“And there are real concerns about whether the program is providing a fair return to the owner of the land — the American people.”
In addition to incorporating those social costs, the authors make the case that more research is needed to better understand how policy changes might impact the potential shift to nonfederal coal and other energy resources if royalty rates are increased, a lack of competition in federal coal leasing auctions, and incentives inherent within the current leasing program.
About 40 percent of all coal mined in the U.S. is extracted from lands owned by the federal government under leases managed by the DOI. The burning of that coal accounts for about 13 percent of U.S. energy-related greenhouse gas emissions.
More than 80 percent of federal coal comes from the U.S. West. Coal extracted from the Powder River Basin, located in Wyoming and Montana, fetches about $0.51 per one million British thermal units (MMBtu) before transportation. By comparison, other major coal-producing basins in the U.S. range from $1.41 to $1.80 per MMBtu.
In addition, the current leasing program promotes very little competition: From 1990 to 2012 more than 90 percent of leases had a single bidder. Yet despite this and other shortcomings, the authors write, there has been little research on finding new solutions. In the case of the auction system, for instance, there could be more research into regional leasing models that would encourage greater competition.
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