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US should reallocate money to clean coal: Cloud Peak CEO

The top official at one of the Powder River Basin's producers would like to see the federal government reallocate subsidies from wind and solar projects to new technologies that would make coal mining cleaner and reduce climate change, he said Thursday at a federal listening session.

The listening session, one of several being provided by the US Department of the Interior as it considers raising royalty rates on federally owned coal lands, was held in Gillette, Wyoming, where Cloud Peak Energy is based.

"Climate scientists know eliminating US coal would not fix climate change," said Colin Marshall, CEO of Cloud Peak. "I believe what we should be doing is using some of the $11.3 billion per year that currently subsidizes large-scale wind and solar projects to develop and commercialize carbon capture and storage."

The CCS technology, which is currently being utilized with limited success around the US, has been held back due to high costs.

The royalty rules, under review by the Department of Interior, could raise royalty rates from their existing 12.5% level and change the way producers calculate rates from the final point of sale to an end user for both domestic and export sales.

The Sierra Club, which also spoke at the listening session, called the Interior Department to raise coal royalties to 18.75% and updating the decades-old rules to assess royalties at the point of sale. The Sierra Club has argued that companies such as Cloud Peak that export coal through affiliated organizations are paying less in royalties than if they paid royalties based on the price an end user pays for the coal.

Marshall called that characterization unfair and called the auditing process for determining royalties "exhaustive, open and transparent."

Cloud Peak's PRB operations paid $354 million in taxes and royalties in 2014 as the company had reported earnings of $78 million, Marshall said. Additionally, the company paid $69 million for federal leases.

"The taxes and royalty burden paid by miners of US federal coal is the highest I have come across anywhere in the world by a large margin," Marshall said. "I believe the US is getting a very fair return for its coal, and any balanced review would acknowledge this."

The next federal listening session will be held Tuesday in Denver with the final session scheduled for August 20 in Farmington, New Mexico.

source: http://www.platts.com