Jobs matter. For the job holder, this is obvious: the wages support them and their family. But jobs also matter to the country overall, as economic strength forms the basis for a strong foundation of political stability, prosperity, and growth. Community relationships can turn ugly if lots of people are thrown out of work, purchasing power evaporates, and a downward economic spiral begins. But preventing this spiral is more about protecting the golden goose than it is about trying to protect any one of the goose's golden eggs.
It turns out that if the US takes its commitments under the Paris climate agreement seriously -- the ones where we pledge to limit global warming to well below 2 degrees centigrade so as not to fry the planet -- there is too much coal.
Standard markets rationalize capacity based on price signals. If folks overbuild and prices collapse, shareholders may suffer but the general public doesn't care much.
The US coal industry faces not just overcapacity but crippling liabilities that will outlive mine closures. Setting the industry on a viable course will require all stakeholders to step up with new ideas.
Special legislative provisions have allowed a select group of industries to operate as tax-favored publicly-traded partnerships (PTPs) more than 25 years after Congress stripped eligibility for most sectors of the economy. These firms, organized as Master Limited Partnerships (MLPs), are heavily concentrated in the oil and gas industry. Selective access to valuable tax preferences distorts energy markets and creates impediments for substitute, non-fossil, forms of power, heating, and transport fuels.
Just last week, the Economist magazine noted in an editorial that:
However you measure the full cost of a gallon of gas, pollution and all, Americans are nowhere close to paying it. Indeed, their whole energy industry—from subsidies for corn ethanol to limited liability for nuclear power—is a slick of preferences and restrictions, without peer. The tinkering that will follow this spill will merely further complicate it.
Starting a conversation about leakage immediately makes people uncomfortable. Their gaze shifts to floor, and it is clear they are hoping the speaker will have the good sense to avoid the rather uncomfortable topic addressed by the smiling actors in a Depends undergarments commercial.
Rest assured: your averted eyes have been noticed. But leakage in the world of environmentally-harmful subsidies and climate change is hardly a happier exchange. At least with Depends there is a recognition, albeit an awkward one, that the problem is an unhappy fact of the human condition.
While subsidies to fossil fuels are thankfully getting increasing attention, even at the level of the G20 (see paragraphs 24-26 of the link), subsidies to a variety of environmentally harmful activities are pervasive at lower levels of government as well. An Earth Track review of state-level subsidies to biofuels in the United States, for example, found roughly 200 state and local prog
Kym Anderson and Warwick McKibbin. Brookings Institution, Discussion Papers in International Economics, November 1997.
(Working Paper). Miles Light, University of Colorado. Final version published in Energy Policy, V. 20, No. 4, pp. 117-148, 1999. Final draft available only through publisher.
Department Trade and Industry. Brief overview of residual liabilities arising from the coal and nuclear industries’ past activities.