The mix of energy sources powering our electric grid has changed dramatically over the last decade, with coal on the decline, nuclear energy flatlining, natural gas almost doubling, and solar energy growing about 70 times.
To some, this is the market—combined with a handful of government incentives—at work. But if you ask the coal industry and its political backers, it’s a “national security” crisis.
But aside from skirmishes over tax credits for renewables, drastic measures to undo strong market forces weren’t politically feasible—that is, until the Trump administration. From the beginning, the administration has been exploring unprecedented avenues for bailing out coal and nuclear power plants.
The idea first emerged last year, when Energy Secretary Rick Perry directed his staff to examine how “continued regulatory burdens, as well as mandates and tax and subsidy policies, are responsible for forcing the premature retirement of baseload power plants.” The idea was to investigate whether the regulation of coal pollution and the growth of renewables threatened the reliability of the electric grid.
“Baseload” power plants are typically fossil fuel and nuclear facilities capable of generating electricity continuously. Comments Perry made at an industry conference show he had predetermined conclusions in mind for the study. He referred to pollution rules for coal plants as “politically driven policies” motivated by “hostility toward coal” that “threaten the reliability and the stability of the greatest electrical grid in the world.”
At first glance, the premise of the study appears fair—after all, the sun doesn’t shine at night and the wind doesn’t always blow. So when growing numbers of baseload facilities retire, that could hypothetically threaten grid reliability.
But several independent experts have shown that the growing share of renewables is compatible with increased reliability. Denmark and Germany have much higher renewable penetration than the U.S.—and an order of magnitude lower incidence of power outages. Energy storage and smart grids are becoming more effective and cheaper.
In the end, Perry’s own career staff torpedoed his preordained conclusions. They leaked a draft version of the report before their political appointee bosses could alter it. And they found, resoundingly, that renewables didn’t threaten the grid.
Thanks to that leak, it was immediately clear that the report’s eventual recommendation to effectively subsidize coal and nuclear had been tacked on by Perry’s political appointees. In particular, they wanted the Federal Energy Regulatory Commission (FERC) to allow coal and nuclear facilities to charge customers more for their alleged reliability.
Thankfully, FERC rejected that proposal unanimously. Still, the idea won’t die.
Now the administration reportedly plans to use the Defense Production Act, a 1950 law authorizing government intervention in industry in national security emergencies, to push through coal and nuclear subsidies without congressional or FERC review. Perry told a House panel this May that he was “looking very closely” at that option.
It’s unclear exactly what form subsidies under the Defense Production Act could take. But what is clear is that under this proposal, taxpayers will subsidize old, uncompetitive technology that harms the planet to boot. And by defining the issue as “national security,” the Energy Department is manufacturing an excuse for secrecy about its rationale, which rules out informed debate.
That’s the apparent intent: to enable unaccountable, secretive policymaking with no rational basis.
Coal companies are getting the message. FirstEnergy, a financially troubled coal-burning utility in Ohio, now wants the federal government to require a grid operator to pay them more for their power output to guarantee their profits. FirstEnergy is invoking another law, the Federal Power Act, to justify this proposed bailout.
The coal-fired power plants the government wants to subsidize are major sources of planet-warming greenhouse gas emissions. They also emit other pollutants such as nitrogen oxides and particulate matter, which have harmful health effects such as asthma. Mining coal and the disposal of coal ash have their share of harmful impacts too.
The threat of climate change is existential. So why then is the U.S. government going down this dangerous road? Who influenced Perry to formulate these subsidy schemes?
One key figure is Robert Murray, head of coal mining giant Murray Energy. Murray contributed $300,000 to Trump’s inauguration—along with a wish list of energy policies.
A memo from Murray to Vice President Mike Pence, along with a similar memo that Murray gave Perry, laid out a policy blueprint for the administration, including bailing out coal. The administration has since tried to implement much of this agenda, including undoing the Clean Power Plan and weakening ozone regulation. (It’s worth nothing that an Energy Department photographer reportedly lost his job after leaking a photo of Perry literally giving Murray a big hug.)
And it’s not just Murray. There’s also Joseph Craft of Alliance Resource Partners, another coal company, who gave Trump a million dollars for his inauguration. At an Energy Department conference, Craft urged the federal government to come up with policies to keep existing coal-fired power plants open and make it cheaper to build new ones. The proposed coal bailout does both.
With these bailouts, the Trump administration is willing to place large numbers of vulnerable people at risk in our country and worldwide, and to trigger planetary changes that may well destroy human civilization as we know it. Worse, it’s all being done in the name of “national security”—and all to assist politically favored businesses and wealthy individuals.
It’s worse than crony capitalism. It’s self-annihilation.
Basav Sen directs the Climate Policy Project at the Institute for Policy Studies.