U.S. pledges to ease pain of closing coal mines in shift to cleaner energy

By Coral Davenport, New York Times News Service

Saturday, Jan. 16, 2016 | 1:06 a.m.

For the past five years, President Barack Obama has denied the Republican charge that he is waging a war on coal. On Friday, with the Obama administration’s announcement that the Interior Department will halt new coal leases on public lands, Obama acknowledged that his climate change polices are hurting U.S. miners and began offering ways to ease that economic harm.

As Obama has sought a legacy in tackling climate change, his top target has been the burning of coal for electricity — the nation’s largest source of planet-warming emissions. New rules could freeze construction of new coal plants, shutter existing plants, limit U.S. investment in foreign plants — and with Friday’s move, keep coal in the ground.

Interior Secretary Sally Jewell announced that her agency would begin a three-year review intended to overhaul the federal government’s program for leasing coal on public land, with an eye to raising the costs paid by coal companies to mine on public land, and ultimately to slow down production. The agency also announced a moratorium on new federal coal leases while those reviews and changes take place.

The latest move comes as the coal industry contends with plunging natural gas prices that have offered electric utilities a cheap coal alternative. Over the past six months, at least half a dozen major coal companies have declared bankruptcy. Employment in the coal mining industry is at a 20-year low.

The moratorium could have a profound impact on the coal industry since about 40 percent of the nation’s coal is mined on public lands. Under the new plan, companies can continue to mine on existing leases, which contain about a 20-year supply of coal, according to the Interior Department. But the move sends a clear signal to markets that the future of U.S. coal may be limited.

In his State of the Union address Tuesday, Obama explicitly conceded that his push to transition the U.S. economy away from coal-fired electricity and toward cleaner sources such as wind and solar could help the planet — but leave coal mining communities behind. He said that the government had a role to play in helping them find work in new fields.

“Now we’ve got to accelerate the transition away from old, dirtier energy sources,” he said. “Rather than subsidize the past, we should invest in the future, especially in communities that rely on fossil fuels. We do them no favor when we don’t show them where the trends are going.”

The goal of the administration’s coal plan is to extract more money from coal companies for mining on federal land and invest that revenue back into coal communities to help them train and prepare for new jobs.

But in many coal-heavy but relatively remote areas, such as West Virginia, eastern Kentucky, Wyoming and Montana’s Powder River Basin, job options are limited. And the federal government’s efforts to help communities transition from a dying industry to more vibrant ones have met limited success, as steel towns in the Midwest and tobacco towns in the south attest.

“Look at Youngstown, Ohio,” said Phil Smith, a spokesman for the United Mine Workers of America. “Our great concern is if government policy is going to move us away from coal the way government policy moved those communities away from steel, we don’t want to end up the same way.”

Lawmakers from coal regions savaged Obama’s proposal.

“When rural America says President Obama has contempt for their lives and livelihoods, they mean decisions like today’s announcement,” said Sen. John Barrasso, R-Wyo., who has been a leading critic of the Obama administration’s climate change policies. “A moratorium on federal coal leasing effectively hands a pink slip to the thousands of people in Wyoming and across the West.”

Administration officials did not exactly disagree.

“We recognize many coal communities are in transition and struggling,” Shaun Donovan, director of the White House Office of Management and Budget, said Friday in a conference call with reporters.

The spending bill that Congress passed last month included $10 million to support new economic development programs in Appalachia, and Donovan said Obama’s budget request for fiscal 2017 would include $1 billion over five years for programs to reclaim and redevelop retired coal mines for different economic activities.

“The work we accomplished in December is a down payment on the assistance of coal communities,” Donovan said.

That is not a large group. There are only 64,000 direct jobs in the coal mining industry, according to the Bureau of Labor Statistics.

Administration officials appear determined to squeeze more money from coal companies mining on public land. In 2014, leases, royalties and other fees from mining coal on public land generated about $1.2 billion to the federal government.

But coal-mining royalty rates are a comparative bargain: 8 percent to 12.5 percent on coal, compared with 18.75 percent paid to the federal government for offshore oil and gas production.

A 2015 analysis by the firm Headwaters Economics concluded that changes to the federal coal mining program could increase annual revenues by $139 million to $512 million.

But coal miners say even if those totals materialized and went straight to the communities, they would not come close to meeting the needs of the thousands of coal miners who could face unemployment in the coming decades.

“The magnitude of the problem is tremendous,” Smith said. “The proposals that are on the table are a drop in the bucket.”