Can't please everyone: Trump energy
policy riles competing sectors
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[January 05, 2018]
By Timothy Gardner
WASHINGTON (Reuters) - When the
administration of U.S. President Donald Trump proposed new subsidies for
coal and nuclear plants, it seemed like an obvious way to deliver on
campaign promises to boost the nation's energy industry.
And yet the plan, announced in September, set off sharp criticism from
other sectors that Trump has also vowed to help, such as natural gas and
utilities.
“Subsidies don’t make you competitive - and don’t make you great again,”
said Robert Flexon, the president and chief executive of Dynegy Inc, a
Houston-based utility that owns both coal- and gas-fired power plants.
Squabbling over the proposal exemplifies the administration's larger
struggle to deliver on promises of a sweeping "energy renaissance"
across the coal, oil, gas and nuclear industries.
Trouble is, policies that help one of those sectors often hurt another,
illustrating the complexity of energy regulation and the difficulty in
appeasing competing interests. While election campaigns often seek to
neatly divide voters into two camps - those supporting energy vs. those
supporting the environment - such rhetoric fails to capture the messier
policy impacts on profits, hiring and emissions reductions across the
energy landscape.
There is little evidence that Trump's moves so far have aided energy
firms of any stripe; some administration proposals have languished amid
divisive politics, while other regulatory changes have seen their impact
muted by market forces.
Utilities, for instance, have shown little interest in buying more
coal-fired power despite the regulatory rollbacks in Trump's pro-coal
push.
A broader measure of investor sentiment on the energy industry - the
Standard & Poor's 500 energy index - lost more than 7 percent in 2017
even as stock markets soared.
White House and Energy Department officials did not respond to requests
for comment.
Another political flashpoint has been the administration’s waffling over
proposed changes to biofuels policy.
Trump's Environmental Protection Agency initially entertained a plan
from oil refiners to upend regulations requiring them to blend ethanol
into their gasoline - then rejected it after a backlash from the ethanol
industry, rooted in Midwest corn-growing states that supported Trump's
election.
The dispute sparked open warfare among the congressional backers of
various industry interests, including threats to block Trump's agency
nominations and accusations he had welched on campaign promises.
Even the coal industry, which played a starring role in Trump's
campaign, has seen a marginal return on its lobbying efforts. It has,
for instance, had little success so far in attacking subsidies for wind
and solar power.
Trump and others in his administration have criticized renewable energy
as expensive and dependent on government support. But the White House
has not sought to repeal tax breaks expected to provide $12.3 billion to
renewable energy firms by 2020, which other Republicans continue to
support.
Fossil-fuel firms clearly have more influence on policy under Trump and
easier access to decision makers. Coal, oil, and gas company executives
have met regularly with senior administration officials, according to
official agency schedules.
Their policy victories include rollbacks of regulations limiting
emissions of carbon, methane and other pollutants; the opening of
Alaska’s Arctic National Wildlife Refuge to drilling; and the lifting of
a coal-mining moratorium on federal lands.
But the impact of these moves on production, profits and jobs remains
uncertain. Demand for additional drilling and mining leases on federal
lands has been thin, and top U.S. oil and gas companies have told
shareholders in regulatory filings that environmental regulations have
little impact on their business.
While coal advocates have generally cheered Trump's ascension, White
House policies have so far had little effect on U.S. coal consumption.
Robert Murray, chief executive of private coal company Murray Energy
Corp., said Republican efforts to boost coal have addressed only the
“low hanging fruit” of overturning a few environmental regulations while
avoiding tougher issues.
The oil and gas industry, also championed by Trump, similarly feels let
down by an administration it had hoped would strip away government
interference, said Susan Ginsburg, a senior vice president of regulatory
affairs for the Independent Petroleum Association of America, which
represents small oil and gas companies.
The industry, she said, expected that "markets would be allowed to
work."
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A bulldozer moves coal at the Murray Energy Corporation port
facility in Powhatan Point, Ohio, U.S., November 7, 2017.
REUTERS/Joshua Roberts/File Photo
HELP FOR COAL HURTS NATURAL GAS
For the coal industry - which has seen a decade of decline amid
competition from cheap natural gas - the wish-list for the Trump
administration is long.
In the months after Trump was elected, Trump and senior cabinet
members including Energy Secretary Rick Perry met with mining
executives such as Murray. Other administration officials met with
lobbyists for coal firms including Peabody Energy Corp, the nation’s
largest miner.
Murray handed the White House a long list of recommendations,
including rescinding pollution controls, slashing the EPA’s size and
ending green energy incentives.
Emails obtained by the Sierra Club in October revealed that Peabody
had also given the administration a list of proposals, including a
controversial electricity pricing measure based on the argument that
coal and nuclear plants improve grid reliability.
Perry proposed in September that the Federal Energy Regulatory
Commission reward coal and nuclear plants that have 90 days of fuel
supply in reserve by covering their operating costs through power
pricing changes. FERC is expected to decide on the request by Jan.
10.
That proposal irritated oil and gas producers, along with renewable
energy firms. Both were caught off guard, said a Washington-based
oil-and-gas lobbyist who spoke on condition of anonymity out of
concern over offending the administration.
“Nobody in the oil and gas industry, or in the renewables industry
for that matter, was consulted," the lobbyist said. "It just came
out of nowhere.”
The American Petroleum Institute, which represents major U.S. oil
and gas companies, wrote that the plan “upsets the very foundations
of the competitive wholesale electricity markets.”
Michael Steel, a spokesman for the Affordable Energy Coalition,
which has oil major BP as a member, called the proposal an unfair
subsidy.
"The Department of Energy is trying to pick winners and losers in a
way that will raise costs for consumers by billions of dollars,"
Steel said.
'BROKEN PROGRAM'
The political dustup over biofuels policy provides another telling
example of the difficulty appeasing competing industry camps.
The Renewable Fuel Standard was introduced under former President
George W. Bush as a way to help farmers and reduce oil imports. But
refining companies say it costs them a fortune and threatens their
survival.
Refiners expected changes to the policy after Trump named
billionaire investor and refinery owner Carl Icahn as an unofficial
adviser on regulation. Icahn and others proposed shifting the
blending requirement to other businesses and reducing biofuels
blending quotas.
But the proposals drew heavy fire from the ethanol industry and its
backers. Republican Senators Chuck Grassley and Joni Ernst of Iowa
in October threatened to block a key EPA nomination until the
administration rejected the proposals - which it did days later, at
Trump's direction.
The refining industry, in turn, was outraged by the reversal.
Republican Senator Ted Cruz of Texas and other lawmakers from states
with refineries demanded a meeting with Trump. Cruz later said he
would block a nomination to the Department of Agriculture over the
issue.
The White House is now mediating talks between both sides.
EPA spokeswoman Liz Bowman, asked if the agency could have handled
the situation differently, said: "It is good public policy to vet
our options with all stakeholders, which is what we have – and will
continue – to do."
(Additional reporting by Richard Valdmanis; Editing by Richard
Valdmanis and Brian Thevenot)
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