Springing Forward on Fuel Diversity

Show-Me State Legislators Show Value of Hedging
March 13, 2018
Driving an EV: The Promise and Hazards
March 20, 2018

With spring come spending bills, and this year Congress has the chance to support energy diversity across the board. In the FY18 omnibus, and a series (hope springs eternal) of appropriation bills for FY 2019. There are also talks of a fix-it tax package. In short, there are many opportunities for lawmakers to support a robust, diverse fuel mix now and in the future.

Rep. Larry Bucshon, M.D. (R-IN) has introduced legislation, the “Electricity Reliability and Fuel Security Act” that seeks to establish a 30 percent tax credit, for only a five-year period, for the fixed operation and maintenance expenses of some coal plants.

In various remarks this week, Rep. Bucshon notes that since 2010, 599 coal plants in 43 states, totaling almost 108,000 MW have either been named to retire or have already been shuttered. That’s over one-third of the U.S. coal fleet.

Tax policy certainly isn’t the only reason these plants are going, going, gone; slowed demand plays a part, as does the rise of natural gas and renewable alternatives. However, in energy, as in any other form of business, tax policy can make or break a plant’s viability. The renewables industry knows this well, having received tax benefits for 40 years, which it relentlessly fights to keep.

Rep. Bucshon’s bill highlights what many consumers and government leaders perceive about the electricity markets. If too many coal plants disappear, the U.S. could be in for a series of unwelcome surprises caused by extreme weather events, natural gas price increases, or delays in technologies needed to renewables contribute more, and more reliably, to the generation mix.

While the Buchson effort will likely draw some stiff opposition from the determined, permanent coal opposition, it shouldn’t. The bill, with its five-year term for tax supports, is aimed at keeping some plants around and useful for a short time horizon while electricity and environmental stakeholders continue to work toward a future with more renewable and clean energy.

We’ll all get there together faster with less arguing about fuel sources and more purposeful conversations about developing a full range of resources and technologies. In that spirit, PACE also took note of a letter to appropriators this week, from a group of renewable trade associations asking to maintain critical programs, especially at the well-renowned DOE labs, that are helping explore and perfect innovative electricity technologies. PACE agrees with these advocates; it is “… a particularly poor time to reduce research and development in energy.”

As spring draws closer and memories of the Bomb Cyclone fade, PACE will continue to update you on how Congress can leap forward on strengthening fuel diversity.