If lawmakers on Capitol Hill want to cut carbon dioxide (CO2) emissions that cause global warming, they will have to face another giant to make real progress: A government program, hailing from the Depression era, that sends billions of dollars of low-interest loans to rural areas to build coal plants. The Rural Electrification Administration was created in 1935 by President Franklin Roosevelt to bring electricity to U.S. farms. The mission has been accomplished, but the money keeps coming.
Rural electric cooperatives ("co-ops") are nonprofit organizations that distribute electricity and are owned by their customers. There are more than 800 of them across the U.S., and more than 50 of them own a power plant. The co-ops plan to spend $35 billion to build old-fashioned coal plants over the next 10 years. A sobering reality check: That’s enough to offset all state and federal efforts to cut CO2 emissions over that time.
The Office of Management and Budget wants to end the loans for new power plants and limit the ones for transmission projects in the most remote areas. But the National Rural Electric Cooperative Association is a powerful lobby, and sent 3,000 members to Capitol Hill last week to keep the lending program rolling, arguing that the new coal plants are needed to keep energy cheap and reliable.
Glenn English, chief executive of the National Rural Electric Cooperative Association, pointed out that taxable utilities get tax breaks to encourage renewable energy projects and efficiency measures, but rural co-ops can’t. He wants Congress to give the nonprofit co-ops incentives too, like no-interest loans.
Besides political influence, co-ops often carry a lot of clout in their communities because they are more involved than just distributing electricity. English explained that one co-op reopened a gas station that went out of business. Another bought and kept open the local Dairy Queen.
Others argue that many of the co-ops shouldn’t qualify as rural anymore because of their expansion into densely populated zones, like Dallas-Fort Worth area and Atlanta. Additionally, the low-interest money they receive removes any incentive to promote energy efficiency or go after renewable resources. In fact, rural co-ops get on average 80 percent of their electricity from coal, compared to 50 percent with the rest of the country. Their energy demand is also growing at twice the national rate.
This is going to be a tough political issue for Congress to tackle. Both sides may have valid points, but the system must be restructured to be a more efficient process that emphasizes clean, renewable, local energy. If not, than all the state and federal goals, programs, and initiatives that aim to cut climate change emissions will be simply blown away.