TODAY’S STUDY: ANOTHER WAY THE U.S. COAL INDUSTRY’S PROFIT IS THE WORLD’S LOSS
Leasing Coal, Fueling Climate Change; How the federal coal leasing program undermines President Obama’s Climate Plan
July 2014 (GreenPeace)
The United States’ federal coal leasing program has come under increased scrutiny in recent years, as communities impacted by coal mining and export proposals, taxpayer advocates, and environmental groups have questioned the ability of the Bureau of Land Management (BLM) to ensure a fair return to US taxpayers and adjust to newer challenges such as climate change and coal export proposals. Recent audits from the Interior Department Inspector General (IG) and Government Accountability Office (GAO) both faulted BLM’s inattention to increased coal exports, among other issues. However, the IG and GAO reviews fell far short of a comprehensive review of the coal leasing program, and did not attempt to calculate the total amount of taxpayer revenue that has been lost. Moreover, neither report addressed a more fundamental question: how can a federal program that increases the supply of coal be reconciled with President Obama’s Climate Action Plan?
This question is especially important in light of a recent federal court ruling, which blocked plans to expand a coal mine in Colorado because of the failure of the federal coal leasing program to properly consider the federal government’s social cost of carbon figures and climate change impacts. This report focuses on the carbon pollution that has been unlocked by the federal coal leasing program during the Obama administration, and calculates the damages expected from those emissions, using the federal government’s social cost of carbon figures as suggested by the federal court ruling. Without major changes, the federal coal leasing program will continue to undermine federal, state, and international efforts to reduce carbon pollution; the BLM Wyoming office plans to lease over 10 billion tons of coal in the coming years, dwarfing the emissions reductions expected from the Environmental Protection Agency’s Clean Power Plan.
A summary of our conclusions:
I. The Bureau of Land Management has leased 2.2 billion tons of publicly owned coal during the Obama administration, unlocking 3.9 billion metric tons of carbon pollution. This is equivalent to the annual emissions of over 825 million passenger vehicles, and more than the 3.7 billion tons that was emitted in the entire European Union in 2012.
II. The carbon pollution from publicly owned coal leased during the Obama administration will cause damages estimated at between $52 billion and $530 billion, using the federal government’s social cost of carbon estimates. In contrast, the total amount of revenue generated from those coal lease sales was $2.3 billion.
III. A ton of publicly owned coal leased during the Obama administration will, on average, cause damages estimated at between $22 and $237, using the federal government’s social cost of carbon estimates – yet the average price per ton for those coal leases was only $1.03.
IV. The federal coal leasing program amounts to a major fossil fuel subsidy, favoring coal at the expense of cleaner methods of generating electricity. A recent federal court ruling rejected BLM’s argument that increasing the supply of coal would not increase carbon pollution, in part because coal competes with cleaner methods of generating electricity. This conclusion is supported by the history of the coal leasing program, an International Monetary Fund report on fossil fuel subsidies, and common sense.
V. The Bureau of Land Management has not adjusted to the US coal mining industry’s efforts to increase exports of publicly owned coal. The US coal mining industry is openly aiming to increase exports of publicly owned coal, and the federal coal leasing program has been faulted by multiple government audits for ignoring exports when determining the “fair market value” of leased coal. Nevertheless, BLM officials seem either unable or unwilling to adjust the coal leasing program to account for these major shifts in the market.
VI. Major exports of publicly owned coal would undermine global efforts to reduce carbon pollution. US coal exports have contributed to increased coal consumption in Europe, and partially offset US carbon pollution reductions. Allowing the coal industry to export major amounts of publicly owned coal to Asia would undermine global efforts to address climate change.
VII. The federal coal leasing program is the source of 40% of US coal extraction, with major impacts on coal markets and carbon pollution. One BLM field office in Wyoming recently proposed a plan that estimates new coal leases amounting to 10.2 billion tons, which would unlock an estimated 16.9 billion metric tons of carbon pollution.
VIII. A moratorium and comprehensive review of the federal coal leasing program is needed to ensure that it does not continue undermining President Obama’s Climate Action Plan. Interior Secretary Sally Jewell and others in the Obama administration should take the President’s call to climate action seriously, beginning with a moratorium and comprehensive review of the federal coal leasing program, including its role in fueling the climate crisis.