(Casper Star Tribune, January 17) – Mine closures are unlikely as a result of the Obama administration’s decision to temporarily halt new coal leases on federal land. Companies are not expected to need access to new reserves within the three years the Interior Department estimates it will take to complete a study of the federal coal program. In fact, environmental analyses of new lease applications will actually proceed throughout the “pause,” though a final decision will be delayed until after the program-wide study is complete.
And yet the announcement marks a momentous occasion, both for President Obama’s ambition to curb climate change and for Wyoming, the country’s top coal producing state.
For the president, the announcement represents one of the last major pieces in his temperature tamping puzzle. Obama’s seven years in office have produced new fuel economy standards for cars and trucks, regulations to limit mercury and carbon emissions from power plants and a global climate deal aimed at limiting the Earth’s rise in temperatures to 1.5 degrees Celsius.
Yet few of his efforts to combat a warming planet have focused on the actual supply of fossil fuels. Roughly 40 percent of U.S. coal production occurs on federal land. Interior’s plan calls for the government to assess the impact of coal production from federal leases on climate, wildlife and water. It would also create an inventory of greenhouse gas emissions resulting from energy production on federal land.
“Talking about accounting for carbon is potentially transformational,” said Theo Spencer, senior policy advocate at the Natural Resources Defense Council. “The smart money will start to move more quickly away from polluting fossil fuels and toward cleaner sources of energy.”
The deteriorating market has afforded the country the opportunity to examine the program, said Shannon Anderson, a lawyer at the Powder River Basin Resource Council, the Sheridan-based landowners group. Coal companies have dropped plans for new leases in recent years with prices mired in a rut and the market woefully oversupplied. A new lease secured today wouldn’t likely be mined for decades, she said.
“Those were exactly the type of conditions that created the pause and the review by the Reagan administration to take a look at the program,” Anderson said, referring to the moratorium on new leasing under the 40th president.
Pointing to a series of reports that have identified deficiencies in the way the government evaluates the value of leases, she added, “you can’t do that if you’re leasing coal to mine 20 years in the future. You don’t know what demand is going to look like.”
But for Wyoming, the announcement represents a gut check. The state was already reeling from the bankruptcy of its second largest coal producer, Arch Coal, which employs 1,600 people at the Black Thunder Mine near Wright. Arch is the second Wyoming producer to file for bankruptcy in recent months after Alpha Natural Resources filed for Chapter 11 protection last year. Both have continued to operate as they restructure their debt in an attempt to emerge from bankruptcy.
Coal contributes roughly $1 billion in annual revenues to Wyoming and employs around 23,000 people both directly and indirectly. But the state is now suffering a revenue shortfall because of slumping energy prices. On Thursday, state budget analysts told lawmakers they expected Wyoming’s energy revenues to sag 35 percent to $625 million in the current fiscal year.
New investments are needed to help the industry curb it’s carbon emissions, the governor said, arguing such investments have lagged behind funding for renewables under Obama.
“There is no question, a lot of people are concerned about climate change. I certainly respect that. The issue of the climate changing is an objective thing. The climate’s changing or it’s not,” Mead said. “It’s the causes where people tend to disagree. But as I’ve said before, agree or disagree, it is now our duty to make advancements in coal.”
Underpinning discussion of Interior’s leasing plan are questions over whether an incoming president will continue the policy. Environmentalists and coal supporters agreed Interior’s three-year time frame for an environmental analysis of the federal coal program is extremely ambitious.
“A Democratic winning is most likely to continue the policies. A Republican winning, I don’t know if they will be discontinued, but hopefully someone will take a different look at the policies,” said U.S. Rep. Cynthia Lummis, a Wyoming Republican.
Still, industry supporters worried about the damage that could be done by the plan in the remaining year of Obama’s presidency. Companies will be less likely to invest in projects like a new coal terminal for Asian exports, Mead said.
Others noted the plan will force utilities and states to begin planning for increased carbon regulations.
“The planning process starts to become an implementation process,” said Bob Burnham, an industry consultant.
And the coal leasing plan is unlikely to be Obama’s last. Environmentalists and industry observers expect the U.S. Bureau of Land Management to release new rules governing flaring and venting for oil wells in the coming weeks. For better or worse, there is at least one more major greenhouse gas cutting proposal to go.