|November 12, 2014|
The real story of US coal: inside the world's biggest coalmine
|In the world's biggest coalmine, even a 400 tonne truck looks like a toy. Everything about the scale of Peabody Energy's operations in the Powder River Basin of Wyoming is big and the mines are only going to get bigger -- despite new warnings from the United Nations on the dangerous burning of fossil fuels, despite Barack Obama's promises to fight climate change, and despite reports that coal is in its death throes.|
At the east pit of Peabody's North Antelope Rochelle mine, the layer of coal takes up 60ft of a 250ft trough in the earth, and runs in an uninterrupted black stripe for 50 miles.
With those vast, easy-to-reach deposits, Powder River has overtaken West Virginia and Kentucky as the big coalmining territory. The pro-coal Republicans' takeover of Congress in the mid-term elections also favours Powder River.
"You're looking at the world's largest mine," said Scott Durgin, senior vice-president for Peabody's operations in the Powder River Basin, watching the giant machinery at work. "This is one of the biggest seams you will ever see. This particular shovel is one of the largest shovels you can buy, and that is the largest truck you can buy."
By Durgin's rough estimate, the mine occupies 100 square miles of high treeless prairie, about the same size as Washington DC. It contains an estimated three billion tonnes of coal reserves. It would take Peabody 25 or 30 years to mine it all.
But it's still not big enough.
On the conference room wall, a map of North Antelope Rochelle shows two big shaded areas containing an estimated one billion tonnes of coal. Peabody is preparing to acquire leasing rights when they come up in about 2022 or 2024. "You've got to think way ahead," said Durgin.
In the fossil fuel jackpot that is Wyoming, it can be hard to see a future beyond coal. One of the few who can is LJ Turner, whose grandfather and father homesteaded on the high treeless plains nearly a century ago.
Turner, who raises sheep and cattle, said his business had suffered in the 30 years of the mines' explosive growth. Dust from the mines was aggravating pneumonia among his Red Angus calves. One year, he lost 25 calves, he said.
"We are making a national sacrifice out of this region," he said. "Peabody coal and other coal companies want to keep on mining, and mine this country out and leave it as a sacrifice and they want to do it for their bottom line. It's not for the United States. They want to sell it overseas, and I want to see that stopped."
As do some of the most powerful people on the planet. About 120 world leaders met at the United Nations (UN) in September to commit to fighting climate change -- many noting that the evidence of warming was occurring in real time. Obama last year proposed new rules that will make it almost impossible to build new coal power plants.
Last week, an exhaustive UN report from the world's top scientists warned of "severe, widespread and irreversible impacts" without dramatic cuts in greenhouse gas emissions.
Coal is also facing competition from cheap natural gas. Peabody had a very bad year in 2013, losing $525m (£328m) as global demand for coal flatlined.
But despite the promises from Obama and other world leaders the use of coal for energy rose again last year in America, Europe and in Asia - and so did the emissions that cause climate change.
Peabody continued to post losses this year. But extraction and revenue from the Powder River Basin mines went up - and company officials say they could ship out even more coal if they could just get the trains to run on time.
On an average day, 21 long freight trains full of coal leave North Antelope Rochelle bound for 100 power plants across the country. But the company says that's still not enough. As for climate change -- that's hardly Peabody's concern.
The company is deeply reluctant to even mention the words. Durgin, who refuses to appear on camera, introduced himself an "active environmentalist, not an environmental activist".
Chris Curran, a Peabody spokesman, refused to talk about climate change or the effects of Obama's efforts to cut carbon emissions on the company's profits. "They are only proposed regulations right now. Nothing is going on," he said.
It takes a call to the senior vice-president of corporate communications, Vic Svec, at the head office in St Louis before the company will discuss climate change. As it turns out, the company's official position is that there is no such thing as human-caused climate change. "We do not question the climate changing. It has been changing for as long as man has recorded history," Svec said. Climate change was a "modelled crisis", he went on.
"What we would say is that there is still far more understanding that is required for any type of impacts of C02 on carbon concerns." Asked whether he saw climate change as a threat, Svec said: "Climate concerns are a threat to the extent that they lead to policies that hurt people."
Peabody's official position on climate science is divorced from scientific reality. But their grasp of the politics of coal clearly is not.
America gets about 40% of its electricity from coal - and by far the biggest share of that coal comes from Powder River. According to the Energy Information Administration (EIA), its use of coal for energy rose 4.8% last year, in part because of the Arctic blasts of the polar vortex. Carbon dioxide emissions from energy registered one of their steepest rises in the last quarter century.
Australia, where Peabody has three mines and which has the world's second largest reserves of coal, has ramped up production 37% since 2000, helped by up to $3.5bn in government subsidies to the entire fossil fuel industry, a forthcoming report from the Overseas Development Institute and Oil Change International will say.
China has doubled its use of coal over the last decade. India is preparing to open its large coal reserves to foreign mining companies to meet a promise to hook up the 400 million without electricity on to the grid in the next five years.
Coal use in Germany rose last year for the third year in a row, even as the country met its ambitious targets to transition to wind and solar power. Poland has been promoting its coal as an alternative to Russian natural gas.
Overall global coal use rose 3% last year, faster than any other fossil fuel, according to the BP Statistical Review of World Energy.
That's a disaster in the making, scientists and energy experts say. The International Energy Agency has concluded that two-thirds of all fossil fuels will have to stay in the ground if the world is going to avoid crossing the 2C threshold into dangerous climate change.
Obama agrees. Burning all of those fossil fuels would trigger "dire consequences" for the planet, he told an interviewer last June. "We're not going to be able to burn it all."
But the reality is that Obama has spent the last six years expanding coal, oil and gas production under his "all of the above" energy strategy.
"We quadrupled the number of operating rigs to a record high. We've added enough new oil and gas pipeline to encircle the earth and then some," Obama told a rally during his 2012 re-election campaign.
Coal exports have risen on Obama's watch, with mining companies shipping some 100m tonnes a year for each of the last three years. Mining companies are actively pursuing plans to expand coal ports and ship more coal overseas, as a back-up market should the incoming Environmental Protection Agency (EPA) rules on carbon pollution make it harder to burn coal for electricity.
Meanwhile, the federal government, under Obama, gave away $26m last year in tax breaks to the coal industry, according to the Overseas Development Industry report.
Even if the president wants to do more to curb coal, the Democrats' heavy defeat in the mid-term elections means there will be no pull in that direction from Congress. Mitch McConnell, the Republicans' leader in the Senate ran on a slogan of "Guns, Freedom and Coal".
But even before the mid-terms, campaigners say the rise in coal use under Obama undermines his climate agenda and could wipe out efforts by other countries to fight climate change. Last July, a judge in Colorado agreed, throwing out a mining permit granted by the Bureau of Land Management on the grounds that it would worsen climate change.
What's especially frustrating, campaigners say, is that Powder River Basin coal is on public lands, which means that Obama could intervene to limit future mines.
"This whole notion that you can just address the smoke stack is wishful thinking at the end of the day. Why wouldn't you address the problem from cradle to grave? Why wouldn't you trace it all the way back to where it is being produced rather than just look at the stack?" said Jeremy Nichols, climate and energy director from Wild Earth Guardians.
Campaigners say they see little evidence Obama has tried to curb coal use. The Bureau of Land Management (BLM), which oversees extraction on public lands, shows little sign of incorporating Obama's climate change directive into future planning.
The agency came in for scathing criticism from government auditors earlier this year who said the BLM gave up too much control to the mining companies, and sold coal too cheaply, to the detriment of US taxpayers.
Those low prices are crucial to Peabody's business model. "It's a high volume, lower priced product and we can still ship literally across the country and compete," Durgin said. In 2012, the company acquired the rights to mine an additional billion tonnes of coal, paying just $1.11 a tonne. Peabody also pays 12.5% royalties to the US federal government, once the coal is mined.
Campaigners say such prices represent a giveaway that allows mining companies like Peabody to keep the prices for Powder River Basin coal artificially low.
Campaigners also argue low coal prices make it harder to ramp up production from renewable energy sources like wind and solar.
"We have never seen leases of more than a billion tonnes and we are starting to see that under the Obama Administration," Nichols said.
The Department of Interior, which has final authority over public lands, refused to respond to multiple requests for comment on its efforts to implement Obama's climate policies.
Instead, a stock email attributed to Jessica Kershaw, the interior spokeswoman, confirmed that Obama was committed to mining more coal.
"As part of the Obama Administration's all-of-the-above energy strategy, the Department of the Interior and specifically the Bureau of Land Management (BLM) is committed to the safe and responsible development of both traditional and renewable energy resources on public lands," the email read.
"The BLM also recognizes that coal is a key component of America's comprehensive energy portfolio and the nation's economy."
The email did not mention climate change.
For Peabody though, the aim is expansion. The company produced 134m tonnes of coal from its combined Powder River Basin mines last year, and was on track to increase production this year, Durgin said.
"I've been asked when is the end of the mine," said Durgin. "I don't know. Economics will tell us that."
So long as Obama pursues policies that keep coal cheap, that end is unlikely to come soon.