Energy companies don’t pay for the damage caused by their pollution, amounting to a major advantage for coal over cleaner competitors.
So where does that shocking fact lead our efforts for carbon emissions targets and responsible energy companies.
READ n WEEP facts about your Feds
Also, more than 40% of the coal produced in the U.S. is mined on federal land, and outdated policies allow companies access to these resources without paying fair market value. Leases are auctioned through noncompetitive processes, and coal companies are allowed to get away with accounting maneuvers to avoid paying the royalty rates owed to the federal treasury. For example, under current policies, companies routinely mask the profits on which they must pay royalties by selling coal to affiliate businesses before making external sales, and by deducting large, untraceable expenses as “transportation allowances.” A reform process was launched in 2016, but the Trump administration seems likely to shut it down. If companies paid fair value for coal mined on public lands, they would likely have to raise prices and lose even more market share to natural gas and renewable energy sources.
Coal also benefits from tax breaks and federal research and development funding. Coal companies receive tax benefits for mine exploration, development and investment. The Trump administration has discussed eliminating tax breaks for renewables, but not for coal. Additionally, the administration has proposed cutting R&D support for renewable technologies, but the government also spends a great deal each year on carbon capture and storage R&D, which benefits the coal industry. Many analysts believe that, in the future, coal will be viable only if coal-fired power plants can capture their carbon emissions, given the likelihood of stronger climate policies in the coming years. If the government cuts tax benefits and R&D funding across the board, and not just for renewables, investors might retreat further from coal.
The Trump administration has diagnosed a legitimate problem with distorted energy markets, but an honest attempt to stop picking winners would require eliminating all subsidies, many of which favor coal. During the campaign, Donald Trump frequently talked about “running the government as a business.” No self-respecting business would give coal the enormous, unwarranted benefits that the federal government does.