In fact, the industry gets trillions of pennies
Sen. Joe Manchin (D-WV), the newest member of the Senate Energy and Natural Resources Committee, claimed today that the coal industry doesn’t receive any government subsidies, unlike every other form of energy. Brad Johnson debunks this absurd claim.
The former governor of coal-state West Virginia, who famously fired a rifle at clean energy legislation in a campaign ad, argued that the Obama administration has “villainized” coal. In a hearing on energy markets, Manchin went on to criticize the Environmental Protection Agency “” which has issued regulations to limit the catastrophic impact of mountaintop removal mining and the existential threat of global warming pollution “” for putting up “roadblocks” on the “greatest source” of energy in the nation:
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.
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?
Watch it:
In reality, the coal industry is heavily subsidized by the federal and state governments, enjoying explicit subsidies of billions of dollars a year, plus the indirect subsidy of free pollution that costs the United States 10,000 lives a year, destroys the land and water of mining communities, and destabilizes our climate. In September 2009, the Environmental Law Institute identified coal industry “subsidies of around $17 billion between 2002 and 2008″³ [amounts in millions of dollars]:
Credit for Production of Nonconventional Fuels ($14.1 billion)- 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.
Characterizing Coal Royalty Payments as Capital Gains ($986 million) – IRC Section 631(c). Income from the sale of coal under royalty contract may be treated as a capital gain rather than ordinary income for qualifying individuals.
Exclusion of Benefit Payments to Disabled Miners ($438 million) – 30 U.S.C. 922(c). Disability payments out of the Black Lung Disability Trust Fund are not treated as income to the recipients.
Other-Fuel Excess of Percentage over Cost Depletion ($323 million)- IRC Section 613. Taxpayers may deduct 10 percent of gross income from coal production.
Credit for Clean Coal Investment ($186 million)- IRC Sections 48A and 48B. Available for 20 percent of the basis of integrated gasification combined cycle property and 15 percent of the basis for other advanced coal-based generation technologies.
Special Rules for Mining Reclamation Reserves ($159 million) – IRC Section 468. This deduction is available for early payments into reserve trusts, with eligibility determined by the Surface Mining Control and Reclamation Act and the Solid Waste Management Act. The amounts attributable to mines rather than solid-waste facilities are conservatively assumed to be one-half of the total.
84-month Amortization Period for Coal Pollution Control ($102 million) – IRC Section 169(d)(5). Extends the amortization period used in calculating the deduction from the generally applicable 60-month period available for other types of pollution control facilities.
Expensing Advanced Mine Safety Equipment ($32 million) – IRC Section 179E. The costs of qualifying mine safety equipment may be expensed rather than recovered through depreciation.
Black Lung Disability Trust Fund ($1 billion)- As industry excise tax payments did not sufficiently cover early benefits payments, the BLDTF was given “indefinite authority to borrow” from the U.S. General Fund, and bailed out for $6.498 billion, 13 percent of which is relevant to the 2002-2008 period.
In addition, Synapse Energy Economics found that the government subsidizes the coal industry through several other avenues:
Financial support for the World Bank and other international financial institutions that finance fossil fuel use and extraction. Since 1994, these institutions have provided $137 billion in direct and indirect financial support for new coal-fired power plants.
U.S. Treasury Department’s backing of tax-exempt bonds and federally subsidized taxable Build America Bonds for use in the electric sector. $81 billion in tax-exempt debt was issued between 2002 and 2006 for electric power, most for coal plants.
U.S. Department of Agriculture’s Rural Utilities Service provision of loans, loan guarantees, and lien accommodations to public power companies that are investing in new or existing coal plants.
Tax credits, loans, and loan guarantees through the U.S. Department of Energy. In 2009, DOE issued $5.9 billion in loan guarantees for advanced coal projects.
Furthermore, cash-strapped state governments give millions of dollars in subsidies to coal, including $115 million from Kentucky, and $26 million from Virginia. In 2008, then-Gov. Manchin himself offered Appalachian Fuel $200 million in subsidies for a liquid coal plant.
Meanwhile, the health and environmental costs of mining and burning coal are staggering. “What’s been the healthcare cost of 47 tons per year of mercury from burning coal,” the Sierra Club asks, “that put 300,000 fetuses at risk for neurological damage each year?”
The coal industry was responsible for 2,237 megatons of carbon-dioxide-equivalent greenhouse pollution in 2008, 38 percent of the United States footprint. The cost of this “market externality” is between $60 and $600 billion every year, given expert estimates for the cost to human civilization of manmade climate change.
Manchin is correct that coal “doesn’t get a penny of subsidies” “” the industry gets trillions of pennies, borrowed against our children’s future.
–Brad Johnson, via the Wonk Room.
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In Australia the government has cut greenhouse abatement programs to pay for the damage from greenhouse gases. At the same time they are giving incentives to BP to do deep sea drilling for oil in the Great Australian Bight. Ludicrous!
We should be at least making our coal and oil industries pay for the cyclone and flood damage around the country, if not the bushfire damage a couple of years back and the drought schemes.
Has anyone added up the subsidies paid to coal and oil industries in other countries (like Australia)?
Great post. But our study found coal subsidies closer to $22 billion–the source you cite didn’t quite get the tally right. The graphic for the study is at http://www.eli.org/pdf/Energy_Subsidies_Black_Not_Green.pdf
and the study itself is at
http://www.elistore.org/Data/products/d19_07.pdf
Manchin appears as a caricature escaped from Looney-Tunes but he ain’t funny!
I don’t know about big coal, aside from not believing anything Manchin has to say. When it comes to big oil however, its estimated that 4 billion could be saved by closing oil tax loopholes. Speaking of profits
Shell Announces Near-Doubling of Annual Profit
As gas prices at the pump put pressure on motorists pockets, oil giant Shell has announced annual profits of $18.6 billion. http://www.newslook.com/videos/288027-shell-announces-near-doubling-of-annual-profit?autoplay=true
I see Manchin’s comments as another sign that the epic battle BETWEEN the fossil fuel industries is starting up.
Everyone knows now that CO2 is going to be restricted in the future. And every fossil fuel industry is going to want to grab as much of that shrinking CO2 allotment for themselves as they possibly can.
The big boys are on a melting iceberg, so to speak, and there just isn’t enough room for all of them to get bigger. Someone’s gotta go.
It is like a for-keeps game of musical chairs. One chair is being hauled away and the music is starting. Big Coal, Big Oil, Big Tarsands and Big Frack are all eyeing each other.
Seriously, Big Oil knows their growth depends on Big Coal taking a swim. When MunichRe called Coal in USA “Dead Man Walking” you know the blood is already on the water.
Gonna be very interesting to see what happens with the kill-the-subsidies “cage match” that is brewing.
How much does government, businesses, and homeowners pay for subsidence of abandoned mines? That’s probably quite a nice chunk as well.
Manchin’s daughter, Heather Bresch, the chief operating officer for pharmaceutical manufacturer Mylan, was awarded an executive M.B.A. by West Virginia University in 2007, though she had completed just 22 of the required 48 credits when she last attended WVU in 1998. The University rescinded the degree in April 2008 after releasing a highly critical report on the awarding of the degree.[22][23]
In the wake of the scandal, WVU president Michael Garrison, who was a family friend and former classmate of Bresch, and who had worked for Mylan, resigned his post at the University. The provost also resigned though he was allowed to stay on the faculty http://en.wikipedia.org/wiki/Joe_Manchin
Hats off to Brad Johnson’s very thorough and immediate response to Manchin’s “no subsidies” claim.
“It gives back more than what it takes,” Manchin said in the video clip. Johnson’s report lists what coal takes, but I wondered why Manchin was so confident about what coal gives.
Manchin mentioned “super-critical heating” as if it were an ace card that would overcome any criticism.
A search for the technology picked up on a supercritical coal plant profile (Sorry I don’t tidy up hyperlinks).
http://www.netl.doe.gov/KMD/…/PC%20Plant%20Case_Supercritical_051507.pdf
Without carbon capture, the supercritical coal plant is spec’d to put out 3.6 million tons of CO2, that would be for 550,150 KWe.
In turn, supercritical CO2 (compressed to function as a pseudo-liquid solvent) has a number of uses.
But gosh, do we need so much solvent?
–Perhaps I too am supercritical.
Re: Exclusion of Benefit Payments to Disabled Miners ($438 million) – 30 U.S.C. 922(c). Disability payments out of the Black Lung Disability Trust Fund are not treated as income to the recipients.
Is this a subsidy to the industry?
Re: KCredit for Clean Coal Investment ($186 million)- IRC Sections 48A and 48B. Available for 20 percent of the basis of integrated gasification combined cycle property and 15 percent of the basis for other advanced coal-based generation technologies.
This seems like something that would be supported under Obama’s proposals.
Steve H makes a good point.
Universities get funding for coal research. Some of it might qualify as ‘clean coal’ work, but not all of it. We have a Coal Research Center on my campus. Some of the funding is federal, some from the state and likely some from industry for which they likely get tax breaks.
Brilliant reporting Brad. Time to end perverse, ecocide, corporate welfare.
This sentence seems to need correction:
“subsidies of around $17 billion between 2002 and 2008″ [amounts in millions of dollars]:
(end of paragraph under the video)
When I read that headline I literally broke into uncontrollable laughter. This is the perfect example of the brain-dead teabagger representatives the right wing has put into office.
Feeling pretty darn good about 2012 at this point.
(Yes.) I know he’s a democrat.
The prime rhetorical device of Rightwing pathocrats is, and has been for some time, the Big Lie. You know, the lie so audacious and preposterous that the average man cannot believe that anyone would be so arrogant as to utter it. Adding further to its utility are two developments. The rise of the Dunning-Krugerites, who are too dumb to realise how stupid they really are, so will believe really imbecilic stuff, so long as it conforms to the very small number of thought patterns that rule their reptilian minds. These are ‘greed is good’, ‘rich man is Boss-I must admire him’ ‘environmentalists are Communists’ and a few others. And the growth of an insane, wicked and utterly unprincipled media brainwashing apparatus, Murdoch’s archipelago the most glaring example, that deliberately spreads untruth and disinformation, and, through incessant fear and hatemongering, makes those most susceptible to appeals to paranoia, hatred and self-destructive greed, ever more fanatic and dangerous.
Giving billion to industries that pollute our air, our water and our soil so they just can keep polluting is just insane.
President Obama seems to be willing to stop this. I hope he will succeed but I am not really confident…
We Europeans aren’t clean on these issues as well as we keep supporting coal. I am glad France doesn’t rely on coal anymore.
Nuclear might not be as clean as we would like it to be, but at least, it is not sending massive amounts of carbon dioxide in the air…