White House: Raising Federal Royalties Will Save GHGs

Federal coffers and greenhouse gas emissions reduction efforts would benefit if royalty rates for coal mined on public lands were raised, according to a new White House report.

The White House Council of Economic Advisers (CEA), an executive branch agency that advises the president on economic policy, found as much as 32 million metric tons annually of carbon emissions could be saved under a change in the way payments are collected on federal coal.

"What this report aims to do is to ask the question:  If you raise the royalties on coal, what will it do in terms of revenues, in terms of the environmental impact, the impact on coal?" said James Furman, chairman of the CEA.

The 33-page report, launched yesterday at an event at the Washington, D.C.-based think tank Resources for the Future, examines the economics behind federal coal royalties.  It comes amid a hot debate in states about the Interior Department's plan, announced in January, to halt new federal coal leasing for three years while it conducts a comprehensive review of the program.

The study only examined whether the federal coal leasing program provides a fair return for the American taxpayer. Furman said the report does not recommend any policy actions, just models suggestions.
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"These actions wouldn't do anything like kill the coal industry," Furman said.

A 'tax avoidance manual'?
The report says the program "has been structured in a way that misaligns incentives going back decades, resulting in a distorted coal market," and the result is that federal coal is now sold at artificially low prices and that is distorting the entire American coal market and cheating the country of revenue.

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