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?


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.


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.