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The Green Life: Ask Mr. Green: Coal on the Dole

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May 24, 2012

Ask Mr. Green: Coal on the Dole

Bob Schildgen is Mr Green

Hey Mr. Green,

Is there a resource that compiles all coal related subsidies, including transportation, property, and other tax and direct subsidies, that can be quantified to a per-megawatt-hour cost?

—James, Richmond, Virginia

As I noted two years ago, puzzling out the subsidies to coal is as about as dicey as navigating through a dark mine tunnel swarming with Velcro-winged bats. The situation hasn’t changed greatly since. Because there is no single resource that totals up all the subsidies, it’s impossible to arrive at a per-megawatt-hour cost. The most clearly stated total is a federal subsidy of $1.358 billion in 2010 to coal, by the U.S. Energy Information Agency (EIA). However, this number is deceptive because it grossly understates the total subsidies, which is why it has been sharply criticized by the Union of Concerned Scientists, among others

The problem with that EIA calculation is that it looks at only five coal-subsidy sources — direct payments, tax advantages, R&D funding, loan guarantees, and federal electric programs — while conveniently ignoring numerous other forms, including low-cost mine leases, tax-free revenue bonds to support construction of coal-fired power plants, subsidies to coal-burning electric power plants, subsidized transportation of coal on federal waterways, and expenditures to police coal pollution and clean up the mess created by coal in the first place. Perhaps more fudgingly, the EIA doesn’t even count tax breaks for coal (or any other energy source) if those same tax benefits are also bestowed on other industries. Nor does it account for state subsidies to coal, such as Kentucky’s $115 million per year. The EIA also makes no attempt to calculate the hidden subsidies in the form of the costs incurred from damage to public health and the environment, which may run to the tens of billions of dollars each year. This damage includes mercury poisoning, lungs damaged by power plant emissions, and lives and landscapes destroyed by everything from mining itself to pollution from shipping.

Even the EIA’s latest lowball estimates admit that the federal government pays a direct subsidy of $4.18 billion for all fossil fuels, and $6.64 for biofuels, mostly ethanol, which itself requires a huge amount of fossil fuel to produce. But if you think that total of $10.82 billion a year is a steep price to pay to suffocate in global warming gases and pollution, consider that worldwide subsidies for all fossil fuels exceed $500 billion, according the International Energy Agency.

Got a question? Ask Mr. Green!


--photo by Lori Eanes


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