Enough Already: Meeting 2°C PRB Coal Demand Without Lifting the Federal Moratorium

Attributed Authors: Mark Fulton, Doug Koplow, Reid Capalino, Andrew Grant Published: Jul 2016
 

In January 2016 the US Secretary of the Interior announced a moratorium on new coal leasing on public lands pending completion of a comprehensive review. Nearly 90% of coal produced from public lands is from leases in the Powder River Basin (PRB) of Wyoming and Montana.

In this paper, produced by Carbon Tracker, Energy Transition Advisors and Earth Track, potential coal supply from the PRB is compared with a demand profile consistent with an International Energy Agency (IEA) scenario to restrict global warming to a two degrees Celsius (2°C) outcome, in line with the upper limit at the recent COP21 agreement in Paris. Demand for coal over the period is found to be far outweighed by supply from existing leases alone, meaning that no new federal acreage in the Powder River Basin is required to be leased by the Federal government through the end of our assessment period in 2040.

When potential supply is compared to the Energy Information Administration’s (EIA) Annual Energy Outlook (AEO) 2016 Reference Case for PRB coal production, which does not constrain warming to 2°C, total business as usual (BAU) supply is provided by existing leases until 2031, with production from new leases only being required thereafter. Given the time period until new leases are required, and that new leases are only required in a scenario incompatible with the United States’ commitment to taking actions consistent with limiting global warming to levels well below 2°C while pursuing efforts to keep warming to no more than 1.5°C, it makes sense to continue the moratorium for the foreseeable future.

Although demand and supply are not always matched on an annual basis, this can be covered by adjustments to production schedule, as shown by recent output swings within the PRB.

Key Findings

  • Reserves at existing mine leases are more than sufficient to meet 2°C demand through the IEA 450 scenario timeframe of 2040.
  • The Bureau of Land Management does not need to issue any new leases to meet demand in the review period.
  • Some production from existing mines will be surplus to requirements. Closure and reclamation of existing operations will need to be fully funded by the operators.
  • Comparison with the (non­‐2°C compliant) EIA AEO Reference case implies that new leases will enter meaningful production in 2031 under a BAU scenario.
  • We therefore recommend that, to be consistent with the Administration’s aspirations at COP 21, the current short-­‐term moratorium on new leases within the PRB be extended indefinitely.
  • A review of other studies shows that PRB specific policies will result in net savings to CO2 emissions despite some substitution with fossil fuels from other sources.
Tags: coal, Powder River Basin, WY, MT, public lands, leasing, royalty reform