> Frost thinks we should pay the organizations which own underground coal deposits—specifically, the U.S. government—for the right to never mine it.
This is a wildly impractical idea. It's so bad, it hardly deserves any serious consideration.
There is far more coal still in the ground - to go with deposits that are either expected to be there or have not been found yet - than that which we already have operating mines for. If, for example, you remove US coal from the global supply, the only thing it'll accomplish is to lift prices for the rest of the world's miners (bringing their operations back to high levels of profitability, whereas today the global coal industry is in terrible shape), and encourage the creation of new mines all over the planet. In the process of restricting supply, it'll lift coal back to highly profitable as an industry, and it'll fund the creation of new mines.
Unless the plan is to buy all the land on earth of course, so you can guarantee all those untapped coal deposits never come on-line. I'm sure it would only cost a mere few dozen trillion dollars to make a serious dent.
Matt Frost's plan should be renamed: The Coal Industry Restoration Act
When the price of coal rises other forms of fuel become more cost competitive. The net result should be a reduction in coal production as utilities switch to other fuels.
It wouldn't make coal non-competitive, that's the central flaw in the argument.
You have to buy the majority of all known coal deposits on earth to accomplish that, and there is far too much land / coal to be purchased to get even remotely close to that. Up to that point, more supply will perpetually come on-line to off-set the price gains, because of the substantial increase in profitability price increases enable.
Not to mention that the vast global coal industry that remains - ie those mines not purchased (and there would be vast numbers of those) - will move into high gear and invest into producing more coal, faster, to capture the profits available.
It's already very well understood that this is what happens in practice. See: the oil industry.
Increase the price of oil from $50 to $200 and see how much supply comes on-line, and the unusual sources it starts coming from (eg tar sands, or two miles below the surface of the ocean).
Yes, but there are other ways to raise the price of coal which don't involve bribing coal companies to stop destroying the world. They're destroying the world, how about they pay for it? You could put a massive property tax on coal mining rights, a massive tax on profits from coal, and/or a massive sales tax on coal. Any of those would achieve the same result, but instead of rewarding sociopathic corporations that are literally destroying the world, they'd put that money in public coffers which could be used, for example, to fund renewable energy.
I really don't think we need to bribe coal companies to stop killing us.
EDIT: And don't even think of playing the "but if we tax them they'll pass that cost on to consumers" card. Driving up the cost of coal by buying mines will also result in them passing that cost on to consumers. All costs are always passed on to consumers: billionaires are billionaires because they're adept at getting other people to pay for things. At least if the money is going into taxes, it can be passed back to the consumers it was taken from in the form of public programs.
Supply would come on-line to control the price increases, which would completely neutralize any large price spike.
We know this is how economics works. We have hundreds of years of commodity market examples to pull from that demonstrate exactly that. The oil industry has provided numerous obvious examples of it in practice in just the last 50 years.
This is the flaw at the heart of the plan, that guarantees it can never be feasible.
Unless you plan to buy the majority of all coal deposits on earth.
>> "This is a wildly impractical idea. It's so bad, it hardly deserves any serious consideration."
But arguably it may be more effective than the political process.
>> "and encourage the creation of new mines all over the planet. In the process of restricting supply, it'll lift coal back to highly profitable as an industry, and it'll fund the creation of new mines."
If you read the entire article, it mentions that purchasers should consider buying the more harder to mine deposits first, to counter your concern:
"Harstad thinks that his coalition should lease or purchase the hardest coal to access: In other words, the coal that’s most expensive to mine. Then, as demand for coal grows and the price rises—and mining companies start to look more more difficult reserves—they’ll find that coal is already locked up."
Or take the same amount of money and convert/build plants to use natural gas. It creates half as much CO2 per unit of energy created and we have more of it than we know what to do with right now. Instead of burying all that money in a coal mine we could get some new infrastructure, some jobs, and less CO2.
but that would decrease price of coal, which would lead to other nations - particularly developing nations like china - to increase their consumption, thereby offsetting most of the ecological benefit from converting/building the natural gas plants.
This is stupid. Why are we playing these economic games? These people are literally destroying the environment for all of us, which is already resulting in deaths and billions of dollars of destruction and will likely result in far worse. We don't need to pay them to stop killing us, we need to make laws making what they are doing illegal.
The problem isn't that we don't have solutions to global warming. We are still subsidizing fossil fuel energy far more than renewable energy: one easy, obvious step would be to stop doing that but we haven't. The reason we haven't done simple things like that is that it isn't profitable for billionaires. I'm quite tired of the conversation about global warming centering around "finding solutions" as if we don't have solutions. The problem isn't a lack of solutions, it's that amoral corporations control environmental policy and don't care if we all die if it makes them a profit.
> we need to make laws making what they are doing illegal.
In context, you are saying burning coal should be illegal. This is a weighty proposal.
You need to either a) describe, in detail, what would happen if burning coal were made illegal (bonus points for discussing how this changes depending on which countries make it illegal, since getting China on board might be rather difficult) or b) respond by admitting that your idea needed a little more thought than you've given it.
> In context, you are saying burning coal should be illegal.
In context, I'm saying mining coal should be illegal, but sure, I'll add that burning coal should also be illegal.
> You need to either a) describe, in detail, what would happen if burning coal were made illegal
No, that's impossible because the effects of illegalization would depend very heavily on how it was illegalized. Obviously I'm not proposing an immediate global ban, that would be stupid. But something along the lines of the Montreal Protocol[1] is certainly doable. Even illegalization over the next 50 years would have some positive effects. It would be quite difficult to find a solution to this problem which is less effective than current pro-coal policies.
> (bonus points for discussing how this changes depending on which countries make it illegal, since getting China on board might be rather difficult)
You're proposing a perfect solution fallacy[2]. Of course it would be hard to get some countries on board, but even getting just the EU or the US to illegalize coal would have a significant effect.
How should nations that sit on top of large coal reserves and lack any other fuels work without energy source?
Not everyone has enough money to build nuclear plant or enough wind for wind power plants, or enough high water for water power plants, or enough sun for solar plant.
More over, why do you want coal plants to be disabled now?
Developed countries used it for many years, until they got richer and have the luxury of choosing how they will get power. You want undeveloped countries to use more pricey power source from the start? This will slow down their development (in comparison to the first round of countries).
Coal is the largest source of electricity in the United States. It will take decades to replace it on the most optimistic predictions (how long to build Natural Gas or Nuclear plants? How long to solve the Solar/Wind peak capacity problems?). So what happens when it's illegal to mine coal? The only non-disastrous solution is that we import it from countries that don't have the ban, which is relatively pointless--it would probably cause a short time price jump, with all the attendant disruption, and no significant long-term benefits.
Put that way, your solution sounds a lot better than I thought, but somehow I doubt that's what you mean.
I think we should be doing a lot to move away from coal. A 50 year runway to eliminate coal burning sounds conceivable.
But your original post sounds like an environmentalist Donald Trump speaking--no actual analysis of anything, just knee-jerk "it oughta be illegal!!!" If what you meant all along was a decades long reduction in coal to zero, you did a tremendous job of attacking your own credibility.
P.S. Your citation of the perfect solution fallacy is off the mark. I was not arguing that it would be good, but not good enough. Rather, I was implying that it would be actively bad. China uses much more coal than us, as a proportion of their electric generation. If the US were to drastically drive up its electric prices, some proportion of industry would move overseas. The net effect might be increased greenhouse gas emissions, and certainly increased non-greenhouse pollutants. That's above and beyond the negative effects on the US economy.
It was an international treaty and it had a time span for phase out.
So arguments "but we will import and thus externalize" and "it's impossible to replace everything immediately" look kind of arguing against something that was not presented.
> If what you meant all along was a decades long reduction in coal to zero, you did a tremendous job of attacking your own credibility.
I'm not sure why you're holding me responsible for your assumptions. I didn't go into any detail about how a ban would be implemented: if you assumed it would be implemented immediately and with no transition plan, that's on you.
While you may have strong opinions, the reality of politics however is not as simple as you might like it to be. The article presents a solution that doesn't require significant political change by instead relying on private property and market forces.
Without significant political change there will not be significant economic or (positive) environmental change.
The article proposes paying the people who are destroying the world to stop destroying the world. But even if we could make a significant dent in coal production in this way, what's to stop the coal companies from reinvesting that money in finding new coal sources and lobbying for continued lax policies?
Relying on private property and market forces is generally the proposal of people who have a lot of private property and are therefore favored by market forces. I'd rather take the money away from the people who are destroying the world and devote that money to saving the world.
If you want to use market forces to drive up the price of coal, how about lobbying for taxes on coal, and having the money from those taxes go to renewable energy sources? Billionaires can lobby, and at least that way, they're ensuring that the money goes somewhere useful.
Let's stop pretending government isn't a market force. Coal companies have no qualms about lobbying government, why should we?
Capitalist solutions to this problem have been tried and have done shit all. It's time we tried something else.
Er... what? The article suggested bribing the government to forbid other companies from mining the coal. Which part of that sounded like market forces to you?
that is a good point. For the sake of argument regarding this article, there is a presumption that the government owns the mineral rights to lands west of the Mississippi: "But west of the Mississippi, things work different. Especially in Montana and the Mountain West, the government mostly holds mineral rights."
But if one does not accept the government's property claim on those mineral rights, then I suppose the act of paying the government to forbid other companies from mining there could be considered a bribe.
The article is presenting a solution that works in the current state of the world: presuming the current state of property rights and legal structure.
China produces 41%+ of the global coal-based energy; the US produces less than 17%, and it dropped significantly between 2010-2012 (I don't have later data).
Buying coal has a global impact; ending US subsidies doesn't (in fact, it would make it cheaper to burn elsewhere).
> Buying coal has a global impact; ending US subsidies doesn't (in fact, it would make it cheaper to burn elsewhere).
I'm not sure how you came to the conclusion that 17% is insignificant. Yes, coal prices elsewhere would go down, but at the very worst case that would mean that demand for goal rises to match previous prices: at the very worst coal usage stays the same. And if even 5 of those 17 percentage points end up not getting burned, that's still pretty significant.
Meanwhile, the US is where a large portion of the research into renewable energies occurs. If subsidies to fossil fuels were redirected to renewable energies, the research that would result would have global effects.
So ending US subsidies absolutely does have global impact.
By raising the price of coal will allow for seams of coal that are less economically viable to be mined. These unviable seams are likely more environmentally damaging to mine.
I had a family member that owned property in WV. They looked into the mineral rights for the property. The seam below the property would be difficult to mine due to a near by river. To access the seam the water would need to be diverted. With a high enough price for coal then these sorts of seams become mineable.
>> "By raising the price of coal will allow for seams of coal that are less economically viable to be mined. These unviable seams are likely more environmentally damaging to mine."
Actually, the article mentions that purchasers should consider buying the harder to mine coal deposits first, precisely for that reason:
"Harstad thinks that his coalition should lease or purchase the hardest coal to access: In other words, the coal that’s most expensive to mine. Then, as demand for coal grows and the price rises—and mining companies start to look more more difficult reserves—they’ll find that coal is already locked up."
Unless the price increase puts coal power plants out of business (remember: they have to compete against oil and natural gas [and solar, nuclear, wind, ...]), and kills off demand.
Indeed. His plan would be massively damaging environmentally. It would encourage a huge increase in exploration for new deposits, and it would subsidize the worst types of mines.
The craziest aspect of it, is the assumption that you could pull a meaningful fraction of known mines off-line to accomplish the end goal of seizing up the coal market (essentially crashing it, such that it can't recover).
Here's what would actually happen: Gates & Co. buy up 10% of mines (at a huge $ cost), the price of coal rises say 50%, increasing the profitability of the other 90% of the industry. The other 90% then invests those gains into more output, more exploration, and they bring on-line what were formerly less profitable deposits (Gates & Co. will not be able to buy all of those, the planet is a big place, and there's an extraordinary amount of coal).
You would have to buy a truly massive number of mines, in an extremely short amount of time, to accomplish the plan. The moment you start trying to buy up mines, the price of each of them will rise, so you'd have to do it impossibly fast.
There's no scenario you can walk through in which it's a feasible plan. Not even close.
If the price of coal rises 50%, a whole host of non-coal alternatives suddenly become economically feasible.
So yes, entrenched actors (i.e. coal companies) will react to a rise in the price of coal by mining for more coal. However, many other actors will be incentivized to innovate and develop new sources of energy.
We've seen coal go up in price by more than 50%, and it didn't hammer the industry. For example, global coal prices basically doubled from 2003-2007. Coal consumption did not plunge during that time, China kept buying more of it at higher prices (coal at 2x the current prices, is still a cheap energy source if you don't properly force in environmental costs). It wasn't until fracking made huge amounts of natural gas available, that the US coal industry began to sink (in tandem with the Obama Admin targeting coal).
More expensive coal can help speed the process, I certainly agree with that. The question is, can you buy enough coal mines around the world to crash the coal industry in that respect, and out-pace the amount of new coal supply other miners can bring to the market seeking higher profits. I seriously doubt it, I'd argue there's far too much coal.
Politically you'd have to basically use the Obama Admin tactics, globally, to hit the coal industry, while also removing as many mines as possible. It's an incredibly expensive, risky proposition (and good luck getting everyone to sign on to it) - when we'd be far better off continuing to improve alt energy, and building nuclear plants. China for example isn't going to chop their own legs off to placate climate concerns, they're going to keep using coal until they can gradually diversify to other sources like nuclear, wind and solar.
The hardest part for this is going to be convincing the first set of billionaires to take money out of (gold, x commodity) and putting it into coal. Gates will probably have to be a guinea pig and convince some of his other investor friends to do the same, and everyone else will follow suit.
That is of course, if you believe global warming is a thing.
well at least it requires these global-warming-concerned billionaires to put their money where their mouth is, instead of by enforcing their beliefs on others via the political process.
How do they enforce their beliefs via the political process? Last time I checked (in the U.S. at least) you needed to be elected to office in order to pass policy and I don't believe there are that many billionaires in elected office.
If you are suggesting they manipulate it with donations then remember that your money spends just as well in Washington as theirs does. And don't forget that global-warming-denier billionaires make campaign contributions as well.
>> "How do they enforce their beliefs via the political process?"
By electing and lobbying politicians who make laws.
>> "Last time I checked (in the U.S. at least) you needed to be elected to office in order to pass policy and I don't believe there are that many billionaires in elected office."
Billionaires don't actually have to be in office in order to enforce their beliefs via the political process.
>> "remember that your money spends just as well in Washington as theirs does"
Using money to implement laws via politics is rent-seeking behavior. But although my money may spend just as well in Washington as their money does, the key argument this article is making is: market methods can be more effective than political methods for limiting greenhouse gas emissions.
If you want to solve global warming invest in nuclear power and make it so that I can drive to any gas station and have a new battery put in my car that can take me as long as a tank of gas, in a car that isn't far more expensive than my current car.
On the face of it, without having any knowledge of the amount of coal out there or the cost of extraction for various amounts of reserves, this seems like it could be feasible. I say that because of the ways to keep this potential carbon dioxide out of the atmosphere, there are three points of intervention:
1) buy it and prevent it from ever being burned (cheaper than the coal itself)
2) capture it as it comes out of the smokestack. Estimates I've heard of this are ~$0.06/kWh, which is pretty much the same cost as the electricity, so this is more expensive than buying the fuel before it's been mined
3) extract the CO2 from the air or oceans. Engineered, electricity-based processes for this will likely cost 3x-6x as much energy as the coal generated originally. Biostorage (forrestation, etc..) may or may not be cheaper than this, depending on how effective we can make CO2 sinks.
With coal CO2, prevention really is the way to go.
Of course, if we had a carbon market where fossil-fuel CO2 emitters had to pay the cost of CO2 extraction, or sequester the carbon themselves, the market would allow quick and efficient solutions, letting innovators profit as they improve CO2 management.
Coal/fossil fuels/CO2 emissions are not moral evils that must be stopped at all costs, they must just be stopped at their true market costs.
OK. interesting idea. But whenever i look - i don't seem to find the missing piece- how much would it cost and what would get from that cost .I even looked at the original paper by harstad :
I've often wondered why there wasn't a charity fund that would just buy up portions of rainforests to turn into nature preserves, similar to the way Norway paid Brazil to protect the Amazon: www.reuters.com/article/2015/09/15/us-climatechange-amazon-norway-idUSKCN0RF1P520150915
Probably a lot of reasons behind it (and maybe charities like that do exist -- there are a lot of charities out there) but some countries do not allow foreign ownership of land. I believe Mexico you can only get a 99 year lease on land when you "buy" there. Another reason might be distrust of government. Some countries with rain forests do not have the most stable governments (do they seem to be less stable the closer to the equator you get?) and it would be a shame to buy up a lot of land only to have it nationalized or laws not enforced (owners aren't here so who is to stop me from logging it?) when government changes.
This is the same thing as trying to corner the market by buying up the supply. It doesn't work. The supply will increase faster than anyone can buy it.
Renewable energy is paid for by rich people, so long as you don't force economic adoption to occur too fast (eg shifting from coal to solar/wind). There's a reasonable economic adoption curve, if you stay on it, then the rich primarily subsidize the shift - if you move too fast, and to the extent you do so, you punish the poor too much.
The rich pay for the shift through their higher taxes (government R&D, subsidies, etc), funding research at top tier universities, owning large corporations that do R&D or implementation (eg Musk / SolarCity, or Walton / FirstSolar and so on), buying big batteries for their homes, being first to adopt large scale home solar, building massive solar plants or wind farms (or being customers ala Buffett / Berkshire / Mid-American). This is similar to the way the rich subsidize most new technology until it becomes economical.
First, most billionaires don't just have billions in cash laying around usable to buy things. To get that, they'd have to sell off their companies, which usually lowers the value, so the cash to purchase needs to come from others willing to put billions of cash into purchasing these companies. The economic loss from this step would be huge.
Next, how much of the coal supply can they affect?
The US mines about a billion tons a year of coal, and has done so for many years, with value about 50/ton, making this around 50 billion a year in produced value. Presumably the places we mine coal has much left (many places put our coal supply at about 400 years worth).
This puts the value of the US coal around 20 trillion (ignoring a few factors like present value, etc., but this is around the total value). To purchase the land right from owners would cost somewhere around this amount, give or take an order of magnitude.
So the sheer number of billionaires needing to liquidate their companies, sucking the capital out of circulation, just to purchase land they will never extract any value from, makes this approach a non-starter. It just would not make much dent, if any, since closing a few mines will not reduce demand; others would likely step up production.
This money would likely be much better used to invest in new energy research to wean us off coal in the long run.
"First, most billionaires don't just have billions in cash laying around usable to buy things. ... The economic loss from this step would be huge."
There would be no economic loss. In real terms, the companies that the billionaires are selling are just as valuable. The sellers might be big enough to cause the paper value to go down temporarily, but it would only hurt the sellers themselves. And obviously, in nominal terms the cash would enter right back into the economy once the coal was purchased. So there would be near-zero negative impact to the overall economy from the asset sales.
"This puts the value of the US coal around 20 trillion (ignoring a few factors like present value, etc., but this is around the total value). To purchase the land right from owners would cost somewhere around this amount, give or take an order of magnitude."
It's hard to get exact numbers, but the total value of US coal is many many times higher than the value of just the mineral rights. The legal right to mine $50 worth of coal is obviously worth way, way less than $50. In other words, you can wipe out a huge amount of coal usage with smartly bought mineral rights, especially, like the story alludes to, if you buy them in such a way as to be inconvinient to everyone around you.
I think the basic idea is sound. The main problem would be that such a solution would be profoundly regressive. Western billionaires literally plunging poor people into darkness. It's probably not a bad plan B if an international political solution fails and things get very dire.
The total economic loss is (economic gains from burning coal to generate electricity) - (economic losses from the pollution and injuries caused by burning coal to generate electricity).
If the gain from burning coal to generate electricity is more than enough to counter the loss to do so, then leaving the coal in the ground is an economic loss.
Well yeah obviously. The entire point of the scheme is to lower our coal usage by shifting into less economically efficient forms of energy. That strictly implies lower overall economic output.
If fact, any emission-lowering scheme (besides funding new technology) will lower economic output.
But the question at hand is if the sale of assets itself would cause economic output to go down, if the billionaires selling their stock and purchasing land rights would somehow destroy value. And the answer is clearly no.
EDIT: You're right, economic loss is a cause of a fall in stock prices, not the other way around, in this scenario.
I'm saying the lost value is the coal in the ground doing nothing[1], from billionaires selling stock and purchasing land rights and doing nothing. I'm disregarding the numbers and stock prices and think about what's really happening, and what shifting all this capital means. I am putting on two hats at once to connect these financial actions with reality. The answer clearly depends on the caveat described below. If coal can produce power and the economic gain can be profitably allocated to counter environmental and societal damage, then leaving the coal in the ground is the loss that will be incurred when billionaires sell their stock and purchase land rights. That loss will be shared by everybody. Hundreds of thousands of companies' costs will go up, and their profits reduced, due to reduced electricity supply or increased cost of electricity, and their stock prices will be reduced. Production that is marginally profitable will be wiped out. That is the answer. Just like the world would lose out if Sergey and Larry didn't start google. In that alternate universe, the market capitalisation of stocks that rely on search engines would be lower.
[1] With the caveat being the coal could be used to produce enough extra electricity in conjunction with other forms of electricity generation to counter it's own negative effects. That is, at this current moment, instead of using coal, there won't be more utility to spam solar power or wind power in less efficient places today.[2]
[2] Assuming current solar power and wind power has been placed in the most efficient places already.
Taking cash from the economy, which is a productive asset, useful for investment, and purchasing land which you plan to do nothing with, is most definitely an economic loss. There is no question about this step.
>It's hard to get exact numbers
and
>I think the basic idea is sound
So give us an estimate. Mine is orders of magnitude above what billionaires could affect. It's vastly more than the difference between the gap between value of coal versus mineral rights. I produced a first estimate. Hand waving without giving a more refined estimate does not make it go away.
Another factor is to slow down production today one has to buy more than mineral rights - one has to buy working mines, possibly related infrastructure/equipment/contracts if the mine owner (or other interested/entwined parties) have investment that goes to waste if the mine closes, etc. So the above, merely estimating the coal, while a simple estimate, may be close to actual costs involved to purchasing the coal mining industry out from under itself.
You also ignore the fact I stated that as places get purchased, since this does not change demand, so other places will simply produce more or more places will become coal mines.
The billionaire plan, even at its most perfect execution, is unlikely to affect the overall production much at all.
> Taking cash from the economy, which is a productive asset, useful for investment, and purchasing land which you plan to do nothing with, is most definitely an economic loss. There is no question about this step.
No man. The cash doesn't evaporate. It goes to the sellers of the rights, who then plug it right back into the economy. They may even go right back and purchase that same stock! If it makes it clearer, try to think of the coal rights as a bond with zero interest rate. Obviously, people trading the bond around doesn't destroy value.
> Give us an estimate.
I'm not sure your 20 trillion dollar estimate is very relevant. Most folks see the next 30-40 years as the key phase we need to get right, after which the switch to renewable will be more or less complete. In other words, your usage of 400 years of coal WAAAAAY overstates the size of the problem. But yeah sure I'll throw some numbers up.
If you assume mineral rights are 5% of total cost (if you buy them intelligently), and that you can rustle up $5B in cash, and that in the next 30 years you have a gradual slowdown of coal usage anyways, then the scheme cuts between 10 and 20% of US coal production. Not too shabby. Now, I admit my numbers are soft and optimistic, but it's by no means "orders of magnitude" below what it needs to be.
> Another factor is to slow down production today one has to buy more than mineral rights
I see no reason why this is the case. According to the article the gov't owns most of the rights, and the whole idea is to make it easy for private actors to buy just the rights.
> You also ignore the fact I stated that as places get purchased, since this does not change demand, so other places will simply produce more or more places will become coal mines.
Well yeah, but at higher cost. Producers are forced to use less optimal sites, and to outbid each other. This lowers overall production as coal is made less competitive than gas/oil/renewables. That's the whole point.
You're not paying for speculative revenues. You're paying for known quantities of valuable material.
It's also highly unlikely Apple will last 400 years, so no one would price them at this.
As I said, this is an estimate. Coal covers a very large part of the US (38 states, totaling about 13% of all US land area), and we have about 25% of the entire world's coal reserves. Even if you bought rights to some existing mines, demand for energy would simply make people build new mines on neighboring land. So you're going to play a game of catchup trying to buy all the coal bearing land (or at least mineral rights).
Consider simply the cost of buying 13% of land rights (or even enough to make a dent in the production) in the US. It's staggering.
The idea of just keeping the carbon in the ground makes sense. But it would be simpler (and require a lot less capital) to just impose punitive taxes on coal mines and coal imports.
The mining companies pass the cost on, renewables become more attractive, no complicated capping and trading system necessary.
The only problem I can see with this is that the WTO probably forbids it. But one would hope that everyone involved could get together and make an exception for the sake of saving millions of lives.
Lots of economic reasons in these threads why this technically feasible (if disruptive) solution can't come to be.
Maybe a better use of these billionaire saviours time and money would be to invest in solar and other renewable energy sources, as well as water desalination (the connection being high energy cost).
Despite the fundamental economic problems with this proposition listed elsewhere here, I'm just floored by the political implications:
There is hardly such a thing as a "climate-concerned billionaire." Mostly there just exists the "capital-concerned billionaire." The writer is enamored with the capitalist class, but there have been no signs in the history of ever that it systemically works in the interest of the massive people or its planet.
Who is the author really trying to appeal to? Are they still trying to convince the affected people that we can depend on the unaffected people to be saviors? Where the hell is the Atlantic article titled "Destroy Capitalism: the only way for billions of concerned people to save themselves and their environment"?
My keyword was "hardly," as in the capitalist class does not care about the climate. My intention was not to demonize individuals and generalize all people into two types (those who are rich and hate Earth and those who are poor and love Earth). My intention was to give a realistic analysis on the mechanism of capitalism, which is something this author failed to recognize altogether.
By the way, tell your roommate that "AMERICA DOESN'T IGNORE PROBLEMS" is not readable on whatever devices that the 600,000 US homeless people are using.
We need X amount of energy per year and increasing.
Energy = money = health and well being, so this has to continue and quicker. Morally the worlds poor deserve this.
If you take away cheap energy people will spend more money and effort on more expensive energy sources.
This might include more environmental solutions but will mostly be dirtier fossil fuels.
No one likes energy dependence and cheap cleaner solutions are what almost everyone wants. It'll happen as technology matures enough to allow it to happen. Full steam ahead is the best and moral solution. As is pointed out in other comments the cost alone to even make a dent is conveniently not mentioned anywhere.
It'd be trillions to do nothing but keep something in the ground. We need to move forward.
I think articles and philosophies like this are symptomatic of the resignation of a democratic civil society. Humankind is supposed to be begging a few eccentric billionaires to do these things for everyone - instead of making enlightened laws and just doing them.
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[ 2.3 ms ] story [ 170 ms ] threadThis is a wildly impractical idea. It's so bad, it hardly deserves any serious consideration.
There is far more coal still in the ground - to go with deposits that are either expected to be there or have not been found yet - than that which we already have operating mines for. If, for example, you remove US coal from the global supply, the only thing it'll accomplish is to lift prices for the rest of the world's miners (bringing their operations back to high levels of profitability, whereas today the global coal industry is in terrible shape), and encourage the creation of new mines all over the planet. In the process of restricting supply, it'll lift coal back to highly profitable as an industry, and it'll fund the creation of new mines.
Unless the plan is to buy all the land on earth of course, so you can guarantee all those untapped coal deposits never come on-line. I'm sure it would only cost a mere few dozen trillion dollars to make a serious dent.
Matt Frost's plan should be renamed: The Coal Industry Restoration Act
You have to buy the majority of all known coal deposits on earth to accomplish that, and there is far too much land / coal to be purchased to get even remotely close to that. Up to that point, more supply will perpetually come on-line to off-set the price gains, because of the substantial increase in profitability price increases enable.
Not to mention that the vast global coal industry that remains - ie those mines not purchased (and there would be vast numbers of those) - will move into high gear and invest into producing more coal, faster, to capture the profits available.
It's already very well understood that this is what happens in practice. See: the oil industry.
Increase the price of oil from $50 to $200 and see how much supply comes on-line, and the unusual sources it starts coming from (eg tar sands, or two miles below the surface of the ocean).
I really don't think we need to bribe coal companies to stop killing us.
EDIT: And don't even think of playing the "but if we tax them they'll pass that cost on to consumers" card. Driving up the cost of coal by buying mines will also result in them passing that cost on to consumers. All costs are always passed on to consumers: billionaires are billionaires because they're adept at getting other people to pay for things. At least if the money is going into taxes, it can be passed back to the consumers it was taken from in the form of public programs.
We know this is how economics works. We have hundreds of years of commodity market examples to pull from that demonstrate exactly that. The oil industry has provided numerous obvious examples of it in practice in just the last 50 years.
This is the flaw at the heart of the plan, that guarantees it can never be feasible.
Unless you plan to buy the majority of all coal deposits on earth.
But arguably it may be more effective than the political process.
>> "and encourage the creation of new mines all over the planet. In the process of restricting supply, it'll lift coal back to highly profitable as an industry, and it'll fund the creation of new mines."
If you read the entire article, it mentions that purchasers should consider buying the more harder to mine deposits first, to counter your concern:
"Harstad thinks that his coalition should lease or purchase the hardest coal to access: In other words, the coal that’s most expensive to mine. Then, as demand for coal grows and the price rises—and mining companies start to look more more difficult reserves—they’ll find that coal is already locked up."
https://en.wikipedia.org/wiki/Underground_coal_gasification
Now all we need are space-based oxidants. Maybe we could capture a large-ish comet or two.
http://www.tandfonline.com/doi/abs/10.1080/10473289.2003.104...
The problem isn't that we don't have solutions to global warming. We are still subsidizing fossil fuel energy far more than renewable energy: one easy, obvious step would be to stop doing that but we haven't. The reason we haven't done simple things like that is that it isn't profitable for billionaires. I'm quite tired of the conversation about global warming centering around "finding solutions" as if we don't have solutions. The problem isn't a lack of solutions, it's that amoral corporations control environmental policy and don't care if we all die if it makes them a profit.
In context, you are saying burning coal should be illegal. This is a weighty proposal.
You need to either a) describe, in detail, what would happen if burning coal were made illegal (bonus points for discussing how this changes depending on which countries make it illegal, since getting China on board might be rather difficult) or b) respond by admitting that your idea needed a little more thought than you've given it.
In context, I'm saying mining coal should be illegal, but sure, I'll add that burning coal should also be illegal.
> You need to either a) describe, in detail, what would happen if burning coal were made illegal
No, that's impossible because the effects of illegalization would depend very heavily on how it was illegalized. Obviously I'm not proposing an immediate global ban, that would be stupid. But something along the lines of the Montreal Protocol[1] is certainly doable. Even illegalization over the next 50 years would have some positive effects. It would be quite difficult to find a solution to this problem which is less effective than current pro-coal policies.
> (bonus points for discussing how this changes depending on which countries make it illegal, since getting China on board might be rather difficult)
You're proposing a perfect solution fallacy[2]. Of course it would be hard to get some countries on board, but even getting just the EU or the US to illegalize coal would have a significant effect.
[1] https://en.wikipedia.org/wiki/Montreal_Protocol
[2] https://en.wikipedia.org/wiki/Nirvana_fallacy#Perfect_soluti...
More over, why do you want coal plants to be disabled now? Developed countries used it for many years, until they got richer and have the luxury of choosing how they will get power. You want undeveloped countries to use more pricey power source from the start? This will slow down their development (in comparison to the first round of countries).
Put that way, your solution sounds a lot better than I thought, but somehow I doubt that's what you mean.
I think we should be doing a lot to move away from coal. A 50 year runway to eliminate coal burning sounds conceivable.
But your original post sounds like an environmentalist Donald Trump speaking--no actual analysis of anything, just knee-jerk "it oughta be illegal!!!" If what you meant all along was a decades long reduction in coal to zero, you did a tremendous job of attacking your own credibility.
P.S. Your citation of the perfect solution fallacy is off the mark. I was not arguing that it would be good, but not good enough. Rather, I was implying that it would be actively bad. China uses much more coal than us, as a proportion of their electric generation. If the US were to drastically drive up its electric prices, some proportion of industry would move overseas. The net effect might be increased greenhouse gas emissions, and certainly increased non-greenhouse pollutants. That's above and beyond the negative effects on the US economy.
It was an international treaty and it had a time span for phase out.
So arguments "but we will import and thus externalize" and "it's impossible to replace everything immediately" look kind of arguing against something that was not presented.
I'm not sure why you're holding me responsible for your assumptions. I didn't go into any detail about how a ban would be implemented: if you assumed it would be implemented immediately and with no transition plan, that's on you.
The article proposes paying the people who are destroying the world to stop destroying the world. But even if we could make a significant dent in coal production in this way, what's to stop the coal companies from reinvesting that money in finding new coal sources and lobbying for continued lax policies?
Relying on private property and market forces is generally the proposal of people who have a lot of private property and are therefore favored by market forces. I'd rather take the money away from the people who are destroying the world and devote that money to saving the world.
If you want to use market forces to drive up the price of coal, how about lobbying for taxes on coal, and having the money from those taxes go to renewable energy sources? Billionaires can lobby, and at least that way, they're ensuring that the money goes somewhere useful.
Let's stop pretending government isn't a market force. Coal companies have no qualms about lobbying government, why should we?
Capitalist solutions to this problem have been tried and have done shit all. It's time we tried something else.
But if one does not accept the government's property claim on those mineral rights, then I suppose the act of paying the government to forbid other companies from mining there could be considered a bribe.
The article is presenting a solution that works in the current state of the world: presuming the current state of property rights and legal structure.
Buying coal has a global impact; ending US subsidies doesn't (in fact, it would make it cheaper to burn elsewhere).
I'm not sure how you came to the conclusion that 17% is insignificant. Yes, coal prices elsewhere would go down, but at the very worst case that would mean that demand for goal rises to match previous prices: at the very worst coal usage stays the same. And if even 5 of those 17 percentage points end up not getting burned, that's still pretty significant.
Meanwhile, the US is where a large portion of the research into renewable energies occurs. If subsidies to fossil fuels were redirected to renewable energies, the research that would result would have global effects.
So ending US subsidies absolutely does have global impact.
I had a family member that owned property in WV. They looked into the mineral rights for the property. The seam below the property would be difficult to mine due to a near by river. To access the seam the water would need to be diverted. With a high enough price for coal then these sorts of seams become mineable.
Actually, the article mentions that purchasers should consider buying the harder to mine coal deposits first, precisely for that reason:
"Harstad thinks that his coalition should lease or purchase the hardest coal to access: In other words, the coal that’s most expensive to mine. Then, as demand for coal grows and the price rises—and mining companies start to look more more difficult reserves—they’ll find that coal is already locked up."
The craziest aspect of it, is the assumption that you could pull a meaningful fraction of known mines off-line to accomplish the end goal of seizing up the coal market (essentially crashing it, such that it can't recover).
Here's what would actually happen: Gates & Co. buy up 10% of mines (at a huge $ cost), the price of coal rises say 50%, increasing the profitability of the other 90% of the industry. The other 90% then invests those gains into more output, more exploration, and they bring on-line what were formerly less profitable deposits (Gates & Co. will not be able to buy all of those, the planet is a big place, and there's an extraordinary amount of coal).
You would have to buy a truly massive number of mines, in an extremely short amount of time, to accomplish the plan. The moment you start trying to buy up mines, the price of each of them will rise, so you'd have to do it impossibly fast.
There's no scenario you can walk through in which it's a feasible plan. Not even close.
So yes, entrenched actors (i.e. coal companies) will react to a rise in the price of coal by mining for more coal. However, many other actors will be incentivized to innovate and develop new sources of energy.
More expensive coal can help speed the process, I certainly agree with that. The question is, can you buy enough coal mines around the world to crash the coal industry in that respect, and out-pace the amount of new coal supply other miners can bring to the market seeking higher profits. I seriously doubt it, I'd argue there's far too much coal.
Politically you'd have to basically use the Obama Admin tactics, globally, to hit the coal industry, while also removing as many mines as possible. It's an incredibly expensive, risky proposition (and good luck getting everyone to sign on to it) - when we'd be far better off continuing to improve alt energy, and building nuclear plants. China for example isn't going to chop their own legs off to placate climate concerns, they're going to keep using coal until they can gradually diversify to other sources like nuclear, wind and solar.
That is of course, if you believe global warming is a thing.
If you are suggesting they manipulate it with donations then remember that your money spends just as well in Washington as theirs does. And don't forget that global-warming-denier billionaires make campaign contributions as well.
By electing and lobbying politicians who make laws.
>> "Last time I checked (in the U.S. at least) you needed to be elected to office in order to pass policy and I don't believe there are that many billionaires in elected office."
Billionaires don't actually have to be in office in order to enforce their beliefs via the political process.
>> "remember that your money spends just as well in Washington as theirs does"
Using money to implement laws via politics is rent-seeking behavior. But although my money may spend just as well in Washington as their money does, the key argument this article is making is: market methods can be more effective than political methods for limiting greenhouse gas emissions.
I believe market methods are more effective at most things but environmental protection is not one of them due to the tragedy of the commons.
If course I could be wrong.
Then maybe we can talk.
1) buy it and prevent it from ever being burned (cheaper than the coal itself)
2) capture it as it comes out of the smokestack. Estimates I've heard of this are ~$0.06/kWh, which is pretty much the same cost as the electricity, so this is more expensive than buying the fuel before it's been mined
3) extract the CO2 from the air or oceans. Engineered, electricity-based processes for this will likely cost 3x-6x as much energy as the coal generated originally. Biostorage (forrestation, etc..) may or may not be cheaper than this, depending on how effective we can make CO2 sinks.
With coal CO2, prevention really is the way to go.
Of course, if we had a carbon market where fossil-fuel CO2 emitters had to pay the cost of CO2 extraction, or sequester the carbon themselves, the market would allow quick and efficient solutions, letting innovators profit as they improve CO2 management.
Coal/fossil fuels/CO2 emissions are not moral evils that must be stopped at all costs, they must just be stopped at their true market costs.
http://www.kellogg.northwestern.edu/faculty/harstad/htm/depo...
And none is found. So maybe it's one of those ideas who is only good in theory ?
The rich pay for the shift through their higher taxes (government R&D, subsidies, etc), funding research at top tier universities, owning large corporations that do R&D or implementation (eg Musk / SolarCity, or Walton / FirstSolar and so on), buying big batteries for their homes, being first to adopt large scale home solar, building massive solar plants or wind farms (or being customers ala Buffett / Berkshire / Mid-American). This is similar to the way the rich subsidize most new technology until it becomes economical.
Ironically it seems that rich people have the most interest in preventing that from happening.
First, most billionaires don't just have billions in cash laying around usable to buy things. To get that, they'd have to sell off their companies, which usually lowers the value, so the cash to purchase needs to come from others willing to put billions of cash into purchasing these companies. The economic loss from this step would be huge.
Next, how much of the coal supply can they affect?
The US mines about a billion tons a year of coal, and has done so for many years, with value about 50/ton, making this around 50 billion a year in produced value. Presumably the places we mine coal has much left (many places put our coal supply at about 400 years worth).
This puts the value of the US coal around 20 trillion (ignoring a few factors like present value, etc., but this is around the total value). To purchase the land right from owners would cost somewhere around this amount, give or take an order of magnitude.
So the sheer number of billionaires needing to liquidate their companies, sucking the capital out of circulation, just to purchase land they will never extract any value from, makes this approach a non-starter. It just would not make much dent, if any, since closing a few mines will not reduce demand; others would likely step up production.
This money would likely be much better used to invest in new energy research to wean us off coal in the long run.
There would be no economic loss. In real terms, the companies that the billionaires are selling are just as valuable. The sellers might be big enough to cause the paper value to go down temporarily, but it would only hurt the sellers themselves. And obviously, in nominal terms the cash would enter right back into the economy once the coal was purchased. So there would be near-zero negative impact to the overall economy from the asset sales.
"This puts the value of the US coal around 20 trillion (ignoring a few factors like present value, etc., but this is around the total value). To purchase the land right from owners would cost somewhere around this amount, give or take an order of magnitude."
It's hard to get exact numbers, but the total value of US coal is many many times higher than the value of just the mineral rights. The legal right to mine $50 worth of coal is obviously worth way, way less than $50. In other words, you can wipe out a huge amount of coal usage with smartly bought mineral rights, especially, like the story alludes to, if you buy them in such a way as to be inconvinient to everyone around you.
I think the basic idea is sound. The main problem would be that such a solution would be profoundly regressive. Western billionaires literally plunging poor people into darkness. It's probably not a bad plan B if an international political solution fails and things get very dire.
If the gain from burning coal to generate electricity is more than enough to counter the loss to do so, then leaving the coal in the ground is an economic loss.
If fact, any emission-lowering scheme (besides funding new technology) will lower economic output.
But the question at hand is if the sale of assets itself would cause economic output to go down, if the billionaires selling their stock and purchasing land rights would somehow destroy value. And the answer is clearly no.
I'm saying the lost value is the coal in the ground doing nothing[1], from billionaires selling stock and purchasing land rights and doing nothing. I'm disregarding the numbers and stock prices and think about what's really happening, and what shifting all this capital means. I am putting on two hats at once to connect these financial actions with reality. The answer clearly depends on the caveat described below. If coal can produce power and the economic gain can be profitably allocated to counter environmental and societal damage, then leaving the coal in the ground is the loss that will be incurred when billionaires sell their stock and purchase land rights. That loss will be shared by everybody. Hundreds of thousands of companies' costs will go up, and their profits reduced, due to reduced electricity supply or increased cost of electricity, and their stock prices will be reduced. Production that is marginally profitable will be wiped out. That is the answer. Just like the world would lose out if Sergey and Larry didn't start google. In that alternate universe, the market capitalisation of stocks that rely on search engines would be lower.
[1] With the caveat being the coal could be used to produce enough extra electricity in conjunction with other forms of electricity generation to counter it's own negative effects. That is, at this current moment, instead of using coal, there won't be more utility to spam solar power or wind power in less efficient places today.[2]
[2] Assuming current solar power and wind power has been placed in the most efficient places already.
Taking cash from the economy, which is a productive asset, useful for investment, and purchasing land which you plan to do nothing with, is most definitely an economic loss. There is no question about this step.
>It's hard to get exact numbers
and
>I think the basic idea is sound
So give us an estimate. Mine is orders of magnitude above what billionaires could affect. It's vastly more than the difference between the gap between value of coal versus mineral rights. I produced a first estimate. Hand waving without giving a more refined estimate does not make it go away.
Another factor is to slow down production today one has to buy more than mineral rights - one has to buy working mines, possibly related infrastructure/equipment/contracts if the mine owner (or other interested/entwined parties) have investment that goes to waste if the mine closes, etc. So the above, merely estimating the coal, while a simple estimate, may be close to actual costs involved to purchasing the coal mining industry out from under itself.
You also ignore the fact I stated that as places get purchased, since this does not change demand, so other places will simply produce more or more places will become coal mines.
The billionaire plan, even at its most perfect execution, is unlikely to affect the overall production much at all.
No man. The cash doesn't evaporate. It goes to the sellers of the rights, who then plug it right back into the economy. They may even go right back and purchase that same stock! If it makes it clearer, try to think of the coal rights as a bond with zero interest rate. Obviously, people trading the bond around doesn't destroy value.
> Give us an estimate.
I'm not sure your 20 trillion dollar estimate is very relevant. Most folks see the next 30-40 years as the key phase we need to get right, after which the switch to renewable will be more or less complete. In other words, your usage of 400 years of coal WAAAAAY overstates the size of the problem. But yeah sure I'll throw some numbers up.
If you assume mineral rights are 5% of total cost (if you buy them intelligently), and that you can rustle up $5B in cash, and that in the next 30 years you have a gradual slowdown of coal usage anyways, then the scheme cuts between 10 and 20% of US coal production. Not too shabby. Now, I admit my numbers are soft and optimistic, but it's by no means "orders of magnitude" below what it needs to be.
> Another factor is to slow down production today one has to buy more than mineral rights
I see no reason why this is the case. According to the article the gov't owns most of the rights, and the whole idea is to make it easy for private actors to buy just the rights.
> You also ignore the fact I stated that as places get purchased, since this does not change demand, so other places will simply produce more or more places will become coal mines.
Well yeah, but at higher cost. Producers are forced to use less optimal sites, and to outbid each other. This lowers overall production as coal is made less competitive than gas/oil/renewables. That's the whole point.
Apple might be expected to bring in $200 billion of revenue a year for 400 years. But the market cap is not 80 trillion dollars.
It's also highly unlikely Apple will last 400 years, so no one would price them at this.
As I said, this is an estimate. Coal covers a very large part of the US (38 states, totaling about 13% of all US land area), and we have about 25% of the entire world's coal reserves. Even if you bought rights to some existing mines, demand for energy would simply make people build new mines on neighboring land. So you're going to play a game of catchup trying to buy all the coal bearing land (or at least mineral rights).
Consider simply the cost of buying 13% of land rights (or even enough to make a dent in the production) in the US. It's staggering.
The mining companies pass the cost on, renewables become more attractive, no complicated capping and trading system necessary.
The only problem I can see with this is that the WTO probably forbids it. But one would hope that everyone involved could get together and make an exception for the sake of saving millions of lives.
Maybe a better use of these billionaire saviours time and money would be to invest in solar and other renewable energy sources, as well as water desalination (the connection being high energy cost).
Be a sun baron.
There is hardly such a thing as a "climate-concerned billionaire." Mostly there just exists the "capital-concerned billionaire." The writer is enamored with the capitalist class, but there have been no signs in the history of ever that it systemically works in the interest of the massive people or its planet.
Who is the author really trying to appeal to? Are they still trying to convince the affected people that we can depend on the unaffected people to be saviors? Where the hell is the Atlantic article titled "Destroy Capitalism: the only way for billions of concerned people to save themselves and their environment"?
It's an environmental advocacy organization funded by Tom Steyer. So, there certainly is such a thing as a "climate-concerned billionaire".
By the way, tell your roommate that "AMERICA DOESN'T IGNORE PROBLEMS" is not readable on whatever devices that the 600,000 US homeless people are using.
We need X amount of energy per year and increasing.
Energy = money = health and well being, so this has to continue and quicker. Morally the worlds poor deserve this.
If you take away cheap energy people will spend more money and effort on more expensive energy sources.
This might include more environmental solutions but will mostly be dirtier fossil fuels.
No one likes energy dependence and cheap cleaner solutions are what almost everyone wants. It'll happen as technology matures enough to allow it to happen. Full steam ahead is the best and moral solution. As is pointed out in other comments the cost alone to even make a dent is conveniently not mentioned anywhere.
It'd be trillions to do nothing but keep something in the ground. We need to move forward.