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Pitch

An outline of a plan to acquire coal companies, phase out production, mitigate impacts on communities and on coal employees.


Description

Summary

We can end US coal generation in less than 10 years without energy disruptions.

The coal industry has social and political power that's disproportionate to its valuation and number of employees. And its harmful impacts on communities, people, the local environment and the planet are also far higher than its market value.

Shutting it down will significantly slow greenhouse gas production and improve public health. And it will reduce or eliminate the coal lobby -- a major obstacle to a transition to renewables.

But the coal industry won't agree to anything without a fight. And so far, it's winning. We propose a complement to advocacy, and legislative and regulatory approaches.

We estimate  the cost of buying out the industry may be well under $100 billion. (See cost section below.)

Compare that to the value of the negative externalities produced by the U.S. coal industry. NOT COUNTING greenhouse gases. We need better numbers, but estimates range from $100-$500 billion per year: tens of thousands of deaths and millions of people ill from pollution, especially mercury, communities poisoned by its activities, creeks and rivers ruined, and mountaintops destroyed.

If a one-time expenditure less than the annual harm done by the industry could actually take it out of the picture, that would be a great bargain purchase for our society!

It's time to start to assemble a team of business analysts and financial leaders to develop a plan to buy out both private and public companies over the next few years. This is a challenge worthy of the attention of people like Jeremy Grantham, Tom Steyer, John Doerr, and George Soros.


Category of the action

Reducing emissions from electric power sector.


What actions do you propose?

A national negotiation  process that will result in the coal industry receiving an offer it can't refuse.

Public and private companies will be acquired by the government or a special entity. Workers will retire or be retrained for other jobs. Communitiers will transition to other indiustries, ideally cleantech.

Vastly accelerate the current decline of the coal industry, deferring construction of new power plants and shutting down old ones. One of the key players, the Sierra Club's Beyond Coal campaign http://content.sierraclub.org/coal/victories, says 145 plants have been retired, with 377 to go. The U.S. government has managed to gain some regulations on new plants, but has made little progress on the existing ones.

As we phase out coal, we can expand wind and solar as rapidly as possible. We can quickly scale up a new smart grid and expanded transmission capabilities, plus energy storage options to avoid intermittencies and provide baseline power. Natural gas can be the last-recourse short-term option.


Who will take these actions?

We submit this as a preliminary outline that we hope will inspire many people to begin thinking big!

In particular, we aim to assemble a team that can get the attention of the big players, including the entrepreneurs and business experts described in the summary.


Where will these actions be taken?

A national dialogue, followed by action in Washington and Wall Street, where the fate of companies and industries are decided.

Along the way, the small number of coal miners will no longer be used as "poster children" for why we can't afford to leave behind this most destructive industry.


How much will emissions be reduced or sequestered vs. business as usual levels?

Coal's percentage of energy generation has already fallen from over 50% to under 40% in recent years. We aim to reduce this to zero over a decade, or sooner.


What are other key benefits?

What will happen to today's coal workers? They have sacrificed so much and they deserve our thanks. They can retire or be retrained. They and their families will thank us for being delivered from hellish jobs, harsh overseers, and unheallthy retirements.

It turns out there aren't that many. According to the US Department of Labor's May 2012 National Industry-Specific Occupational Employment and Wage Estimates for the Coal Mining, http://www.bls.gov/oes/current/naics4_212100.htm total employment for the entire industry is 87,520.

Non-management, non-professional workerts total 78,790: 44,610 in "construction and extraction" occupations, 11,920 in "installation, maintenance and repair," 4,180 in production occupations, and 18,080 in "transportation and material moving."

In 2012, a national solar jobs census showed many more people -- 119,016 Americans -- working in the 21st century U.S. solar industry. http://thesolarfoundation.org/research/national-solar-jobs-census-2012 )


What are the proposal’s costs?

Even before the deflation of the "carbon bubble" begins, which will happen as investors recognize that this industry will be further regulated or taxed, the industry's valuations have already fallen. This is in part the result of competition from natural gas and renewables.

Peabody Energy, producing 10% of US electricity, has a share price of 17, down from over 70 in 2011. It has $1B/year net income, assets valued at over $15B, but its market capitalization is down to $5B. (Peabody, the world's largest private-sector coal company, was way down at 315th on the 2013 Fortune 500 list, showing how insignificant the industry is in the giant U.S. economy.)

One of our priorities is to get an accurate figure for the market capitalization of public coal companies (many are part of the Coal Stock Index http://www.tickerspy.com/index/Coal-Stocks) plus private companies. We estimate the total at well under $100B.


Time line

Develop interest in the concept in 2013, recruit a team to work on it and flesh it out, and bring a realistic plan out in 2014.


Related proposals

We see this as a "dress rehearsal" for an even bigger buyout. CarbonTracker's math http://www.carbontracker.org/wastedcapital, confirmed by the International Energy Agency and others, shows we can't use more than 20-25% of total's fossil fuel reserves and still stay under the two degrees Celsius (3.6 Farenheit) threshhold that 194 nations have agreed we must not exceed. That's why we need a global economic transition ASAP.

As the carbon bubble deflates, the buyout will become cheaper. We need better numbers, but we estimate that the entire global fossil fuel industry (private companies and national enterprises) is valued at under $50 trillion. That's a huge amount -- even for a one-time expenditure spread over many years.

Yet the global economy has an annual gross world product over $80 trillion. If it were understood as necessary, we could  -- and must -- absorb this cost.

It will be much cheaper than wars, disasters, reconstruction, and a panicked transition years from now.


References

Submitted by Felix Kramer, a serial entrepreneur and founder of the nonprofit California Cars Initiative http://www.calcars.org.

After spending 10 years in a successful campaign to bring plug-in hybrid cars to market, and a follow-on effort, DrivingElectric http:DrivingElectric.org to build awareness and demand for all plug-in cars, he is transitioning most of his attention to climate issues.

He and colleagues will soon present other ideas developed after conversations with many advocates, scientists, and political stratergists. This proposal is the most ambitious.