While coal-fired electricity lights homes around the world, the environmental side effects are huge and devastating. Switching to renewable energy sources, dumping the coal industry into the ash bin of history, is supposedly astronomically expensive. Or, is it? According to a new report published Tuesday, it would cost $50 billion to buy and shut down all the coal companies operating in the U.S. while retraining employees for other work, and produce benefits that quickly pay for the investment.
The plan, published by the Guardian and written by a pair of leading thinkers in sustainability Felix Kramer and Gil Friend, would make a one-time investment of $50 billion, spread out over 10 years, and generate $100-150 billion in benefits every year. That’s quite an economic payback, which leaves one scratching their head over why it hasn’t already happened.
The phased buyout of coal companies and their assets, closing and cleaning up the mines, writing down assets, and paying off existing investors, would take care of one set of stakeholders – the existing investors.
Another set of stakeholders are the workers, who must find new jobs once the coal companies shut down. Kramer and Friend suggest they can be retrained for other work that will create job opportunities in coal communities.
The last stakeholders are everyone whose electricity is generated from burning coal. The plan has to be coupled with a massive investment in renewable energy technologies. Perhaps the coal mines could be the site of wind turbine farms, built and staffed by retrained coal miners?
While it sounds great to invest $50 billion and receive $100-150 billion in payback every year, it’s illustrative to ponder where that payback occurs.
The biggest direct benefit is the massive reduction in carbon emissions, in the U.S. The US’s largest single source of greenhouse gases is carbon dioxide from coal plants. But currently the value of this is $0, because of efforts to squash any attempt at putting a price on carbon. Putting a price on carbon gives one way to pay for the investment, and to reap continuing rewards.
Coal burning causes a slew of negative effects beyond the carbon emissions. Effects on the environment and health that are directly attributable to burning coal. These include the sulfur dioxide that becomes acid rain, the nitrogen oxide that becomes smog, the particulates that cause asthma and other cardiovascular diseases, and the toxins like mercury, lead and cadmium that harm human brains, animals and fish. These cause hundreds of billions of dollars a year in costs, according to studies by the National Academy of Sciences and the Harvard Medical School.
Unfortunately that is an “externalized” cost, meaning that the health care costs are spent by people other than the coal companies. The people living down-wind from a coal plant are breathing a witches brew of toxic chemicals, but have no recourse to get any repayment for health care costs from either the power plant operator or the coal company. Ending coal burning would reduce those health care costs, producing huge savings to the overall economy, but it’s unclear from the plan how the investors would reap that benefit.
The authors of the audacious plan are no strangers to big thinking with big impacts. Felix Kramer founded The California Cars Initiative (Calcars) in 2002 that advocated for plug-in hybrid cars, creating the information enabling 3rd party Plug-in Prius conversions to be performed, and resulting in cars like the Chevy Volt entering the market. Gil Friend is a long-time leading thinker in sustainable business, the former CEO of Natural Logic, author of a book on the topic, and the Chief Sustainability Officer of Palo Alto, CA.
Kramer and Friend believe the time is opportune, because the coal industry is beleaguered by competition from low priced natural gas, and the decreasing cost of wind and solar power. That industry is littered with abandoned plans for new coal mines and new coal-fired electricity plants, especially after public opposition has blocked hundreds of plants.
It’s suggested that “coal company directors and executives may come to see a buyout as the best way to protect shareholder value.”
Who would be able to make this happen? Normally it is the Government which undertakes large projects that benefit the common good, but that’s unlikely given the current political climate. Instead, Kramer and Friend suggest that “savvy climate hawks” like Michael Bloomberg, Richard Branson, John Doerr, Jeremy Grantham, and Tom Steyer know about corporate buyouts, and could structure a Coal Buyout Fund and maybe even turn a profit.
The cost of waiting is enormous. Under the moniker of “mountain top removal” the coal industry is literally destroying the Appalachian mountains, and causing coal ash spills such as those recently occurring in West Virginia and North Carolina. Today the Huffington Post is reporting that Peabody Energy is illegally beginning to strip mine the Rocky Branch site in southern Illinois, while the Illinois Department of Natural Resources looks on with indifference.
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