Guest essay by Eric Worrall
Secretary of Energy Rick Perry has defended proposed subsidies for coal and nuclear power, claiming they are required to “rebalance” the market after the abuses under the Obama Presidency. In my opinion subsidising fossil fuels and nuclear is just as wrong as subsidising renewables.
Rick Perry: DOE’s Coal, Nuclear Proposal Is ‘Rebalancing the Market’
Perry doubles down on arguments that the NOPR will protect Americans.
LACEY JOHNSON NOVEMBER 02, 2017
Energy Secretary Rick Perry said a proposed rule to subsidize coal and nuclear plants is “rebalancing the market” to correct for the Obama administration’s support of renewable energy.
They “clearly had their thumb on the scale toward the renewable side,” said Perry, who spoke about his energy policy priorities with Meet the Press moderator Chuck Todd and Axios CEO Jim VandeHei at an event in Washington, D.C. on Thursday.
The DOE’s request to the Federal Energy Regulatory Commission (FERC) would upend decades of energy market policy by guaranteeing cost recovery for power plants with 90 days of fuel supply on-site — something that only nuclear power, a few hydropower sites, and some larger coal power plants can provide.
“If you can guarantee me that the wind is going to blow tomorrow, if you can guarantee me that the sun’s going to get to the solar panels…then I’ll buy into that. But you can’t,” said Perry.
The notice of public rulemaking, or NOPR, implies that there is a looming threat to grid reliability due to coal and nuclear power plant retirements. Its conclusions are largely based on an incomplete analysis of the 2014 polar vortex, which could have led to blackouts had several coal-fired plants now slated for closure not been available to serve the load.
The move has been widely criticized by clean energy advocates as politically motivated and factually unproven, and has drawn a backlash from major sectors of the energy industry.
In my opinion, subsidising coal and nuclear is just as wrong as subsidising renewables, a sure path to more expensive electricity.
The moment the government starts wheeling out subsidies, businesses stop focussing on improving their product or service, because its far cheaper and more cost effective to lobby a few politicians.
What happened to the coal and nuclear industry under President Obama was awful and unjust. But two wrongs don’t make a right.
Given Democrat hostility to fossil fuel, and the identified systemic risks to the system, I would support providing government guarantees of financial compensation to coal and nuclear plant operators, a specified payout if the next government imposes punitive new taxes or even outlaws coal or nuclear power, to counter the sovereign risk to investors of a future green administration expropriating or destroying the value of their assets.
But this should be the limit of government intervention in the market. Anything else risks triggering a major haemorrhage of public money, as fossil fuel operators and nuclear operators are tempted to join renewable operators in gaming the system, demanding ever greater government subsidies or government guaranteed prices in return for agreeing to supply their product.
Government should get out of the energy industry.