Coal is king when it comes to subsidies
September 26, 2007
My local Montana newspaper ran a letter not long ago complaining about the cost of wind power. The only thing that lets wind power compete with good old coal-fired electricity, the writer said, was the 1.9 cent per kilowatt-hour subsidy that a wind producer gets for the first 10 years of production.If only it were that simple. The only thing that lets good old coal-fired electricity compete is that it gets subsidies no one even thinks about. Many subsidies come through the tax code. If a coal producer, for example, sprays his coal with diesel oil, the IRS suddenly recognizes that coal as an “alternative synfuel” eligible for a tax credit that currently amounts to $3 billion per year.But the largest subsidy to black electrons isn’t through the tax code, it comes from the coal industry’s license to pollute, a subsidy that is expanding in its ability to impoverish the rest of us.The biggest part of this subsidy is related to climate change. Worldwide, coal-fired electricity is the source of 25 percent of carbon dioxide emissions; thus it does much to damage the polar ice caps and create the unstable weather nearly everyone around the globe is experiencing. In the 1960s, severe weather caused $50 billion in damage over a 10-year period. In the 1990s, the damage from severe storms, flooding and drought was almost $300 billion. Insurance covered less than 30 percent of the losses. It’s safe to say that the coal industry did not cover the rest. So that counts as a subsidy.Hurricanes, typhoons, the peril of the polar bears and the drowning of low-lying islands in the Pacific are the most dramatic effects of global climate change. But here in Montana, and throughout the Rocky Mountain West, we are seeing more subtle signs of the change. We see our trees and perennials blooming earlier – weeks earlier, in some cases – in the spring. We see a decent winter snowpack melting off weeks earlier than in the past, depriving ranchers, farmers and gardeners of even midsummer irrigation. We note that some ski companies are up in arms about global climate change because they’re already seeing the damage it is doing – and will do – to their industry.But to really measure how big a subsidy coal-fired electricity gets, look at what it would cost to create the level playing field that coal-fired power plant proponents say they want. By level, I mean a field on which coal would produce the same amount of pollution that wind produces, which means no emission of mercury and no carbon dioxide, to say nothing of no nitrogen oxides and no sulfur dioxides.Coal is already pretty good, though not as good as wind, when it comes to the oxides of nitrogen and sulfur. But it is very bad when it comes to mercury. Cleaning up coal’s mercury emissions would add two-tenths to five-tenths of a cent per kilowatt-hour to your bill. That means if you paid 10 cents per month before, you’d pay 10.5 cents afterward.Then there’s the big one: carbon dioxide. The leading plan for eliminating coal’s carbon dioxide emissions is to bury the gas in exhausted oil and gas fields. Only a few sequestration projects currently exist. According to a 2007 MIT study, The Future of Coal, none of those has the capabilities necessary to resolve outstanding technical issues, at scale. Thus all costs are based on limited experience. The best estimate is 2 to 5 cents a kilowatt-hour, according to the Intergovernmental Panel on Climate Change. Total up the costs of dealing with mercury and carbon dioxide, and you’ll find that coal gets a hidden subsidy, so far, of roughly 2.2 to 5.5 cents per kilowatt-hour. That makes wind’s federal subsidy of 1.9 cents look pretty puny.To begin getting us to a playing field where coal and wind subsidies are closer to being the same, let’s repeal the subsidy for treated and blended coal-mine waste and other giveaways in the tax law. And let’s impose a carbon tax to fund renewable energy and mercury cleanup, as well as carbon dioxide sequestration. Until then, it would be nice if backers of old king coal stopped whining about public-policy support for clean energy. After all, coal’s advantageous share of public money has gone on for decades. It’s time to put some dough into a cleaner world.Russ Doty is a contributor to Writers on the Range, a service of High Country News (hcn.org) in Paonia, Colo. He heads New World WindPower LLC and is also executive director of the Green Electricity Buying Cooperative in Billings, Mont.