As climate change costs rise, Biden seeks to assess damage

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Hardin, Mont. — In the coalfields of eastern Montana, climate change is forcing a stark choice: Halt the mining that has helped build everything from schools to senior centers, or risk astronomical future damage as fossil fuel emissions are warming the planet and increasing disasters, crop losses and premature deaths.

One of the biggest mines in this arid region straddling the Wyoming border is Spring Creek – a gaping hole among the sagebrush hills where house-sized diggers dig up millions of tons of coal through year, much of which is shipped overseas and burned in Asian power plants. .

Spring Creek’s hundreds of jobs help sustain the economy of the Crow Indian Reservation and surrounding areas of Wyoming. In Big Horn County, which encompasses most of the reservation, coal taxes and royalties fund nearly two-thirds of government services. It is one of the most coal-dependent communities in America.

“Everything is covered in coal dust,” said County Commissioner George Real Bird III, referring to civic projects funded by coal money since Spring Creek opened 40 years ago.

Greenhouse gas emissions from burning that coal are also fueling climate change, and President Joe Biden’s administration wants to put a cost on the resulting damage to people and the environment. Highlighting the “social cost of carbon” could justify emission reduction rules for fossil fuels, transport and other industries.

But a Louisiana federal judge temporarily halted those efforts this month and blocked the administration from using an interim damages standard of $51 per ton of carbon dioxide emitted.

The White House was preparing to update its climate damage award in the coming weeks. Many economists expected this figure to increase significantly and even double. Republicans and business groups have argued that a focus on future climate damage will hurt the economy, especially the energy industry.

For Spring Creek, enforcing the administration’s carbon cost would result in estimated damages of more than $1 billion a year from a federal coal sale that would keep mining going at least still a few years.

That’s a staggering number for just one of the 15 mines that dot the Powder River Basin in Montana and Wyoming. But, after a federal judge in Montana rules the government overstated the economic benefits of the mine, the Biden administration is weighing the climate costs and reconsidering the mine permit.

Environmentalists want the department to halt the ongoing expansion of Spring Creek and halt mining. Their goal is to use the social cost of carbon to deny fossil fuel projects, not just to inform rules and policies as in the past.

PREPARE FOR A SLOWDOWN

Climate change is already being felt in this sparsely populated region – where recurring droughts are hitting farms and ranches, falling river levels are hurting fishing and massive wildfires are ravaging the landscape.

“The impacts of greenhouse gas emissions alone from burning this coal are enormous,” said attorney Shiloh Hernandez of the Western Environmental Law Center, representing environmentalists against mining. “These are real impacts causing real harm to real people.”

Pending permit review, Spring Creek continues to dig – 13 million tonnes last year as Powder River Basin coal prices hit record highs as economy rebounds from early slump of the pandemic. The mine is owned by a Navajo company that became the third-largest US coal producer when it took over bankrupt Cloud Peak Energy three years ago.

Spokesman Erny Zah said the Navajo Transitional Energy Company values ​​responsible mining and balances the environment with the economic needs of Spring Creek residents.

Local officials aren’t counting on the recent coal boom to last: Over the past decade, U.S. demand has plummeted and dreams of shipping more coal overseas have been stymied by West Coast states . A mine next to Spring Creek closed in early 2021.

Worried Big Horn commissioners hired accountant Michael Opie eight years ago to help navigate the industry’s collapse. At the time, he thought the coal was still about 10 years old. It will no longer offer predictions.

After the cuts hit key services such as maintaining 1,000 miles (1,609 kilometers) of gravel roads, the county shifted the tax burden onto local residents to keep its sheriff’s office and d other departments.

“We’ve had to…essentially reduce government to a bare minimum,” Real Bird said.

Spring Creek paid $23 million in local and state taxes and other payments last year, Zah said. The company expects 2022 to be good for coal, but is bracing for another downturn – halting investment in new equipment and planning to shift workers to mine reclamation work.

CARBON COST DEBATE

The Obama administration first embraced the social cost of carbon and used it more than 80 times in cost-benefit analyzes for government rules, including tougher vehicle emissions standards and regulations to shut down coal-fired power plants.

By seeking to roll back these rules, the Trump administration has reduced the social cost of carbon to $7 or less per ton. The lower number only included domestic climate impacts and not global damages, making it harder to justify costly rules for industry.

Biden tentatively reinstated Obama’s 51-ton estimate and signaled an even higher number would be passed. On Saturday, the administration appealed the Feb. 11 court ruling that blocked the use of the social cost of carbon, saying it could affect more than 30 pending rules, delay permits and the leasing of federal fuel reserves fossil fuels and undermine international climate negotiations by silencing US officials. on the subject.

“It’s kind of shocking to see all the stocks impacted,” said Romany Webb, a Columbia Law School researcher who specializes in climate change.

Republican attorneys general led by Louisiana’s Jeff Landry have warned of tougher rules in everyday life if the administration wins – including for appliances, vehicles and electricity. They called the use of carbon pricing “the most significant regulatory encroachment on individual freedom and state sovereignty in American history.”

But many economists say dealing rationally with climate change means weighing its future costs into decisions today.

The 51 tonne estimate comes from climate models developed by three economists in the 1990s.

Two of them – William Nordhaus from Yale University and Richard Tol from the University of Sussex in the UK – say the updated models show more damage than expected.

“The estimates are higher…because we better understand the impact of climate change on labor productivity — the human body can’t work hard when it’s hot and humid,” Tol said.

Nordhaus, in a recent study, reported a “substantial increase” in the social cost of carbon – up to twice previous estimates. He predicted trillions of dollars in damage, equivalent to 2% of global income based on a warming of 3 degrees Celsius (5.4 degrees Fahrenheit).

However, some economists say the models fail to capture the complexities of climate change that could cause less damage than expected.

“You have to model the global climate system, you have to model the global economy, and you have to do it for centuries. There’s a lot of uncertainty,” said Steve Rose, senior economist at the industry-funded Electric Power Research Institute.

Despite the debate over the correct monetary value of climate damage, past court rulings have made it clear that future impacts must be considered in some way, Rose and several legal experts said.

With much of Biden’s climate agenda stalled in Congress, the issue could take center stage if the administration uses executive branch rules to limit industry emissions, said Michael Greenstone, a former chief economist of the White House Council of Economic Advisers.

“Climate science and climate economics have advanced rapidly,” said Greenstone, who helped establish Obama’s carbon cost and now thinks a major increase is warranted. “It would be easy to justify a value of around $200 per ton which would represent the frontier of our understanding.

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Follow Matthew Brown on Twitter: @MatthewBrownAP

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