Does the Coal Industry Get Subsidies?

Hey Mr. Green,

An acquaintance of mine claims that there are no subsidies for the coal industry. Well?

--Bill in Landenberg, Pennsylvania

Puzzling out the subsidies to the coal business is as unnerving as edging through a dark mineshaft swarming with Velcro-winged bats. This is because a big chunk of the subsidies are not direct handouts, but packaged as tax credits, tax breaks, and other goodies too numerous to itemize here. The U.S. coal industry enjoyed subsidies of around $17 billion between 2002 and 2008, including tax credits for production of "nonconventional" fuels ($14.1 billion), tax breaks on coal royalties ($986 million), exploration, and development breaks ($342 million), according to a study by the Environmental Law Institute.

On top of this federal largesse, state and local governments coddle coal with hundreds of millions per year. The Kentucky state government’s net subsidy to coal is $115 million. Virginia grants tax credits of about $26 million to power plants just to burn Virginia coal, and doles out credits ranging from 40 cents to $2 per ton for another 20 million tons not burned by power plants. Bioregionalism at its finest.

Around $1.5 billion of the federal costs are associated with damages to miners’ health such as the notorious black lung disease. Thinking of the miners’ plight lands us smack in a morass of hidden subsidies as thick as the billion gallons of coal-ash sludge that poured into eastern Tennessee in 2008.

What is the true health and environmental cost when mining machines rip off mountaintops and chuck the rubble into streams? What was the cost of acid rain? What’s been the healthcare cost of 47 tons per year of mercury from burning coal that put 300,000 fetuses at risk for neurological damage each year? And how do you calculate the cost of coal’s 20 percent contribution to global-warming gases?

It doesn't end with this list. There are huge subsidies, direct and indirect, for the coal industry in the American Clean Energy and Security Act (ACES), H.R. 2454, passed by the U.S. House of Representatives last year. It remains to be seen what will emerge after the Senate has its go at the bill, but the EPA's own analysis notes that there will be substantial subsidies for carbon-capture technology, up to $90 per ton for carbon dioxide that’s "captured" in the first ten years. This is why some critics say it looks more like a "Coal Subsidy Act" than a Clean Energy and Security Act. For those who don’t have time to wade through the 946-page proposed law, Grist provides a valuable summary of welfare for coal here.

Among the coal subsidies cited: In the cap-and-trade program, a portion of the 85 percent of emission permits would be given away for free to the coal industry. (The EPA projects the total value of emissions permits to reach $113 billion in 2025.) Energy-intensive industries, which obviously use coal, would get 15 percent of the free permits, while coal would get 5 percent. On top of this, a whopping $60 billion would be dedicated to carbon-capture-and-sequestration technology, the bulk of which would benefit the coal industry. Among the indirect subsidies to coal are $20 billion to develop electric vehicles and other automotive technologies. (As I've noted before, electric cars are not a magical solution to energy waste because EVs require vast amounts of power, much of which will come from coal if we continue on the present course.)

Another troubling matter is that our obsessive quest for more and cleaner energy is blinding us to other important environmental issues. Ripping off the tops of mountains and choking streams up with the rubble to mine coal is every bit as noxious as emitting global-warming gases. So is building new power plants and power lines to feed electric cars, not to mention building thousands of miles of new roads for them. Even solar and wind power are not environmentally benign. The cleanest, cheapest, quickest source of energy is quite simply to use less. I'm quite certain that we can cut overall energy use in half without sacrificing anything except our pathetic need for oversized, overheated, overcooled, overlit, over-gadgetized homes built on endless stretches of roads where we drive 3 trillion miles per year – 500 billion more than just 15 years ago.

True, we owe an enormous debt to coal. It fueled the Industrial Revolution, which has made our lives a whole lot easier than most of our ancestors' years of unremitting toil. Alas, though the time may have come to retire the stuff to technological museums, coal still produces almost half of our electrical energy. But unless we demand radical policy changes in the form of drastically improved energy conservation and efficiency, we could be stuck with coal for a long time to come.

Comments

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I guess the to go is building and re-planning the cities in new ways and investing in public transportation! This way we could save much more energy. And we could drive only when necessary.

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coal still produces almost half of our electrical energy. But unless we demand radical policy changes in the form of drastically improved energy conservation and efficiency, we could be stuck with coal for a long time to come.

[Ugg Cardy]

On top of this federal largesse, state and local governments coddle coal with hundreds of millions per year. The Kentucky state government’s net subsidy to coal is $115 million. Virginia grants tax credits of about $26 million to power plants just to burn Virginia coal, and doles out credits ranging from 40 cents to $2 per ton for another 20 million tons not burned by power plants. Bioregionalism at its finest.

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What I don’t understand is the subsidies. The subsidies of energy, whether it be to oil, gas, wind, solar, biofuels, ethanol. The only energy source — which is the greatest source that we have so far as we’re dependent on — is coal. It doesn’t get a penny of subsidies. But it’s been villainized by this administration and so many people and it’s the one we depend on the most. It gives back more than it takes. I can’t figure it out.

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We’re trying to use it in so many different forms, in super-critical heating, and things of this sort. We’re running into roadblocks with the EPA from every turn that we go. We’re trying to use it in conjunction with our natural gas productions, and trying to look at the changing the fleet to compressed natural gas, I think that’s very doable. Do you all have a comment on why that one source of energy which is the most dependent upon in this nation has no types of subsidies but the others demand so subsidies?

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Credit for Production of Nonconventional Fuels ($14,097)- IRC Section 45K. This provision provides a tax credit for the production of certain fuels. Qualifying fuels include: oil from shale, tar sands; gas from geopressurized brine, Devonian shale, coal seams, tight formations, biomass, and coal-based synthetic fuels. This credit has historically primarily benefited coal producers.

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this is such an informative article. I specially like this part 'It doesn't end with this list. There are huge subsidies, direct and indirect, for the coal industry in the American Clean Energy and Security Act (ACES), H.R. 2454, passed by the U.S. House of Representatives last year. It remains to be seen what will emerge after the Senate has its go at the bill, but the EPA's own analysis notes that there will be substantial subsidies for carbon-capture technology, up to $90 per ton for carbon dioxide that’s "captured" in the first ten years." i hope to see more....You truly impressed me.

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After reading the article, I felt intrigued by this part of the article "Another troubling matter is that our obsessive quest for more and cleaner energy is blinding us to other important environmental issues. Ripping off the tops of mountains and choking streams up with the rubble to mine coal is every bit as noxious as emitting global-warming gases. So is building new power plants and power lines to feed electric cars, not to mention building thousands of miles of new roads for them" more power

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I like the writing structure of your blog and it does a pretty decent job of presenting the material.

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Hello Mr.Green.
Coal has always been a great contributor why our ozone layer gets thinner and thinner. We owe a lot to coal for our electricity, and now, our environment is paying for that debt.

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Hello Mr.Green.
Coal has always been a great contributor why our ozone layer gets thinner and thinner. We owe a lot to coal for our electricity, and now, our environment is paying for that debt....

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Coal Industry is one of most interesting and prospect industries.

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In my opinion the coal industry are not relevant. First, the heat is less in the second production costs are too high, and third, into the atmosphere huge kolichesvto harmful substances. But there is one caveat when the oil in the world over, people will be coal one of the few fuels.

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this is such a great thing to know "Another troubling matter is that our obsessive quest for more and cleaner energy is blinding us to other important environmental issues. Ripping off the tops of mountains and choking streams up with the rubble to mine coal is every bit as noxious as emitting global-warming gases" more power.....

[Anthony Peterson]

I really appreciate your comment about electric cars not being totally benign. Auto manufacturers and the general public keep referring to the electric car as if it is free to drive which is simply not true.