Fossil fuel leases should charge for climate change, says president

Fossil fuel leases should charge for climate change, says president
© Greg Nash

President Obama wants companies leasing oil and coal rights on federal land to pay more for the effects those fuels have on climate change.

In his final State of the Union address Tuesday night, Obama said the prices charged for oil and coal ought to reflect the cost of the greenhouse gases from burning them.


It answers a top request from Democrats and environmentalists who say that federal resources account for about a quarter of the nation’s greenhouse gas emissions, with coal as the top culprit.

“Rather than subsidize the past, we should invest in the future — especially in communities that rely on fossil fuels,” Obama told Congress. “That’s why I’m going to push to change the way we manage our oil and coal resources, so that they better reflect the costs they impose on taxpayers and our planet.”

“And that way, we put money back into those communities and put tens of thousands of Americans to work building a 21st century transportation system.”

Obama presented the proposal as a way to accelerate the ongoing transition toward clean energy sources like wind and solar and “away from old, dirtier energy sources.”

He warned that the move to charge for climate impacts would not be easy. “But the jobs we’ll create, the money we’ll save, and the planet we’ll preserve — that’s the kind of future our kids and grandkids deserve.”

The Interior Department, which manages energy resources on the federal government’s massive land holdings, last year launched a comprehensive effort to reevaluate how it values fossil fuels and charges fees and royalties to the companies that extract them.

Part of that conversation includes whether it’s appropriate to charge for the climate impacts of the fuels, something that industry has staunchly opposed.

The Center for American Progress reported last year that 24 percent of the nation’s energy-related greenhouse gases come from fossil fuels extracted on federal land and water, or 1.34 billion metric tons of carbon dioxide-equivalent greenhouse gases.

But Obama’s idea falls short of what some activists have called for: a complete stop to all new fossil fuel leases on federal property.

Nonetheless, greens applauded the president's proposal.

“For far too long, the Interior Department has given away our publicly owned fossil fuels to mining and drilling companies without regard for the damage they cause to communities and our climate,” Annie Leonard, executive director of Greenpeace USA, said in a statement, calling the move “encouraging.”

“The president tonight shined a bright flashlight into the forgotten corners of the federal coal and oil programs, where loopholes and subsidies are costing taxpayers and local communities millions of dollars in lost revenue every year,” said Matt Lee-Ashley, a senior fellow at the Center for American Progress.

The National Mining Association disagrees with the characterization that the current royalty rates are “subsidies.”

The group argues that increases in rates will raise energy costs and deprive taxpayers of revenue.

“Critics of the federal coal lease program have neither an economic nor an environmental case to make that withstands the barest scrutiny,” Hal Quinn, the mining group’s president, said in a statement last month, calling it a “foolish idea.”