The cost of coal—US coal companies shift climate burden overseas
Plus, who really owns the rights to a coal mine?
Recently I read an article from the New Yorker, “Money to Burn,” about the “tough times” the coal industry in the US is going through. With COP21 coming to a close understanding what coal mining in the US looks like is pretty important. There’s a lot of interesting negotiations going on between the US government and coal companies, and sadly it has not evolved as much as you think.
The first thing you need to know involves land rights. How does selling land to mine coal work? On the East Coast the Industrial Revolution created a boom in the coal mining industry and the majority of coal mines were sold early on. But, in the Western region of the US, fossil-fuel rich land was discovered later down the road so more land belongs to the government. When the government owns the land, the US Bureau of Land Management leases the land to coal mining companies.
The idea here was that competitive bidding for land leases between coal mining companies would generate revenue for the US government when they put the lease up for auction. The problem—coal mining companies already had a huge monopoly over the market. So usually only one company would bid on the lease for the land, and the government lost out on the whole “healthy competition” notion because no competitors would drive up the bid.
90 percent of coal leases in the last 25 years have had just one bidder. Bids usually from one of the major four companies in the US that supply and produce coal for energy production.
Black Thunder Coal Mine, located in the Powder River Basin. This mine is owned by by Arch Coal.
There’s another aspect of leasing land rich in coal: the US Bureau of Land Management is the department that decides what areas are “federal coal-production” areas. This means they pick they the regions to sell leases for coal—and they’re influenced by big coal companies, often at the expense of environmental concerns of citizens. For example, in 1990 the US Bureau of Land Management declared a major coal production zone (the Powder River Basin) in Montana and Wyoming “not a federal coal-production region.” In this case, instead of the US government controlling and monitoring which areas of land are used for coal production, the decision on where to mine within the Powder River Basin (a region that accounts for 40 percent of US coal production!) is up the coal company. The coal company instead of the US government then has control over the leasing process aka price and location of the lease in this case. It’s pretty mind-blowing the government simply hands over all economic and environmental control of area to one coal production company. And those can be horrendously managed as in the case of Donald Blankenship, former CEO of Massey Energy who was convicted of violating federal safety standards causing 29 miners to die.
This monopolized lease system leads to little environmental review of proposed coal leases, lax oversight, and major devaluing of the coal production for the region since the coal company is setting the lease price low so they can benefit by selling the product.
Today, demand for coal in the US is lower thanks to increased awareness of the unsustainable nature of burning fossil-fuels and growing action against climate change. Demand to use domestically produced coal for energy production in the US is expected to decrease from 44 percent to 33-36 percent in the next 20 years. And it’s dropping quickly—US energy production is currently 39 percent coal. But as demand for coal falls in the US, they’re turning their attention to foreign markets, often developing countries with growing economies that want greater access to energy. In the process, coal giants are blotting out clean energy alternatives.
Coal exports from the US to markets in China and other Asian countries increased from 4 percent in 2007 to 25 percent in 2012.
Basically, coal companies are mining at the same rate, but instead of selling that coal in the US, they’re shipping surplus abroad, which does nothing to change the underlying problems of climate change.
Selling abroad is a double hit on US taxpayers who lose by having coal companies set the price of the lease (way undervalued!) and then selling it overseas. In the case of the Powder River Basin, coal sells for five times more than domestic value in global markets. The cost of the damage from carbon-pollution from the Powder River Basin alone is estimated at $19 billion US dollars.
No New Coal protest in Australia, another major coal exporting country to south-east Asia and the rest of the world.
Developing countries need clean energy, not coal, if the Global Goals are to be achieved.
The US cannot continue to push fossil fuels that contribute directly to climate change and allow companies to profit by shipping coal to developing countries.
The responsibility of helping developing countries build and use green technology and sustainable renewable energy falls to wealthy developed nations.
You can help advocate for equality in access to clean energy for all by going to TAKE ACTION NOW and ask world leaders to shift all countries economies to 100 percent clean energy.