Trump Bails On Coal Industry Incentives

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Yves here. We so seldom have good news on the greenhouse gas and energy fronts that we should celebrate even a qualified win. Trump is reportedly abandoning his plan to hand subsidies out to coal-fired electrical plants and nuclear power plants because the pretty much every other type of energy producer opposed it.

By Irina Slav, a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry. Originally published at OilPrice

President Trump has reportedly cancelled a plan proposed by Energy Secretary Rick Perry to provide financial support for troubled coal-fired power plant operators, Politico says, quoting four unnamed sources familiar with the matter. According to the sources, the President made the decision prompted by opposition from his own advisers.

Last year, Energy Secretary Rick Perry proposed a plan for subsidizing coal and nuclear plants for providing base load generation—that is, round-the-clock power, but the plan was rejected by the utility regulators who said they will study the national grid’s resilience to supply interruptions. Many grid operators said they are already factoring in everything that has to do with their grid’s resilience to disruptions.

In June, the Federal Energy Regulatory Commission said it did not see any emergency in the U.S. electricity market that would merit financial aid for coal and nuclear power plants. The stance was announced by the panel regulating the national grid at a Senate hearing. The opinion is likely to undermine efforts by the Trump administration to save non-competitive coal and nuclear power plants on the grounds that they guarantee the grid’s resilience in case of emergency.

Now, advisors to the president from the National Security Council and the National Economic Council have also spoken against the plan that has raised the hackles of the oil and gas industry—another priority industry for Trump along with “beautiful, clean coal”. The bailout plan proposed by Perry largely sought to shield coal and nuclear plant operators from the suffocating competition of cheap natural gas.

But oil and gas producers are by far not the only stakeholders opposing a potential bailout for American coal. Pretty much everyone except the coal industry itself is against it. “The problem they’ve got is every option they might consider raises the costs for somebody at a time when nobody has an appetite for increased costs anywhere,” the co-head of an energy advisory company told Politico.

“I think that’s the problem they keep running into. The political will to pay for it is not broadly there enough yet for them.”

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  1. Geo

    That is some good news. Now if only we could do something about this:

    the U.S. government spent $26 billion each year in 2015 and 2016 on fiscal support for fossil fuels, with $15 billion going to oil and gas production – the highest amount of any G7 country. A further $1 billion of public finance went to fossil fuel exploration.

    Oil companies are the real welfare queens. Imagine what we could do with that $26 billion for education or infrastructure. Not to mention the untold billions in military and diplomatic efforts to “protect” oil markets.

    When I hear someone complain about the “moochers” taking advantage of food stamps or whatever I tell them I’ll care about the poor gaming the system after we stop the rich from gaming it.

  2. The Rev Kev

    I suppose that Trump could tell the coal and nuclear plants operators: “Nothing personal. It’s just business!” I wish the same could happen in Australia. A powerful faction of the Coalition (like your Republicans) seem to have nothing but wet dreams about coal and nuclear. They want massive subsidies to coal plants that the owners themselves want to shut down and dream about nuclear power plants around the country. Perhaps this development in the US is a sign that the glory days of these two industries are steadily coming to a close. Nothing personal. It’s just business!

      1. Jonathan Holland Becnel

        Wentworth is the BETTER version of Orange is the New Black. Set in Australian Prison, Wentworth is grittier and darker.

  3. Mickey Hickey

    Nuclear power has a bright future as a base load supplier. Fracking has reduced the cost of tight oil and natural gas to a level that has made nuclear noncompetitive. The depletion rates of tight oil and natural gas are very high when compared to conventional oil. The burning of fossil fuels will become increasingly controversial as the US South gets blown away or burnt up. Solar and wind energy will meet part of the need, coal burning will be banned and gas will be in short supply in the near future. Countries with abundant supplies of coal like the US, Germany and Australia are having great difficulty recognising that burning fossil fuels are causing climate change. In anticipation of objections to placing Germany in the same company as the US and Australia, it should be known that Germany is still burning large amounts of coal.

    1. taunger

      Nuclear has never been competitive without unlimited government subsidies. Given the timeline for GHG reductions and the timeline for nuclear plant construction, we are far more likely to have a buggy whip renaissance than a nuclear renaissance.

      1. Mickey Hickey

        Nuclear has not been competitive in the US and UK. The same cannot be said for France and Canada. The question that needs to be answered is what will replace coal when it becomes illegal to burn it. Perhaps gas from coal which is produced in an enclosed chamber as a chemical reaction giving total control of emissions. Solar and wind will never reach the scale required to replace coal. Even in Canada hydro electric is almost fully exploited. I was in Havre St Pierre, Quebec, Canada a few months ago which is south of Labrador on what Quebecers call the North Shore (Nord Cote) near where one of the few remaining potentially profitable hydroelectric generating plants is being built.
        Something to be kept in mind is that in northern latitudes the coldest night of the year occurs around January 25th and is always calm. In addition the sun is low on the horizon and the night is relatively long, on the positive side cloud free conditions prevail. Six hours without power at -30 C freezes indoor plumbing.

        1. PlutoniumKun

          Nuclear can never have a role apart from base demand generation, its too capital intensive.

          So for a situation where you need coverage for the ‘5 nights a week when demand is sky high and renewables are very low’, then for several decades simply keeping legacy fossil fuel plants mothballed and available would be the most cost effective option. And after that, probably either long distance power networks or just old fashioned emergency mobile diesel or gas generators would probably be cheapest.

      2. P Fitzsimon

        Nuclear can’t compete with natural gas now but what happens when fossil fuel use ends and we have only wind and solar to provide energy? When economical sites for solar and wind are no longer available their price will soar and nuclear could be the only non co2 emitting option.

        1. PlutoniumKun

          No one power source can be considered in isolation. Power sources have to be complementary in order to make for a viable mix. Hence the value of gas powered plants historically (despite their very high cost pre-fracking). They could provide power for peak demand which the base generators (historically usually nukes or coal plants) could not cover. The problem for coal and nuke has been that cheap gas means that these plants are now covering both base and peak demand.

          Big thermal plants like nukes or coal are almost impossible to integrate with large scale renewables. You need a power source that can cut in quickly when renewables are down. This means either very large scale energy storage, gas or distillate generators, or (if available) suitable types of hydro.

          So if you go for very large scale renewables, nuclear power (as the technology exists now) is a dead technology. It simply can’t coexist in a mix with large scale renewables. The point where it ceases to be viable depends on the nature of your network (the bigger the power network, the more flexible it is).

          This is why the nuke industry has been so hostile to renewable energy – its not just a direct competitor – its about what makes up a viable network mix, and picking one technology inevitably leads to further decisions about the viability of individual technologies.

        2. Plenue

          It’s not just energy generation though. Everything, including the means to exploit alternative energy sources, is made of, well, stuff. And that stuff, especially the plastics, often involve oil or natural gas in their production. I don’t think I’ve seen any serious plans for finding a way to shift production to something other than fossil fuels. Recycling can only go so far.

          1. Blake Kelly

            The stuff in the products doesn’t have to go in the air though, oil to plastic to landfill doesn’t cause global warming if you catch the landfill methane and such.

      3. Chris

        Without a carbon market, nuclear can’t compete economically with natural gas. And in a few years, the economic competitiveness of nuclear will be a moot point. We barely have the talent or capacity anymore to build a new plant.

    2. knowbuddhau

      Right now, *we don’t have a bright future. Our timeline, according to the IPCC’s conservative, massaged numbers, is 12-32 years .

      2 years ago, 7 top climate scientists said we’re already going to be at +2C by 2050.

      “The planet has already heated up 1.0 C (1.8 F) above the pre-industrial benchmark, and could see its first year at 1.5 C within a decade [2026, 8 years and counting], scientists reported at a conference in Oxford last week.”

      Already been 2 years since that report. Some researchers question the validity of the pre-/post-Industrial benchmark. Feedback is compounding faster than expected.

      At the very least, top climate scientists warn we could be only 8 short years from blowing right on by Paris’s lofty goal.

      What’s the timeline for siting, permitting, and all the rest before ground is even broken? Look at the disastrous public works from coast to coast. FFS, Hanford is still contaminating everything for miles and miles around, and you think nuclear has a bright future?!

      The opposition to this instance of Trump’s crass cronyism ain’t nothin compared to what you’ll see for spending umpteen billions for more nukes right now instead of genuinely sustainable renewables.

      Why throw billions, and time we no longer have, hello?, on those dinosaurs? We need full-scale, moon-shot level decarbonization now.

  4. trassylinz

    Leadership of the Navajo Nation has been put in the weird position of fighting for its coal power plant near Page, Arizona. Once the coal plant goes, where do isolated residents of northern Arizona get their affordable electricity? How about other rural places? Is DOE doing anything for the country living crowd?

    1. TheScream

      Coal has to go one way or another. Isolated residents of Arizona will either have to go clean or move. Or we can keep burning coal and all die in 50 years. The arguments based on economics or deprivations for particular groups are no longer valid. Greatest good for the greatest number in a situation like this…or extinction.

  5. drumlin woodchuckles

    This is one little subsidy that appears to be ended. But the Trump Group still drives bigger pro-coal tilting-of-the-battlefield. I read an article I now can’t find about how the Trumpists have installed their people into policy making and enforcing positions at TVA. Those Trump moles are ordering TVA to change what and how it charges for various aspects of its electricity-provision services. One of those changes is a much higher fixed charge for just being hooked up. Another of those changes is much lower prices-per-kilowatt-hour for a threshhold-level of vastness of use. This is meant for business customers and is meant to discourage energy conservation in order to encourage TVA to buy and burn more coal.

    As I said, I can’t find the article. But I found an article about fighting one of its downstream effects in one particular place. And here it is.

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