Julian Spector is a former editorial fellow at CityLab, where he covers climate change, energy, and clean tech.
But it won’t affect the U.S. coal supply—or force more renewable energy sources—any time soon.
President Barack Obama wasn’t joking about coal.
In his State of the Union address on Tuesday, Obama said he would “push to change the way we manage our oil and coal resources, so that they better reflect the costs they impose on taxpayers and our planet.” By the end of the week, that became reality, when the Department of the Interior announced Friday a freeze on new coal leasing on public lands. This is something environmentalists have been calling for as part of the movement to keep fossil fuels in the ground. But in justifying the move, Interior Secretary Sally Jewell framed it as primarily an economic strategy to get a better deal for taxpayers.
The DOI says coal mined on public lands accounts for 41 percent of the nation’s annual coal production and supplied 14 percent of U.S. electricity generation in 2015. Leases from the past decade brought in $10.3 billion. Cutting off this supply of the country’s dirtiest energy-generating fuel would be a major step in curtailing the country’s carbon emissions.
Or maybe not.
“We don’t believe it will have any impact whatsoever on coal production,” Jewell said in a press call on Friday. “As we have looked state by state, the average is a 20-year run rate, at current production, off of coal mines currently under lease.”
She added that the Energy Information Administration forecasts a drop in demand for coal, so the supplies that are already leased could last even longer. U.S. coal production has already been in decline since 2008, dropping another 10 percent in 2015. That decline is expected to continue when the Environmental Protection Agency’s Clean Power Plan goes into effect, requiring electricity producers to cut carbon emissions to 32 percent below 2005 levels by 2030.
In fact, the DOI is doing everything it can to stress that this moratorium is not primarily an environmental action. Instead, they say it’s a pause to allow for a comprehensive analysis of the current leasing procedures in order to ensure taxpayers are getting “a fair return” on the sale of public resources. The last such review was 30 years ago, under President Ronald Reagan. The review before that started in the Nixon presidency. Both of those reviews included a pause on new leases until the process was complete.
The department says they have reason to believe the public has been getting a bad deal due: overly generous leasing terms amount to a hidden subsidy to mining companies at the expensive of taxpayers. Anyone accusing them of radical environmental activism would have to level the same charge at Reagan.
Indeed, the leasing program is very much in need of a revamp. While the Bureau of Land Management researches a fair market value before selling the mineral rights, a stunning 90 percent of lease sales receive bids from only one company. A mining company will set up shop in one mine, and when they choose to expand, they initiate a bid for the neighboring land.
“If you never have competitive sales, you can never really establish fair market value,” says Dan Bucks, who dealt with coal leasing as director of Montana’s Department of Revenue from 2005-2013. “Over the years and decades, we’re talking about something that accumulates to billions of dollars” of lost revenue, he says.
There’s a clear public interest in demanding more competition for federally owned minerals. Then again, one of the stated goals of the review is to examine environmental and public health impacts of coal leasing. This could soothe the public with assurances that nothing will really change, only to see a full cessation of coal leases when the report comes out, or an increase in fees that makes mining less economical . Twenty years isn’t that long: If new leases stop for good, plant operators will have to start planning for other sources of fuel. Caught between the CPP and the federal coal sunset, the smart choice would be looking for cleaner fuels. And if companies are going to do it eventually, sooner may be better.
This decision sends a message to workers and investors, too, that coal mining in the U.S. probably isn’t where they want to stake their future. That writing has been on the wall for some years now—solar panel installation alone employs more people than mining coal does—but this caps it off with an exclamation point. The leasing freeze might not cut America’s contributions to climate change for years, but we may look back from the future and hear in this announcement the first notes of the coal industry’s swan song.