Opinion: American energy fueled by freedom, not bailouts

Jeff Stier
MAIDSVILLE, WV - AUGUST 21:  The Longview Power Plant,  a coal-fired plant, stands on August 21, 2018 in Maidsville, West Virginia. The plant's single unit generates 700 net megawatts of electricity from run-of-mine coal and natural gas. In a stop in West Virginia tonight, President Donald Trump is expected to announce a proposal to allow states to set their own emissions standards for coal-fueled power plants. Environmental activists say this would be a massive blow to reducing carbon emissions.  (Photo by Spencer Platt/Getty Images)

A leaked memo circulating in the White House calls for electricity consumers to bail out struggling coal and nuclear plants by mandating that a portion of energy to be purchased from certain failing suppliers. 

This proposal doesn't make sense. Following through on it would undermine the market-driven forces that have boosted U.S. energy production, saved money for consumers, and helped the environment. 

Since President Trump took office, the U.S. Department of Energy has supported an '"all-of-the-above" approach to domestic energy production. 

This is a smart strategy. It promotes economic growth by ensuring that demand is driven by consumers -- and not political trends. Whether wind, solar, hydro, nuclear, oil, coal, or natural gas, the administration's expressed intention has been to resist the temptation to "discriminate against any of our fuels," as energy secretary Rick Perry has explained.  

Or so we thought.

Perhaps the administration is all-too-willing to misuse government power to enrich political allies. Whereas the Obama-era beneficiaries were renewables such as solar and wind, Trump has asked for a plan to subsidize coal and nuclear plants that have currently become economically uncompetitive.  

According to the Brattle Group, a research firm, the White House proposal would force electricity consumers to give coal and nuclear companies nearly $17 billion annually. 

Resources for the Future, a think tank, has found that the bailout plan would preserve just 790 coal-related jobs -- and cause substantial job losses in other industries. 

Since Trump took office, at least 25 coal plants have shut down, edged out by cheaper and environmentally sound alternatives like natural gas. Such is the reality of a market-based economy. Eventually, uncompetitive companies -- and even uncompetitive industries -- go out of business.  

The United States has plenty of resources available to ensure a secure power grid. There's no need to keep failing coal and nuclear plants on-line. 

In the case of coal, there's an environmental cost as well. Overall U.S. carbon emissions have declined nearly 20 percent since 2005 thanks largely to the replacement of dirty coal-fired plants with clean-burning natural gas plants. 

Just last month, Colorado's largest electric utility, Xcel Energy, reported that modernizing its energy sources will reduce its carbon footprint by 60 percent. Coal, the most carbon-intensive form of power, is responsible for 67 percent of carbon emissions even though it accounts for only 32% of electrical generation.

The government shouldn't interfere with this market-based environmental improvement.

Government favoritism would also raise consumer electricity bills. Over the past decade, as hundreds of coal plants shut down, electricity prices have fallen, thanks in large part to a revolution in shale gas and renewable energy. Colorado's Xcel reports it stands to save its customers $213 million by replacing two coal-fired units with a mix of wind, solar, battery, and natural gas.

Consider that before 1882, when the first American coal-fired plant was built, a typical American family supplied its energy needs with firewood.  Where would the American economy be today if President Chester A. Arthur suppressed coal production and put his thumb on the scale in favor of Big Lumber?

America's diverse energy resources have evolved, innovated, and grown thanks to market principles.Government interference that picks winners and losers would destroy it.

Jeff Stier is a Senior Fellow at the Taxpayers Protection Alliance