Economists take a look at Ohio’s coal subsidies

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Coal subsidies passed in 2019 as part of a historically corrupt energy law are not helping the state’s economy, the vast majority of a panel of academic economists said in a statement. survey published Monday.

Of the 22 economists who responded, 21 disagreed with the proposition that “subsidies for coal-fired power plants paid through state-imposed rate increases, such as those by (House Bill 6) have economic benefits that outweigh their costs, ”according to Scioto Analysis, which conducted the survey. The remaining economist was uncertain.

House Bill 6 is a package including $ 1 billion to support nuclear power plants in northern Ohio, a $ 102 million a year grant to Akron-based FirstEnergy, and rules that gutted standards renewable energy. It also included $ 233,000 a day in grants for two 66-year-old coal-fired power plants, one of which isn’t even in Ohio.

In the summer of 2020, federal agents arrested then Speaker of the House Larry Householder, R-Glenford and four associates on charges of embezzling $ 61 million from FirstEnergy via black money groups and with the aim of electing lawmakers who would support Householder for the speaker and pass HB 6. Two pleaded guilty and a third committed suicide. Head of the family pleaded not guilty.

Sam Randazzo, appointed by Gov. Mike DeWine to chair the Ohio Utilities Commission, was also forced to resign after it was revealed he received a $ 4 million payment from FirstEnergy while ‘he was about to assume his post as the head of the state’s utilities regulator.

When announcing the indictments, US attorney David M. DeVillers said it was “possibly the largest corruption and money laundering program ever carried out in the state of Ohio ”.

Some of the main provisions of HB 6 are no longer in force. FirstEnergy’s successor company, Energy Harbor, which owns the nuclear power plants, no longer wants these grants because of the way they are treated under federal rules. And earlier this year, FirstEnergy agreed to waive the huge grant it was receiving under the law.

But the coal subsidy, worth $ 153,000,000 so far to the companies that own the power plants, is still on the books. This is the case even after the Capital Journal reported that the Randazzo-led PUCO censored an audit of the program, removing statements such as “keeping factories running does not appear to be in the best interest of taxpayers.”

Economists participating in this week’s survey said the subsidy is also not good for the Ohio economy.

“Subsidies would only be justified by positive externalities, but burning coal produces the opposite,” wrote Jonathan Andreas, an economist at Bluffton University, in the comments section accompanying the survey. “If energy prices have to rise to encourage supply, then that would allow any producer to compete for business, but instead of letting the markets run, politicians chose two winning power plants for their allocate money. It smacks of corruption. Half the money goes to an out-of-state plant and most of the profits probably go to out-of-state shareholders! Bad for Ohio.

Maintaining the subsidy – and removing renewable energy standards – appears to be totally out of step with an alarming report released in August by the International Panel on Climate Change. By synthesizing 14,000 scientific papers, the committee indicated that there is no longer any doubt that human activity is affecting the climate, that we will see the effects in the next decades, no matter what we do, and that if we do not tackle the problems urgently, the results will be catastrophic.

Many economists in the Ohio survey pointed out that this environmental damage represents economic costs.

“Coal-fired power plants emit particles and produce coal ash pools that are extremely dangerous to human health and the environment,” wrote Fadhel Kaboub of Denison University. “Not only must we eliminate the subsidies, but we must also replace them with renewable energy sources and move their workers to local green jobs with equivalent wages and benefits. ”

An economist said that in addition to being dirtier than renewables, coal is also more expensive.

“Coal is now a more expensive source of energy than natural gas or renewable sources such as solar and wind power AND coal is the most polluting energy source,” wrote the University’s Kevin Egan. of Toledo. “So it’s effective to drastically reduce our use of coal. Instead, Ohio is backing it up with inefficient business grants. Complete the 100% waste of taxpayer money. “

Ohio Capital Newspaper is part of States Newsroom, a grant-supported media network and donor coalition as a 501c (3) public charity. Ohio Capital Journal maintains editorial independence. Contact editor-in-chief David DeWitt with any questions: [email protected] Follow Ohio Capital Journal on Facebook and Twitter.



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