The federal coal program has been rightly criticized for failing to provide a fair share to U.S. taxpayers, so it’s encouraging that the Interior Department is finally looking critically at the program. But the most troubling aspect of giving away our coal at such low prices is that it amounts to a major subsidy for coal, perversely encouraging the use of this most polluting fossil fuel at the expense of cleaner forms of energy. And while some Bureau of Land Management (BLM) officials and coal mining executives have tried to argue that other coal reserves would be mined if federal coal were not, this excuse ignores two key facts: first, at 40 percent of U.S. coal production, federal coal dominates the market, so leasing and pricing decisions have an out-sized influence; and second, coal competes with cleaner forms of energy. That’s exactly what the Colorado District Court concluded when it blocked a coal lease last year—selling coal for cheap “will impact the demand for coal relative to other fuel sources, and coal that otherwise would have been left in the ground will be burned.”
That Court also specified that BLM could have quantified the climate change impacts from leased coal using the federal government’s social cost of carbon. Other federal agencies such as the Department of Energy and Environmental Protection Agency use social cost of carbon figures when considering measures that reduce carbon pollution. So why doesn’t the Interior Department?
Because Interior has failed to use this important tool, we published a report last year that used the federal government’s social cost of carbon figures to calculate the damages to society of the 2.2 billions tons of our coal that have been sold during the Obama administration. We found that the emissions from that coal would amount to more than 3.9 billion metric tons of carbon pollution—that’s more than the annual emissions of 825 million cars. And those emissions would cause between $52 and $530 billion dollars in damages.
Of course, that’s just a monetary figure that seeks to quantify some of the climate change impacts that will result from burning that coal. In reality, we should recognize those impacts mean devastation to people’s lives and livelihoods. Here in Colorado we’re seeing more dangerous wildfires, drought, and pine bark beetle epidemics – including in places like Rocky Mountain National Park that the Interior Department (through its National Park Service) is responsible for protecting. And for many vulnerable communities, the stakes are much higher. Sea level rise doesn’t just threaten the Everglades, where Secretary Jewell and President Obama spoke this Earth Day—it poses an existential threat to entire nations. That’s why last week, the President of Kiribati, a nation of low-lying Pacific islands, wrote to world leaders to call for a moratorium on new coal mines and coal mine expansions.
So the Interior Department should use the federal government’s social cost of carbon figures when assessing the costs and benefits of the federal coal program. It will see that the revenue brought in by the program is tiny in comparison to the damages caused by mining and burning this coal. But Secretary Jewell and other Interior officials should also remember that the stakes here go well beyond revenue.
And while some coal mining executives have claimed that the Interior Department must continue to give away our coal, when they are required to be honest, they recognize that in fact there is no such obligation. In its most recent 10K filing with the Securities and Exchange Commission, Cloud Peak Energy states quite clearly on page 26: “There is no requirement that the federal government must lease its coal.”
Cloud Peak Energy 10K admits “There is no requirement that the federal government must lease its coal.”
Author’s note: this blog is adapted from the testimony I gave during a listening session in Colorado on August 18, 2015, which was held in response to Interior Secretary Sally Jewell’s call for an “open conversation” about the federal coal program and climate change. If you’d like to join that conversation, the Interior Department is also accepting online comments from the public about the federal coal program until September 17, 2015 – submit comments to: [email protected].
