Coal CEO calls Tesla a “fraud," doesn't mention subsidies for failing coal | RenewEconomy

Coal CEO calls Tesla a “fraud,” doesn’t mention subsidies for failing coal

Unpacking the unruly exchange between Elon Musk and the head of a struggling US coal company.

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DeSmog

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Last Monday, Robert Murray, President and CEO of coal giant Murray Energy Corporation, called Tesla Motors a “fraud” on CNBC, going on to bash the company for failing to yet turn a profit despite subsidies.

Tesla is a fraud. [It] has gotten $2 billion from the taxpayer and has not made a penny yet in cash flow. Here again, it’s subsidies,” Murray claimed.

Tesla founder Elon Musk fired back quickly on Twitter, writing that Tesla gets “pennies” on the dollar in subsidies compared with the coal industry, and that climate science denial is the “real fraud.”

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So let’s unpack this unruly exchange a little bit.

Distortion #1: EV subsidies pale in comparison to coal subsidies. 

First off, the only direct subsidy that Tesla has received was a $465 million guaranteed loan from the Department of Energy. Which, for the record, the company paid off in full, nine years ahead of schedule, effectively earning the government and American taxpayers millions.

But Murray is technically referring to the indirect subsidies that Tesla benefits from in the form of $7,500 tax credits issued to the purchaser of electric vehicles. So, first, it’s not Tesla that is receiving the $2 billion, but rather the American car buyers that choose to buy a Tesla, or any other electric vehicle. Technically, then, it’s inaccurate to say that Tesla has “gotten $2 billion” from the taxpayer.

But, sure, let’s grant that the company benefits from the increased demand encouraged by the consumer-facing subsidies. So how do those $2 billion in consumer-facing subsidies stack up to what the coal industry receives?

Coal’s very own tax breaks. The coal industry—not the taxpayers that buy the electricity generated by coal, mind you—benefits from billions of dollars of special tax policy loopholes. As ThinkProgress reported, in 2012, the Treasury Department estimated that eliminating just three tax preferences for coal would save taxpayers $2.6 billion between 2013–2022:

  • Expensing of exploration and development costs: Under current law, coal companies can expense costs incurred by locating coal ore deposits.
  • Percentage Depletion for Hard Mineral Fossil Fuels: As the tax code currently stands, coal companies can claim a tax deduction to cover the costs of investments in mines.
  • Capital Gains Treatment for Royalties: Some coal royalties for private owners are treated as long-term capital gains, so they are taxed at a lower rate.

Coal’s cheap ride on the rails: Coal companies benefit directly from subsidized transportation along America’s railways. ThinkProgress laid out the numbers: “As the Association of American Railroads describes, ‘In 2009, coal accounted for 47 percent of tonnage and 25 percent of revenue for U.S. railroads.’ U.S. railroads get loans and loan guarantees from government agencies like the Department of Transportation/Federal Railroad Administration and have received numerous tax incentives for investments in new infrastructure.”

Below market leases on America’s public lands: Most of Murray’s mining operations are in the Northern Appalachia and the Illinois Basin, and most of the mines are on private lands. But at least one, the Lila Canyon mine in Utah is on publicly-owned lands, and so Murray takes advantage of the federal coal leasing process for that mine. It’s been shown time and time again that the federal coal leasing program is tantamount to a massive subsidy to coal companies, which are routinely buying coal owned by American taxpayers for well below market value.

Finally, it’s worth noting that none of these coal-supporting subsidy figures include the costs that are borne by taxpayers related to climate damage, or the local environmental and health impacts of the mining, transportation, combustion, and disposal of coal.

In a 2011 study, Dr. Paul Epstein of Harvard Medical School’s Center for Health and the Global Environment attempted toquantify how harmful coal is in terms of local impacts alone:

Our comprehensive review finds that the best estimate for the total economically quantifiable costs, based on a conservative weighting of many of the study findings, amount to some $345.3 billion, adding close to 17.8¢/kWh of electricity generated from coal…. These and the more difficult to quantify externalities are borne by the general public.

Distortion #2: Murray bashes Musk for not earning a profit, yet coal industry is going bankrupt. 

Despite these enormous subsidies, dozens of coal companies are failing, and Murray knows it. He acknowledged as much publicly at a talk he gave at a dinner meeting of the Tug Valley Mining Institute in Utah:

There are currently 52 bankrupt coal companies in the United States. This year, the prestigious McKinsey and Company issued a study showing that, as whole [sic], the United States coal industry is not only bankrupt, but that it also lacks $45 billion in the funds needed to cover its debt and employee-related and reclamation liabilities.

Even with all those billions in subsidies, 52 coal companies have gone bankrupt, and the industry as a whole is worse than bankrupt, owing $45 billion it doesn’t have for its current debts and liabilities. Murray called Tesla a “fraud” for far less dire a financial situation.

As for Murray Energy’s own finances, Moody’s has downgraded its investment rating for Murray Energy Corporation three times over the past year, most recently in February when the investment service wrote that the downgrade “reflects our expectation that the company’s leverage metrics and cash flow generation will continue to be under stress due to the headwinds facing the coal industry.”

Despite all the government support that Murray Energy Corporation receives through subsidies like special tax treatments, still the company’s cash flow is under stress.

Bonus Distortion: Murray says America’s coal plants don’t cause global warming

Now this isn’t related to Musk or Tesla or subsidies, but for the heck of it, and just so you are clear where Murray stands with respect to climate change, he wrapped up the segment with this remarkable statement:

And by the way you could close down every coal fired power plant in the United States today and you would not affect the temperature of the earth at all. Not at all.”

Okay then.
Originally published on KochvsClean.com.
*Update October 14: Bob Murray sent DeSmog the following note about this article, and pointed to this CNBC article: Musk fires back at coal CEO who called Tesla a ‘fraud’ with alternate figures on fossil fuel and renewable energy subsidies.

Screen capture of letter received by DeSmog from Bob Murray.
Screen capture of letter received by DeSmog from Bob Murray.

 

Source: Desmog. Reproduced with permission.

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28 Comments
  1. john 4 years ago

    The only subsidy that the person can point at is the subsidy to buy an EV which will very shortly finish meanwhile the Industry he is in has has historical and forward looking subsidy in every county I think the man needs help.

    • Ace Diamond 4 years ago

      So are you in 3rd grade now or do you have to repeat 2nd grade?
      If it wasn’t for all the taxpayer money that Obama hands Musk and also all the other money Obama’s EPA takes BY FORCE from other manufacturers and gives to Musk, your child murderer Musk would be out of business.

      • john 4 years ago

        The only money directly given to Tesla was paid back before time and the US is not out of pocket.
        The tax credits to the purchaser will finish, as soon, from recollection 250,00 EV’s are sold that number is fast approaching.

        I do not follow the rest of your post re some one murdering some one care to elaborate ?

        • Lightfoot 4 years ago

          The arrogance of Diamond Ace,
          Is there for all the world to see,
          Does not topic at hand embrace,
          Prefers to slander endlessly.

          Just you wait for when he grows tall,
          A Fireman is his calling card,
          A Soldier to climb over wall,
          He built this day when playing hard.

          Healing the hurt is not his way,
          He has some airs that he knows best,
          But does not well with others play
          So scorn within his heart your test.

          Seldom bother a troll I would,
          But Renew our great neighbourhood.

          For the more Respectful contributors, who clearly have some value to add to the conversation.
          Thanks Renew Economy.

  2. trackdaze 4 years ago

    Last time i looked murray coal employs 6000
    Tesla i think is double that.

    • Ace Diamond 4 years ago

      The subsidy comparison was to the entire coal industry. Musk gets up to 50% in subsidies and credits per TESLA sold. Imagine if the coal industry got that…50% in subsidies and cradits per tonne of coal???
      You’re just dazed and confused.

      • trackdaze 4 years ago

        Keep it coming put all your cards on the table.

        • trackdaze 4 years ago

          Update in order
          murray coal now down to 5800 employees.

  3. MaxG 4 years ago

    Robert Murray must have gotten so used to his subsidies, he forgot about them… what a looser.

    • Ace Diamond 4 years ago

      You’re such a liberal socialist liar….it’s disgusting.

      First, you have to use percentages and not dollar amounts when comparing tax breaks and subsidies if the businesses that you are comparing vary in size and net income.

      For example, lets say Max has a Solar Company and Max makes $10 million a year….and Max gets $9 million in subsidies. Arthur has a much larger natural gas company and Arthur makes $10 billion a year..and Arthur gets $50 million in subsidies. So now all the liberal socialists will cry and moan that Arthur gets a much larger subsidy than Max even though in reality Arthur only gets 5% in tax breaks while Max gets 90% in tax breaks and direct subsidies from the American taxpayer.

      Are you one of those illuminati? Do you have many sheep? Is that why you are smiling? It’s disgusting.

      • MaxG 4 years ago

        What is the reason for the ad hominem attack?
        How does your reply relate to what I’ve said?

  4. YeahRightPal 4 years ago

    It’s a shame he didn’t mention “carbon credits” which are really the only source of what Tesla could remotely call “revenue”. Unfortunately, “carbon credits” are based on the end product, not the “sausage-making” involved in the production of a Tesla vehicle and those, oh, so green Li-Ion cells.

    As for “failing coal”. It’s not hard to fail when the government makes operating your business all but impossible.

    • serge delinois 4 years ago

      Nobody wants coal anymore that’s why it impossible. As it stands today renewable energy is already cheaper than coal. Even the Chinese have dumped coal.

      • 小杜 (xiao du) 4 years ago

        Except for SA (South Africa, not South Australia)

        South Africa* has just launched an REIPP for *Coal* powered generation.
        Boggles the mind.

        *Completely politically driven, given that Solar and Wind are < 50% the cost of new Coal in South Africa at 2015 pricing, and likely even cheaper at 2016 pricing.

        • Ace Diamond 4 years ago

          So by “new coal” you mean “taxed to death coal”?
          Hey, bullshit can be made more expensive than gold if you tax gold to death.

      • Ace Diamond 4 years ago

        Great….the same old liberal socialist liar.

        So please explain to us, you liberal socialist master debater, if the Chinese dumped coal, why is China the largest consumer of coal in the world? Why does China get over 85% of its electricity from coal? (actually they first reported that its 80%, but we know they lied about it and its a lot more than 80%).

        Riddle me that serge….how does China obtaining 85% of electricity from coal equate to “Even the Chinese have dumped coal”

        Not everyone in the USA is high on cannabis like you liberal socialists would want everyone to be.

    • Ace Diamond 4 years ago

      Carbon Credits is a liberal socialist scheme based on lies and deception. Musk gets those paid to him directly…..about $25,000 per TESLA sold….paid for as penalties by other manufacturers who refuse to destroy the environment with the nasty Li-Ion cells.

      I can tell you one thing, if Jeep got a $40,000 bonus per Wrangler or Grand Cherokee sold in subsidies and credits, we would all be driving Rubicons and SRT Grand Cherokees. You would be able to buy a Rubicon for something like $2500…or a Grand Cherokee SRT for about $25,000. I would pick the SRT.

  5. Jason Willhite 4 years ago

    Tesla and coal companies don’t even compete against each other. Coal must be going down fast, and man are they swinging hard at anything remotely clean/renewable.

    • PhilH 4 years ago

      Teslas run on electricity, much of which, for the time being, comes from coal – so Teslas actually benefit his business. He must be so blinded with rage he’s hitting out at anything.

      • Ace Diamond 4 years ago

        Don’t forget those nasty batteries that TESLAs need. The batteries are an environmental disaster….almost as bad as nuclear power…and the batteries don’t last very long….although the liberal socialist media will make you think that the batteries last forever…or at least 100,000 miles.

        In this day and age, a Suburban is much better for the environmant than a TESLA…and automobile manufacturers actually have to pay penalties for making SUVs like Suburbans.

        Just like the Clintons, the EPA is a bunch of liars….with leadership that has been hand-picked by the gangster Obama.

        • john 4 years ago

          A Tesla bad for the local environment !!!
          It does not emit any CO2 or NO2
          Which part of your post do you wish to substantiate?
          In fact I would not be surprised if the batteries do last for 100,000 miles.
          If they do not then they will be recycled at the factory.
          Not thrown on the rubbish dump like the alternative.

    • Ace Diamond 4 years ago

      COAL is being punished by Obama’s EPA. Musk is constantly being rewarded by Obama and the EPA who think it is OK to give TESLA taxpayer $$$.

      The only one who is going down fast is your lovely lady when you’re not home…but someone else is.

  6. Geoff 4 years ago

    Man this guy has just opened himself up to a huge shalacking! Small fry compared to peabody, which is now dead. it is the last gasp of a loosing fuel and really no one cares or is even listening. Who is this guy anyway??

    • Ace Diamond 4 years ago

      Are you from the UK or something Geoff? You must have voted against the Brexit. You are delusional and disconnected from reality. So how will you get all your cannabis once England’s borders are sealed? Is that why there is all that sudden emergency to legalize pot in England…so the 49% that voted against Brexit will be able to satisfy their addiction?

  7. Miles Harding 4 years ago

    I wouldn’t want to be this cranky old coal troll’s dog!

    Tesla is almost completely orthogonal to the coal mining business, so there must be another reason. I suspect that he’s deeply troubled by the imminent demise of his own sector and very angry that he’s not part of a sunrise industry. Tesla is simply a convenient dog to kick.

    • Ace Diamond 4 years ago

      Why do you think about being other people’s dog? Do you want to be Musk’s dog? I would not recommend it considering Musk wants China to be his greatest manufacturing base. Let me know if that’s beyond your comprehensive skills to figure out.

  8. Ace Diamond 4 years ago

    Musk is such a dispicable liar, he makes Hillary look like a decent person…so…yeah…he’s extremely bad.

    Musk gets anywhere between $7500 and $12000 per TESLA sold in tax subsidies. He also made a couple of hundred $million in additional tax subsidies in California from the battery swapping that never worked….but of course he did not return the money.

    In addition, because he is Obama´s greatest hero, he gets bogus BEV credits because he builds the worst cars for the environment…battery electric cars….but Obama´s EPA punishes other car companies who refuse to build enough electric cars…and they have to pay Musk….and then they have to charge the American taxpayer more money for normal cars.

    When all is said and done, Musk gets about $40,000 per TESLA sold in tax subsidies and bogus BEV cradits….and it all comes out of American pockets. That’s an average of a 50% subsidy and credit per TESLA sold.

    But wait, there is more.

    TESLA has made about 120,000 cars and yet it is valued at nearly half of what the oldest automotive mass-porducer is worth….Daimler. What TESLA has sold in its lifetime, Daimler sells in one month. Obama’s liberal socialist friends at financial institutions like Morgan Stanley had infalted TESLA’s stock price to ludicrous levels. What this means is that many Americans have all this false money in their 401k because Morgan Stanley and Goldman Sachs want to give Musk all they can.

    Finally, Musk gets to spend his Valentine with Obama, and together they get to strategize how to make even more money stealing from the American People. They also discuss all the nasty health effects of having American Children sit on top of ultra-powerful electric motors. Finally, they try to figure out how to place Musk’s competition out of business or worse, especially this one Arthur dude who has been especially daring in trying to get the truth to the American People.

    • john 4 years ago

      You do realize your post is full of absolute rubbish not true in any way.
      Quote “Musk gets about $40,000 per TESLA sold
      This false end of story.

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