Washington, D.C. – A new report released today by the Center for American Progress finds that the federal coal-leasing program in the nation’s richest coal region, the Powder River Basin in Wyoming and Montana, is costing more than $19 billion per year in losses and damages resulting from carbon pollution.
Using recently released data and guidelines from the U.S. government, CAP calculated that the social cost of the carbon pollution that results from mining and burning federal coal from the Powder River Basin is currently $62 per short ton—4.5 times more than what the coal sells for on the domestic market.
“Between bargain basement prices, a noncompetitive leasing process, and sky-high pollution costs, taxpayers are losing big at every level of the federal coal program,” said Matt Lee-Ashley, Senior Fellow and Director of the Public Lands Project at CAP. “With coal companies expanding their shipments of U.S. taxpayer-owned coal to China, now is the time to reform and modernize the BLM coal program.”
The report notes that the federal coal program, managed by the U.S. Department of the Interior’s Bureau of Land Management, or BLM, appears to be enabling coal companies to mine and sell U.S. taxpayer-owned coal at prices that are dramatically below the price of coal produced from other domestic coalfields. At $13 per short ton, the market price for coal from federal lands in the Powder River Basin is, for example, one-fifth the market price of coal produced in the Appalachian region.
“As the single largest source of U.S. fossil fuels and carbon pollution, federal coal mined in the Powder River Basin is costing taxpayers billions of dollars a year,” said Nidhi Thakar, Deputy Director of the Public Lands Project and a co-author of the report with CAP economist Michael Madowitz. “As the United States moves forward to cut carbon pollution and meet the president’s goals under the Climate Action Plan, policymakers can’t afford to leave the federal coal program behind.”
When considering the carbon-pollution costs and below-market pricing of Powder River Basin coal, the cost of mining this publicly owned coal is a social loss of at least $49 per ton. With 388 million tons of federal coal sold from the Powder River Basin in 2012, this adds up to a net loss per year of more than $19 billion dollars.
The Powder River Basin currently accounts for approximately 40 percent of U.S. coal production overall and almost 90 percent of coal production from federal lands. More than 200 power plants across 35 states currently burn coal from the Powder River Basin.
In the report, the authors note that their analysis calculates the social costs of burning Powder River Basin coal based solely on carbon pollution. Adding other social and health costs for burning this coal, as well as foregone revenue, would result in an even higher estimate of the true costs paid by taxpayers.