Today's post tries to quantify US subsidies for coal power.
This blog is basically a response to an eponymous 1BOG advertisement, which is so pathetic that I will not mention it again. Except to say that I will use the same source for US fossil fuel subsidies (the "$72 billion" figure), a dubious study by the "Environmental Law Institute" (ELI).
I don't actually agree with much of this study, I think it is dishonest (for instance classifying oil company's benefits from the Foreign Tax Credit as a "fossil fuel subsidy", when it applies to all international companies), and needless to say heavily biased. But I'll use its results anyway.
Let's begin. The ELI figure is $72 billion in US fossil fuel subsidies over 2002-2008, an average of $10 billion per year in that period.
First thing to note is that almost none ELI's alleged subsidies deal with coal electricity (and with those that do the link is very dubious -- but I won't challenge this). Going through every item in their report, an upper bound of $9,961 million of it can be linked to coal electricity at all -- the rest being unambiguously oil/gas or some synthetic transport fuel.
- The largest single item I've included is the "Low Income Housing Energy Assistance Program" (LIHEAP), at $6,358 million. Because there is no breakdown, I've attributed the entirety of it to coal electricity to be generous (I would assume it's less than half). Personally I think it's ridiculous to classify welfare to the needy as a "subsidy to fossil fuels", but it's in my source so I'll stick to it.
- Next is a coal-injury subsidy, the "Black Lung Disability Trust Fund" ($1,035 million) and tax exemptions on its payments ($438 million, "Exclusion of Benefit Payments to Disabled Miners"). This is disability with should be paid by the liable coal companies; the trust fund shortfall is paid by taxpayers and therefore a subsidy.
- Then there's "Characterizing Coal Royalty Payments as Capital Gains" ($986 million).
- Small-ticket items make up the balance ($1,144 million).
In all, $9,961 million or less for coal subsidies over 2002-2008, or an average $1,423 million per year. For comparison, the EIA statistics account $854 million in "coal subsidies... to electricity generation" in 2007. (The table at the bottom).
To clarify the things that I did not count as coal-electricity subsidies include:
- The entirety of the Foreign Tax Credit ($15,300), because US coal production is almost purely domestic (c.f. EIA data, production vs. imports). I assert almost all of fossil-fuel FTC benefits go to petroleum.
- "Credit for Production of Nonconventional Fuels" ($14,097), because it is for transportation fuel, not electricity.
So I say, solar advocates: you want the same solar electricity subsidies as US coal gets? Um, okay, $1.4 billion a year it is then...
To compare with German solar power. The current subsidy for home installations is 0.3303 €/kWh (USD 46 c/kWh). With the same $1.4B/yr subsidies as coal, that could support... 353 MWe of average generation. (About 1.4-3.5 GWe of capacity, depending on location). Less than 1/1,000th of US electricity.
Not that by "same subsidies" we're using absolute amounts -- $1.4 billion for coal, $1.4 billion for solar. In the US coal generates almost 2,000x more electricity than solar (2010 YTD). In fact the coal subsidy averages out to less than 0.07 cents/kWh. (The EIA figure here is 0.044 c/kWh for FY2007).
Rough accounting of US coal electricity subsidies 2002-2008, based on ELI study
|Entry||ELI's fossil fuel amount (million USD)||Amount for coal electricity|
|Tax Expenditures and Other Foregone Revenues|
|Foreign Tax Credit||$15,300||$0|
|Credit for Production of Nonconventional Fuels||$14,097||$0|
|Oil and Gas Exploration & Development Expensing||$7,100||$0|
|Oil and Gas Excess Percentage over Cost Depletion||$5,441||$0|
|Credit for Enhanced Oil Recovery Costs||$1,575||$0|
|Characterizing Coal Royalty Payments as Capital Gains||$986||$986|
|Exclusion of Benefit Payments to Disabled Miners||$438||$438|
|Reduced Government Take from Federal Oil and Gas Leasing||$7,049||$0|
|(remaining small items)||$2,468||$1,144|
|Grants and Other Direct Payments|
|Low Income Home Energy Assistance Program||$6,358||$6,358|
|Strategic Petroleum Reserve||$6,183||$0|
|Black Lung Disability Trust Fund||$1,035||$1,035|
|Highway Trust Fund||$1,035||$0|
|(remaining small items)||$78||$0|
(Yes, there is a $3.4 billion discrepancy between mine and ELI's total sum ($68.6 vs. $72 billion). Where is it? (I don't know))