Hypocritical Ohio law links nuke support to coal subsidies, cuts off renewables
The incredibly low prices of new renewable and natural gas generators have made it difficult for some traditional generating plants to stay in business. That’s mostly good news for the climate, as the majority of plants that are shuttering burn coal, the most polluting source of energy we use. But they’ve also hit nuclear power hard, which is bad news from the perspective of carbon emissions.
The risk of having to close nuclear plants has led their owners to ask the federal government for a bailout, a move that initially gained some traction but has since stalled out. With that effort ground to a halt, the state of Ohio has stepped in to pass a law that will see state ratepayers subsidize a nuclear plant operator. But the bill steps into spectacularly misguided territory by also subsidizing coal plants, cutting funding for efficiency programs, and lowering the state’s renewable energy standards.
What to subsidize?
The law had been sent back and forth between the House and Senate and was the subject of heavy lobbying, so both its final form and its passage had been uncertain (a Senate draft reveals extensive revisions). In part, it places new charges on the bills of all Ohio ratepayers. One will provide a subsidy to First Energy, the company that had been asking the federal government for a bailout as it faces bankruptcy. The primary beneficiary of this subsidy will be First Energy’s two aging nuclear plants, which have been struggling to turn a profit in the changed energy landscape.
A second subsidy will go to the Ohio Valley Electric Corporation, which operates money-losing coal plants in Ohio and Indiana.
While these provisions will add charges to electric bills, the fees will be more than offset by the end of other programs that the bill targets. Chief among these will be the elimination of a program that subsidized efficiency efforts. While not ideal from a utility’s perspective—these programs reduce the use of the utility’s product—efficiency has been a key factor in lowering the total energy used within the US despite its growing economy. And by cutting the pollution from fossil fuel plants, they help lower health costs in a way that typically more than offsets their price.
But the Ohio legislature didn’t stop there. While boosting fossil fuels, the law cuts the state’s already low renewable energy targets. Under previous law, the state was supposed to reach 8.5% renewable power by 2022; that has been pushed back to 2028 now. The previous standards had Ohio at 12.5% in 2027, so this is a significant step backward.
Overall, it’s difficult to see this as anything but a net loss for efforts to control carbon emissions. While keeping nuclear plants running is a clear positive, that’s more than offset by the subsidies to coal power. And the decision to pair this legislation with reductions in renewable power and efficiency efforts will clearly set Ohio back when it comes to lower emissions. That may not matter during the Trump administration—indeed, it may be celebrated—but the state will be poorly prepared for an administration that is willing to take climate science seriously.
Indulge me as I editorialize
Those who simply wish to understand the news can stop reading now because I’m about to veer into opinion. We often cover various forms of misguided legislation at Ars, but it’s rare to have a law that so thoroughly gathers everything that’s wrong with US energy policy in one place. So this legislation provides a good opportunity to summarize the issues.
We’ll start with the one thing that this law gets right: supporting existing nuclear plants. We’re not building new nuclear plants, because the combination of vast initial cost and inevitable delays and overruns mean that the financing costs of the initial investments in the plant may never get paid back. Existing nuclear plants, however, aren’t saddled with this issue, and they produce energy that’s largely free of carbon emissions. While they do produce some extremely dangerous waste, that waste is at least well contained and hasn’t posed a threat to public health.
But even existing plants are struggling in the current energy economy, which means that keeping them running requires government intervention in the market. Given the value of their contribution to limiting climate change, I feel this intervention is necessary. So, apparently, do Ohio lawmakers.
At the same time, the lawmakers are trying to get the government out of the market when it comes to renewables and efficiency. This is just as hypocritical as it sounds. In the Cleveland.com coverage linked above, the reporter notes, “A number of lawmakers—mostly Republicans, who dominate both the Ohio House and Senate—have worked for years to eliminate [renewable] mandates, saying they are an example of government overreach, raise electricity costs, and are no longer needed thanks to the rise of cheap natural gas.”
It goes beyond hypocrisy, though. Faced with the fact that renewables plunged in price and had become competitive with fossil fuels, the state responded by using a budget bill to ram through zoning restrictions that effectively killed wind power in the state by making it nearly impossible to site. Attempts to kill this form of government overreach in the intervening years have failed. The renewable mandates that might have forced something to happen regardless have now been watered down.
At the same time, Ohio’s lawmakers are demonstrating an antipathy to efficiency that we’ve rarely seen since efficiency standards killed off the incandescent light bulb. Yes, eliminating the efficiency program will get rid of a surcharge on electric bills. But efficiency tends to have a return on investment that dwarfs its cost, so this will end up costing people money—most likely the disadvantaged people who couldn’t afford to buy efficient products otherwise. And that elimination comes via a bill that will add a new surcharge to subsidize coal, which costs all of us money through the health issues and the ensuing lost productivity it causes.
It’s clear there’s no overarching government principle justifying this antipathy toward our changing energy market. The only potential economic one is a desire to prop up dying industries that are already going away on cost alone, which doesn’t make a lot of sense. I’m left with the conclusion that the motivations are primarily a combination of fear of change and a simple desire to trigger the greens.
https://arstechnica.com/?p=1541077