By Brittany Patterson

Federal coffers and greenhouse gas emissions reduction efforts would benefit if royalty rates for coal mined on public lands were raised, according to a new White House report.

The White House Council of Economic Advisers (CEA), an executive branch agency that advises the president on economic policy, found as much as 32 million metric tons annually of carbon emissions could be saved under a change in the way payments are collected on federal coal…

…In earlier comments submitted to the Interior’s Office of Natural Resources Revenue, Cloud Peak argued that changing the way royalties are paid on coal to account for all costs — transportation, production, refining costs — is unnecessary, and the current valuation of coal leads to a proper price in the marketplace.

Still, regardless of whether coal is valued correctly in the market, Michael Greenstone, director of the Energy Policy Institute at the University of Chicago, said Interior has an obligation to consider other costs to burning coal, including to the environment.

Accounting for externalities — an economic term for indirect effects on the parties producing or consuming a good — related to the environmental costs of coal is another important consideration, the report notes, although outside its purview.

In terms of coal, the climate change effects from carbon emissions generated when the coal is burned is perhaps the best-known negative externality. Assessing royalties payments based on the price of regional coal, for example, would reduce carbon emissions 12 million metric tons annually, the report found.

On the other hand, Greenstone said it should be recognized that coal has been a relatively inexpensive source of energy that has powered the United States for decades…

Continue reading at ClimateWire…

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