Why is coal still getting subsidies?
• The US provides over US$1 billion per year in fiscal support for coal mining at federal level (2016–2017 average), split between tax expenditures that benefit coal mining companies and research and development spending via the Department of Energy’s Office of Fossil Energy.
• Support for consumption of coal and coal-fired electricity is mainly provided at state level, accounting for over US$718 million in fiscal support (2016–2017 average).
In 2017 Secretary of Energy Rick Perry proposed subsidisation of coal-fired power plants, arguing that the reliability of facilities that keep more than 90 days of fuel on site was undervalued by the market. However, this was rejected by the Federal Energy Regulatory Commission
- ElizabethLv 76 months agoFavorite Answer
We, in the West, all live in developed capitalist nations. But the one thing we all pretty much agree on is that unfettered capitalism and free markets don't actually work. The problem is that companies have a duty to their shareholders, and no one else. In fact, in most nations, companies that don't put the interests of their shareholders first are legally culpable. So how do you get companies to do stuff in the national or local interest if it isn't in the interests of their profits and hence dividends to shareholders? The answer is we legislate, offer subsidies, and enter into public-private partnerships. And before my Republican colleagues argue that they disagree with what I've said, they have supported clean air policies, clean water policies, introduced cap-and-trade on sulfur dioxide emissions, broken up companies with virtual monopolies, etc. So, as I said, everyone agrees that interference is necessary ... the disagreement between political parties is really over how much!
Coal is a valuable resource not only in terms of energy production, but also in terms of various chemicals and byproducts we need. The steel industry, for example, is dependent on the production of coking coal. Filters used in medical devices, like kidney dialysis machines, are also created using byproducts of the coal industry. Mining of coal also provides us with metals, including many of the rare-earth metals used in the semiconductor industry.
Politicians live in the real world where compromise is the only solution. Sure, we could ban all coal but we'd have to replace coal powerstations with other types. Who is going to pay for that? We could ban coal and then have to worry about unemployment in that sector, and unemployment in other sectors dependent on coal products. Do we import those products from other nations instead of producing them ourselves? We'd like companies to develop cleaner coal, but what's in it for them other than huge costs in R&D that hit their bottom-line?
So, my opinion is simply that many sectors will require subsidies, including the coal industry, if we want them to do things that benefit us rather than their shareholders if those aren't exactly aligned. However, subsidies are, in my belief, the weaker, lazier option by politicians. Rather than actually legislate and create the environment in which companies must operate (which would be seen by many as unwanted government interference) they go for subsidies instead. It basically transfers the burden onto us rather than the shareholders. The rich get richer and we all pay for it rather than create the environment which forces companies to use some of their own profits to become compliant with that new legislation.
- JimZLv 76 months ago
Subsidies from Washington is inevitably a bad idea whenever it is tried. It is a way for elitists and politicians to skim off money by granting favors. Typically what the left calls subsidies for fossil fuels are just the difference between what they want to tax and what are already being collected as taxes. The corruption can and does occur at the state level as well.
- 6 months ago
Look at how long they allowed Weinstein and Epstein to get away with their crimes.
- CowboyLv 66 months ago
It was a law - they'll have to pass another to get rid of them. They tried not paying once but the oil industry sued the government for non compliance.
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- it is iLv 56 months ago
Same reason buggy companies are... wait a minute... I'd have to guess someone is heavily invested in coal?
- vulcan_alexLv 76 months ago
No link to the "subsidies"?? Now research and development might create "clean coal" so that we could use the vast amount we have, or converted to natural gas, or use for making plastics. Without knowing the tax expenditures I can't comment. Coal is still a fuel for generation, so we need it.
- 6 months ago
OK, everyone reading this owes me $10 million. But I will let you off $1 million of that.
Now, what does it feel like to get a $1 million subsidy? Are you better off? Can you employ more people?
The moral of the story is that not everything that can technically be listed as a subsidy is exactly what you think.
Also, isn't every private company in the US that carries out Research and Development allowed to offset some of the cost against tax? How is coal special?
- Anonymous6 months ago
Clean coal is a good thing for mankind. Wind power is bad for the environment.
- oikoσLv 76 months ago
Miners don't need much education, so it's easier to buy votes with subsidies than it is to educate them to do useful work.
- davidLv 76 months ago
Rich coal operators need the subsidies They aren't rich enough