Rent Seeking Goes Viral (competing energies seek special favor)

By Robert Bradley Jr. -- March 31, 2020

“We write on behalf of our millions of members, supporters and employees to ask that you prioritize enacting a robust package of critical clean energy tax incentives this year. These incentives create jobs, boost energy independence and cut greenhouse gas emissions that contribute to climate change.” (Renewable Energy Groups, February 27, 2020)

“The fuel security provided by coal reserves at power plants offers resiliency to a system that is bracing for uncertainty, and it is imperative to keep these plants online—whether through the use of the Defense Production Act or other means—in the interest of national security.” (National Mining Association, March 18, 2020)

When government favor is offered to some businesses or industries, expect other businesses or industries to ask for the same–or more. In the current Pandemic, competing energy trade associations predictably wrote letters to lawmakers and have lobbied hard behind the scenes to get special treatment.

Two letter requests from the “clean energy” interests (wind, solar, electric vehicles) and from the coal industry are reprinted below. A plea from the oil industry (via a US Senator from Oklahoma) for “anti-dumping” relief is also reprinted. (An Appendix adds a letter from the US nuclear industry asking for, quite reasonably, operational freedom during the pandemic.)

“Clean Energy” Advocates: “Climate Crisis”

The February 27, 2020, letter follows submitted by twenty-four ‘Bootleggers and Baptists’ groups:

• Industry (8) American Council on Renewable Energy; American Wind Energy Association; Business Network for Offshore Wind; Electric Drive Transportation Association; Energy Storage Association; EV Drive Coalition; Southern Alliance for Clean Energy; Solar Energy Industries Association

• Baptists (16) Climate Hawks; Vote Climate Reality Project; Earth Justice; Environment America; Environmental Defense Fund; Friends Committee on National Legislation; League of Conservation Voters; National Audubon Society; National Wildlife Federation; Natural Resources Defense Council; Protect Our Winters; Public Citizen; Sierra Club; Union of Concerned Scientists; Voices for Progress; World Wildlife Fund

Dear Chairmen Neal and Grassley and Ranking Members Brady and Wyden:

We write on behalf of our millions of members, supporters and employees to ask that you prioritize enacting a robust package of critical clean energy tax incentives this year. These incentives create jobs, boost energy independence and cut greenhouse gas emissions that contribute to climate change.

The science tells us we are running out of time to avoid the worst impacts of climate change, which threatens to devastate our communities and our economy. Accelerating the deployment of clean energy and electric vehicles is essential to addressing this crisis.

Tax incentives remain our most effective federal policy tool, but many of them are phasing down, in need of modernization, or will soon expire. We cannot afford to backslide on clean energy and the climate. We ask that you come together to get these clean energy tax incentives done in the 116th Congress.

According to a December 2019 poll by the Global Strategy Group, 89% of Americans from across the political spectrum support extending clean energy tax credits for solar, wind and energy storage to combat climate change, grow the economy, and protect public health.These findings complement the conclusions of a recent Rhodium Group analysis showing that extending tax credits for solar and wind could grow renewables to as much as 38% of total U.S. electricity generation by 2030.

From electric vehicles to energy efficiency, there are now over 3 million Americans working in the clean energy sector; these pro-business/pro-consumer incentives make clean energy more affordable and help create jobs in every state. Updating and extending tax incentives for clean energy, energy storage, energy efficiency and electric vehicles is essential for addressing climate change,and we cannot afford further delay. We urge you to enact the following provisions this year.

• H.R.2096/S. 1142, “The Energy Storage Tax Incentive and Deployment Act of 2019”. This bipartisan legislation will extend to batteries and electricity storage systems the same ITC currently offered to PV solar. Energy storage helps integrate more renewable energy onto our electric grid and increases grid reliability and resiliency.
• H.R. 3961 and S. 2289, “The Renewable Energy Extension Act.” Extending the investment tax credit for solar and other technologies will help us build on the current 2.6% of solar in our electricity mix.The ITC can spark major investment in renewable energy at this critical time, create hundreds of thousands of jobs, and help ensure that immediately available technologies are deployed rapidly to meet pressing climate goals.
• Extend the Production Tax Credit (PTC) for wind as included in the House Ways and Means Committee’s GREEN Act proposal. Extending the current PTC for wind for an additional five years will expand the 500 manufacturing facilities involved in producing wind energy components and dramatically reduce carbon emissions. In 2018, the electricity generated from wind turbines avoided an estimated 201 million tons of carbon pollution, or more than 43 million cars’ worth of CO2 emissions.Alternatively, Congress could create a technology-neutral tax credit for renewable energy technologies based on their contribution to carbon emissions reduction.
• S. 1988/H.R. 4887, “The Offshore Wind Power Act”, and S. 1957/H.R. 3473, “The Incentivizing Offshore Wind Power Act.” By extending the 30 percent investment tax credit for offshore wind facilities, these bills will give us another tool in the climate fight by unlocking vast quantities of affordable, zero-emissions electricity.
• H.R. 2704,“The Renewable Energy Transferability Act.” This bipartisan bill would provide limited transferability for renewable energy investment tax credits (ITCs) and production tax credits (PTCs), which would expand the pool of investors for existing renewable energy incentives and drive additional renewables deployment. Alternatively, Congress could facilitate tax credit monetization through a “direct pay” approach as outlined in the House Ways and Means Committee’s GREEN Act proposal.
• H.R.2256/S. 1094, “The Driving America Forward Act.” Transportation is the largest source of U.S. greenhouse gas (GHG) emissions, and cars and light-duty trucks are responsible for about 60 percent of those emissions. This bill will increase the number of electric vehicles that are eligible for the existing tax credit, thereby dramatically increasing the number of electric vehicles on the road, improving air quality and cutting carbon emissions.

• H.R.4506/S. 2588, “Home Energy Savings Act”; H.R.4646/S. 2595, “New Home Energy Efficiency Act”. The residential and commercial sector accounts for 40 percent of U.S. energy consumption. Improved efficiency will reduce harmful emissions, save businesses and consumers hundreds of millions of dollars annually on energy bills, and reduce the demand on the electric grid. The 25C incentive for homeowner efficiency improvements, the Section 45L incentive for energy efficient new homes, and the Section 179 deduction for energy efficient commercial and multifamily buildings are outdated and should be modified to reflect new technologies and market conditions.

We ask that you prioritize support for these critical clean energy tax incentives so that we can create jobs, increase energy independence, and make progress on addressing climate change instead of going backwards. While not all the undersigned organizations work directly on each of these policies, we are united in our request for your consideration of these crucial clean energy priorities.

The Coal Industry: “Fuel Security”

The National Mining Association sent this letter on March 18, 2020.

Dear Mr. President, Speaker Pelosi, and Majority Leader McConnell:

As the country faces this unique and mounting challenge around the COVID-19 pandemic, U.S. coal miners continue to work to provide the resources necessary to power America while bracing for the severe financial distress facing all sectors across the nation. To minimize the impact of this crisis on the coal industry, Congress should ensure all businesses have the financial resources necessary to ride out the pandemic.

The coal industry is absolutely critical to securing a domestic, secure supply of affordable energy. As global supply chains are disrupted, countries close their borders and the shock of national quarantines buffets the global economy, American-mined coal is here when it is needed. The industry remains steadfast.

The fuel security provided by coal reserves at power plants offers resiliency to a system that is bracing for uncertainty, and it is imperative to keep these plants online—whether through the use of the Defense Production Act or other means—in the interest of national security.

Further, as an essential industry for the processing of raw materials for equipment essential to primary operations in the electric power sector under Presidential Policy Directive 21 (PPD-21) and the 2013 Department of Homeland Security National Infrastructure Protection Plan, additional designation is necessary to ensure the continued national operation of critical infrastructure and supply chains to allow uninterrupted operations.

To maintain this essential role, it is imperative that coal companies have access to the necessary cash flow they need to continue operations. Even before the recent crisis, the coal industry was struggling to recover from a series of disabling public policies impairing coal demand and production. Compounding the impacts, late last year Congress imposed a $220 million tax increase on the industry through the Black Lung Excise Tax (BLET).

The U.S. Department of Labor recently testified that increasing the tax rate was unnecessary as the lower tax rate is sufficient to cover beneficiary payments and program administration costs. Congress should immediately reduce—not eliminate—the BLET to its 2019 levels. Doing so would provide much needed relief for the coal industry and ensure continued revenue for the payment of benefits under the program that could otherwise face financial stress.

Separately, coal companies paid approximately $150 million in fees in fiscal year 2019 into the Abandoned Mine Land Fund to reclaim high-priority coal mines abandoned or not sufficiently reclaimed before 1977. Over the last 40 years, more than $11 billion plus interest have been collected into the fund. Reclamation projects at existing operations and historic sites continue today even during this time of crisis.

With an estimated $2.2 billion already in the fund, Congress should provide a temporary 50 percent reduction in the amount of fees collected for surface-, underground- and lignite-mined coal to ensure the continued purpose of reclaiming high priority abandoned and active coal mines.

Congress should also suspend or reduce the federal royalty payments to the treasury. Royalty rates for federal coal are 30 percent to 65 percent higher than the prevailing rates for private coal in the East. Moreover, federal coal lessees pay bonus bids and surface rentals, financial features rarely found in private coal leasing transactions.

Between taxes, fees and royalties, the federal, state and local governments receive almost 40 cents on every dollar of coal sold from the Powder River Basin. This relief, well in line with other industries, would help companies operating on federal lands to mitigate the economic impacts of COVID-19 while maintaining operational capacity and ensuring access to in-demand energy resources.

Recent policy announcements to immediately increase the availability of credit must also be expanded to make certain that the credit is readily available to all operating businesses in the short term without prejudice or discrimination. Under pressure from environment groups, financial institutions have divested from carbon-intensive industries, specifically coal, over the last decade, leaving very limited options available to the coal industry. Without access to available credit, the operations of hundreds of mines will be threatened, together with the nearly 81,000 miners they employ.

In a perilous time, the essential work of our coal miners to produce the fuel to keep the lights on and homes warm and the certainty and security provided by coal power is just what we need to keep the country moving forward. We appreciate your consideration and thank you for your leadership during these very difficult times.

Oil Industry: ‘Dumping’ Investigation

On March 18, 2020, U.S. Senator James Inhofe (R-Ok) wrote the following letter to Secretary Wilbur Ross of the U.S. Department of Commerce

We write urging you to initiate a Section 232 investigation into the excessive dumping of crude oil by the Kingdom of Saudi Arabia and the Russian Federation. As you know, the global oil market is in disarray in large part as a result of the recent actions taken by Saudi Arabia and Russia to flood the oil market with an unprecedented supply of crude. The manipulation of markets has roiled the economy, causing severe trauma to the American energy industry. It is essential that the American government respond with swift, decisive action.

We are deeply concerned about the inevitable loss of American jobs and investment in our nation’s energy infrastructure as a result of this price war. We applaud President Trump and his Administration’s historic success in securing America’s energy independence; however, it is essential to America’s national security interests that egregious actions like those of Saudi Arabia and Russia be rebuked immediately.

The global economy is already suffering as a result of the pandemic caused by COVID-19, and these actions taken by Saudi Arabia and Russia have added unprecedented hardship on American oil and gas producers and the thousands of blue-collar workers they employ. It is fundamentally important the the Department of Commerce pursue a Section 232 investigation into the deliberate actions of these Foreign nations to weaken America’s energy independence.

We appreciate your urgent consideration of this request and look forward to continuing our shared commitment of supporting a strong, robust American economy.

APPENDIX: Nuclear Power: Electric Reliability

On March 20, 2020, the Nuclear Energy Institute send the following letter to U.S. Department of Energy Secretary Dan Brouillette. This letter does not ask for specific monies but only freedom of operation for employees and materials.

Thank you very much for speaking at the Nuclear Energy Institute’s recent Executive Committee meeting. The U.S. nuclear energy industry is committed to working with the Administration to provide clean, reliable and affordable electricity as the nation addresses the COVID-19 pandemic.

As follow-up to our discussion, we want to work with you, the Administration and state governors to ensure nuclear workers and the suppliers and vendors that we rely on to meet electricity demands are allowed unimpeded access to the plants.

Background on Nuclear Continuity Requirements

As you know, nuclear energy plants have been designated by the Department of Homeland Security as critical infrastructure, because continued operation of the power grid is vital to pandemic response. Our industry has multi-stage plans to continue operations during a pandemic, and our plants have implemented these to the degree required by local conditions. To date, all operating plants are continuing to run reliably, and refueling operations already underway are moving forward on schedule.

However, we want to bring to your attention the unique requirement with respect to nuclear reactors and the need to load a fresh batch of fuel once every 18 or 24 months. The reactors typically shut down for two to four weeks of intense work, including maintenance that can only be performed while the reactor is not operating. These “refueling outages” are typically scheduled in the Spring and Fall when electricity demand is lowest. Each plant typically brings in several hundred specialized workers for this work over a typical period of 30-60 days, which includes activities in advance of and following the outage. These workers typically stay in hotels or board with local families, and eat in restaurants.

In the course of performing these outages, and in routine operations, nuclear power plants utilize personal protective equipment (PPE) and supplies for radiological protection. During the pandemic, these supplies are supplemented by medical PPE and supplies needed to protect workers and minimize the potential for spread. Attachment 1 is the list of necessary PPE and supplies that are expected to be in short supply during this pandemic.

This Spring, 32 nuclear power stations in 21 states are planning to undergo refueling outages, which are essential to maintaining reliable and clean power generation. We note that plants can also have unplanned safe shutdowns with similar challenges during a pandemic. Attachment 2 provides the reactor name, location, and time frame for the planned refueling outages in 2020.

Across the nuclear fleet, precautions are being taken to limit the risks of COVID-19 during these intense work periods, including:

• Directing employees who don’t feel well to stay home, encouraging them to seek medical attention, and asking for a report on their condition;
• Excluding personnel who have recently been in countries impacted by the virus;
• Screening of employees, contractors, and any necessary visitors at the plant gate and, at some plants, taking their temperature;
• Disinfecting surfaces more often;
• Closing or limiting access to cafeterias and other places employees congregate; and
• Increasing the number of handwashing facilities.

Urgent Support Needed to Ensure Continuity of Reactor Performance

To help in addressing potential challenges to maintaining a reliable electric grid during the COVID-19 pandemic and particularly during current and near-term refueling outages here and abroad, we have identified specific actions that would be of immediate benefit in helping the people and the companies of our nation’s nuclear energy sector to withstand the ongoing operational and economic disruption:

• Ensure that the Federal designation of essential workers includes workers supporting nuclear operations and refueling outages;

• Allow travel to the plants for the performance of these essential activities;
• Maintain hotel and food services to support these essential activities;
• Permit unfettered access to travel across state lines and in communities in order to reach plant sites, lodging, and food services;
• Provide priority for PPE, in particular, surgeons’ gloves, sanitized wipes, dust masks, and disposable thermometers;
• Provide priority for COVID-19 testing kits and necessary radiological and medical protective equipment and supplies for nuclear workers; and
• Permit international workers who perform highly specialized functions to travel into the U.S. and establish protocols immediately to enable their safe entry.

We urge your support for these actions, and we stand ready to work with you to ensure our nation’s energy needs are met safely, reliably and affordably –today, tomorrow, and for the long-term.