Trump Bails On Coal Industry Incentives

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Published : October 16th, 2018
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Category : Editorials

President Trump has reportedly cancelled a plan proposed by Energy Secretary Rick Perry to provide financial support for troubled coal-fired power plant operators, Politico says, quoting four unnamed sources familiar with the matter. According to the sources, the President made the decision prompted by opposition from his own advisers.

Last year, Energy Secretary Rick Perry proposed a plan for subsidizing coal and nuclear plants for providing base load generation—that is, round-the-clock power, but the plan was rejected by the utility regulators who said they will study the national grid’s resilience to supply interruptions. Many grid operators said they are already factoring in everything that has to do with their grid’s resilience to disruptions.

In June, the Federal Energy Regulatory Commission said it did not see any emergency in the U.S. electricity market that would merit financial aid for coal and nuclear power plants. The stance was announced by the panel regulating the national grid at a Senate hearing. The opinion is likely to undermine efforts by the Trump administration to save non-competitive coal and nuclear power plants on the grounds that they guarantee the grid’s resilience in case of emergency.

Now, advisors to the president from the National Security Council and the National Economic Council have also spoken against the plan that has raised the hackles of the oil and gas industry—another priority industry for Trump along with “beautiful, clean coal”. The bailout plan proposed by Perry largely sought to shield coal and nuclear plant operators from the suffocating competition of cheap natural gas.

But oil and gas producers are by far not the only stakeholders opposing a potential bailout for American coal. Pretty much everyone except the coal industry itself is against it. “The problem they’ve got is every option they might consider raises the costs for somebody at a time when nobody has an appetite for increased costs anywhere,” the co-head of an energy advisory company told Politico.

“I think that’s the problem they keep running into. The political will to pay for it is not broadly there enough yet for them.”

By Irina Slav for Oilprice.com

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