When the Market Delivers Cleaner, Cheaper Energy, the Government Should Step Aside

November 15, 2018

As originally published in Morning Consult

Recently, the Trump administration has reportedly pulled the plug on a proposal (at least for now) to aid coal and nuclear power plant operators at the expense of ratepayers and competitive markets. When the policy comes under scrutiny at a Senate committee hearing this week, lawmakers should take the opportunity to assure the American public that it will be served by an “all of the above” approach to energy to enhance reliability and keep consumers’ costs low.

Over the summer, President Donald Trump directed the Department of Energy to take steps to stem the closure of struggling coal and nuclear plants, including ordering grid operators to buy electricity from them, even if it made little economic sense. The proposal was a heavy-handed intervention in the energy marketplace and drew rebukes from pro-market conservatives, advocates for renewable energy, and cybersecurity and national security experts.

When Bernard McNamee, one of the program’s architects, appears before the Senate Energy and Natural Resources Committee today to seek confirmation to serve on the Federal Energy Regulatory Commission, it will be a welcome opportunity to look ahead and publicly discuss the most promising approaches for a cleaner, more efficient, competitive and secure power grid.

Market forces have satisfied the public’s growing demand for more widespread use of wind, solar, photovoltaics and natural gas. And market forces — specifically, low-cost renewables and natural gas prices rather than government mandates — have reduced the number of coal-fired power plants from 580 to 350 over the past decade in favor of innovative, job-creating, cleaner alternatives. And that is what voters prefer. Candidates who favor clean-energy policies prevailed in dozens of congressional races this year, confirming yet again there is no need to choose between economic growth and environmental stewardship.

Natural gas has been a key part of the story; it is inexpensive and plentiful. Shale gas development is on track to spur $1.9 trillion capital investment by 2035, creating jobs and generating economic activity that is expected to provide local, state and federal governments with nearly $1 trillion in tax revenue, according to an in-depth study by IHS.

In addition to making economic sense, natural gas produces half the carbon dioxide emissions of coal when used to generate electricity. Based on data from the Energy Information Administration, it is estimated that over 60 percent of the reduction in CO2 emissions from 2006 to 2014 was attributable to the switch to natural gas by utilities.

Renewables have played a big role, too. Incentives worked by encouraging the adoption of wind, solar and breakthroughs in battery technologies — and now, even without subsidies, renewable energy sources are cost-effective options for utilities and businesses in many states. Such sources already account for about 17 percent of electricity generation nationwide. This means new jobs and cleaner air.

To be sure, the rapid transformation in how we generate power requires public officials to consider matters of reliability and security carefully. A new study by PJM Interconnection, a regional transmission organization, offered a cautious outlook and concluded contingency plans could be needed over the next five or six years if more coal or nuclear plants went offline more quickly than projected. But PJM’s chief executive reiterated recently that a federal bailout for coal and nuclear plants is not necessary and would be “inefficient and more costly.”

How costly? Analysis out from The Brattle Group estimates the administration’s coal and nuclear support plan could cost between $9.7 billion and $17.2 billion annually. If the administration were to also compensate facilities for capital already invested in power plants and operating shortfalls, the cost to taxpayers could be as high as $35 billion a year.

It’s time to look beyond the government propping up yesterday’s energy sources. Instead, our nation should aim for a modernized system that delivers what Americans want: reliable, cheap and clean energy. Lawmakers and regulators should implement public policy that stimulates growth and competition in the energy sector and allows the next generation of entrepreneurs and small businesses to flourish.

Charles Hernick is director of policy and advocacy at Citizens for Responsible Energy Solutions, a nonprofit organization that promotes conservative solutions to advance clean energy.

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