddenly be in danger.
But with Trump at the helm, this fear just isn’t realistic. The president and his collaborators in Congress are all but certain to protect the estimated $135 billion in giveaways expected to pass to oil, gas and coal over the next decade — the most prominent of which are tax code carve-outs allowing polluters to more quickly recover their investment costs.

The stumbling block in all of this is revenue. The GOP’s current tax reform wish list — including deep cuts for corporations and repealing the inheritance tax — is expensive. Without help from Democrats, it is procedurally impossible for Republicans to pass permanent changes to the tax code unless they are fully funded. Whether from corporate welfare or tax incentives for the poor, the revenue is going to need to come from somewhere.

In a sane world, billions in subsidies to the industry driving the climate crisis would be the first thing on the chopping block to fund lower tax rates. Unfortunately, the world is less than sane, and a speech on tax policy in the literal shadow of an oil refinery is the clearest indication yet that Trump and the GOP have zero interest in generating revenue from clamping down on polluter tax cuts.

Talking about tax fairness at North Dakota’s Mandan refinery is especially strange. Recently expanded in 2012, it almost certainly benefitted from a Bush-era tax giveaway allowing 50 percent of expansion costs to be deducted immediately. Starting in 2015, the facility likely began claiming yet another tax handout specifically for independent refiners. The provision was snuck into a must-pass spending bill by Sen. Tom Carper (D-Del.) — dirty energy subsidies can be a bipartisan enterprise.

Another layer of irony is that the Mandan refinery is fed predominantly with crude oil from the Williston Basin, the booming region that includes North Dakota’s Bakken Shale. According to the Stockholm Institute, without subsidies, 2.4 billion barrels of Williston crude would be left in the ground over the next two decades. Cutting century-old tax giveaways for drilling like the percentage depletion allowance would see a full 59 percent of future production cease to be economic. That’s a huge tilting of the scales in favor of Big Oil.

Quote:Perry has started a pre-ordained process to subsidize coal and nuclear plant operators, taxing people through artificially high electricity rates to subsidize costly coal and nuclear plants. What’s the problem with coal and nuclear plants, besides that they’re expensive? Coal pollutes. Badly. Nuclear, when it works well, leaves radioactive waste behind that has a half-life of 24,000 years. When it does not work well, like it didn’t at Three Mile Island, Chernobyl, and Fukushima, it tends to create ecological disasters.

Besides that the two sources of power have serious environmental problems they’re more expensive than alternative energy sources that do not. The US Energy Information Administration released a report on the various costs of energy, here. Spoiler alert: nuclear power costs a fortune to generate. Coal comes next. Then solar. Then wind. Then natural gas. Hydroelectric is marked “N/A” in 2015 but, in 2013, it was cheaper than coal. The price of wind declined 25% from 2013 to 2016 and the price of solar declined 67%. Assuming those price declines continue — and with the newfound Chinese enthusiasm for renewables that seems a given — it won’t be long before renewables cost less than any fossil fuel.

For Perry, the former Governor of Texas — who works for a guy that promised to Make Coal Great Again — this is a meltdown (I couldn’t resist).
Perry’s still-in-existence Department of Energy has asked the Federal Energy Regulatory Commission (FERC) to begin the rule-making process to subsidize both the cost and profitsof coal and nuclear plants. Perry’s puppet-master’s constituents, with their aging nuclear and coal plants, argue that renewable energy from wind and solar is variable so that backup generators are sometimes needed for days with calm winds or cloudy skies.

For now, let’s ignore the rapid pace of battery progress (which I’ll get to later) and take this assumption as true. There is an easy solution: turn on the inexpensive natural gas plants to make up the difference. In fact, right now, that is exactly how things work: energy companies constantly sell backup energy capacity to one another. But, under Perry’s scheme, companies would be required to purchase a certain amount of this backup energy from fuel plants that store 90-days or more of fuel on-site. Why 90-days? Because it’s completely impractical to store 90-days of natural gas on-site but easy enough to store that much coal and nuclear fuel. This is an old-school Rand-style looter giveaway from a bunch of self-described “conservatives” trying to rescue a dinosaur industry that’s choking the world.

Quote:The coal industry and its allies in the Trump administration have recently devoted considerable energy to arguing that subsidies to renewable energy have distorted energy markets and helped drive coal out of business. “Certain regulations and subsidies,” says Rick Perry, “are having a large impact on the functioning of markets, and thereby challenging our power generation mix.” You can guess which regulations and subsidies he’s talking about. This is nothing new, of course. It is in keeping with a long conservative tradition of challenging the economic wisdom and effectiveness of energy subsidies.

At least, uh, some energy subsidies. Energy analysts have made the point again and again that fossil fuels, not renewable energy, most benefit from supportive public policy. Yet this fact, so inconvenient to the conservative worldview, never seems to sink in to the energy debate in a serious way. The supports offered to fossil fuels are so old and familiar, they fade into the background. It is support offered to challengers — typically temporary, fragmentary, and politically uncertain support — that is forever in the spotlight. So let’s change that. Let’s talk about “certain regulations and subsidies” — namely, the ones propping up US fossil fuels. Three recent analyses can help.

Quote:But Perry also found time to defend DOE’s surprise request to the Federal Energy Regulatory Commission (FERC) to rush through a rule that would upend decades of energy market policy by guaranteeing cost recovery for power plants with 90 days of fuel supply on-site -- something that only nuclear power, a few hydropower sites, and some larger coal power plants can provide. 

Perry’s prepared statement called the notice of proposed rulemaking (NOPR) "just the first step," although he left that phrase out of his opening remarks. Instead, he repeatedly called the proposal “a way to kick-start a national discussion about resiliency and reliability about the national grid,” with a "very robust and open conversation" between parties his primary goal. 

This does not sound like a description of the NOPR that DOE filed with FERC, however. That document implies a looming threat to grid reliability due to coal and nuclear power plant retirements, based on a sketchy and incomplete analysis of one cold weather event (the 2014 polar vortex) that grid operators have already taken steps to address. 

It then leaps to proposing that FERC must rush through a rule to establish “cost recovery” for its definition of grid resources that meet its reliability and resiliency requirements, with the 90-day fuel supply qualification completely overshadowing the remainder.

DOE’s proposal for pushing this rulemaking through on a 60-day timeline prompted an immediate outcry across the energy industry spectrum, with 14 energy trade groups including solar, wind, natural gas, oil and major commercial and industrial power users filing a motion with FERC to extend DOE’s 60-day timeline. FERC rejected that request on Wednesday, with no explanation.

Many Democratic members of the subcommittee zeroed in on the NOPR for criticism. “You are distorting the market, damaging the environment and delivering preferential treatment to favored industries,” said Rep. Frank Pallone Jr. (NJ), the top Democrat on the full House Energy and Commerce committee. Pallone also sent a letter to Perry on Thursday, demanding the names of DOE staffers involved in the NOPR and a record of who they met with as it was created. 

Rep. Kathy Castor (D-FL) cited a study by research firm ICF that showed the rule could cost ratepayers from $800 million to $3.8 billion annually through 2030. “There is just no rational basis for this FERC rule you are trying to move through as quickly as possible,” she said. "I am concerned that a discussion about how this will increase prices for consumers is being short-circuited. How do you give voice to consumer concerns about massive price increases?”

Rep. Paul Tonko also asked Perry if he had considered the costs to ratepayers when crafting the rule. Perry responded, “I think you take costs into account, but what’s the cost of freedom? What’s the cost to keep America free? I’m not sure I want to leave that up to the free market.”

Perry several times evoked the specter of blackouts as justification for expediting the proposed rule. In response to Rep. Mike Doyle (D-PA), who asked him to clarify whether the NOPR was a 60-day rush order for major energy market policy overhaul or a conversation-starter, he said, “It is both. It can be both. We can have a conversation, and I think they must act.”

Perry also undercut the free-market side of the argument against the NOPR -- that by subsidizing expensive and outdated power it will shove out more competitive alternatives and suppress innovation -- by questioning the idea of a free market in energy itself. “We subsidize a lot of different energy sources. We subsidized wind energy, we subsidize ethanol, we subsidize solar, we subsidize oil and gas,” he continued. “The question is: How do you make it as fair as you can?”

Perry also left open the possibility the rule would be rejected. "If the letter to FERC is what you say it is, they won't go forward," he said.
FERC Commissioners Rob Powelson and Cheryl LaFleur have voiced their concerns about rushing ahead with a rule that could upend energy markets, while Chairman Neil Chatterjee has previously expressed his support of examining market forces that could threaten coal and nuclear power’s role in grid resiliency. 

Quote:A conservative think tank is raising concerns about a Department of Energy plan to help boost coal and nuclear power. An analyst for the American Action Forum (AAF) said the proposal, announced this month by Energy Secretary Rick Perry, aims to address a “real problem” with “not the best solution." Perry’s proposal aims to prop up coal and nuclear plants by mandating higher payments for the electricity they generate, arguing the two power sources are able to store so much of their fuel on site that they help support the reliability and resilience of the electric grid.

But Philip Rossetti, an AAF data analyst, said the plan “does not promote a policy that would necessarily achieve” a more stable electricity system, and instead would “arbitrarily value nuclear and coal power above their market rates.” “The only effect of the [proposal] is to set an arbitrary target of on-site fuel requirements that values coal or nuclear power, regardless of if those sources are able to provide resiliency and reliability at least cost,” Rossetti’s analysis says. AAF’s disapproval of Perry’s plan comes as others raise questions and doubts about the proposal.

The Institute for Energy Research, an energy think tank whose political side endorsed Trump, called the plan “excessive and unnecessarily distortive.” Lawmakers on Capitol Hill blasted the plan during a hearing featuring Perry last week, and the Sierra Club estimated Monday that the proposal “would severely distort America’s energy markets and cause ratepayers’ bills to skyrocket.”

Quote:Donald Trump campaigned for president with intense support from coal miners and coal mining communities. He promised them the moon — mines would reopen, their jobs would come back, and their communities would thrive. Like many of Trump’s promises, these are impossible to keep, but he’s been making a real effort (more than you can say about his other promises). Part of that effort was instructing Rick Perry, head of the Department of Energy, to figure out a way to stop so many coal-fired power plants from closing.

Perry dutifully came up with a plan (albeit a bonkers plan), but it requires the cooperation of federal regulators. Specifically, Perry asked the Federal Energy Regulatory Commission, or FERC, to pass a new rule that would bail out coal plants. Now the deadline is approaching, and FERC faces a fateful decision: whether to go along. FERC is within its rights to say no, to ignore Perry’s proposal or pass a different rule of its own — but it is under considerable pressure to toe the administration line. Originally, FERC was working under the deadline of Monday, December 11. On Thursday, however, newly sworn-in chair Kevin McIntyre wrote to Perry requesting a 30-day extension, which Perry has grudgingly granted on Friday. So the real moment of truth is in 30 days, early in 2018.

But it’s worth looking now at how much this decision will serve as a kind of barometer that tests just how far partisan hackery has penetrated the federal bureaucracy. It has become extremely clear since Perry debuted his proposal that it is nothing but raw crony capitalism — a bid to heap rewards on a few wealthy friends, with no larger justification. Pretty much everyone hates the proposal except the handful of companies that would directly benefit from it. It is built on a false premise. It would raise costs for electricity consumers and produce unnecessary pollution, to line the pockets of energy executives. "The precedent is so bad,” one industry official told E&E, “on so many levels."

Quote:If the policy is in effect from 2020 through 2045, it prevents the retirement of approximately 25 GW of coal-fueled capacity, delays the retirement of 20 GW of nuclear capacity, causes 27,000 premature deaths in the United States, and has an estimated total net cost of $263 billion during those 25 years. ... We find that the policy’s net cost for electricity end-users is $72 billion and its net benefit for generation owners is $28 billion.

Quote:The second analysis, from the researchers at Energy Innovation, modeled four different ways of implementing the NOPR and found that it would increase annual costs between $311 million and $10.6 billion. They also found, significantly, that “more than 80 percent of the increased costs customers would pay to subsidize coal would go to just five companies, and nearly 90 percent of the costs to subsidize nuclear would go to just five or fewer companies.” (An analysis by SNL found something similar.)

The third, by the Brattle Group, estimates the cost of these out-of-market payments at between $3.7 to $11.2 billion a year — and 60 percent of that would be in one power market, the PJM Interconnection (which ranges over 12 states from the Midwest to the Mid-Atlantic). The fourth, by analysts at research consultancy ICF, found that, depending on how it is implemented, the NOPR could cost ratepayers between $800 million and $3.8 billion annually through 2030.

Quote:By now, it’s no secret that the sweeping tax reform package approved by Congress last week includes a bunch of provisions that help the oil and gas industry. As the Washington Post reported, cutting the corporate income tax rate alone will likely add $1 billion to the profits of U.S. oil and gas exploration and production firms. Oil refining companies stand to do even better, according to one analyst who estimated that those companies’ earnings per share will increase by an average of 23 percent. The tax bill also opens up the Arctic National Wildlife Refuge in Alaska, the largest wildlife refuge in America, to drilling.

But there’s also something to be said about what the tax bill didn’t change: the billions of dollars in permanent, century-old tax subsidies for the fossil fuel industry. According to Oil Change International, the U.S. federal government provides a combined $14.7 billion in various annual subsidies for the fossil fuel industry, the vast majority of which remained untouched in the tax bill. And while the majority of those subsidies favor the oil and gas industry, 20 percent go toward incentivizing coal consumption and production. What’s more, the effective tax rate for coal—which is less than 1 percent—stays the same. In other words, the government still sacrifices billions in revenue every year to prop up coal, an industry that most energy analysts agree is dying.

Quote:The House passed a non-binding measure Thursday to denounce a carbon tax, calling it “detrimental” to the United States.  The resolution, sponsored by House Majority Whip Steve Scalise (R-La.), states that a tax on emissions of carbon dioxide — the most prevalent greenhouse gas that causes climate change — “would be detrimental to American families and businesses, and is not in the best interest of the United States.” It passed 229-180 with two members voting present.

Quote:As the Trump administration crafts a $30 billion bailout plan for coal and nuclear plants, the president used a political campaign event in New York last week to stage a failed attack on the wind energy industry. “You need subsidy for windmills. You need subsidy,” Trump said in his remarks. “Who wants to have energy where you need a subsidy? So, uh, the coal is doing great.”

Although it’s not entirely clear, Trump’s use of the term “subsidy” was most likely a reference to production tax credits for the wind energy industry. These tax credits have helped to drive tens of billions of dollars of investment into areas of the country with strong wind potential, bringing thousands of jobs with them. But they are now being phased out, with the support of the wind energy industry, ending after 2019.

Quote:While the administration claims the rule will achieve the main objectives of the Clean Power Plan, which Trump canceled last year, even the EPA itself is forecasting that adopting this rule will increase the death rate over what it would have been under Obama's framework, according to a report in The New York Times:

Quote:The proposal lays out several possible pathways that individual states might use for regulating coal-fired power plants, and what the consequences would be for pollution and human health in each case. In the scenario the E.P.A. has pegged as the most likely to occur, the health effects would be significant.

In that scenario, the Trump E.P.A. predicts its plan will see between 470 and 1,400 premature deaths annually by 2030 because of increased rates of microscopic airborne particulates known as PM 2.5, which are dangerous because of their link to heart and lung disease as well as their ability to trigger chronic problems like asthma and bronchitis.

President Donald Trump has been obsessed with protecting and expanding the use of coal, one of the dirtiest fuels and a huge contributor to global warming. He even toyed with the idea of using a Cold War era national defense law to force electric utilities to buy power from failing coal plants.