By Brad Johnson, campaign manager of Forecast the Facts
The Obama administration’s Bureau of Land Management auctioned a major tract of Wyoming coal to Peabody Energy at a bargain-basement price of $1.10 per ton yesterday.
The North Porcupine coal tract in the Powder River Basin went to the single bidder, Peabody subsidiary BPU Western Resources, for $793,270,310.80 for 721 million tons, BLM representative Beverly Gorny stated in a telephone interview.
This sale, made under the provisions of the Mineral Leasing Act of 1920, represents a massive fossil-fuel subsidy based on the assumption that the use of coal benefits the American public. However, it is likely this coal is intended for the Asian market, where sub-bituminous coal fetches a much higher price. The non-competitive leasing program is under federal investigation.
Moreover, the costs of the carbon pollution from mining and burning this coal were not taken into consideration. The 721 million short tons of sub-bituminous coal in the lease sale will generate approximately 1.1 billion metric tons of carbon dioxide when burned. With a modest estimated social cost of carbon at $65 per ton of CO2, the global-warming impacts to society of this lease sale exceed $70 billion — 90 times the price paid for the lease. More than 27,000 people signed a Credo Action petition opposing the fire sale of Wyoming’s sub-prime carbon reserves.
The lease sale still has to be approved by the BLM post-sale panel, which recently rejected a low-ball bid for an adjoining tract.