Monday, January 28, 2013

Hidden Subsidy and Greenpeace "Point of no Return"

Greenpeace is out with a new report about climate change. The report "Point of no Return" is focused on preventing the largest planned carbon producing projects from going forward.
The report has a nice 3 page executive summary and lots of pretty graphs (and scary photos).
And a huge amount of information...I've only skimmed it, but one particularly noteworthy "nugget" that I found buried in the appendix (pg. 44) is a wonderful example of a "hidden subsidy" that the coal industry gets year in and year out...

While Arch, Ambre, and Peabody hope to reap sizable
profits in overseas markets, the US public would unfairly
shoulder much of the financial burden. The economics of
these export proposals rest, in part, on a massive public
subsidy delivered through the US Department of Interior’s
coal-leasing program that charges the companies a
pittance for a valuable resource. Coal companies are given
cheap access to taxpayer-owned coal, and allowed to
strip mine it from public lands, through auctions run by
the Bureau of Land Management (BLM). The BLM allows
companies to propose and set the terms of the lease to
maximise their profits. As a result, only three federal coal
auctions in the past 20 years have had more than one
bidder. Knowing there won’t be competition, companies
are free to enter the lowest possible bid for this coal. In
2012, the BLM gave Peabody access to 721 million tons
of taxpayer-owned coal for $1.10 a ton.
The Institute for Energy Economics and Financial Analysis
(IEEFA) estimates that the federal BLM’s undervaluing
of Powder River Basin coal has amounted to a public
subsidy of $28.9bn to the coal industry since 1980,
on the backs of US taxpayers.

I decided to highlight this "hidden subsidy" with a post, because I bet 99% of the public has no idea this is going on.  Also, it drives me nuts when I see all those ads about how important "clean" affordable coal power in the US is...yeah when nearly all the costs are socialized (yet the profits are privitized...) it is easy to appear affordable.  Furthermore it is one thing for taxpayers to subsidize the extraction of coal if the coal is used to generate "cheap" power in the US, quite another thing if the coal is used to generate "cheap" power in China....which is increasingly where our coal is going.


At 7:37 AM, Anonymous Anonymous said...


Do you have solar or wind devices at home ?

We need to stop subsidizing coal mining on federal lands and propping up tobacco crops.

At 7:11 PM, Anonymous online travel insurance said...

Good point of blog. Its very eyeopener and informative.

At 5:50 PM, Anonymous Jim Horn said...

Good reporting Dan. I hope you have lots of readers. All the best, Jim


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