Should we buy coal mines?
At Effective Altruism Global, Will MacAskill proposed the idea of buying a coal mine in order to keep coal in the ground, as a potential longtermist megaproject. The idea was covered in a piece by Richard Fisher for the BBC here. There is a large literature in economics on the idea of reducing the supply of fossil fuels in the economics literature, and the idea recently received additional attention thanks to a post by Alex Tabarrok on the Marginal Revolution blog here.
I have spent around 50 hours looking into whether it would be worth buying a coal mine.
I talked to more than 10 experts about this. I have mainly focused on feasibility in the US and Australia because the project seemed more promising in those countries due to likely political and legal barriers in countries like India, China and Indonesia. I have concluded that:
Buying a coal mine is much more expensive than it might at first appear due to costs to reclaim the land after mine closure and foregone royalty payments to the mine owner.
Buying mines is legally impossible for some mines, and for others seems extremely practically difficult, for legal, political and cultural reasons. My impression is that there are few viable opportunities to buy coal mines in the world.
The full costs of buying a mine would be in the hundreds of millions of dollars for a mine a similar size to a top 30 US coal mine. So, the barriers to buying just one mine are very high. For context, total global spending on climate philanthropy is $5-9 billion. So you could spend close to a tenth of global climate philanthropy buying just one coal mine.
It is unclear whether buying a mine and retiring it would make much difference compared to the counterfactual, in the US at least, because coal demand there seems to be in structural decline. The counterfactual benefits seem larger in Australia because the coal industry is more buoyant, but, for that very reason, buying up coal mines would be much more politically difficult there.
It seems likely that there are other better ways to limit coal production or consumption, such as political advocacy, or paying some lawyers to gum up the works. I think EA donors could have more impact through other projects.
Buying up a coal mine might be a good option for donors who would otherwise have lower impact and have the time to identify some workable opportunities.
This is a very quick write-up of my reasoning that I thought I would share in case anyone else had thought about looking into this area. I am optimising for speed and writing up my findings quickly, rather than referencing to back up my claims, doing lots of checking of my numbers, and asking for review before publishing. I am >75% sure that my central claims are correct.
Thanks to Max Daniel, Abie Rohrig and Will MacAskill for comments and discussion.
1. Costs are much higher than they seem
In his recent post on the promise of buying a coal mine, Alex Tabarrok noted that there is a coal mine for sale for $7.8m dollars. If you assume that this is the total cost of buying the mine and shutting it down, then doing so would be highly cost-effective. However, the true cost would be much higher than this.
Reclamation costs
Owners of coal mining leases have to pay ‘reclamation costs’, which is the environmental cleanup of the mine: turning it into forest, a solar farm etc. In the US, the typical cost of reclamation is ~$10,000 per acre (report). For mines with data in the US, the size ranges from 1,000 acres to 40,000 acres. North Antelope Rochelle, the world’s largest coal mine, is ~5,000 acres. So, the reclamation costs would range from $10m to $400m and would be $50m for North Antelope (calculations are here). For the McDowell mine listed by Tabarrok, reclamation costs would be $30 million, which is several times the mining lease.
Lease owners also have to cover reclamation in Australia. In both the US and Australia, this is typically done with a bond. Many coal producers are strategically going bankrupt to avoid paying for reclamation (report).
Foregone royalties
Governments typically charge royalties on the gross value of fossil fuels sold from an extraction lease. The royalty rate for federal US coal is 12% for surface coal and 8% for underground coal. The top 30 coal mines in the US produce more than 4m tons of coal each year (US EIA information). North Antelope produces 66m tons. So, the federal royalty for these mines would range from $20m, up to to $330m per year for North Antelope. States also charge royalties on fossil fuel production typically around 5-20%.
Private reserve owners in the US charge commission on the sale value of the coal extracted. In the mine listed on Alex Tabarrok’s initial post, the commission was 4% per ton.
In Australia, the royalty rate is 5-10%, depending on the province. The length of a typical lease is 20 years.
If an environmentalist did buy the lease, the reserve owner would want the buyer to cover the foregone royalties from fossil fuel extraction. This would add tens to hundreds of millions of dollars to costs, depending on the mine size.
Just transition
There has recently been more attention from philanthropists on ‘just transition’ of communities that were previously reliant on fossil fuel extraction to give these communities an off-ramp losses of jobs and local tax revenue.
An environmentalist aiming to buy a coal mine would have discretion over whether to fund just transition for communities in the places affected. If they did decide to pay for it, this would increase costs. If they decided not to pay for it, the political blowback would be greater.
Total costs
The total cost to buy the 20 year lease for North Antelope Rochelle, including foregone royalty payments and reclamation, would be upwards of $6bn. For a top 30 mine in the US it would be >$500m. The mine listed by Tabarrok would need to be backed by >$100m to cover reclamation and foregone commission (calculations). This is far in excess of the list price of the mine, which was $8m.
On the assumption that all of the coal resources in these mines would be extracted, the cost-effectiveness of buying a single mine would still be reasonable – $0.20 to $14 per tonne of CO2 avoided, depending on the mine. But the environmentalist buyer would still need upwards of $100 million to make the project work and even then, there is no guarantee that the project would work – it would still likely be embroiled in political and legal challenges.
Note there is a trade-off between cost and additionality, i.e. whether the coal would have been left in the ground anyway. If you bid against no-one for a lease, the cost will be low but the chance of additionality is also low. If you win a competitive bid, the cost will be higher, but you would also have additionality.
2. Legal barriers seem very high
In the US, around 33-40% of coal is on federal Bureau of Land Management land. This is mainly in the western US in the Powder River Basin. In the eastern US in Appalachia, coal tends to be privately owned. I think there is also coal on land owned by US states.
In Australia, all coal is owned by state provinces.
State discretion over coal resources makes buying coal mines difficult. In Germany, the government summarily excluded Greenpeace from the bid for a coal mine without providing an explanation. All in all, I think wherever this is done, there is a real risk of being locked in an interminable legal battle on this. It is worth noting that Citigroup explored the ‘buying mines’ idea but abandoned it, though they were planning to run the mines and then retire them in 2045, so their project was importantly different.
US Federal coal
Coal on federal Bureau of Land Management land is subject to ‘use it or lose it’ laws: coal must be ‘diligently developed’ otherwise the lease owner would lose the lease. So, at present, retiring coal is not possible on federal land.
US state coal
There is some coal on what is known as state trust land, which is land granted to states. Funds from state trust land are used to pay for schools and public amenities.
There are technically no ‘use it or lose it’ laws on state trust land, though states have discretion over who wins energy leases on state trust land. This means that environmentalists are unlikely to win conservation leases without first negotiating with states.
My impression is that there are not (m)any new thermal coal mining leases coming up on state trust land, though I couldn’t get comprehensive info on this. For comparison, there have been around 2 new coal mining leases on sold on federal land each year for the last few years (EIA data). The market for metallurgical coal (for steel production) seems more buoyant.
Private US coal leases
For privately owned coal reserves, there are no ‘use it or lose it’ laws. However, my impression is that there is not much publicly available information openly available on which private leases are up for sale. Many of the deals seem to happen behind the scenes between reserve owners and mining companies. My sense was that it would be hard for an environmentalist to develop the relationships and connections required to identify and execute viable deals.
My impression is that there are very few new leases coming up for thermal coal at the moment.
Australian coal
There are no strict ‘use it or lose it’ laws in Australian provinces. However, provinces have discretion over who wins mining leases. Given the cultural and political importance of coal mining in Australia, it seems to me very unlikely that a province would grant a mining lease to an environmentalist.
3. Political barriers
I would guess that the cultural and political significance of the mining industry is more important than any concerns about taxation foregone.
Politics in the US
For example, upon learning that the federal govt was considering increasing the federal coal royalty to 18%, Wyoming said they would reimburse the industry from state coffers!
Coal mines are partnered with coal power plants in power purchase agreements, so just shutting off a mine would be problematic if it meant losing reliable power. This would increase the risk of a legal challenge.
Politics in Australia
Coal mining and climate is a factor that determines elections in Australia. The current Prime Minister once used a lump of coal as a prop in parliament. It is widely thought that he won the last election because the Labour party was insufficiently pro-coal. I think this is the kind of thing that it would be difficult to fully compensate for with money. It would be too hard to target the money effectively at those affected, and I think many people would view it as something ‘sacred and not to be traded off’.
There is a trade-off between additionality and tractability. The case for additionality is strongest in the jurisdictions where it is clearest that the coal would have been extracted if the environmentalist did not win the bid. But these are also jurisdictions where the political environment is also likely to be pro-coal and it will be hardest for the environmentalist to win.
4. Would the coal be extracted if you didn’t buy the mine?
US
In the US market forces and regulations seem to be taking care of coal. Renewables and batteries are likely to decline in cost in the future. They are already cheaper than many coal plants, but the plants keep running due to long-term contracts with utilities. Regulations on coal are also now quite strict and environmental policies are becoming more strict at the state level.
Coal production in the US has been trending downwards for more than a decade, mainly due to shale gas. I think it is unclear whether the trend in declining gas prices will continue and my best guess is that they will be static.
There are no planned new coal power plants in the US. It seems to be in structural decline.
So, there is a real risk of buying up a lease for coal that would not have been extracted anyway.
Australia
Australian coal is mainly for export (around three quarters compared to 15% in the US). It is high quality and geographically close to areas of high demand in East Asia. So, the prognosis for that industry looks good, unfortunately. Buying up a mine in Australia stands a greater chance of additionality, but also seems very unlikely to succeed, for the reasons mentioned above.
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Thanks John. I happen to have done a BOTEC on this; I’ll post it here b/c this seems like a canonical place for conversation. It’s pretty scrappy, and you shouldn’t feel obliged to respond, but I’d be interested to know if you think it’s going wrong anywhere (I think my bottom-line is slightly more negative than your “might be a good option for donors who would otherwise have lower impact”).
What does success look like?
Large amounts of fossil fuels remain in the ground but accessible for re-industrialization in the event of civilizational collapse
Mostly targeted at civ collapse in 50+ years (since early enough there’s plenty of coal left) but pre-singularity (or we presumably have more effective ways of improving robustness to collapse)
How good is that?
2% estimated risk of civilizational collapse on relevant timescale (mostly in worlds where AGI is very far off)
50,000 microdooms from chance of no industrial recovery given civ collapse
⇒ 1,000 microdooms affectable
Doubling available fossil fuel reserves maybe cuts 5% of the risk
⇒ doubling fossil fuel in the ground averts 50 microdooms
On default trajectory expect to have 5% of mineable coal stay in the ground
So extra 1% of fossil fuel staying in the ground is worth 10 microdooms
If coal is half of relevant fossil fuel, extra 1% of coal staying in ground worth 5 microdooms
What does it cost?
At scale?
$
Guess elasticity of coal consumed with available coal = 0.5 (i.e. have to buy twice as much as you’d naively think to get a given effect)
Worth of global coal reserves = $25T
About $50T at current prices. This is for reserves not resources, so things that people are pretty confident they know how to get out. The price of extraction should reduce this somewhat, I guess by a factor of 2
(my naive guess before looking things up was $2.5T)
⇒ cost to pay for an extra 1% of coal to stay in ground = $500B
Labour
Negligible
⇒ CE = 0.01 microdooms/$B
This is pretty low!
Maybe by being tactical about which mines one buys one can bump this up by a factor of 2 or 3? It feels like it’s out of reach to make it a good buy, though
Pilot
I think the at-scale cost is sufficiently bad that we shouldn’t put aligned dollars into this
Is there a way to leverage public funds into this? If so possible a pilot could be cost-effective
However, my suspicion is that this is a less leveraged way to keep fossil fuels in the ground than the things goverments spend dollars on by default to encourage transition to green economy (e.g. clean energy R&D; also subsidies for clean energy stuff, which indirectly feed back into R&D)
Transition to clean energy economy will presumably happen when tech is sufficiently advanced
Advancing tech by 1 year means we can expect 1 year more of current consumption to be left in the ground (if we’d complete transition before fossil fuels run out), or an increased chance of completing the transition before fossil fuels run out
I guess we’re consuming around 1% of reserves per year at the moment, so guess this would be worth 1% of all fossil fuel staying in ground (not just coal)
(Plus probably bigger effects in intermediate years)
Clean energy sector R&D budget = approx $10B/yr (I found recent energy R&D = $22B, of which “less than half” on clean energy)
Guess 5x budget would double rate of progress
⇒ $50B/yr worth 10 microdooms
Think smart choices about where to invest R&D can probably beat that by a factor of 10 for EAs
⇒ 0.2 microdooms/$B for governments, or 2 microdooms/$B for EAs
I therefore think buying coal mines is most likely net negative to pursue, although it’s close enough to untargeted clean energy R&D on my calculations that it could be worth getting more careful calculations (maybe from economists, maybe from someone like McKinsey)
FWIW, your calculation seems still optimistic to me, still, e.g. assuming quite a high elasticity (cost of coal is not such an important part of the cost of producing electricity with coal) and, if I understand your reasoning correctly, a fairly high chance of additionality (by default, coal is in structural decline globally).
Makes sense; thanks for flagging. I’m tempted to conclude “robustly a bad idea”.
Maybe the parameter that I can most imagine someone pushing on to make it look better is that I’m assuming 5% of mineable coal will stay in the ground on default trajectories, and you might think it would be significantly less than that. I don’t think this would make it look better than generic clean energy R&D, but it’s not impossible (my cost-effectiveness estimate is >1000x below where I’d put the threshold for interventions I’m excited about, so it seems pretty much impossible for it to reach that if my calc is currently skewing optimistic in places).
What’s a BOTEC
Back of the envelope calculation
Bottom Of The Envelope Calculation
Thanks for this. Yeah, I haven’t crunched the numbers on cost per microdoom and probs don’t have time to go through your calcs.
Mike Cannon-Brookes, an Australian tech billionaire, recently bought an 11% stake in AGL, a huge energy company, for the stated intention of accelerating its transition away from coal. This was following two rejected takeover bids earlier this year.
the buying up plants idea is somewhat different idea to the buying mines idea. The main barrier there is that you are dealing with a highly regulated utility who has to ensure security of supply. The market to buy up coal plants is not an open one.
Ah fair, thanks. I figured there might be a reason you didn’t mention it in passing.
I think your comment was a useful comparison anyways :)
If you want to spend money quickly on reducing carbon dioxide emissions, you can buy emission rights and destroy them. In schemes such as the EU ETS, destroyed emission rights should lead to direct emission reduction. This has technically been implemented already. Even cheaper is probably to buy and destroy rights in similar schemes in other regions.
there’s some endongeneity in the policy though—policymakers probably respond to that kind of activity, especially if it happens at scale.
Anyway I posted this here because I think it somewhat resembles the policy of buying and closing coal mines. You’re deliberately creating scarcity. Since there are losers when you do that, policymakers might respond. I think creating scarcity in carbon rights is more efficient and much more easy to implement than creating scarcity in coal, but indeed suffers from some of the same drawbacks.
Possibly, in the medium term. To counter that, you might want to support groups who lobby for lower carbon scheme ceilings as well.
I thought part of the reason you wanted to do it was so there was coal after an existential catastrophe, though:
1) It seemed cheaper to just buy the coal and store it as a post nuclear strategic reserve near some water
2) Is coal very hard to find?
A number of comments:
Total Costs
Alex Tabarrok’s initial idea was about buying cheap mines, ie mines which are currently uneconomic to produce but could become economic in the future, thereby creating the opportunity to shut in future capacity. When you price off the top 30 US coal mines you are pricing current cash flow producers, so yes you need to pay 3-5x cash flow multiple. If you price off uneconomic mines you can buy billion tonnes in the group for between 10-100 million dollars. Far cheaper.
There is a difference between mine acreage and reclamation area. In a typical open cut mine as little as 10% of the land area is mined. In a typical underground mine it is as little as 2%. So much less land needs to be reclaimed than your calculation which was based on the entire acreage. Also, again if you purchase uneconomic mines, they are typically not developed, so you don’t have to reclaim anything. If you purchase on operating mine, many have some form of reclamation reserve fund that you will have access to and many also perform continuing reclamation (No govt will allow a mine not to reclaim even a little bit if it’s been years since the original mining of the area)
Legal barriers are high—not sure what was the purpose of this para. Yes? And so? For uneconomic mines, no govt will force you to mine. You can buy it and file a plan every year saying you continue or do technical work while waiting for prices to go up. You do need a skeleton technical team to manage paperwork and reporting. Hey, it’s a regulated sector. For economic mines, you can slow walk process. There’s millions of ways. As long as you don’t come out and explicitly say you’re forever going to sit there and not mine, you should be fine.
political risk—and so? As long as you respect the commercial contracts and legal policies in place, hire the necessary technical team and produce the paperwork required, I don’t see any political risk EXCEPT if you explicitly market as total and permanent shut in.
X) you don’t seem to have any knowledge of the industry. Let me tell it to you straight, commodity traders will shut in coal capacity if they get paid to do it. There’s no romance in the industry. If the mine is more valuable to the EA community as sequestered carbon than it is to coal mine owners as cash producing assets, they will sell it, shut it in, and politically lobby to make sure you can keep it shut in.
Alex’s original idea focused on NON ECONOMIC coal. As you point out there are carrying costs. So someone sitting on a billion tonnes of coal, on 10,000 acres probably pays lease fees of 500k per year. If the coal is mineable at 50 bucks as ton, and market price today is 25 bucks, the guy is eating a negative carry of 500k as real call option premium on higher coal prices. He’ll sit there waiting for prices to hit 75 bucks a ton and when they do he’ll try to producer
When you buy the mine from him, you’re eliminating his cost of premium but you have to pay him for the value of the option.
Hello,
The problem with buying off uneconomic mines is that there is a greater risk of having no additionality. If the mine is indeed uneconomic you’re probably just taking on a huge reclamation liability without producing any climate benefits. There are surely better ways to use the money.
Comment on land acreage. I’d have to look into this more, but probably don’t have the time right now.
2. Legal barriers matter because they affect the chance that the project will be possible. Again, this leads back to the additionality/barrier trade-off I mentioned in the post.
3. The political risks matter because they make it extremely unlikely that the project will even be possible. For example, I would be happy to be proven wrong, but I would be very surprised if a province in Australia ever let an environmentalist buy a mine. States have discretion over who wins mining bids and they would likely foresee that someone is buying the mine not to run it: if the mine is economic, they would know after the first year if the lease owner wasn’t actually going to mine it. The Wyoming govt has been shown to be willing to take a financial hit in order to keep mines open.
Indeed, this has been the experience of every case I know of environmentalists trying to buy fossil fuel resources—Greenpeace in Germany, Tempest Williams in the US etc. People have been trying to buy fossil fuel resources to retire them for many years. I know of literally no cases in which the govts have let them do it.
“Let me tell it to you straight, commodity traders will shut in coal capacity if they get paid to do it. There’s no romance in the industry. If the mine is more valuable to the EA community as sequestered carbon than it is to coal mine owners as cash producing assets, they will sell it, shut it in, and politically lobby to make sure you can keep it shut in.” I am aware of that, but I don’t see how it refutes anything I said in the post.
the mine is uneconomic now, but may not be in the future. If you’re in EA you have to look at the future no? You’re trying to play the long term game right ?
you can pay a billion dollars and stop an operating mine from producing 10 million tonnes of coal a year for 30 years, or you can pay 10 million dollars to prevent an currently uneconomic mine with a billion tonnes of reserves from ever being built. I mean at some number/ratio of costs it makes sense correct ? Or are you of the opinion that regardless of costs you are only interested in currently produced coal
I reiterate that uneconomic mines don’t have reclamation expenses because they have never been exploited. The land has not yet been disturbed by mining.
there are surely better ways to use the money. Sure. That’s the point of this debate correct? Is it a good use of money ? And that depends on a) How much money? And b) produced how much good? You offered a big money (economic mine takeover) big and certain good (immediate stopping of mining). I’m just offering a small money (uneconomic mines) smaller and less certain good (less future production). At some level maybe the balance of the two works for someone.
I’m not saying they legal barriers don’t matter. I’m saying that they can be overcome. Including by doing things which are standard for corporations but not usually done by NGOs. For eg fairly easy to imagine a billionaire funding a group of actual coal mining executives to buy up uneconomic mines, put out great plans to develop them, on the side fund someone to sue the company saying it hasn’t met it’s obligations, go into long legal issues, and delay development indefinitely. I mean think like Peter Thiel. Of course this also means you gotta look like an actual miner and you can’t have PR saying you’re doing EA. I would in fact say that the legal barriers to mine development are greater than the legal barriers to mine non development. Yet mining executives put up with great barriers and risks of expropriation to do business in a lot of shady jurisdictions. The EA community should decide what it values and then put in the blood, sweat, tears and money to get it done.
Tempest Williams is instructive. She was successful in purchasing a lease. It was cheap. She paid 1.50 an acre, so 1,120 acres cost her $2,500. She then didn’t make “reasonable efforts” to exploit. She could have just hired a team to make those reasonable efforts, which could literally be “I walked around to see if there was oil today, and there was none” and then write a report. I mean it’s all just useless paperwork and filings. Just work the bureacracy and pay the bare minimum fees. I think what kills every environmentalist effort is that the actual project is just an effort to draw attention to the problem rather than an effort to fix the issue. So Tempest Williams spent 2,500 bucks but got millions of dollars of earned media exposure plus a book deal and clout for what she did. And that was way more valuable for her than shutting in 1,120 acres of exploration claims. I’m just saying you can actually execute on this, it’s not particularly hard BUT you have to actually EXECUTE, meaning hire lawyers, accountants, engineers, tax counsel, raise money, deploy, and manage regulated assets over a long period of time.
I don’t think I’m refuting much in your post besides the clear factual errors (land acreage use, reclamation fees on undeveloped claims etc). There is a fundamental cost benefit focus area that we differ on. Specifically i believe the “Buy coal mines” idea in EA was recently popularized by Alex Tabarrok, amongst others.
https://marginalrevolution.com/marginalrevolution/2021/10/be-green-buy-a-coal-mine.html
“ Indeed, you could buy the right to mine costly-to-exploit coal deposits–those deposits are cheap (since they are costly to exploit) and by taking them off the market you are making the supply curve even more inelastic so you aren’t encouraging much additional supply. ”
So my focus area is specifically on the cost benefit of uneconomic coal, which is also exactly what your write up does not focus on.
You came to a negative conclusion on “Should we buy coal mines” focusing on one segment (economic coal mines) without considering the other… and I’m guessing perhaps being unaware of the previous recent intellectual discussion in the EA community on uneconomic coal mines ? Is that so ?
I mean do you have any response to Alex ?
If the goal is preserving an energy source for use after civilizational collapse, and the coal industry is in structural decline, then it’ll be cheaper to wait and buy a mine in the future (assuming there’s enough coal left and that civilization hasn’t collapsed by that time).
If the decline continues, then the coal mines are even less relevant. But maybe this is to hedge against them coming back in vogue?
You’re thinking that if renewables take over, then coal mines will be abandoned and preserved without us doing anything?
Yeah that’s my default hypotheses and (I think) what’s driving the intuition behind John’s and Owen’s posts/comments.
I’ve read your overview and skimmed the rest. You say there will probably be better ways to limit coal production or consumption, but I was under the impression this wasn’t the main motivation for buying a coal mine. I thought the main motivation was to ensure we have the energy resources to be able to rebuild society in case we hit some sort of catastrophe. Limiting coal production and consumption was just an added bonus. Am I wrong?
EDIT: appreciate you do argue the coal may stay in the ground even if we don’t buy the mine which is very relevant to my question
EDIT2: just realised limiting consumption is important to preserve energy stores, but limiting production perhaps not
Buying coal mines to secure energy production post-global-catastrophe is a much more interesting question.
Seems to me that buying coal, rather than mines, is a better idea in that case.
that’s one option, but it would also be more expensive because then you have to cover all the costs of mining.
Post civilizational collapse you might not be able to pay that cost though
I’ve long wondered about this. Thanks!
Interesting. We had a similar discussion in Sweden 2016, when the government decided to sell coal mines in Germany that were owned by the Swedish state-owned company Vattenfall. It was a lot of pressure from the environmental movement to keep the coal mines in order to keep the coal in the ground. As you mentioned, Greenpeace were not allowed to buy it.
But instead “the Swedish proposal” won to rise the price of emissions trading in the EU (EU ETS) and soon the price of burning coal increased a lot and the value of these coal mines plummeted. So in this case, Sweden got the billions from selling AND a way larger emission reduction that still today have an important effect.
TLDR: Do not buy a mine, in the US or abroad, rather assist energy-intensive industries to purchase alternative energy more affordably, during higher supply times (sunlight, wind activity). Keep in mind the possibility to inform regulations of large energy consuming economies or companies.
Re 3: Assuming that in countries from which coal is exported new mines will just open ‘next coal reserve,’ it does not make sense to buy mines there.[1] In countries where coal is for domestic consumption, it may be used as a demand-surge complementarity to other sources of energy, either domestic or foreign, from alternative sources or otherwise, such as coal. So, here, regulating energy supply sources (e. g. max 40% from coal, including imported) or developing smart contracts (automatic production adjustments) with energy-intensive industries (such as concrete or fertilizers production) (produce more when wind/solar energy is cheap (wind, sunlight)) - it can still be profitable for companies to let some of their machinery unemployed when alternative source energy is more expensive, if energy amounts for the vast majority of their costs. This demand-driven regulatory method can account for the issue of no further coal mines are built domestically but mining increases abroad and the efficiency-increasing approach in energy-intensive industries can further stimulate demand for alternatives, preventing mines to produce more.
Unless large-scale, ideally structural changes, are implemented. For example influencing the entire national industry to stop employing children who fit well in the shafts (that is what I heard when looking at mines in one developing country, but apparently the practice is reducing) (which is unlikely to be achieved by buying mine, more so by regulation), or improving labor standards without reducing competitiveness of the industry (which can be challenging, assuming that efficiencies cannot really be increased: cost can be reduced by employing cheaper labor), or offering better alternatives (‘instead of a mine, there is a school’ type of activities—which may however be ineffective, because persons in school learn to coordinate miners/natural resource extraction including value chains, as an oversimplification) (but these alternatives are not conditional on buying the mine). Thus, it may be less cost-effective to improve the mining situation in buying a mine than in targeting the issues, such as child labor (conditional cash transfers?), or dangerous conditions (free technology that improves conditions, just like iron fortification for flour).
Hi John—Thanks, this was an interesting read and a concept I didn’t know about before reading your post. Interesting to see the numbers. I’m an Australian who is chuffed that the current government got chucked out a matter of hours ago. The opinion polls seem to cite a collective frustration at the outgoing government’s lack of commitment to meaningful climate change policies/mitigation. Still, I am doubtful there will be much in the way of dialing back on coal to come. Morrison holding that piece of coal up never fails to make me shudder. An often missed but crucial point in the discussion around mining/coal in Australia is that it happens on land that always has and always will be Aboriginal land. We benefit from the land that was stolen from the first nations people of Australia.