Trump administration should forget subsidies for coal, nuclear energy

Despite President Obama’s insistence that “we can’t drill our way” to energy independence, America has been enjoying an energy renaissance under the Trump administration. We have become an energy exporter for the first time in 75 years, gas prices are low, and we are on track to achieve energy independence by 2020.

The Trump administration can be proud of these data points. Yet, its energy policy is not perfect.

Energy Secretary Rick PerryJames (Rick) Richard PerryRick Perry planning to leave Trump administration: report Will Biden lead a 'return to normalcy' in 2020? Who will Trump pick to succeed Nielsen at DHS? MORE recently visited the Vogtle nuclear power plant in eastern Georgia, where he announced that the administration would provide an additional $3.7 billion in loan guarantees to support construction of two reactors. The move leaves the government guaranteeing a full $12 billion of the project’s financing.

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To say that the project’s construction has been troubled would be an understatement. It is billions of dollars over budget and years behind schedule, and it is not certain that the project will, in fact, ever be completed. Its potential customers are balking at the prospect of paying the high prices it will be forced to charge to recoup its investment. The fact that energy prices overall are sharply lower than they were when the project began — thanks to the 50 percent increase in natural gas production in the past decade — has put its long-term prospects in doubt even if the Vogtle plant does get up and running.

The Trump administration appears unwilling to let the market determine the optimal energy mix in this country. In the past two years, it has attempted to prop up failing nuclear and coal-fired power plants several times, offering up various rationales for doing so. Last year it suggested these fuel sources were more resistant to cyber threats, an unsure claim. The administration also put forth the argument that subsidizing coal and nuclear plants is necessary for reasons of national security, but the majority of our nation’s natural gas supply is sourced from domestic producers. 

Earlier, the Trump administration tried to push the Federal Energy Regulatory Commission to determine that it was necessary to prevent coal and nuclear power plants from closing in order to ensure grid resilience, but the commission rejected that notion in January 2018.

Most recently, the administration introduced language in the Economic Report of the President outlining a potential vehicle for a federal bailout. The report discussed a “voluntary reserve program” that would serve to “promote the grid’s resilience.” While all sources would be eligible to be part of a reserve, unsurprisingly the report specifically mentions nuclear and coal plants as assets that could be shown preferentially treatment given they provide alleged “greater resilience benefits.” It is little more than a solution to a problem that doesn’t exist.

The Trump administration no doubt feels compelled to protect the shift away from coal and nuclear and towards natural gas. It has a deep vein of support in coal country, and nuclear power plants provide well-paying jobs for both blue- and white-collar workers.

However, the unprecedented increase in natural gas production has brought substantial economic benefits. Most importantly, its rise has helped to moderate energy prices across America. Not only has that helped U.S. companies — especially manufacturers and other businesses in energy-intensive activities — but lower energy prices have been good for consumers. For example, a study by the Consumer Energy Alliance estimated that Ohio energy consumers saved a total of $40 billion from the lower prices engendered by the rise in natural gas production, which amounts to a significant boost in the state’s collective standard of living — less money spent on energy allows people to spend more on other things.

There’s no denying that the economy’s transition away from coal and nuclear power towards natural gas has disrupted some communities and careers, especially in areas of the country heavily dependent on coal. However, spending billions of dollars to prevent this evolution from occurring would leave us with energy prices higher than they need to be and diminish the environmental benefits of transitioning to natural gas, which releases 40 percent fewer greenhouse gases than coal.

The best response from this, or any, administration to the changing mix of energy prices would be benign neglect. Protecting coal or nuclear plants with further subsidies will generate no public benefit.  

Jared Whitley is principal at Whitley Political Media, LLC. He worked as a press assistant for Sen. Orrin Hatch (R-Utah) in 2006-2008, as an associate director for rapid response in the George W. Bush White House in 2008-2009, and as a government and media coordinator in the defense industry. Follow him on Twitter @whitleypedia.