California’s historic clean-energy law could become a $300 million source of new revenue for the coal industry if a state regulatory agency votes today to allow California’s major polluters to offset their emissions by purchasing credits from methane-reducing projects at coal mines located primarily out of state. But it doesn’t make sense to allow a compliance option that would come at the expense of pollution-control opportunities that could instead directly improve California’s air quality and economy.
As a board member of the Climate Action Reserve that developed our current offsets protocols, which can be used in limited quantity for complying with the cap-and-trade program under the state’s landmark AB 32 Global Warming Solutions Act, I know offsets can be an effective tool to decrease or sequester carbon pollution to help meet our 2020 reduction target.
Currently, our state’s major polluters have three options for compliance under the cap-and-trade program. They can cut pollution in their businesses, buy permits to pollute from state-run auctions or from other businesses that have cut their emissions aggressively, or purchase “offsets” that represent carbon emission reductions in sectors not regulated under the AB 32 program. Providing alternatives helps ensure we achieve our emission reduction targets in the most cost-effective manner, as AB 32 requires.
The California Air Resources Board already has approved offset protocols that allow investments in forest conservation or reducing emissions from livestock practices to count against the mandatory pollution limits for our major industries. Today, the agency is scheduled to decide whether to allow coal methane offsets as well. But unlike the other protocols, which can provide a range of environmental and local benefits in California, this proposal doesn’t add up.
Since California has no active coal mines and only a few small abandoned mines, virtually all of the methane-capturing projects would be outside California. That means that none of the additional benefits that can accompany greenhouse gas emission reductions – like new jobs from emissions controls and decreases in toxic air pollutants that harm our health – will occur in California.
Instead, the protocol will provide a new revenue stream – potentially upward of $300 million by the end of the decade – for coal mine operators at a time when low-carbon energy resources have king coal on the financial ropes in the United States.
That’s revenue that could be invested instead in emission-reduction projects at California facilities, in existing offsets benefitting our forests and low-carbon farming practices, through the state’s Greenhouse Gas Reduction Fund where the proceeds are earmarked for clean-energy investments, or as utility bill credits for California customers. With the eyes of the world watching the development of California’s carbon market as a climate-control measure, the Air Resources Board needs to get this right.
When coal is mined, methane – a potent greenhouse gas pollutant – is vented into the atmosphere. If the methane is captured or injected into a pipeline instead, the climate impact is substantially diminished. Although AB 32 is the wrong vehicle to accomplish it, there’s no doubt that coal mine methane emissions need to be reduced.
Methane is the second-largest source of U.S. climate-warming greenhouse gas emissions after carbon dioxide, and nearly 12 percent of all human-caused methane discharges result from coal mining. With the technology to capture and destroy this type of methane already commercially available and in use in a number of mines, the Environmental Protection Agency should require it.
Here, the Air Resources Board staff says it is recommending adoption of the coal mine methane protocol primarily because it would add tens of millions of potential emissions reductions credits to the carbon market, helping to contain cap-and-trade allowance prices. But the Air Resources Board already has proposed a number of safeguards to ensure allowance prices stay within a reasonable range. Recent market forecasts suggest that, if anything, the concern may be in the other direction, as these pollution permits are projected to stay near the floor price for the foreseeable future.
For a protocol that creates the impression – if not the reality – of helping to prop up the coal industry by providing mine operators with a new and potentially lucrative source of revenue, additional cost containment for California’s biggest polluters doesn’t seem like a strong enough reason to approve it when there are existing compliance options that provide more benefits to Californians. We hope the Air Resources Board agrees and rejects this proposal.
Peter Miller is a senior scientist at the Natural Resources Defense Council, focusing on California energy policy. He is currently a board member of the Climate Action Reserve.