Speakers at Forum Argue Renewable Energy Subsidies Distort Markets

Michael Nasi had something to say to people who think coal is on its way out.

In fact, were it not for America’s energy policy, Nasi said, coal could compete very well against other energy sources, including natural gas.

Nasi is director of Life: Powered, an initiative of the Texas Public Policy Foundation. The project seeks to inform the national discussion about energy choices that best advance the human condition.

“We care deeply about this fuel,” Nasi said of the importance of coal in Texas, where he resides.

He spoke at the “Strengthening Economies in Wyoming” forum in Gillette, which featured Wyoming Senators John Barrasso and Mike Enzi, as well as Governor Matt Mead. The goal of the conference was to facilitate discussion of problems and solutions in coal-reliant communities.

Nasi’s message proposed a more optimistic view of the future of coal and fossil fuels in general. Fossil fuels supply 80 percent of the world’s energy sources, but are demonized as turning the planet into an uninhabitable toxic wasteland.

It’s a perplexing trend in an era of the longest average lifespans, lowest infant mortality rates, highest rates of access to clean water and food, and declining poverty rates—most true in nations that use the greatest amount of fossil fuels per capita.

Nasi presented a couple videos demonstrating how our modern, sanitary, and comfortable lives could not exist without fossil fuels.

He showed a graph on how return on investment (ROI) on energy sources is so distorted by direct and indirect subsidies. All energy receives subsidies, but wind and solar receive most of the production tax credits. Thus, the ROI on wind is nearly 88 times greater than coal generation. Solar is over 1,200 times greater.

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Dale Niezwaag, vice president of government relations for Basin Electric Power Cooperative, also spoke about the impact of subsidies on energy markets.

He said the PTC is what’s driving the rapid buildout of renewable energy.

“It’s of those policies that had good intentions,” he said of the 1990s law that created the credits.

While the PTCs are being phased out, they have a 10-year life. So, recently built wind farms will be taking the credits until as late as 2034.

Niezwaag said, in 2017, 80 percent of the PTCs went to wind. In 2018, it was 60 percent.

The problem is, sooner or later, the wind stops blowing. At that point, a 24/7 source of energy is needed. Natural gas is taking up a lot of new fossil fuel generation, but coal is still a big generator of power in America.

The PTCs and other subsidies, Nasi explained, distort the price people pay for their electricity. Wind energy is so unpredictable, a windy day can end up producing more power than is needed. In these cases, wind companies will actually pay utility companies to take their power. If the price they pay is less than the PTC, they still profit.

As a result, much of the hidden cost of intermittent energy sources are hidden on residential energy bills. If these subsidies were eliminated, Nasi said, coal could compete on the market with other sources, including natural gas.

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The Texan recounted the Obama Administration’s energy policy, which he said pretty much handed the keys over to the EPA and set a “command and control” approach to energy.

Among the most destructive of these policies was the Clean Power Plan, which was a one-size-fits-all strategy that left almost no room for any input from the states that were impacted by it.

The entire policy, which the Trump Administration replaced with a policy more accommodating of fossil fuel development, was largely motivated by concerns about climate change.

Nasi pointed to a 2013 University of Texas study, which showed that if all the US CO2 emissions were eliminated, it would reduce estimated warming trends, according to IPCC climate models, by 0.021 Fahrenheit by 2100.

“That is not an energy policy,” Nasi said.

Nasi also discussed how the US actually has some of the cleanest air in the world, despite being one of the largest consumers and producers of energy.

Fine particulate matter is especially low—lower in the U.S. than other countries. Interestingly, this type of air pollution has important qualities. Everyone agrees it has definite, measurable health impacts. And there are few regulations forcing companies to keep it down. This was largely a result of industry just trying to reduce its impacts.

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Nasi doesn’t believe government has no role to play in energy policy. He said government-funded research and development brings ideas to commercial realization. This includes the research being done at the ITC and Atlas Carbon near Gillette. Both of those projects have received government funding.

Nasi said, while fossil fuel companies are often demonized for being motivated by greed, the renewable energy industry is big business with powerful lobbyists.

“They are a political force to be reckoned with,” Nasi warned.

Originally from New Mexico, Killough began his career writing freelance for a weekly magazine in Albuquerque while completing his undergraduate degree. In addition to reporting on uranium mining in western New Mexico, he spent three years reporting in western North Dakota during the height of the oil boom. He can be reached at kevin@county17.com or 701-641-6603.