The Obama administration is halting major new leases to mine coal on federal land for about three years as it works to reform the controversial program.
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“How do we manage the program that is consistent with our climate change objective?”
“The analysis should account for direct and indirect greenhouse gas emissions, and use tools like the social cost of carbon and social cost of methane”, Hein said in a statement.
Also, the department said there “will be limited, commonsense exceptions to the pause, including for metallurgical coal (typically used in steel production), small lease modifications and emergency leasing, including where there is a demonstrated safety need or insufficient reserves”. Arguing for an increase in the rate, some people said that taxpayers are not now receiving a fair return, suggesting that the rate should match the rate for offshore federal leases and should account for environmental costs associated with coal production.
Leaseholders pay a rental fee of $3 per acre and, in the case of Powder River Basin coal, a 12.5 percent royalty.
The Government Accountability Office said in 2014 that the bureau was not fully considering future market conditions and potential coal exports in determining the value of its leases.
The minimum bid for a federal coal lease has remained at $100 per acre since 1982, the NYU report says: “Accounting for inflation, alone, would raise the minimum bid to $247 per acre”. Now, many scientists agree that the exact opposite approach is needed to have any chance of limiting global warming. “Unfortunately, the president is intent on destroying coal as a domestic energy source”, Mooney said. It is estimated there is around 20 years-worth of coal production already under way, with 50 pending leases set to be affected by the decision. That’s because, with prices so low, big coal companies in the West routinely snatch up leases just to keep in their back pocket without necessarily developing them.
The plan, reported earlier by Reuters, would have little effect on production from existing leases.
Still, the announcement is yet another headache for an industry that has already had a very bad start to 2016.
The coal industry had been battered in recent years by competition from cheap natural gas and clean-air regulations that have raised costs for burning the black rock.
This week, Arch Coal Inc, one of the nation’s largest coal companies, filed for bankruptcy – the latest mining company to seek protection from creditors in the current downturn. Royalty rates under the coal leasing program, however, have not been updated in decades and have always been criticized for vastly undervaluing coal.
Jewell added, “We are undertaking this effort with full consideration of the importance of maintaining reliable and affordable energy for American families and businesses, as well other federal programs and policies”. “If they decided they would like to lessen the amount of coal that’s available to the markets, they would certainly have that discretionary authority to not offer as much land, or tonnage of coal, to companies through the leasing process”.
Lee-Ashley countered that the reforms are “a giant step forward” on Obama’s climate agenda.
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Sierra Club Executive Director Michael Brune said “thanks to the Obama administration’s leadership, we can proudly say that big coal’s destructive reach over our public lands is coming to an end”.
