A new moratorium on coal mining shakes up the energy sector
By Kathryn Ward
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[dropcap]L[/dropcap]ast week, Secretary of the Interior Sally Jewel announced an unprecedented moratorium on public land coal-mining permits. 40% of United States (US) coal production occurs on federal land, and the estimated three year halt will allow for a federal review of lease pricing in accordance with the both the current market and external costs, such as health, pollution, and climate change.
Federal property currently in coal production disproportionately lies in the western Rocky states. In particular, Wyoming, the US’s largest coal producer by almost three-fold, produces about 70% of its total on government land. Alongside rising public and legislative concern over coal’s contributions to climate change, the functional public subsidization of coal raises alarm.
The cost of the mining permits has not changed in over thirty years. Accounting for inflation alone would more than double the price. A royalty tag on coal sales brings in government revenue as well. But a recent study found that over the past two decades, fewer than half of companies paid the full royalty. In other words, the coal industry has been avoiding market fees to mine on public lands. It is, in practice, being subsidized by the American people. There has been little oversight for decades. To quote the Center for American Progress fellow David Haynes, the current leasing rules “were written when you could still smoke on airplanes and dump sewage in the ocean.”
Basic economic adjustments—such as the increase of inflation, current market prices, and coal-market share—would raise the price, but questions remain how far the Obama administration is willing and able to advance its environmental stance with an industry that has deep ties to the last century and half of American history.
President Obama’s presidency has been marked by an extraordinary executive push for a more sustainable future, as exemplified by the US’s role in the Paris climate talks. But the moratorium is one of the most direct attacks by the administration on dirty energy. Conservative leaders have consistently criticized proposals for clean energy subsidization, while praising coal’s accessible pricing and the volume of US coal reserves.
However, the Department of the Interior’s removal of favorable policies akin to subsidization for coal could controversially begin to level the playing field between renewable and fossil-energy prices. Furthermore, the inclusion of health and pollution costs of coal into the formal leasing price would address coal externalities. These costs are not taken account in the market price. Such externalities include increased hospitalization for asthma and the fact that farmland is lost to rising temperatures.
However, the eventual action of the federal review will meet strong resistance. The political will to further enrage an industry that lost one in five jobs during the Obama presidency is weak, even for liberal democratic supporters. On the Democratic side, both Bernie Sanders and Martin O’Malley have signed a pledge to refuse campaign funds from oil, gas, and coal interests. Frontrunner Hillary Clinton has not done so and has accepted millions of dollars from known fossil-fuel lobbyists. Republicans are vehemently against existing environmental measures, and have accused Democrats of destroying strong blue-collar economies in traditional coal states such as Kentucky and Pennsylvania.
The federal review to determine new leasing terms is expected to span three years, so the upcoming elections will determine the tone of its outcome. Barack Obama will not be incumbent when the push to advance the resolution occurs. And as the Democratic frontrunner and the entire Republican Party both have questionable fossil fuel backgrounds, the impact of the moratorium is unclear. Furthermore, lobbyists from the coal industry have pushed for assistance in expanding US coal exports to emerging economies such as China and India. The pull of economic development amidst a slow-growth period is also unlikely to be overlooked by officials.
The case for coal as our primary electricity base has been predicated since the inception of the US power industry on cheap and available resources. A reworking of coal’s place in that system could represent a fundamental shift in our energy future. But it requires political strength that will be difficult to find.
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Kathryn is a sophomore in Timothy Dwight College. You can contact her at kathryn.ward@yale.edu.