President Obama to revamp coal industry, calls miners to 'invest in the future'

President Obama to revamp coal industry, calls miners to 'invest in the future'

Obama's State of the Union address. (Screenshot from White House video)

US President Barack Obama has promised an overhaul of coal mining on public lands, handing a major blow to the struggling industry.

In his final State of the Union address Tuesday, Obama said companies leasing coal and oil rights on federal land should pay more for the effects those fuels have on climate change.

The President added that prices charged for coal and oil must reflect the cost of the greenhouse gases from burning them.

"Rather than subsidize the past, we should invest in the future — especially in communities that rely on fossil fuels,” Obama told Congress. “That’s why I’m going to push to change the way we manage our oil and coal resources, so that they better reflect the costs they impose on taxpayers and our planet.”

“And that way, we put money back into those communities and put tens of thousands of Americans to work building a 21st century transportation system.”

The move follows a listening tour last year by Sally Jewell, the interior secretary, during which she explored leasing options on public lands and the collapse of the coal mining industry due to low prices.

Environmental groups had planned major campaigns around the government’s leasing program for 2016, arguing that continued fossil fuel extraction on public lands was undermining Obama’s efforts to fight climate change.

Reform does what coal industry "cannot do for itself"

Tom Sanzillo, director of finances for the Institute for Energy Economics and Financial Analysis, told MINING.com that the President's reform of federal coal leases does for the coal industry what it cannot do for itself — “discipline production, shrink supply and better manage the nation's energy security and this vital resource."

Environmentalists also welcomed the President's proposal. “For far too long, the Interior Department has given away our publicly owned fossil fuels to mining and drilling companies without regard for the damage they cause to communities and our climate,” Annie Leonard, executive director of Greenpeace USA, said in an e-mailed statement, calling the move “encouraging.”

President Obama to revamp coal industry, calls miners to 'invest in the future'

The promised changes come amid historically weak prices for the commodity worldwide, which have had a major impact on the US total production and the government’s lease program. (Source: EIA Report January 2016)

But the National Mining Association has warned that any increase in rates will push energy costs higher and deprive taxpayers of revenue.

“Critics of the federal coal lease program have neither an economic nor an environmental case to make that withstands the barest scrutiny,” Hal Quinn, the mining group’s president, said in a statement last month, calling it a “foolish idea.”

Read also: U.S. coal industry on board 'slow-motion train wreck'

The promised changes come amid historically weak prices for the commodity worldwide, which have had a major impact on the government’s lease program. The Obama Administration had to put off lease sales involving some 2 billion tons of coal over last year because companies were unwilling to buy.

The White House said further details on the "transition to a low-carbon economy" would come in the next few weeks.