Coal is part of the answer, not the problem

There are those who believe that wind and solar are the only way forward for energy in a carbon-constrained world. They want to stop coal production and use. That nearly 40-percent of America’s electricity comes from coal while after decades of development and tens of billions of dollars in subsidies, wind and solar contribute 4.5-percent of our electricity is an inconvenient truth for them. Their campaign against coal further ignores the truth that in seeking to address climate change, stopping coal use should not be a goal. Surely, what we should do is reduce carbon dioxide emissions.

As the International Panel on Climate Change (IPCC) acknowledges, coal will be a major part of the global energy mix for many decades to come. The dialogue needs to address how we provide the reliable, affordable energy the U.S., and world, needs while reducing carbon dioxide emissions. Coal can, and I believe must, be a major part of this future. As Chairman of Cloud Peak Energy, a major coal producer and the only NYSE-listed company headquartered in Wyoming, I feel it is important to respond to the misinformation from coal’s opponents.

1) “Climate science is settled” – As an engineer who received his degree 51 years ago, I understand better than most that science is never truly settled. The IPCC continues to study data related to the world’s climate to understand how carbon dioxide could impact us and provides regular updates to the world’s governments. They do not appear to be saying that climate science is settled! While that happens, the world will require more energy as people across the globe emerge from poverty. A measured approach that weighs the cost of changes in energy policy with the perceived benefits should be followed to balance these needs. To reduce carbon dioxide emissions in a meaningful way, the IPCC advocates that technology like Carbon Capture, Use, and Storage (CCUS) is critical. Unfortunately, this part of the IPCC reports is ignored by many of the same anti-fossil-fuel groups who do not like the zero emissions nuclear power the IPCC call for either.

2) “Government heavily subsidizes hydrocarbons” – Our company earned a profit of $78 million in 2014 by producing and delivering approximately 86 million tons of coal which, in turn, generated some 4 percent of our nation’s electricity. Contrast that return to the $354 million we paid last year in taxes and royalties to the federal government, Wyoming and Montana and an additional $69 million for coal leases. Taxpayers received over five times more from our business than did our shareholders. Wyoming, alone, earns more than $1 billion annually from coal.

3) “Federal coal leasing represents a giveaway” – Leasing is a very detailed, costly and lengthy process. Prior to leasing, the Bureau of Land Management (BLM) conducts an independent analysis of each proposed tract. This includes both an environmental and an economic assessment to determine its fair value for taxpayers. Companies do not know BLM’s valuation before or after bidding. When the bid or bids are received, BLM accepts the highest, but only if it is equal to or greater than their assessment of the fair value set for the coal. While we are being accused of underpaying for coal leases it is unfortunate that the Department of Interior has not released the total amount of overpayments for coal leases over the last 10 years.

4) “Federal and state reclamation rules are flawed” – Wyoming, Montana and the federal government have strict regulations on governing reclamation. Before mining begins, any land that will be disturbed must have a plan to fully restore it. To ensure this reclamation occurs, companies are required to hold bonds, like insurance, to cover any cost if they cannot meet their reclamation obligations. After meeting stringent criteria, Wyoming can allow companies to use the strength of their balance sheet to meet reclamation guarantees, a process known as self-bonding. Self-bonding is not a right but rather the result of a detailed, impartial financial analysis by the states and federal government.

It is clear to me that coal, and fossil-fuels, will be a key part of the answer if we are to significantly reduce carbon dioxide emissions. The sooner groups concerned about climate change acknowledge this, the sooner we can move to commercialize and deploy the CCUS technology that will let this happen.

At Cloud Peak Energy, we are proud that we demonstrate responsible energy production from pre-mine planning through reclamation. While debates about energy will continue, a fair and factual discourse is critical. We stand by our record and look forward to continuing to meet America’s energy needs.

Keith Bailey, a resident of Saratoga, is chairman of the board of Cloud Peak Energy.