Ending federal coal would hurt Main Street America
Much has been written of late to bury America’s coal industry. The overriding presumption is that coal is no longer needed, soon to be replaced by breakthroughs in renewable power. And although coal still provides 35 percent of total U.S. power generation, President Obama is now pushing headlong with a fistful of policies to simply drive coal off our electric grid and out of business.
There’s a major conflict at work here, though. In attempting to “keep coal in the ground,” the president wouldn’t just be harming the coal and fossil fuel industries. He’d also be hurting the very people whom he has always publicly committed to helping: Main Street America.
This isn’t simply about the tens of thousands of coal workers whose livelihoods are at stake, or even the additional workers in related sectors, like freight, rail, and steel, whose jobs would be impacted. No, what’s really at issue here is whether America will continue to enjoy affordable, reliable power.
That issue will be discussed in Grand Junction on June 23, when the U.S. Department of the Interior holds a hearing on President Obama’s three-year moratorium on the leasing of coal from federal lands. This moratorium would have implications far beyond Western coal fields.
Here’s why. Federal coal anchors a stable, reliable mix of electricity sources nationwide. Coal mined on federal lands accounts for 42 percent of total U.S. coal production, the source of more electricity than any other fuel. Simply put, a halt to federal coal would pose very real consequences for affordable power generation in America. As IHS Energy has reported, America’s current base load power generation, which has long been secured by plentiful coal, saves ratepayers roughly $93 billion in annual electric bills.
Federal coal leases have also generated more than $12.6 billion in royalties, rents, and bonus payments over the past decade. So, not only would a moratorium eventually force families to pay more for electricity, but U.S. taxpayers would lose billions of dollars in revenues, and states with federal coal leases would lose much-needed income as well as high-wage jobs.
There are consequences for using higher-cost energy, and the biggest losers are always the low-income households that pay a greater share of their income for basic utilities. But costlier power also means higher prices throughout the economy — for retail goods, which hurts consumers, and for America’s domestic manufacturers, whose one advantage in recent years against subsidized overseas competition has been low-cost power.
Despite these impacts, the president came to office vowing to address climate change by making fossil fuels more expensive and by forcing much of America’s fleet of coal plants into retirement. But making coal costlier will make electricity costlier, with little impact on global climate—a stubborn fact EPA does not deny. Even if the United States commits to costly reductions in CO2, emerging nations like China and India are on course to vastly expand the world’s coal fleet, rendering any leasing moratorium—like other Obama policies—a costly and largely symbolic gesture.
Consistent with its plan to make coal more expensive for consumers, the Obama administration has floated the idea of increasing the royalty rate for leased coal. Anti-coal activists claim the current rates are too low, but the 12.5 percent royalty rate on federal coal, plus bonus bids and other fees, provide taxpayers with 39 cents of every dollar in federal coal sales. The royalty alone runs approximately 40 percent higher than rates paid for coal on private land in the Midwest and Appalachia.
Overall, the moratorium is about affordable power, an issue whose importance will only grow as power costs increase. The federal government must recognize that keeping coal in the ground keeps affordable electricity from consumers, revenue from taxpayers, and good jobs from American workers.
We cannot bolster the middle class by raising the cost of energy. Nor can we create high-wage jobs and restore U.S. manufacturing while destroying the very industries that support them.
Luke Popovich is Vice President for External Communications at the National Mining Association.