News•July 15, 2015

Gap Seen Between Federal Climate Policy, Coal Leasing

Southern Utah is national park country — five parks spread across scenic red rock canyons and picturesque mesas. It’s also the scene of the Obama administration’s ongoing coal leasing program, which allows mining companies to produce coal on federally-owned public land.

At a time when climate scientists are warning with increasing urgency that many fossil fuel resources must be left in the ground, the federal government is leasing publicly-owned land and minerals for coal mining at an increasing rate, especially in Wyoming, Colorado and Utah. It’s happening even as the White House finalizes the Clean Power Plan, which will regulate coal-fired power plant emissions, and the president prepares to travel to Paris, where he will pledge to slash the United States’ carbon emissions to 28 percent below 2005 levels by 2025.

A coal mine in Wyoming. Credit: Kimon Berlin/flickr

That dichotomy has scientists concerned that the U.S. may be unable to meet its climate goal, especially without both a price on carbon and a comprehensive climate, environmental and economic policy that can allow the U.S. to show leadership in Paris, Kevin Trenberth, a climate scientist at the National Center for Atmospheric Research in Boulder, Colo., said.

“Of course, this is not feasible given our current government and the conflicts that exist, and so what should be a manageable problem instead puts us at huge risk, especially for future generations,” he said.

Publicly-owned land managed by the federal government in the West is the source of about 40 percent of all the coal produced in the U.S., and the power plants burning that coal are the nation’s largest emitter of carbon dioxide emissions driving climate change.

Environmental groups have sued the federal government, saying that coal being mined from public lands is a huge source of greenhouse gas emissions and demanding that the government account for how coal produced on land it manages affects climate change.

“The federal leasing program has a huge climate impact,” said Marissa Knodel, a climate campaigner for Friends of the Earth, one of the groups that has sued the Obama administration. “It’s a really great opportunity for the Obama administration to make good on current (greenhouse gas) reduction pledges.”

Luke Popovich, vice president of external communications for the National Mining Association, said the federal coal leasing program in the West is critical for coal production in the U.S. because coal in the West, particularly in Wyoming’s Powder River Basin, is less expensive to mine than in the Appalachian region.

He said the coal industry believes leasing federal land and minerals for expanded coal production in the Powder River Basin is not likely to have any measurable effect on global warming.

“The climate policy as we’re concerned is essentially a ruse to stop or slow the mining of coal on federal lands in the West,” Popovich said.

Open for Business

If it is finalized and survives court challenges, the Clean Power Plan, which would regulate emissions from existing electric power plants, is expected to accelerate the closure of coal-fired power plants and send coal production into a free fall. Coal produced in Wyoming, Utah and Colorado could decline 34 percent by 2024 under the Clean Power Plan, according to a U.S. Energy Information Administration analysis.

Despite those predictions, the federal government has made no moves to reduce the amount of land it manages that is open to coal mining. Though coal leasing has declined sharply on federal lands over the last 30 years, the U.S. Bureau of Land Management, which manages the federal mineral estate and most public lands in the West, auctioned off more land in 2013 than it did in 2000. Coal leasing reached a 13 year peak in 2012, when the bureau auctioned more than 483,000 acres of land containing federally-owned minerals for coal mining, more than it had auctioned off in any year since 1999.

Much of coal in Utah is produced in Carbon County, named for its abundance of coal and other carbon products.
Credit: Doug Kerr/flickr

This year, several new coal-related projects on public lands have been approved or are in the approval process.

A BLM management plan published in May for nearly 5 million acres in northeast Wyoming’s coal-rich Powder River Basin left the amount of land available for coal mining the same as in 2001, the year the region’s previous management plan was written. The new plan declares that up to 10.2 billion tons of coal could be mined from 106,400 acres of land in the Powder River Basin over the next 20 years, mostly to allow existing coal mines to expand.

In June, the BLM auctioned off nearly 2,700 acres of land south of Salt Lake City containing 42 million tons of recoverable coal. The sale is expected to send $17.2 million into federal coffers.

Another coal project, proposed for 3,500 acres of public land near Bryce Canyon National Park, justifies the need for the mine based on 2010 U.S. coal-use projections that show demand for coal rising each year for decades. The analysis, however, doesn’t account for recent federal data showing natural gas prices and climate policies possibly reducing coal demand.

BLM spokeswoman Megan Crandall said the agency can’t use the most recent data because the approval process for a mine is often many years. The agency has to have a cut-off point for the data it accepts into its years-long environmental analysis, she said.

“We take climate change very seriously,” she said. “We have a responsibility to pay attention to it. It factors into what we do.”

Supply and Demand

Economists and scientists say the current state of the coal leasing program is subject to the complicated politics of climate change and government priorities that may seem at odds with one another.

James Stock, a professor of political economy at Harvard University, said that the best way to reconcile federal coal leasing with climate policy is to impose an economy-wide price on carbon. But that’s not politically feasible at the moment, so the Obama administration may be using the Clean Power Plan to reduce the demand for coal and effectively impose a carbon price on power plant emissions, he said.

Stock said he believes the Clean Power Plan will be insufficient to cut emissions deeply enough. The government should impose a carbon fee, or “adder,” for burning coal produced on public lands, he said.

“Such a carbon adder would increase the price of coal and thus reduce its extraction,” Stock said. “Current coal royalties aim to bring fair value to current taxpayers, but the government has a responsibility to future citizens as well, and that responsibility justifies including a carbon adder in federal coal royalties.”

At least one federal court decision has required the U.S. government to account for the climate impacts of coal mine expansion on federal lands, and one way to do that may be to impose a carbon fee, Ian Lange, assistant professor of economics at the Colorado School of Mines, said.

“Deciding to add a carbon charge would have a substantial impact on a firm’s desire to bid on leases and, accordingly, mine coal,” Lange said. “My read of the legal literature, though I am not a lawyer, is that BLM is on stronger grounds to add a carbon charge than to declare areas off limits to development.”

Trenberth said it’s often the nature of government to promote conflicting priorities simultaneously, such as coal leasing and carbon reduction.

“The whole issue of climate change is riddled with this sort of thing and conflicts,” he said.

The Alton Coal mine near Bryce Canyon National Park in Utah. The federal government is reviewing a proposal to expand the mine into additional public lands nearby.
Credit: slashvee/flickr

Mark Squillace, director of the Natural Resources Law Center at the University of Colorado Law School, said the federal government has no broad plan for its coal leasing program nor has it set caps on the amount of coal it will allow to be mined on public lands. Without an overarching plan for the program, the government analyzes individual coal mine proposals then evaluates them based on individual merits and local environmental concerns, not within the context of a national climate and coal policy. Often, the mines are approved.

“The history has been to react in a way that allows the coal to be developed,” he said.

Modernization

Interior Secretary Sally Jewell and the BLM are working on modernizing the coal leasing program. Their changes would make coal companies pay more for the right to develop coal on public land as way to offset some of the environmental and social costs of coal extraction.

Once land is leased for coal mining, coal companies pay fees to the federal government. Canyon Fuel Co., the firm that won the Wasatch Plateau coal lease last month, will have to pay an annual rental payment to the BLM totaling $3 per acre plus up to 12.5 percent of the value of the coal it produces on the land.

The BLM announced Thursday the first step in the program’s overhaul — a series of public meetings across the country beginning July 29 designed to gather public opinion on how the coal leasing program should be overhauled.

“I have heard many concerns about how the federal government leases coal, the amount of royalty charged and whether taxpayers are getting a fair return from public resources,” Jewell said in a statement. “These listening sessions are an opportunity to better understand how taxpayers, stakeholders and local communities perceive the federal government’s coal program today and how we can improve and strengthen it for future generations.”