Op-ed: Federal Coal Leasing Doesn’t Need Major Reform
Many in Utah may not realize it, but coal provides roughly 75 percent of the electricity in our state. It’s no coincidence that states like Utah with high levels of coal-generated power enjoy the lowest electricity costs in the country.
That low cost of electricity is good for Utah families and businesses. Energy costs are rising, in part due to short-sighted regulations that make coal-fired electricity generation costly if not impossible. Families are paying a higher and higher percentage of their monthly income towards energy, forcing them to forego other expenses and in some cases making it difficult just to pay rent.
And we need to keep in mind that one of Utah’s advantages to attracting businesses, manufacturing jobs, and even high-tech jobs, is our low cost of electricity. Simply put, affordable power lowers business costs and makes Utah more competitive.
It should be all the more troubling to residents of Utah that affordable power faces yet another obstacle from the federal government. The Department of the Interior recently announced a three-year moratorium on the leasing of coal reserves located on federal lands. Much of the coal mined in Utah is produced from federal lands.
Nationwide, coal mined from federal reserves accounts for 42 percent of total U.S. production; this moratorium could eliminate a major portion of domestic coal supplies, creating less fuel diversity with serious consequences for power generation, both in terms of affordability and reliability. One has to ask, why?
One of the Obama administration’s chief rationales for the moratorium is to slow the impact of coal combustion on climate change. But the contribution from the federal coal lease program on global emissions, let alone on global temperatures, is so insignificant it is almost unmeasurable.
Outside the considerable revenue it generates, the greatest value of federal coal may be its central role in anchoring a stable, reliable mix of electricity sources. A study by IHS Energy found that the current base load generation mix anchored by coal saves ratepayers roughly $93 billion in annual electric bills while also reducing utility bill volatility by 30 percent.
Ignoring this reality, the Obama administration also has floated the idea of increasing the royalty rate for leased coal. This move would hurt coal producers who are already operating on a tight margin. Higher royalties will only dampen production, keeping affordable energy off the market and revenue away from taxpayers. So much for taxpayers getting a “fair return.”
Apparently the president is trying to show “climate leadership” following the Paris climate summit. However, given the realities of the world’s energy demands, real climate leadership would be a commitment to advancing development of carbon abatement technologies for all fossil fuels.
The mineral lease process already is too lengthy, and creating further delays under the guise of taking another look at the federal coal program just shows that the Obama administration is more concerned with satisfying their political benefactors than doing what’s best for the American people.
We have a moral and ethical responsibility to produce the products needed to power and drive our society. Ensuring that sufficient domestic coal is produced, transported and converted into the energy products demanded by a growing and increasingly energy dependent economy is a national imperative.
The current coal leasing program doesn’t need major reforms, let alone a work stoppage. The program fairly values a vital public resource and creates substantial revenue for Utah’s taxpayers. A move to replace it with costly new fees serves no legitimate public purpose — environmental or financial.
Mark Compton is the president of the Utah Mining Association.
See the article here.
- On May 17, 2016