by Joe Smyth

Next week, the Bureau of Land Management (BLM) is scheduled to hold an “auction” for 721 million tons of taxpayer-owned coal in the Powder River Basin.

This is for the North Porcupine tract, and like the South Porcupine tract that BLM leased to Peabody last month — even though this coal is owned by you and me — the lease was drawn up by Peabody itself for its own profit. This is what’s known as a “lease by application,” and under BLM’s corrupt coal leasing program, Peabody will almost certainly be the only bidder and pay next to nothing.

WildEarth Guardians’ 2009 report “UnderMining the Climate” found that over the last 20 years, only 3 of 21 lease by applications had more than one bidder. Since Peabody knows it will face no competitive pressure, it can simply offer the lowest possible price, secure in the knowledge that if it doesn’t meet BLM’s absurdly low minimum price, it can just try again later. In fact, that’s just what happened with the South Porcupine tract; Peabody’s initial offer of just $0.90 per ton was rejected as too low by the BLM – so they simply held another auction a few weeks later and accepted Peabody’s offer of $1.11 per ton. In both “auctions” Peabody was the only bidder.

Now, the company is once again seeking cheap access to more of our coal, so it can strip mine it from public lands and export it to lucrative markets in Asia. (See: Will the Bureau of Land Management subsidize Peabody’s plans to export coal to Asia?)

Incredibly, BLM’s coal leasing program deliberately encourages this uncompetitive process. Allowing lease by applications was a key change made possible once the BLM moved to decertify the Powder River Basin as a coal producing region – even though it’s the source of almost half the coal mined in the US. BLM is supposed to manage this coal “in the best interests of the Nation,” and it has a process meant to determine the fair market value of a lease. But as Tom Sanzillo explains, the BLM’s methods dramatically undervalue the coal, so much so that it has amounted to a $28.9 billion subsidy over the last 30 years.

It’s clear that the BLM’s coal leasing program is deliberately designed to benefit a few coal mining companies like Peabody and Arch at the expense of U.S. taxpayers. This has become even more outrageous now that coal mining companies are seeking to dramatically expand exports of this taxpayer-owned coal. And that’s why Congressman Ed Markey has called for a Government Accountability Office examination of the BLM’s coal leasing practices.

Beyond the lost revenue, however, BLM’s undervaluing of this coal is helping fuel the devastating impacts to public health, the environment, and our climate system that inevitably accompany mining and burning this much coal. The BLM is facing a lawsuit from WildEarth Guardians and the Sierra Club because it ignores the impacts of the greenhouse gases that will result from leasing this coal.

And the amount of carbon pollution that will be emitted when this coal is burned is enormous.

Read more

Boston Globe reporter Donovan Slack reports today that Mitt Romney’s top energy advisor also works for a lobbying firm that counts coal giant Peabody Energy as a top client.

Former Sen. Jim Talent (R-MO) has emerged as a key player in Romney’s policy circle, and is featured in Romney’s jobs plan writing about the importance of the coal industry. As Slack reports, Talent simultaneously maintains a lucrative career at a firm that represents Peabody, one of the largest coal companies in the world:

What the former Missouri senator’s essay does not mention is that the Washington lobbying and communications firm he leads as co-chairman, Mercury Public Affairs, counts among its clients Peabody Energy, a St. Louis-based company that is one the largest coal producers in the world.

Peabody Energy has paid Talent’s firm an average of $125,000 every year for the past five years to help represent its interests in Washington. The energy company also retains other firms, spending an average of $2 million each year on lobbying, records show.

As ThinkProgress Green’s Brad Johnson noted back in May, Romney has sought energy advice from other polluter lobbyists. One of them, Jeffrey Holmstead, has worked as a registered lobbyist for Duke Energy, Southern Company, and other fossil fuel giants.

Romney’s current energy policy includes polluter friendly ideas like “amending the Clean Air Act to exclude regulation of carbon and opening the Alaska National Wildlife Refuge for oil production.”

“Why did Rick Boucher vote to kill Virginia jobs?” Newt Gingrich’s coal-powered front group, American Solutions for Winning the Future (ASWF), asked this incendiary question of the coal-district Democrat in a full-page advertisement in the Roanoke Times. The ad, acquired by the Wonk Room, claims Boucher voted “for new energy taxes on every Virginian” when he supported the Waxman-Markey American Clean Energy and Security Act (H.R. 2454) in the House energy committee last month. ASWF goes on to cite terrorizing statistics about “Boucher’s new energy tax”:

Boucher’s new energy tax would:

1. Kill 1,105,000 American jobs per year on average

2. Increase electricity rates 90%

3. Increase gas prices 74%

4. Increase an average family’s annual energy bill by $1,500

5. Send U.S. jobs to China and India

These figures are drawn from a repeatedly discredited study by the Heritage Foundation, who used an unrealistic economic model to examine the effects of a cap-and-trade system that does not resemble the comprehensive clean energy provisions of Waxman-Markey. In reality, independent experts from the Congressional Budget Office and the Environmental Protection Agency have found that the clean energy legislation will:

– Decrease electricity bills 7 percent

– Improve the budgets of the poorest 20 percent of Americans

– Cost between 22 to 48 cents a day for the average American household

– Cut global warming pollution and oil dependence

And these studies didn’t even take into account the economic benefit of averting catastrophic climate change. Furthermore, creating powerful standards for global warming pollution and clean energy create good American jobs, not kill them. Boucher’s vote was a down payment on a national investment in renewable energy and energy efficiency that would dramatically reduce U.S. global warming pollution would create 45,000 jobs in Virginia and create 1.7 million jobs every year.

ASWF’s attack exposes the conflict occuring within the American energy industry. From his perch in the energy committee, Boucher won significant concessions on behalf of the coal industry in the legislation. Some companies — like the coal-powered utilities Dominion Resources, American Electric Power, and Duke Energy — recognize that the United States must pass comprehensive climate legislation now, and have heralded Boucher as a champion of their interests. However, Peabody Energy, the world’s largest coal company, is bankrolling the dishonest attacks of Gingrich’s group and the National Mining Association.

“In Areas Fueled By Coal, Climate Bill Sends Chill” — so goes the title of a recent New York Times article by Felicity Barringer, in which she persuasively describes the “wounded economy” of Missouri. She explained the state’s reliance on “21 coal-fired power plants that emit more than 75 million tons of carbon dioxide annually and generate 80 percent of Missouri’s electricity,” based on “economic incentives built into the state’s laws, history and habits” that “encourage burning as much coal as possible.” But coal-state Democrats are fighting “legislation that would put a price on carbon-dioxide emissions”:

Missouri is hardly alone. Nebraska, Indiana and Iowa are also states where coal turns on most of the lights. That is why, even before Representatives Henry A. Waxman of California and Edward J. Markey of Massachusetts, both Democrats, proposed legislation that would put a price on carbon-dioxide emissions, Senate and House Democrats from coal-using states began to push back. They are concerned that the new costs would get passed on to consumers, to Ms. Daniels-Hanner, to farmers from rural Missouri and to employers like the energy-hungry Noranda aluminum plant in New Madrid in the southeast of the state, which has 1,000 workers. And they worry that in an already wounded economy, increased costs could turn one of the relatively few economic blessings into a blight.

Is that really what “coal-state Democrats like Senator Claire McCaskill” are concerned about? After all, the “low-cost electricity” in coal states hasn’t helped their citizens much. In fact, states with higher electricity rates also have higher wages. Limiting coal pollution will increase the health of their constituents and spur a clean-energy economic recovery.

The actual beneficiary of coal’s dominance in states like Missouri have not been the working people Felicity Barringer profiles, but rather the polluting corporations and their conservative allies. In particular, Missouri is home to “the world’s leading coal merchant,” Peabody Energy, and the 20th largest utility in the country, Ameren. Peabody and Ameren respectively pulled in $6.6 billion and $7.5 billion in annual revenues in 2008. Peabody CEO Gregory Boyce’s salary was $11.95 million in 2008 — Ameren CEO Gary Rainwater made $5 million. Strangely for a piece about the politics of regulating coal’s pollution, Barringer fails to note Peabody and Ameren’s outsized political influence: Read more

Last week the Rocky Mountain Roundtable hosted a day-long symposium on energy and climate change. One session included top officials from major global warming polluters — electric utility Xcel Energy, Arch Coal, Dow Chemical, natural gas corporation GHK, and top coal corporation Peabody Energy. The five men have, of course, become millionaires as their companies have spewed millions of tons of global warming pollution into the atmosphere. At the Roundtable, the pollution executives defended government subsidies for their respective industries, claimed solidarity with average Americans, and pooh-poohed any possibility of change from the status quo:

– Xcel Energy CEO Dick Kelly complained, “Consumers want access to renewable energy and information. People have expectations that the solutions are readily available. That’s not true.”

– Arch Coal CEO Steven Leer — whose company has spent decades litigating and lobbying against the Clean Air Act — admitted, “The Clean Air Act worked.” Leer, who owns $27 million in Arch stock options, continued, “Everybody’s seen pain at the pump.”

– Dow Chemical CEO Andrew Liveris — who made $10 million last year and has fired 7000 American workers — complained, “It’s been a tough couple of years,” and urged the audience, “We can’t as a government abdicate helping corporations.”

– GHK founder Robert A. Hefner III argued, “We can have totally green natural gas plants” in order “to replace coal.”

– Peabody Executive Vice President Fred Palmer — a $25,000 donor to Gingrich’s ASWF 527 corporation — claimed “Clean coal is not an oxymoron.” He then stated, “The United States is not the problem,” putting blame on China.

The Wonk Room interviewed Jessy Tolkan, leader of the Power Vote campaign and executive director of the Energy Action Coalition, for a response:

As one of the most powerful voting blocs in America, we are going to make it abundantly clear that we don’t want an abundance of dirty energy in this country. We want an abundance of clean energy, and we’re going to force our elected officials to listen to us and not the oil and coal and natural gas industry.

Watch it:

In the interview, Tolkan also called Newt Gingrich’s “Drill Here, Drill Now” campaign “a bunch of bullshit,” saying she’s still naive enough believe we should tell the truth. Tolkan recommends that everyone check out PowerVote.org and join the Energy Action Coalition on September 27th in the Green Jobs Now Day of Action.

See also the Wonk Room video interview with Van Jones of Green For All.

King Coal’s front groups — Americans for Balanced Energy Choices (ABEC) and the American Coalition for Clean Coal Electricity (ACCCE) — are continuing to spread misleading propaganda about its dirty and expensive fuel:

Coal is affordable and reliable. Electricity from coal costs about half as much as electricity from other energy sources. In fact, twenty-two of the nation’s 25 lowest-cost power plants use coal to generate electricity. And the price of coal has remained stable over the years, especially when compared to other energy sources. The cost of electricity from coal has risen only four percent since 1979, while costs for energy from oil have risen over 50 percent and the costs for energy from gas have increased more than 200 percent during the same time period.

Unfortunately, it is an dirty illusion that coal is our “cheapest power source” — even if the terrible costs of its pollution are ignored. A time bomb of a price explosion is ticking, with massive increases in the cost of coal-powered electricity to come, year after year after year. In the coal spot markets, high-quality Appalachian coal has nearly tripled in price in the past year:

Average Weekly Coal Commodity Spot Prices (Dollars per Short Ton) Business Week Ended August 8, 2008

These price increases in the spot market are driven by surging international demand, the collapse of the dollar, fuel surcharges in transporting coal, investor speculation, and climate-change-related “wild weather” that played havoc with Australian exports of coal. These seemingly disparate influences are are all tightly interlocked by our global dependence on fossil fuels.

Because coal contracts are purchased on a multi-year basis, changes in the market can take years to hit the consumer. But the first signs of this massive price shock are starting to appear. Coal-country utility American Electric Power, a backer of ACCCE, stated on Thursday that it “must raise electricity rates 45 percent for its nearly 1.5 million customers in Ohio over the next three years, to cover soaring coal prices and the cost of modernizing its systems to keep them reliable.” Joe Hamrock, AEP Ohio president and chief operating officer declared:

The fact is that coal has doubled in cost in the last year alone, dramatically affecting AEP Ohio’s costs.

The coal companies who also fund ACCCE — when they talk to investors, not consumers — are gleeful about how the high prices of coal will guarantee “significant earnings increases for many years to come.” As Gregory H. Boyce, the Chairman and Chief Executive Officer of Peabody Energy, the world’s largest coal company, explained when he announced record second-quarter profits last month:

The structural changes driving demand much higher than supply, across all coal markets, look to be very long-lived. We are just beginning to benefit from the repricing of legacy coal supply contracts at higher levels, which could drive significant earnings increases for many years to come.”

As it revels in record profit, King Coal is bankrolling a fossil-dependent future of energy poverty and pollution: Peabody Energy is also the top corporate funder of Newt Gingrich’s “Drill Here, Drill Now” 527 corporation, American Solutions for Winning the Future.

This is the second post in our series of investigative pieces looking into ASWF. See the first post here.

Peabody Energy, the world’s largest coal company, became one of the top funders for Newt Gingrich’s American Solutions for Winning the Future (ASWF) this June, with a contribution of a quarter of a million dollars. IRS documents reveal that Peabody’s donation of $250,000 on June 9 — days after fossil-industry senators blocked global warming legislation — came on top of an April contribution of $25,000 from Peabody’s top Washington lobbyist, Fredrick Palmer:

Peabody, World’s Largest Coal Company, #4 Backer Of American Solutions For Winning The Future. Newt Gingrich’s 527 organization, American Solutions for Winning the Future, has received $275,000 in contributions from Peabody Energy, Inc. As of July 1, 2008, the world’s largest private-sector coal company is ASWF’s fourth highest contributor. [IRS, $250,000 6/16/08, $25,000 4/30/08]

Last year, a front group backed by Peabody smeared Kansas Governor Kathleen Sibelius (D) as a supporter of Russian President Vladimir Putin, Venezuelan President Hugo Chavez, and Iranian President Mahmoud Ahmadinejad for denying an air permit to new coal plants because of their potential global warming pollution. When challenged, Peabody declared, “We are pleased to support the message.”

On July 23, Peabody reported record profits of $242.6 million and record sales of $1.53 billion for its second quarter, on surging coal prices. Its 59.8 million tons of coal sold are responsible for about one percent of the world’s total global warming emissions that quarter.

Peabody Energy’s vision for “America’s Energy Future,” with U.S. coal consumption doubling by 2025, is shared by ASWF, as its “Platform Of The American People” attests:

– To combat the rising cost of energy and reduce our dependence on foreign energy sources, we support the United States using more of its own domestic energy resources, including the oil and coal it already has here in the U.S.

– We believe the United States should increase its use of coal because it is a domestically available energy source, is less expensive than imported foreign oil, and new technologies have dramatically reduced emissions from burning coal, as well as making it much less harmful to the environment.

– We believe that if research indicates we could build clean coal plants in the United States with no carbon emissions, it would be important to build such plants as rapidly as possible.

– We believe in using United States domestic energy sources such as clean coal and oil, even if it means drilling off our coasts and in Alaska, as well as offering tax credits for American businesses that develop new energy sources.

The fossil-fuel-dependent future that Peabody Energy is promoting through Newt Gingrich’s “Drill Here, Drill Now” billionaire-backed front group is catastrophic, as it “ignores the nightmarish damages that would be caused to our air, water and climate.”

In the words of NASA climate scientist Jim Hansen, “Instead of moving heavily into renewable energies, fossil companies choose to spread doubt about global warming, as tobacco companies discredited the smoking-cancer link.” ASWF is just the latest of these fossil-fueled front groups. Hansen concluded:

CEOs of fossil energy companies know what they are doing and are aware of long-term consequences of continued business as usual. In my opinion, these CEOs should be tried for high crimes against humanity and nature. Conviction of ExxonMobil and Peabody Coal CEOs will be no consolation, if we pass on a runaway climate to our children.