Environmentalists Propose $50 Billion Buyout of Coal Industry - To Shut It Down

cartechboy writes "What's $50 billion among friends, right? At least Felix Kramer and Gil Friend are thinking big, so there is that. The pair have published an somewhat audacious proposal to spend $50 billion dollars to buy up and then shut down every single private and public coal company operating in the United States. The scientific benefits: eliminating acid rain, airborne emissions, etc). The shutdown proposal includes the costs of retraining for the approximately 87,000 coal-industry workers who would lose their jobs over the proposed 10-year phaseout of coal. Since Kramer and Friend don't have $50 billion, they suggest the concept could be funded as a public service and if governments can't do it maybe some rich guys can — and the names Gates, Buffett and Bloomberg come up. Any takers?"

Comments

This is more than a little bit naive.

[stonecypher]

For one, more plants would just spring up. Even if part of the buyout was "you may never go into coal again," someone else may. The economic structure of energy is why coal is still king, and buying out the current players won't change that.

For two, the cost of shutting that industry down does not cover the cost of starting new energy industries to replace it. Or were we just going to go without 37% of our electricity?

For three, coal works efficiently and predictably at far smaller scale than most energy technologies. Many of the locations coal services today cannot be practically services by other generation methods.

Re:This is more than a little bit naive.

[Bengie]

If you buy up all of the coal mines while you're at it, you'll not only drive up the price since it's all have to be imported, but the time taken to rebuild all of those plants would take quite a few years, during which time other competition would have moved in, making it much less lucrative to start a new coal power plant.

Re:This is more than a little bit naive.

[NatasRevol]

Well if the $50B includes buying up the lands/rights where coal is, no one else could go into coal.

But I think $50B towards wind/solar would help replace coal more than trying to block it out.

Re:This is more than a little bit naive.

[PlusFiveTroll]

There are many things that won't move on. Metallurgical coal for example. You'll drive up the price of other goods associated with the products made with it. That is ignoring that the power companies own many of the coal mines. You not only have to pay for the coal mine, but the loss of power generation directly.

TL;DR: Article is ignorant of how the coal industry works.

Re:This is more than a little bit naive.

[ganjadude]

These people are just like PETA, they want everything to be the land of unicorns but they dont think about what doing the change will do to the rest of the world.

they dont think about the unintended consequences Sure lets just close down the major energy supply for most of the world, without a plan in the short term to replace it. We can all go 10-20 years without reliable electric right??

Re:This is more than a little bit naive.

[OakDragon]

For two, the cost of shutting that industry down does not cover the cost of starting new energy industries to replace it. Or were we just going to go without 37% of our electricity?

I picture vast fields of hipsters pedaling bolted-down fixies with generators attached.

Re:This is more than a little bit naive.

[Anonymous Coward]

The article is ignorant of how basic economics work.

Re:This is more than a little bit naive.

[HornWumpus]

So long as you are honest about what is a subsidy. Business expenses being deductible is not a subsidy. Taxes on gas that are used to pave roads are not a subsidy on gas.

Those are both examples of non-subsidies that have been called subsidies.

Re:This is more than a little bit naive.

[dj245]

For three, coal works efficiently and predictably at far smaller scale than most energy technologies. Many of the locations coal services today cannot be practically services by other generation methods.

I think you have that backwards. Coal plants under around 250MW are generally not profitable, and a vast majority of this size have been shut down already. The bar is moving towards 500MW as being economically viable. I can count the number of new coal stations in the US build in the past 5 years on one hand. Compare that to the 1970's when a new coal plant was being built every month. The environmentalists need to learn to quit when they achieve "good enough". Coal today is just as clean as other forms of energy when you factor in all the externalities. Those externalities come in different forms however and it is easy to count 1 form of environmental damage when comparing power plants while ignoring others.

Re:This is more than a little bit naive.

[bws111]

What makes you (or anyone else) think this is even remotely possible? Suppose you manage to buy 10% of the coal mines, and shut them down. What do you suppose will happen to the price of the remaining mines?

These 'ideas' (along with other laughably stupid ideas like Google 'buying' the entertainment industry) always seem to miss one important fact: nobody is required to sell at all, much less sell for some pre-determined price.

Re:This is more than a little bit naive.

[Alsee]

The WOC folks are attempting to use force

If someone offers you a pile of money for your home, and you decide to sell it, it's wild ideological nonsense to say they're taking your home by force.

-

Re:This is more than a little bit naive.

[interkin3tic]

Oh dear god. People are really framing poor old coal as a persecuted entity we've declared war on, and people are actually swallowing it? And a google search reveals you're not joking.

I believe that people are pushing clean energy in an attempt to get rich, since that's what every industry does including coal. But I can't be more open-minded than that when you resort to such bald orwellian tactics.

Re:This is more than a little bit naive.

[Anonymous Coward]

TL;DR: Article is ignorant of how the coal industry works.

These wankers are ignorant on how the whole economy works. The prices they quote are at market equilibrium, but guess what's gonna happen when there are billions of demand in the market ?

Re:This is more than a little bit naive.

[JDS13]

Absolutely right. It's so-called "green" energy that gets real taxpayer subsidies, with capital contributions, taxpayer-funded rebates, loan guarantees, accelerated depreciation, purchase mandates, and (to name just one egregious example) the insane Zero Emission Vehicle credit system that creates a situation where electric cars actually increase net CO2 emissions (not that that matters).

And how will we heat our homes on a cold, dark, windless winter night? And get hot water?

The idea that $50 billion in capital would be squandered in this way boggles the mind. The people who came up with this press release probably have never run more than the $50 in their checking accounts.

Re:This is more than a little bit naive.

[rnturn]

``Article is ignorant of how the coal industry works.''

I suspect the authors are totally aware of how the coal industry works. That's what they're trying to fix. Like you, I didn't take the time to read the whole article (maybe later) but I was appalled when I had to fly over West Virgina years ago and saw the damage to the forests (take the trip in a small plane so you can see the effects close up) that acid rain and the beginnings of mountaintop removal was causing. It makes you sick to see it and it's only gotten worse. I have to wonder if the metallurgical need for coal couldn't be satisfied by some of the extraction methods that are less destructive to the environment. Mining will always be messy but is something like mountaintop removal really necessary? If we think it's okay to take a huge area and render it uninhabitable by human beings -- like what's happening to parts of Appalachia -- then I guess we'll all get what we deserve. All in the name of cheap power. (And I don't know about you but my electric power rates go up -- never down -- every year regardless of the amount of coal that we're clawing out of the ground.) Then do we use the $50B to relocate all the people in Appalachia to other parts of the country where they won't be poisoned? That won't work either.

Personally, I'd like to see coal powered plants disappear as fast as humanly possible. Unfortunately, until we can create a critical mass of renewable power that can be intelligently shuffled around to meet local demands, we're kind of stuck with it. Unless we can work up the political will to take the first (and second) steps. The coal industry would like that to never happen.

Re:This is more than a little bit naive.

[AlphaWolf_HK]

Or to be more precisely, how alternative goods/resources work.

If you take away 37% of the supply of electricity, it will need to be replaced. This means that alternatives to coal will go up in price, and your electricity costs will go up with them. These hipsters might talk all day about saving the rainforest, but in reality they'll never go a day without their ipads and a working espresso machine.

That would actually be a great opportunity for nuclear, however I have a feeling that these guys would hate nuclear even more than coal (I know it's stereotyping, but their type usually does and you'd be hard pressed to argue otherwise.)

Kind of a side rant, but I'm not sure what the ultimate purpose of preventing man-made global warming is supposed to be. The best argument I've heard is to prevent the loss of landmass to rising sea water, but that's already going to happen anyways (less than 100k years ago Los Angeles was under water, and no matter what we do it will one day again be under water.) Higher global temperatures have historically resulted in more arable land rather than simple increased droughts. If you want more physical landmass, then you'll need to drop the climate to ice age levels where biodiversity actually tends to suffer. During the age of dinosaurs, the carbon dioxidie PPM was 18 times higher than it is now, biodiversity was at one of its peaks, the overall climate was 8C warmer, and plantlife was more abundant than ever. In other words, history has shown that a warmer planet is literally a more green one.

So what kind of disaster is anti-climate change supposed to avert again?

Re:This is more than a little bit naive.

[JDS13]

> when it comes to talk about cutting these subsidies, the "big oil" boyz are all against it.

I don't know what "subsidies" you're referring to. I've never seen this in any formal statement from a major oil company. Exxon remains one of the world's biggest taxpayers, with an effective tax rate of 46% of gross margin. In 2013, they paid $30.6 billion in sales-based taxes, $33.2 billion in other taxes, and $24.3 billion in income taxes. (That is, those taxes were included in the price of Exxon's products.)

But the fact is that no business really pays taxes. They're passed along to customers in higher prices, to shareholders in reduced returns, to employees in lower wages. The net effect is a reduction in wealth for all three constituencies.

Re:This is more than a little bit naive.

[gurps_npc]

While it is true that theoretically scientifically, we have clean coal technologies available, Coal is still the dirtiest and worst of the power technologies.

This is because of two reasons. 1) Truly clean coal technologies are expensive - more expensive than solar powered or wind power. So practically nobody uses it. and

2) Coal companies - more than any other power industry - have found ways to avoid complying with regulations. Specifically, they campaigned hard to allow existing plants to go unregulated until after they 'modernized' in the normal course of time. Then they refused to modernize - for the past 60 years.

Tuna fish is one of the healthiest cheap foods you can eat - or rather would be EXCEPT for the mercury in it which comes from coal. Coal burning plants are more radioactive than nuclear power plants because small bits of thorium are in coal and when you burn it, it gets wafted up into the air and settles around the coal plant. Not to mention the acid rain and the green house gas issues.

Re:This is more than a little bit naive.

[JoeMerchant]

The article is a summary of a larger proposal. Even in the article, they state that power generation will be transitioned to other fuels / sources, workers retrained, etc.

Even if the larger proposal is less than perfect, it is examining relative costs and benefits of keeping vs. shutting down the coal industry. From their perspective, every dollar spent in closing down the coal industry will be paid back 2-3x in reduced costs like pollution, healthcare, etc. even after accounting for the increased cost of electricity and other items.

TL;DR: coal costs us more to keep than to get rid of.

Remember lead in paint and gasoline? Accurately accounting for the social/economic benefits of the lead phase out is impossible, but overall it is becoming quite clear that the lead phase-out was a win. Same for asbestos, CFCs and PCBs. For me, the jury is still out over removing arsenic from treated wood, but I think I can agree with their forecasting on coal. As for smaller scale uses of coal, those could continue, and yes, prices might rise in the short term, but actually, those industries would benefit in the longer term due to the reduced demand for coal for power, and therefore longer lifetime of the non-renewable resource.

Re:This is more than a little bit naive.

[Charliemopps]

The coal mines don't own the coal. The states do. The mines buy permits to mine it. As soon as one mine is gone, that permit is open for whomever wants to show up and take over.

What are all the families that heat their homes with coal going to do? Are you going to buy them all new furnaces and pipe natural gas up the mountain to them? Oh, but natural gas isn't green is it? So you're going to install solar panels on their land? where does it end?

Lastly, do you think Virginia is going to allow this at all? Shuttering their biggest industry? Not a chance in hell.

Errr, no.

[blackicye]

This would never fly. The last 10% of the coal mines would just be laughing their way to the bank with this unexpected windfall.

Re:Errr, no.

[Anonymous Coward]

Right - because no one could possibly think of going back to get that coal once the companies were shut down. And of course we burn coal "just because" - its not like we *did* anything with coal that was useful. I'm sure that all the rest of our industry/economy that benefited from the coal use would just ...um .... uh ...

Oh, right. We could collapse without something to replace coal - which we currently do not have - I don't think their $50 billion covers that little problem...

Wanting to solve environmental problems is great and I encourage people to do so. However, any "solution" which refuses to acknowledge and address the reasons why the practice/industry/whatever was started is not a "solution" at all because it will never work.

opposite of brilliant

[brainspank]

imagine their sad faces when they realize that's what charges their electric cars.

Re:opposite of brilliant

[i kan reed]

You understand the point of electric cars is to enable the changeover from fossil fuels at a systemic level, right? The car doesn't care where the energy is coming from, allowing a regulatory framework to change as pragmatic options become available.

(My area's electricity is about 50% nuclear, 15% renewable)

Replaced by what?

[lgw]

This plan doesn't fund replacing the power from those plants with anything, just some hand waving about "renewable energy" being expanded in parallel. Cheap energy matters. The cost of everything we buy, everything we use, comes down to labor and energy costs. If you make energy more expensive everyone pays, and pays in a "regressive" way like a sales tax.

It might still makes sense, maybe, but it will take more than hand waving.

That's nice, however:

[kheldan]

The U.S. is just one country. Many other countries (China, for instance) are still using coal, and I think will more or less say the same thing: That's nice. We'll keep using coal. Want to be real heroes of the environment? Raise enough money to buy out the coal industry all over the world.

Re:This is what Thatcher was good at

[DNS-and-BIND]

Are you still dancing on that woman's grave? Jeez, conservatives didn't celebrate this much when Joseph Freaking Stalin died.

Didn't Hate Week sate your hatred? You know, the week after she died when you had hate parades to show just how much you hated her. No, seriously, this really happened. Hate parades.

Better uses for $50 billion

[MobyDisk]

You have $50 billion to spend on green energy. Make your choice:
1) Give the $50 billion to coal executives and shareholders who will then use that money to create new coal companies and open new mines, since you have done nothing to eliminate with the demand.
2) Build $50 billion worth of green energy to put the coal companies out of business for good.

The entire article is illogical. You can't just eliminate the laws of supply and demand.

Re:Better uses for $50 billion

[Rob Y.]

I would assume that this idea falls under the category of 'thought experiment'. The point being to highlight that the coal industry accounts for 'only' 50 billion dollars worth of assets, which is a smaller portion of our economy and total assets than the hysteria of 'anything you do to attempt to phase out coal will destroy America' would suggest.

Now if the country could shift to renewables for a mere 50 billion it might well be worth it. Of course, as others have pointed out, buying up all the coal plants won't accomplish that.

What to replace coal with?

[SYSS Mouse]

I assume the proposal just assume coal industry to produce electricity, but there is more than that, The iron industry and steelmaking industry also uses coal.

What about buying out the Chinese polluters?

[PseudoCoder]

Because they make US look like amateurs.

Where does the rest come from?

[HockeyPuck]

According to the US Energy Administration...

  In 2012, the United States generated about 4,054 billion kilowatthours of electricity. About 68% of the electricity generated was from fossil fuel (coal, natural gas, and petroleum), with 37% attributed from coal.

Energy sources and percent share of total electricity generation in 2012 were:

        Coal 37%
        Natural Gas 30%
        Nuclear 19%
        Hydropower 7%
        Other Renewable 5%
                Biomass 1.42%
                Geothermal 0.41%
                Solar 0.11%
                Wind 3.46%
        Petroleum 1%
        Other Gases 1%

Re:Where does the rest come from?

[coolsnowmen]

+1 for peaking my curiosity.

I found this: http://www.eia.gov/state/maps.... [which is surprisingly decent]

Not nearly enough money

[icebike]

In addition you have to replace a whole bunch of brand new highly efficient and scrubbed power stations, and totally shut down steel production.
Metallurgic coal (coke) is essential for steel production. That pushes steel production to other countries, causing a world wide shortage, and we end up paying more and they end up polluting more.

Coal gasification projects, current and planned, would all be wiped out exactly when they are needed.

You can't simply look at the market cap of coal industry companies on Yahoo and sum them all up.
Like most plans, this is a simplistic and simple minded approach. It would never work

Retraining

[Anonymous Coward]

The whole "retrain" workers gets me.

Retrain them for what?

Let's assume that all of those workers have the talent to be retrained in any field. What would that be?

Are the billionaires also going to pay those folks to move to areas of the country that have other industries besides coal? Would the billionaires start other industries in coal country to absorb the workers?

Retraining is just a fantasy for policy makers. Folks get retrained and find that they still can't get a job. Part of the reason is that the labor market is still really tight and employers are not willing to hire entry level people because they don't have to. There are plenty of experienced people looking.

Anyway this "article" is nothing but a "what if" by the author; so it's not to be taken seriously.-+

Re:This is what Thatcher was good at

[AGMW]

Obviously carefully stepping over the fact that the previous labour government (Callaghan was it?) shut more mines than Thatcher because, and here's the kicker, they were uneconomic! It cost more to dig up the coal than the coal was worth, and we could get coal cheaper from elsewhere, including the damn shipping costs! ... no really!

Had Scargill not tried to bring down the elected government by flexing the miner's muscle maybe the scenes of violence could have been avoided, but I'll grant you that anywhere the Met (London Police) got brought in it turned nasty, but that's more a reflection of the Met than Thatcher - the Met are _still_ a little too handy with their fists (see Ian Tomlinson)

Re:Why not massively subsidize the Solar Industry?

[PlusFiveTroll]

Panels, panels are useless. Batteries and power storage is the question. Not very many is the answer.

50 billion

[thoth]

They should try Kickstarter!

Dual Fuel: Green != Liberal

[Anonymous Coward]

I have an uncle that is an ex-GE now consulting engineer in the coal power plant industry.

Many power plants are dual fuel: coal or NG. They run whatever is cheaper. And the thing is, at least with modern equipment coal burns as clean as Natural Gas. It even scrubs the metals out of the emissions: no mercury being emitted - or at least 99% of it.

Coal gets a bad rap because of its history and China - they're using 19th Century technology.

You know, General Electric is doing some great things with fossil fuels AND "Green" energy. It royally pisses me off when I hear "Green" energy (solar, wind, geothermal, hydro) labeled as "Liberal" when in fact it's the MOST capitalistic industry out there.

If anyone calls "Green" energy a "liberal" cause, they are just expressing their ignorance.

I was in the Peabody coal IPO

[WillAffleckUW]

Quite frankly, you're wasting your time.

Most of the owners of coal stocks intend to hold it.

You'd be better off investing in more efficient coal-burning plants that cause less waste and less pollution, including GHG emissions, from the same unit of coal.

You're also missing that a lot of the country is national and state parks and federal lands (like military) which are forced to lease lands with coal at insanely low rates for mining.

Fix those things. Your money will go farther.

(personally, my carbon impact is about 1/10th of most Americans, so Do More, Whine Less)

Chump Change

[MadMartigan2001]

The Federal Reserve spends 85 billion a **MONTH** on quantitative easing. Yet 50 billion will buy out the entire coal industry of the United States? Something is wrong there.

Sowhere will the electricity come from?

[sandbagger]

I guess we'll be building a lot more nuclear power plants, then?

Re:How do we fill the energy gap?

[RatherBeAnonymous]

Sure, we would have fewer premature deaths from respiratory illnesses, but that would mean more non-working octogenarians and nonagenarians. Studies out of Europe have shown that keeping people smoking and obese is much more economically viable because they tend to be productive up until retirement, or near-retirement, age, then die of a short illness. "Healthy" people, on the other hand, live a long time, fighting off repeated illnesses for a decade or two after retirement. Eliminating coal would probably have a similar effect.

http://daveatherton.wordpress....

I am playing devil's advocate here. I don't believe we should keep coal just to kill off retirees. After-all, I plan to be one someday.

Re:Why not massively subsidize the Solar Industry?

[DaveV1.0]

New York City is one of the most electrically efficient places in the U.S. It would take 85 square miles of solar panels to power NYC assuming 4 hours of bright direct sunlight per day, every day of the year on each panel. The area under those 85 square miles will be, at best, in permanent shadow. Where are you going to put the panels so that they receive such good sunshine? What will the environmental effects be? How will you keep snow, ice, dust, dirt, bird shit, etc. off them? How will you prevent vandalization?

Retraining Won't Be Enough for Unemployed Miners

[Koreantoast]

I'm REALLY curious as to what they expect to replace the coal mining business with in the middle of rural West Virginia. Even assuming you could retrain all those workers, that simply leaves an entire army of now skilled workers sitting in towns that have had their economy completely decimated by the elimination of coal. One doesn't simply regenerate a brand new, magic economy there from scratch. Even something as basic as building a new factory, say a solar panel factory, would require not just the cost of building the factory, but the infrastructure to support said factory (roads, water, power, rail links, etc.), and $50B is not going to cover the cost of doing that for 87,000 workers.

Re:Easier Still: Reform General Mining Act of 1872

[NoImNotNineVolt]

According to Wikipedia:

"The mining law applies to some mineral products, but not others, and the list has changed over time. Since 1920, the list of locatable minerals does not include petroleum, coal, phosphate, sodium, and potassium. Rights to explore for and extract these are leased through competitive bidding." (Emphasis mine)

Re:This is what Thatcher was good at

[Pino Grigio]

Actually, the Labour governments before her shut down more mines than she ever did; a considerable number more. But don't let the facts spoil a good fantasy. If anything destroyed the miners it was union militancy; the useful idiots of the left who allied themselves with Soviet Russia.

Re:This is what Thatcher was good at

[Pino Grigio]

What a moronic comment. Her `unworkable ideology' has been the centre ground of British politics since around 1986. Even the Labour party dropped it's idiotic "ownership of the means of production" rubbish under Blair and nobody on the left, apart from the usual loons, are arguing to bring it back.

If you want to see what a post neo-liberal political ideology looks like, go to a shop in Venezuela.

Re:This is what Thatcher was good at

[i kan reed]

I'm not going to take advice from someone who uses the term "neoliberal" to mean its literal opposite.

Re:This is what Thatcher was good at

[DaveAtFraud]

Are you still dancing on that woman's grave? Jeez, conservatives didn't celebrate this much when Joseph Freaking Stalin died.

Didn't Hate Week sate your hatred? You know, the week after she died when you had hate parades to show just how much you hated her. No, seriously, this really happened. Hate parades.

Liberals hate conservatives but they REALLY hate conservatives like Thatcher and Reagan who got it right. Conservatives like Bush Jr. and Palin are easy targets and ad hominem attacks that discredit the person rather than the ideas. Thatcher and Reagan put their ideas into operation and both countries benefited. That's what really pisses off the liberals. They'd rather have the country going down a rat hole the way GB was under Labour governments than admit a conservative like Thatcher was right.

Cheers,
Dave

Re:This is what Thatcher was good at

[GameboyRMH]

"Got it right?" Both created some temporary, unsustainable benefit but left disastrous consequences that we're still experiencing today. They're the people who cooked the goose that laid the golden eggs, and you're saying "Mmm mmm that goose sure was tasty! Cooking it was the right thing to do!"

No, Thatcher and Reagan got it the most wrong of all. Not as wrong as Mao, but incredibly wrong by Western standards.

Re:This is what Thatcher was good at

[DaveAtFraud]

No, Thatcher and Reagan got it the most wrong of all. Not as wrong as Mao, but incredibly wrong by liberal standards.

Fixed that for you. You seem to assume that your liberal leanings are Western standards. Not.

Cheers,
Dave