As Electricity Demands Soars, BLM Says No New Federal Coal Leasing

On May 16, the Biden administration announced it would not be issuing any new coal leases in the Powder River Basin, the beating heart of federal coal production. It was a decision that doubles down on the administration’s effort to leave the nation woefully unprepared for surging power demand.

Riding on the coattails of the Environmental Protection Agency’s recent blitz of power plant rules targeting the coal fleet, the U.S. Bureau of Land Management’s decision is the latest shoe to drop in the Biden administration’s alternate energy reality.

The administration is determined – wherever possible – to eliminate the sources of power and fuel supplies that are the foundation of the nation’s energy security and grid reliability well before replacement capacity – much less the capacity needed to meet soaring new demand – is constructed and connected to the grid.

“At a time of deteriorating grid reliability, soaring electricity demand and ongoing concern about global energy shocks, proposing a plan of no new coal leasing in the Powder River Basin is outrageous,” said Rich Nolan, president and CEO of the National Mining Association (NMA). “This damages American energy security and affordability and is a severe economic blow to mining states and communities. The NMA strongly opposes this political move,” he added.

While the nation’s reliability regulators, grid operators and utilities warn of power shortages and unprecedented new power demand, and as the buildout of renewable capacity and enabling infrastructure hits one roadblock after another, the Biden administration is pulling the rug out from under the nation’s energy supply.

Shackling U.S. Economic Competitiveness

The administration pointed to existing federal coal leases providing supply through 2040 as justification for its decision to not provide new leases. But not only is that date misleading – investment decisions for new mines and leases need to be made years in advance – it also conveys some startling insight into the Biden administration’s thinking: The administration is pretending to understand energy and power markets better than the nation’s energy producers and utilities.

Recall that just two short years ago, as the world descended into a global energy crisis as Europe raced to pivot away from Russian energy, American coal producers were asked to surge production. They ramped up exports to energy-starved allies and provided fuel to the U.S. coal fleet that was a critical hedge to renewed natural gas price volatility and explosive energy-driven inflation. Federal coal was indispensable then and remains so today.

We’re now standing on the precipice of another extraordinary moment for energy markets and energy demand. Electrification of transportation and heating, resurgent heavy manufacturing and explosive growth of AI-driven data centers is rapidly transforming the trajectory of power demand. After 15 years of flat demand, we’re now faced with extraordinary growth.

The rapid loss of essential dispatchable generating capacity– namely to policy pressure – threatens power shortages that will result in acute crises, such as devastating brownouts or blackouts. But the energy rationing to come will also mean power demand destruction. Said another way, we’re about to place enormous electricity supply constraints on our economy that will result in deferred or lost investment in communities, key industries and the economy at-large.

By getting our energy policy so wrong, the Biden administration threatens to turn energy – particularly our supply of power, which has historically been an extraordinary economic advantage – into an economic and strategic weakness.

As Senator John Barrasso of Wyoming observed in a recent hearing on the nation’s electricity grid and power supply, the race to capture the future of AI and tomorrow’s economy has already begun. “Whoever secures affordable and reliable electric power – China or America – will have a big head start in the race for artificial intelligence. And right now, America is not positioned well,” he said. As China doubles down on its coal fleet and coal production, while also adding renewable energy at a breakneck pace, the U.S. is tearing down our fleet and tying the hands of coal producers as we struggle to site and build new energy projects.

The impact of ending federal coal leasing in the Power River Basin will be devastating for mining communities and mining state budgets. The federal coal leasing program has delivered more than $9 billion in federal, state and local revenues over the last decade. For example, in 2020, the financial contribution from federal coal to Wyoming state and local governments in the form of taxes, royalties and fees was over $550 million. The impact of the BLM’s decision on those communities is stark. But don’t overlook the impact of this decision as a critical piece of the Biden administration’s energy and regulatory agenda that directly threatens the affordability and reliability of the nation’s power supply. The economic and energy security ramifications stretch far beyond the Power River Basin.