“Like subsidizing bacon for its nutritional content,” is one criticism among many that are driving an unusual alliance against U.S. Energy Secretary Rick Perry’s late September demand that nuclear- and coal-fueled electrical generation get a subsidy designed to exclude other, cleaner forms of energy.
Late last month, Perry asked the Federal Energy Regulatory Commission (FERC)—an arm’s length agency currently dominated by Trump administration appointees—to guarantee the profitability of generating facilities that keep more than 90 days of fuel onsite.
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The initiative is meant mainly to bail out coal and nuclear facilities that have struggled to overcome a variety of economic shortcomings. Hydroelectric generators would also qualify for the benefit, although there is no evidence they face similar financial struggles. The subsidy would not be available to natural gas facilities fed continuously from gas distribution networks, or to wind or solar generators which by their nature can’t “stockpile” fuel.
Perry maintained the benefit was necessary to preserve “resiliency” and “reliability” in the American power grid, basing his decision on a report commissioned earlier this year that did indeed include a call for such support. That document, however, did not support Perry’s claim that nuclear or coal were essential for grid stability, an assertion that a leaked early draft had conclusively put to rest.
The former three-time Texas governor also asked the energy regulator to fast-track the requested bailout scheme, which FERC did through a curtailed schedule for industry input to the market-distorting measure.
Within days, the Washington Post credited the move, tongue in cheek, with helping again to unite America—in opposition to the administration, with 11 industry groups asking FERC to delay issuing Perry’s requested rule.
It was a coalition of “strange bedfellows,” the outlet added. Among the 11 were the American Wind Energy Association and the Solar Energy Industries Association, alongside “oil and gas heavyweights” like the Natural Gas Supply Association and the American Petroleum Institute.
“This is the first time we’ve filed a motion in conjunction with API,” acknowledged Gil Jenkins, spokesperson for the American Council On Renewable Energy. “It’s unprecedented. Just as this very action taken by DOE.”
Across the clean-fossil divide, Dena Wiggins, president of the Natural Gas Supply Association, objected that Perry’s rule would unfairly advantage coal and nuclear plants. “Competing on the economics—we’re fine with that,” Wiggins said. “This seems to be putting the thumb on the scale against natural gas.”
Beyond its impact on the excluded energy sectors, Greentech Media commented, “Perry’s demand for market-disrupting price supports for coal and nuclear power plants has broken multiple rules for how energy policy is made, from upending the facts to subverting regular order.”
As reported by RTO Insider, one former Republican FERC appointee called the request “the antithesis of good economics.” Declared Nora Mead Brownell: “It’s going to destroy the markets [and] drive away investment in new, more efficient technologies, whether they be generating plants or energy efficiency, at a cost to business and ratepayers that is astronomical.”
On The Conversation, University of California economists Meredith Fowlie and Maximilian Auffhammer drew an unexpected inference from Perry’s claim that nuclear and coal generators provide hitherto “uncompensated benefits” that now deserve a cash reward.
“As energy economists,” they wrote, “when we think about coal-fired electricity generation, what usually comes to mind are unaccounted-for costs—not benefits.” Emissions from coal burning contain toxins ranging from caustic ash to complex hydrocarbons, to radioactive particles—to say nothing of climate-destabilizing greenhouse gases.
The U.S. National Academies of Sciences has estimated the externalized (unaccounted-for) costs in damaged public health and environment traceable to those factors amount to US$6.60 per million Btu. “For perspective,” the two economists say, “the delivered coal price in 2016 averaged $2.15 per MMBtu.”
“Coal looks cheap, but we’re paying a hefty hidden cost,” Fowlie and Auffhammer conclude. Paying utilities to burn even more would only “worsen coal’s major negative externalities in the name of some dubious positive externalities—like subsidizing bacon for its nutritional content.
“There are better ways to get your vitamins, and better ways to keep the lights on.”