Buried among all the other coverage of President Obama’s budget proposal there have been a couple of pieces (see here and here) about the administration’s efforts to slow government subsidies for fossil fuels that contribute to global warming.
The White House explained the proposal — which would save the government $2.3 billion in coal tax breaks over a 10-year period — this way:
As we work to create a clean energy economy, it is counterproductive to spend taxpayer dollars on incentives that run counter to this national priority. To further this goal, the Budget eliminates tax preferences and funding for programs that provide inefficient fossil fuel subsidies, which impede investment in clean energy sources and undermine efforts to deal with the threat of climate change. We are eliminating 12 tax breaks for oil, gas, and coal companies, closing loopholes that will raise $36 billion over the next decade. Moreover, this leadership in eliminating subsidies will also encourage prompter action by the major emerging economies to phase out their subsidies, which are in the hundreds of billions of dollars annually.
Of course, this proposal is meeting immediate opposition in the nation’s coalfields, as evidenced by this story in the Lexington Herald-Leader, in which Kentucky officials “worry will mean heavy job losses in economically poor but coal-rich regions of Appalachia.”And today, Sen. Jay Rockefeller, D-W.Va., questioned Treasury Secretary Timothy Geithner about the proposals during a Senate Finance Committee hearing. His office included this quote in a press release about the exchange:
I questioned Secretary Geithner about how coal is impacted in the current budget blueprint. I believe coal-related tax incentives are a necessary part of West Virginia’s energy economy and I have long supported these efforts to enhance investment in our state. I also believe we need a thorough review of how any proposed tax incentive eliminations will impact West Virginia jobs and our economy. Coal plays a significant role in our state and national fabric and it is an important job generator.
The press release also said:
Rockefeller opposes doing away with these incentives and expressed concerns about the impact on jobs, energy prices, and competitive advantage. Rockefeller is a strong supporter of Carbon Capture and Sequestration (CCS) technology and he believes this is a pathway to prosperity for West Virginia.
Now, I’m no expert on coal taxes … but as best I can tell, the loopholes Obama is proposing to close don’t have anything to do with CCS. Page 16 of this budget document lists these three tax breaks for coal that would be eliminated:
— Expensing of exploration and development costs;
— Domestic manufacturing deduction for hard mineral fossil fuels;
— Percent depletion for hard mineral fossil fuels; and
— Royalty taxation.
As reported yesterday, the president also wants to stop spending money intended for cleaning up abandoned coal mines to states that no longer have abandoned coal mines to clean up … and guess what? Lawmakers from coal states that would lose out on that money have promised to put up a fight against that proposal as well.