Lying by Emission: Peabody Can’t Handle the Truth about the Cost of Carbon Pollution

By Leili Fatehi

Peabody Energy is having a tough time of things. As coal prices have declined over the last year, the world’s biggest private-sector coal company has seen its net income fall by more than 1300%, Its stock price plummet to under $1, and its credit ratings downgraded to below investment grade. Last month, in the week leading up to the finalization of the EPA’s Clean Power Plan to reduce the United States’ dependence on coal generation, Peabody posted a quarterly net loss of $1 billion. Indeed, the future looks dim for the inaugural title holder (with a perfect worst-possible score) of Newsweek’s least environmentally-friendly company ranking.


Also having a tough time is the whole of the Earth and everything living on it. In Minnesota alone, fossil fuel power production is costing more than $2.1 billion a year in health and environmental impacts. Pollution from just Minnesota Power and Xcel Energy’s coal plants are responsible for an estimated 2000 asthma attacks, 200 heart attacks, and 115 deaths per year. And that’s just in Minnesota, a state recognized as a leader in clean power production. The national and global costs in terms of lives, health, and environmental losses are unconscionable—impacting the poorest and most vulnerable among us (children, the elderly, the ill) the worst—and are anticipated to increase over time as we continue to use carbon fuels.

Federal and state regulators have historically given these types of health and environmental impacts disproportionately little, if not minimal, consideration in the economic cost-benefit analyses that determine whether and how much to regulate carbon pollution. Fortunately, in recognition of decades of mounting scientific and economic research and evidence, President Obama formed the Interagency Working Group (IWG) on the Social Cost of Carbon to estimate the social cost of carbon pollution in the United States for use in planning and regulatory decision-making by federal and state agencies. This social cost of carbon pollution is a calculated estimate of the economic costs of health and environmental damage caused by each ton of carbon dioxide emissions. Using three different widely-recognized models and five different scenarios for future emissions and economic conditions, the IWG produced four estimates for the social cost of carbon pollution. The midline estimate from these models is $40/ton, though many scholars have argued that this estimate is significantly low because it doesn’t account for such costs as climate change losses to fisheries, to agriculture and forestry (associated with the increased spread of plant pests and diseases), and to environmental services.

Here in Minnesota, the Public Utilities Commission (PUC) is set to update its estimated statewide costs of fossil fuel production for anything more than inflation for the first time since OJ Simpson was acquitted of murder. The PUC uses this estimate for financial planning decisions around the state’s electricity production. As compared to the current $2.1 billion per year estimated statewide cost of fossil fuel pollution, the PUC is using an outdated estimate of between $58 million and $257 million per year.[

Concerned that it may suffer a decline to the 1.5 million tons of coal it sold to Minnesota power plants last year, Peabody has hired its own experts to inform the PUC’s decision – not just on why the social cost of carbon should remain low, but also on why the social benefits of carbon are currently undervalued. Consider some of the following gems from these experts’ testimonies to the PUC in which they demonstrate how Peabody hold the public’s intelligence in the same high regard as their health and well-being (find full testimony in PUC Docket 14-643):

  • Dr. Richard Lindzen, former Prof. of Meteorology at MIT
    • Even the connection of fossil fuel emissions to atmospheric CO2 levels is open to question.”
    • Warming should actually reduce the incidence of extreme weather.”
    • In considering excess deaths attributable to extreme warm events, one should also consider the far larger number of excess deaths due to the extreme cold events.”
  • Dr. William Happer, Prof. of Physics at Princeton University
    • Over most of the past 550 million years, when land plants evolved, CO2 levels have been much higher than today.”
    • If fully cleansed of real pollutants, the exhaust from fossil fuel combustion only differs from a baby’s breath by having almost no oxygen [in it].”
  • Dr. Bedzek, President, Management Information Services, Inc.
    • The agricultural, social and economic benefits of carbon dioxide emissions are increasing rapidly, and there is no limit for the foreseeable future to these benefits as CO2 emissions increase.”
    • Sea ice is not melting.”
    • Droughts are not becoming more severe, and the fraction of the world’s land under drought has been declining for 30 years.”

Personally disappointing is the testimony of Dr. Robert Mendelsohn, a Yale environmental economist whose work I’ve long admired in my own academic career, but who unfortunately approaches this issue with the sophistication of a college freshman on an Econ 101 exam. He really tries to provide Minnesota-specific analysis despite never having done Minnesota-specific research:

Q: How does the cost of carbon in Minnesota compare to the U.S. national social cost of carbon?

A: I believe that Minnesota is currently a net beneficiary of warming. Minnesota has no coastline along the Atlantic to suffer from sea level rise or future tropical cyclone. A warmer, wetter CO2-enriched world would be a clear gain for Minnesota agriculture. Ecological models suggest that Minnesota forests would become more productive and have more standing biomass as a result of near term climate change. A slightly warmer winter is likely to be beneficial as well and would offset possible damage from a slightly warmer summer. The state is not likely to be a net beneficiary if near term emissions are reduced.”

First, note that Dr. Mendelsohn’s answer is not responsive to the question of the cost of carbon in Minnesota–he only discusses near-term impacts while the social cost of carbon is concerned with future impacts as well. Second, he speaks only in limited terms about a very narrow set of impacts. Here are some of the impacts he doesn’t account for:

  • Human health impacts associated with carbon pollution such as asthma and heart disease or, for example, the habitat spread of ticks that deliver Lyme disease;
  • The significant agricultural impacts resulting from the considerable change in high-impact precipitation and adverse weather events that Minnesota is experiencing and will continue to experience;
  • That agriculture depends on stable climate and conditions and that climate impacts such as floods, droughts, extreme weather, changes in season lengths and conditions, and the spread of invasive species and pests will all have negative impacts on crop productivity and yields;
  • That CO2 fertilization will also effect the growth of invasive plant species and weeds that can reduce overall crop productivity;
  • That C02 fertilization effects have mostly been observed in the context of arid environments and are not indicative of effects in all regions;
  • Negative impacts to other Minnesota industries such as fisheries nor nonproduced environmental assets (so-called environmental services);
  • Potential habitat disruptions to nature Minnesotan plants and wildlife;
  • The substantially rising rates that Minnesotan cities, businesses, and individual property owners are paying for insurance against catastrophic losses related to increasing claims for hail and storm damage due to climate change.

But, despite his better efforts, Dr. Mendelsohn ultimately reveals the value that he and Peabody place on human lives and the environment:

[S]ociety will learn about climate change as the planet warms. We will see how quickly temperature changes. We will see what the damages are. For example, we will find out whether or not there are a trillion dollars of damage per year in 2050 when it becomes 2050. If society finds out that climate change is more harmful than we thought, society will react and do more mitigation.”

Peabody wants us to wait for the sickbeds and graveyards to get fuller—to watch and count the number of people who starve or who lose their homes and livelihoods—before we risk their quarterly earnings.


Take Action Today: Stand up to Peabody and tell the Minnesota Public Utilities Commission to include the true costs of pollution in their energy decisions.

Mark your calendar: Public hearing on True Costs of Pollution on Wed. August 26th 2:00pm at the MN Public Utilities Commission, Large Hearing Room, 121 7th Place E, Suite 350, St. Paul, MN 55101. Contact Alexis.Boxer @ for more info.


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