Why Immediately Revoking Coal Mining Permits Could Be Better for Global Economy

The continued operation of brown coal mines is likely to be a net drain on the global economy, presenting a strong legal case for their immediate closure, new analysis published by Oxford University researchers has argued.

The analysis published in the journal Climate Policy modelled the potential economic impacts of revoking coal mining licences at Germany’s largest brown coal mine, and found that an immediate closure of the mine would generate economic savings that would substantially outweigh the earnings of the mine.

The research, led by political scientist Dr Ryan Rafaty of the University of Oxford, estimated that the benefits of closing the Hambach lignite mine, producing emissions intensive brown coal for electricity generation were substantial.

It found that the net economic benefits of immediately closing the Hambach mine would range between €98–208 billion (A$158-336 billion) over 34-years.

The researchers employed a ‘natural capital accounting’ approach to assessing the economic impacts of the coal mine, finding that substantial benefits primarily related to improved health outcomes for surrounding communities and avoided air pollution.

The expanded accounting approach seeks to include the often hidden costs of coal mining, including the impacts on the local environment and ecosystems, and the impact of pollution on local populations, rather than limiting the assessment to the sale of coal alone.

Significantly, the costs of directly compensating workers at the coal mine, and assisting them in transitioning into new industries, was negligible compared to the benefits gained as a result of immediately closing the coal mine.

Brown coal, also known as lignite, is a substantially lower quality fuel than black coal and comes with a significantly higher emissions intensity when used for electricity generation.

Germany is the world’s largest producer of brown coal. However, the country has adopted a pro-active position towards the phase-out of coal mining, announcing this week that it had set a deadline for the closure of all of the country’s brown coal mines and all coal-fired power station by 2038.

It represented a landmark agreement between energy companies, unions and environmental groups that Germany must actively prepare for the end of the coal sector, and follows a commitment from the Merkel government to reach net zero emissions by 2050.

The researchers were optimistic that using the Hambach coal mine as a pilot case study would provide an example that could be repeated elsewhere of the overall economic benefits of an even earlier closure of Germany’s coal mine.

“The end of coal in Germany is nearing, but establishing a target date for the phase-out is just a first step in the potential for restrictive supply-side climate policies to contribute to a greener and more inclusive energy transition,” the research paper says.

“The German government must henceforth confront a number of competing concerns as they determine the policies through which domestic coal use is to be terminated. One thing, however, is clear: continued lignite production represents among the costliest and most myopic options to secure Germany’s energy supply.”

“As our analysis shows, investment in new, green energy infrastructure will pay itself back in less than four years through the savings realized on the healthcare front from avoided PM2.5 damages associated with the combustion of Hambach’s lignite.”

The analysis estimated that the economic costs of going health impacts caused by pollution from the Hambach coal mine were 6.5 times greater than the cost of replacing cost electricity generation capacity with renewable energy sources paired with battery storage.

The Hambach lignite mine is located in the heart of what was previously ancient forest. Energy company RWE acquired the Hambach Forest in the 1970s and cleared all but 10 per cent of the forest cover to make way for the mine.

The operating licence for the mine was extended by the State government of North Rhine–Westphalia to at least 2030 which attached a range of protests and sparked legal challenges to the ongoing operation of the coal mine due to concerns over its environmental impacts and contribution to climate change.

The analysis found that it would be possible to establish a sound legal basis for the revocation of coal mining licences under German law, by quantifying the damaged caused by the coal mining operations to local ecosystems and communities, and demonstrating that they are an overall burden on the wider community.

While the researchers were cautious about suggest that similar legal arguments would work in other jurisdictions, they were optimistic that the negative economic impacts of brown coal mining presented strong legal arguments that could be used to justify the revocation of coal mining licences in other countries.

“Our case study of the Hambach mine may serve as a model, or frame of reference, for other jurisdictions, NGOs, and citizen groups currently exploring measures to keep fossil fuels in the ground,” the paper says.

“Natural capital accounts quantifying the hidden costs of air pollution, CO2 emissions, and disruptions to ecosystem services can and should be used to bolster the evidentiary base for restrictive supply-side climate policies, whether by parliaments, ministries, or courts.”

Australia ranks as the world’s fourth-largest producer of brown coal, ranking behind Germany, Russia and the United States.

Australia continues to operate three brown-coal power stations, all located in Victoria’s Latrobe Valley. The Loy Yang A, Loy Yang B and the Yallourn W power stations rank as Australia’s most emissions intensive power stations, and a recent assessment from The Australia Institute, also found them to be Australia’s least reliable.

Source: RenewEconomy

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