American Energy Is Fueled By Freedom, Not Bailouts

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 be purchased from certain failing suppliers.

This proposal doesn't make sense. Following through 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 - not political trends. 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. There are two possible explanations.

Perhaps the administration is all-too-willing to misuse government power to enrich political allies. Trump has asked for a plan to subsidize coal and nuclear plants that have currently become economically uncompetitive.

Or maybe the administration's error is rooted in a basic misunderstanding of energy economics. Coal and nuclear, as much as they've been maligned, aren't in need of protection. Rather the very market-forces the Trump administration seeks to sacrifice here, are becoming endangered.

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.

To defend this plan, some Trump officials cite national security. Rapid depletion of coal and nuclear is "impacting the resilience of our power grid," White House press secretary Sarah Sanders recently claimed.

But other Trump officials flatly reject such defenses. Indeed, an official responsible for overseeing the electric grid has said, "there is no immediate calamity or threat of the ongoing ability of the bulk power system to operate and serve needs."'

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.

Coal, the most carbon-intensive form of power, is responsible for 67 percent of carbon emissions even though it accounts for only 32 percent of electrical generation. One study suggests that the added air pollution caused by a coal bailout would cause 353 to 815 premature deaths over two years.

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.

A real "all-of-the-above" energy strategy would lower prices for electricity by letting the market decide the most efficient way to generate it. Such an approach has served the country well since its founding.

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

Editor's note: Jeff Stier is a Senior Fellow at the Taxpayers Protection Alliance. This piece originally ran in the Detroit News.