Republicans Are Picking Economic Winners and Losers

smokestacks
(Wikipedia)

On April 25, 2018, Arizona’s Republican Gov. Doug Ducey signed a bill passed by the state’s Republican controlled legislature to exempt coal purchases from the state sales tax. It would lower the price of coal produced at the state’s only active coal mine, Peabody Energy’s Kayenta Mine on Black Mesa. The objective of the bill is to help attract a buyer for the mine’s only customer, the coal-fired Navajo Generating Station power plant near Page. The bill was pushed by Peabody Energy’s lobbyist Tom Dorn.

All but one of the Navajo Generating Station’s owners have decided to shut it down in 2019 because they can buy cheaper and cleaner electricity on the open market. And its other owner, the U.S. Bureau of Reclamation, cannot afford to operate the plant by itself, so if it shuts down, so will the Peabody coal mine.

“This bill is essential to the economic success of the Navajo Nation, the Hopi Tribe, and surrounding communities,” Ducey said when he signed it. The two tribes would, indeed, be severely impacted by a shutdown because the power plant and mine are located on their reservations. Both tribes hold leases for the mine, and the Navajos hold one for the power plant. If the plant and mine close, it’s estimated the annual revenue of the Navajo Nation’s government would shrink by about $40 million, or about 23%, while the smaller Hopi Tribe’s revenue could decline by about $12 million, or about 67%. In addition, the power plant and mine employee about 750 workers, nearly all of them Native Americans. (Some people would still be needed to maintain and dismantle the plant and mine if they were closed.)

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Republican Energy Policies Lack Foresight

dead republican elephantOne of the first things House Republicans did after their party took control of the U.S. Senate in the 2014 elections was to pass legislation authorizing the construction of the Keystone XL oil pipeline. Congressional Republicans remain fixated on approving the pipeline despite the fact that the recent drop in oil prices threatens the economic viability of the Canadian tar sands oil industry that wants to use it. The House bill to authorize the pipeline failed in the Senate, which is still under Democratic control until the newly elected senators are sworn in. But Republicans vowed to get it approved after they take control in January.

Another way Republican politicians have shown their affection for fossil fuel energy is by voicing their opposition to President Obama’s Clean Power Plan. The plan’s goal is to reduce carbon dioxide (CO2) emissions from power plants by an estimated 30 percent below 2005 levels by 2030. This would be accomplished primarily by getting power plants to shift from burning coal to natural gas, which is cheaper and burns much cleaner. U.S. power plants account for nearly 40 percent of the nation’s CO2 emissions and the Earth’s atmospheric CO2 levels have risen to their highest levels in the last 800,000 years, primarily from humans burning fossil fuels for energy. Because CO2 is a greenhouse gas, this has contributed to the recent phenomenon of global warming, and the resultant ongoing climate changes. The U.N.’s Intergovernmental Panel on Climate Change (IPCC) report for 2014 recently confirmed that the effects of human-caused climate change are widespread and serious, already affecting every aspect of human life.

The Environmental Protection Agency (EPA) released a first draft of the Clean Power Plan in June of 2014. It proposed state-by-state carbon emissions rate reduction targets, and offered a flexible framework under which states may meet those targets. Republicans have denounced the plan as a “war on coal”, despite the fact that public opinion polls show most Americans support Obama’s initiative. Also, more than 200 U.S. companies signed a letter supporting the EPA’s proposals, and Native American tribes with reservations near coal-fired power plants have expressed their support too.

Arizona Republicans have been especially critical of the Clean Power Plan because it calls for their state to achieve at least a 52 percent reduction in power plant CO2 emissions by 2030. They say that’s unfair because it’s a higher percentage reduction than almost every other state in the country. They’ve also been sympathetic to claims by local power company officials that it would be “impossible” for them to switch to burning natural gas as quickly as the draft plan requires, even though several gas pipelines already crisscross the state.

It seems, unfortunately, that Arizona Republicans and some of the local power companies have no intention of working on plans to switch from coal to natural gas as soon as possible, and are determined to resist the EPA. They will argue that it’s a matter of cost, or a violation of states’ rights, but I suspect that many of them still don’t believe that human-caused climate change is a reality.

On the national level, if Congressional Republicans really want to improve the economy by authorizing pipelines, they should show some foresight and pass legislation to promote the construction of pipelines that can supply natural gas to power plants.

Updates

On March 28, 2017, President Donald Trump signed an executive order requiring a review of Obama’s Clean Power Plan.

On October 10 EPA Administrator Scott Pruitt signed a proposed rule to repeal the Clean Power Plan. The proposal must go through the federal government’s public rulemaking process.

On June 1, 2018, Republican President Donald Trump announced he had instructed U.S. Energy Secretary Rick Perry to “prepare immediate steps” to keep unprofitable coal-fired and nuclear energy plants from closing. A broad coalition of environmental and business groups responded that it was illegal and would force consumers to pay more for electricity.

Are Fossil Fuels Morally Praiseworthy?

smokestacks
(Wikipedia)

Alex Epstein, the president and founder of a for-profit think-tank called the Center for Industrial Progress, claims he’s seeking to bring about a “new industrial revolution.” The manifesto on his organization’s website claims that, “For the last 40 years, so-called environmentalists have held back industrial progress around the world.”

Epstein also wrote a book titled the The Moral Case for Fossil Fuels wherein he claimed that all recent human progress is the result of the availability of cheap energy generated by fossil fuels. He backs up his theory with statistics showing how the quality of life for people across the globe has dramatically improved in the last couple of centuries – all because economies were powered by fossil fuels.

His clever argument is flawed, however, because he didn’t factor in all of the external costs created by the production of fossil fuel energy. They include respiratory and heart diseases, cancer, mercury contamination in lake waters,  acidification of the oceans, depletion and contamination of groundwater aquifers, mountaintop removals, coal miner deaths, crude oil spills, poisonous coal ash spills, destruction of wildlife habitat, and wars in the Middle East. And, of course, there are the enormous problems being caused by climate change.

The environmental regulations that are being imposed by the federal government on the companies that generate energy from fossil fuels are an attempt to internalize these costs by requiring these companies to include them in their retail energy prices, thereby making the prices more accurate and our energy markets more efficient. Therefore, complaints that enactment of these regulations would raise energy prices aren’t true, because these costs are already spread throughout the nation’s economy, instead of being internalized in fossil fuel energy prices – as they should be.

 

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