WASHINGTON — President Barack Obama's fiscal 2011 budget would cut roughly $2.3 billion in coal subsidies over the next decade, a move Kentucky lawmakers worry will mean heavy job losses in economically poor but coal-rich regions of Appalachia.
"Coal subsidies are costly to the American taxpayer and do little to incentivize production or reduce energy prices," said a White House Office of Management and Budget analysis released Monday. "Removing these subsidies would reduce greenhouse gas emissions and generate $2.3 billion of additional revenue over the next 10 years, an amount that represents only a small percentage of annual domestic coal revenues — about one percent over the coming decade."
The cuts, along with the repeal of roughly $36 billion in subsidies to the oil and gas industry, is part the Obama administration's efforts to uphold an agreement struck last year during the G-20 summit in which member states committed to phase out fossil fuel subsidies to help reduce global greenhouse gas emissions by 10 percent.
Lawmakers from Kentucky, which relies heavily on revenue from the coal industry for both jobs and cheaper electricity rates, have vowed to block the proposed cuts.
"Senator McConnell opposes both the president's proposed new national energy tax and the tax on coal included in his budget outline unveiled today," said Robert Steurer, a spokesman for Senate Minority Leader Mitch McConnell. "Both would hurt Kentucky families who are dependent on coal for their livelihood."
Rep. Ben Chandler, D-Versailles, who voted last year for a measure that would cap carbon emissions and fine companies that go over set limits, expressed concern over the Obama administration's proposed budget cuts.
"We'll have to examine the new budget proposal we received this morning, but we are very concerned about any possible impact this repeal could have on Kentucky jobs," Chandler said.
Environmental groups applauded the cuts.
The president's "budget promotes America's energy independence by reducing our reliance on foreign oil, starting the transition away from dirty fossil fuels, and investing in conservation and clean power like wind and solar," said Wesley Warren, director of programs for the Natural Resources Defense Council. "Cutting harmful greenhouse pollution and ramping up renewable energy will secure our nation and foster innovation that will make our economy more competitive."
Lexington has the country's largest "carbon footprint" — leading the nation in emitting the greenhouse gases that most scientists think contribute to global climate change. Other Kentucky cities follow closely, including the Cincinnati-Northern Kentucky area and Louisville, according to a study of the nation's 100 largest metropolitan areas by the Brookings Institution.
The coal mining industry has donated heavily to the state congressional delegation's campaign war chests. Lawmakers say taxpayers' purse strings, not politics, are at the heart of their opposition to the cuts.
"The president can't have it both ways. You can't seek to end our dependence on foreign oil and get America working, while at the same time imposing policies that harm domestic energy production and kill jobs," said Rep. Hal Rogers, R-Somerset. "This is just another politically motivated assault that takes dead aim at coal, severely limiting coal companies in their ability to create jobs and keep production lines open. Worst of all, it hurts Appalachia's hardworking coal mining families at a time when the commonwealth faces over 10.7 percent unemployment."
Others said the cuts are ill-timed as the nation struggles to recover from an economic recession, foreclosures and high unemployment rates.
"These new taxes will mean less domestic energy production, a substantial increase in the price of power for American homes and businesses, less revenue, as well as jeopardizing thousands of jobs," said Republican Sen. Jim Bunning. "I would encourage the administration to refocus their attention on funding clean coal technologies, along with the commercial deployment of advanced technologies that are necessary to ensure the United States has clean, reliable, and affordable energy."