By John Siciliano
July 9, 2018 - A coal group is arguing that spending $4 billion each year to subsidize coal and nuclear plants is not that much for consumers to bear because it would create energy security and boost national security.
“While $4 billion per year is not trivial, it is tiny compared to other investments for national security,” according to a new paper from the pro-coal American Coalition for Clean Coal Electricity that will be released Monday.
The paper goes on to explain that Defense Department spending over the past three fiscal years averaged about $645 billion per year. Therefore, “paying an additional $4 billion per year to promote national security would represent less than 0.6 percent of federal funding for the same purpose,” the paper added.
The coal group’s analysis uses a number from a recent ICF study that showed subsidizing the fixed number of coal and nuclear plants readying to close, as the Trump administration has proposed, would cost between $1 billion and $4 billion per year.
The group paired the ICF study with the national security argument for keeping the plants open that a White House National Security Council memo explained. The memo argues that ordering many of these uneconomic power plants to stay open was necessary for national security because they “have a secure on-site fuel supply,” which makes them “essential to support the nation’s defense facilities, critical energy infrastructure, and other critical infrastructure.”
The group points out that critics of the Trump administration's proposed plan typically cite price as a key problem. A broad coalition of industries that includes oil, natural gas, and renewable energy trade groups is opposing the plan, arguing that it picks winners and losers and would distort energy markets.
“The cost could be borne by either ratepayers or taxpayers, depending on what the administration decides to do,” according to the paper. “Regardless who pays, it sounds like any cost is too high for these critics.”
It argues that solar and wind tax credits are nearly double the annual amount that would go to coal and nuclear power plants.
“Our best-guess cost of $4 billion per year is considerably smaller than federal tax subsidies that have supported renewable energy sources for four decades,” the group’s report said. “For example, wind and solar will have received tax subsidies averaging $7.3 billion per year over the period 2016-2020, according to the Joint Committee on Taxation,” the paper continues. “Wind and solar do not provide fuel security.”
The coal group's Monday report is part of a series it is releasing over the next few months to make the argument for keeping a number of power plants open that are expected to close over the next four years.
Many of the power plants are closing because they cannot not compete in the nation’s electricity markets that are dominated by low-cost natural gas power plants. Natural gas plants are the cheapest to operate due to the low cost of their fuel spurred by the shale drilling boom.
But the White House is also pointing out that natural gas is not as secure a fuel source when compared to coal and nuclear, because of its reliance on pipelines. President Trump drove home this point in a speech last week in West Virginia.
"You know, you bomb a pipeline, that's the end of the pipeline,” Trump said. “With coal, that stuff is indestructible.”
“So for national security purposes, I don’t think people talk about it enough — coal,” he said.
Trump ordered Energy Secretary Rick Perry on June 1 to develop a proposal to save a number of coal and nuclear power plants from closing prematurely. Perry is expected to release the Energy Department's own cost estimate for what keeping the plants operational would cost in the next few weeks.
Opponents of the Trump plan are also planning to release their own cost estimates in the coming weeks, say industry sources.