Associated Press / Charles Rex Arbogast
North Dakota Rep. Kevin Cramer has emerged as one of Republican nominee Donald Trump’s key energy advisers. As a two-term representative and former state utility regulator, Cramer is a self-identified climate change skeptic who opposes the federal Clean Power Plan and favors continued production of oil and coal. And candidate Donald Trump has called climate change a “hoax” on multiple occasions.
Midwest Energy News caught up with Cramer between panels at the Republican National Convention in Cleveland on Wednesday to hear his views on energy in the campaign and what he’d like to see as a “level playing field” for different types of energy (transcript has been lightly edited for clarity).
Midwest Energy News: How important do you think energy will be in this election and then moving forward?
Cramer: Energy in the campaign is as much about national security and job creation as it is anything.
This discussion we just had [in an earlier panel] on solutions to climate change — I don’t see the campaign getting wrapped around that axle. But in terms of national security — especially as I’m talking about oil and gas development and job creation — I think energy plays a pivotal role in that discussion.
During debate on the Energy Policy Modernization Act of 2015, Congress rejected an amendment that would have ended certain taxpayer subsidies for coal and petroleum. Yet some states say they don’t want subsidies for wind and solar. Do you want to get rid of subsidies for everybody?
What I would prefer is some sort of a technology-neutral tax treatment of American energy. I’d prefer something that resembles an intangible drilling cost deduction, for example, and applying it to American-made energy. Something that allows capital-intensive industries to keep more of their own profits and defer the taxes while they reinvest in their own development.
I think that’s a true leveling of the playing field without picking losers — only picking winners. Let the market determine who wins and who loses. But let’s give a preference to American energy as opposed to, obviously, imported energy.
How do you deal with the start-up issue? Here in Ohio, for example, the coal plants were all paid for and subsidized by ratepayers, and wind and solar were not.
We’re not starting from scratch. Wind turbines weren’t invested yesterday. The wind industry, much like the ethanol industry, benefited dramatically from generous treatment of R&D and, of course, tax credits — the renewable production tax credit. You can argue that invested, whether properly or not, in the emerging technology.
Well, that emerging technology created a whole bunch of wind power. We also saw turbines that went from half a megawatt up to now three-plus megawatt turbines. So you saw the natural evolution of the efficiency and productivity of that technology. Whether [those policies were] proper or not, we know it’s coming to an end. And the same with solar.
So, we now have a menu of choices. And it’s not like we’re starting from zero. We have a menu of choices. Now as all of those tax treatments reach their termination, we can have a more honest discussion of a true leveling of the playing field.
A lot of people recognize the tension between renewable wind and solar energy on the one hand and coal on the other. What about coal versus natural gas?
So coal versus natural gas is a natural market force. I don’t think it would be appropriate to save coal at the expense of the consumer. If natural gas as a competing fuel is more economically feasible, then that’s to the benefit of the market.
That said, remember you referenced earlier that ratepayers subsidized coal early on. Ratepayers paid for the electricity, which includes the input costs of fuel. And [that also] includes the distribution costs of lines and transmission costs. All of that, that’s not just paying for the product. It’s not a subsidy.
But when ratepayers are subsidizing with an additional cost because of a mandate, that’s different. That’s punishing the ratepayer.
So with regard to coal versus gas, the difference I’d say in those two fuels as baseload, especially for electric generation, [is]: I was a regulator. I know of utilities that have 25-year contracts for the price of coal with their supplier. Nobody does that with natural gas. Natural gas is a globally indexed commodity that rides the waves of a commodity market sector. Now, it’s far more abundant in supply than it has ever been. But the best way for demand to grow for it is a low price, just like any commodity.
So, gas has multiple uses. Coal does not.
Again, I’m not advocating for picking a winner or loser in the coal versus gas fight either. I’m looking for a level playing field. But I think utilities and utility regulators want some long-term certainty when you’re building on infrastructure or whether it’s the fuel source or other things.
Now the other advantage to gas is gas plants are pretty easy to build. They’re pretty inexpensive to build. And it’s a highly dispatchable form of baseload electricity. So, it’s got an advantage. I think that’s okay.
But that said, if gas [plays a growing role] — whether you consider it a clean fuel or a transition fuel or whatever the case might be — that’s just all the more reason not to have to drive coal out of business with regulation. But if the market does that, so be it.
What are people not asking you, or what would you want voters most to appreciate?
I want voters most to appreciate the next generation of challenges and consequences of driving energy prices up artificially through manipulation of regulatory policy and methods. And that is our global advantage — in manufacturing, [in] server farms or [other] technology—that is greatly diminished when we unilaterally disarm ourselves with energy policy.
And by the way, especially with regulatory environmental policy, there’s another generation beyond energy that’s going to have to participate in this if we’re going to meet these crazy standards that are being set. And that’s largely in things like manufacturing, steel, [and] cement. I mean, we already know that there’s a MACT rule for bricks, for crying out loud.
So it’s not like anybody is going to escape this regulatory regime. I just want people to be well aware of it.
And that’s the stuff people aren’t asking about. They think of energy development sort of in its own little box. But energy is just one of the entities that will be regulated by the EPA, especially through the Clean Power Plan and other things.
And by the way, energy itself either adds to or diminishes the cost of everything: everything we produce, everything we buy, everything we grow on the farm and what not. I think sometimes we just hunker down [and focus] on jobs in the energy industry and [think that] the energy industry is all about fossils or non-fossils. In reality, it’s a comprehensive economic challenge that we don’t often get to.