In the News

Michael Livermore, executive director of New York University’s Institute for Policy Integrity, called the failure to cover existing plants “a big problem,” noting that the move might encourage utilities to keep operating conventional coal plants operating longer.

“When you want to reduce pollution, you need to go where the pollution is, and that’s existing sources,” he said, adding that when the government grandfathers existing plants and raises the standards for building new ones, “you increase the incentives to keep existing facilities around.”

In addition to lucrative tax breaks and subsidies from the government, many fossil fuel producing companies also enjoy another type of built-in bonus: they don’t have to pay for a lot of the harm they cause to public health. If they did, it could cost billions per year and make investing in renewable energy much more attractive.

If citizens could send an invoice to coal, oil, and gas companies for all of the damage they did—medical bills, reimbursements for sick days taken thanks to illnesses caused by pollutants in the air, even funeral costs—it would amount to a staggering bill.

“You have to focus on what you’re buying,” said Michael Livermore, executive director of the Institute for Policy Integrity at the New York University School of Law. “If you just look at the price, you don’t know what you’re getting. Are these wise investments? That’s the question.”

An example of a regulation that is paying off, according to Livermore, is the Environmental Protection Agency’s mercury and air toxics rule, which caps pollutants emitted by power plants. It will cost utilities about $9.6 billion per year and is projected to yield up to $90 billion in benefits in terms of saved lives, reduced illness and jobs created, according to the EPA.

But Michael Livermore, executive director of the Institute for Policy Integrity, said EPA’s soon-to-be final rule for boilers is reasonable, if not a little too lax. “EPA has been working on this for a long time, and they’ve done a lot to address industry concerns,” he said.

He added that manufacturers would criticize the rule almost no matter what it looked like, because environmental regulations do not contribute to their bottom line.

“Industry is going to oppose the rule no matter how large the benefits are for the American public,” he said.

But said Jason Schwartz, legal director for the Institute for Policy Integrity at New York University, believes focusing on the numbers is too narrow. In the broader sense, the tailoring rule works if the court allows EPA to take a “step-by-step piecemeal approach” by focusing on the big sources first.

“The agency is looking at all of the language together and coming to the closest reading they can get,” he said.

When the Obama administration moves forward with stronger environmental protection, some see a “phony theology” at work. But most thoughtful observers see a moderate administration steering a middle course, irritating businesses with increased protections when they are cost-benefit justified, but also frustrating environmentalists with a relatively slow pace of change.

Two recent pieces raise the question of whether The Economist is falling into the alarmist’s trap. One accuses the Obama administration of over-counting benefits and the other frets that too many regulations are crushing the American economy.

While any major change to our nation’s transportation model is currently floundering on Capitol Hill in the form of a massive transportation bill being used as a political football, it’s still possible for the president to slowly change the way we get around in this country. He can do this by exercising some of his regulatory power, something he has tried to do by raising the fuel economy standards of America’s automotive fleet.

Mike Livermore, executive director of the Institute for Policy Integrity at New York University, said the offer from electric utilities is not surprising, because they do not benefit as much from the remaining subsidies as some other industries do.

But while there is broad support in theory for a plan that streamlines the tax code and gets rid of provisions that “pick winners and losers,” that comity will disappear as soon as Congress takes a serious look at making certain companies pay more than they do under the current tax code, he said.

Livermore expects a battle royal between some energy companies — such as coal, oil and gas producers — and those that lack the same portfolio of tax breaks. One question is whether heavy-hitting utilities will line up against their compatriots in the energy industry, or sit on the sidelines during what could be a bruising political battle.

“Energy producers are going to fight tooth and nail for their provisions,” he said. “Everyone else is going to moderately want a tax break, but the question is how hard they’re willing to fight for it.”

No doubt about it, “it’s going to be a fight,” he added. “We’re not going to hold hands and sing Kumbaya and figure it out.”

There’s a lot of uncertainty around exactly how much taxpayer money the government gives out to Big Oil, Big Coal and the rest of the dirty energy industry each year in subsidies. But we know one thing for sure: it’s a lot. A new crowdsourced project called the Energy Tax Breaks Wiki promises to help identify the sections of the tax code containing these outrageous fossil fuels subsidies.

The Institute for Policy Integrity just rolled out an “energy tax breaks wiki” that will attempt to log every tax subsidy provided to the fossil and renewable energy industries. With all the political hand-wringing over permanent tax credits for oil companies, short-term tax credits for clean energy that are set to expire, and the differences between the government support provided to both sectors, this is a very important resource for helping uncover the opaque world of energy tax law.