Curious and Curiouser:
When Patriot filed for bankruptcy in 2015 — its second time in three years — environmentalists and regulators were prepared for the company to figure out ways to shunt liabilities and maximize returns. But no one could have envisioned what happened next.
Patriot handed over millions of dollars of environmental obligations to a nonprofit company run by a man named Tom Clarke, who owned a chain of nursing homes and a tourist attraction that had fallen behind on its bills. Until that day in April, Mr. Clarke, 61, had never been in a coal mine.
Patriot sold not only the troubled Federal mine to Mr. Clarke, but also several other mines that were no longer in operation, including a sprawling surface mine carved from the top of a mountain in southern West Virginia. Mr. Clarke’s new company agreed to clean up the shuttered mines and reclaim the land that had been ravaged.
As part of the deal, the miners’ union invested $10 million in the Federal mine operation, which was supposed to keep producing coal for Mr. Clarke to sell. But the mine has struggled from low coal prices. ...
Why then, would someone like Mr. Clarke want to take over a troubled mine and the environmental obligations that Patriot Coal was seeking to get rid of? As improbable as it may seem, Mr. Clarke said the Patriot deal had played to his advantage — helping start his grand plan to remake coal mining into a greener industry.
He is not only reclaiming Patriot’s mines that are no longer in use. He has come up with a model, he said, for how the industry can keep producing coal, while reducing its impact on the climate.
The plan involves creating pollution credits by planting or preserving trees around the world to offset the carbon emitted from burning coal. For every ton of coal he sells, Mr. Clarke attaches some of the credits.
Mr. Clarke has had trouble, however, persuading buyers of his coal, like utilities and steel companies, to pay extra for the credits.
Mr. Clarke hoped electric utilities would be able to count his green-coal credits toward the carbon-emissions goals that the Obama administration has set for states in its Clean Power Plan, now before a federal court. But administration officials have effectively ruled that out. ...
Ultimately, Mr. Clarke hopes to offset all of the expected emissions from the coal he is producing with pollution credits. But right now, he is offsetting only 10 percent. That worries environmentalists. “It’s all I can afford,” he said.
Mr. Clarke says he has been absorbing the costs personally until he can persuade utilities and steel mills to agree to pay for credits. He is hoping that states, led by West Virginia, will allow utilities to pass through the costs of his credits to ratepayers. Those discussions are continuing, he said.
via www.nytimes.com
I think the economics is clear. A climate policy based on voluntary contributions (in this case green washing by electric utilities) will not provide enough funding to achieve the efficient amount of pollution reduction (or help Mr. Clarke make money). A carbon tax (or cap-and-trade) with an offset provision would provide the right incentives.
