Blog Post

Using the Social Cost of Carbon in the Bureau of Land Management’s Planning: An Opportunity for a Carbon Price?

Mar 31, 2015 | Alan J. Krupnick

In new research (described in an earlier blog post), we lay out a legal argument for how the Bureau of Land Management (BLM) might implement a carbon pricing policy, based on the social cost of carbon, on coal extraction on federal lands (with RFF coauthors Joel Darmstadter, Nathan Richardson, also of the University of South Carolina School of Law, and Katrina McLaughlin). As we mentioned previously, BLM has a mandate to manage public land in a way that provides for multiple uses. This responsibility means that it must account not for just resource extraction or recreation or conservation. BLM must manage the land for multiple uses and also get a sustained yield (economically and for the good of the public) out of the land. Implementing a significant carbon charge on federal coal at the point of extraction (at the royalty stage) might make one of those uses, resource extraction, no longer viable. This would most likely create a legal threat to the use of a carbon charge in this way. But there is another option, described in our research, that BLM might use: it could consider the social cost of carbon in its planning process.

The Council on Environmental Quality’s newly revised draft guidance under the National Environmental Policy Act (NEPA) says that federal agencies should include climate change considerations in their planning efforts. Incorporating a carbon charge at this stage would be using the policy even farther “upstream.” In theory, BLM could examine a parcel of land that could be used for coal development, or grazing, or set aside as a wildlife reserve, and, at that point it, could consider a carbon charge in determining whether this land should be put up for coal leasing. As we note in the paper:

“This would be the earliest possible time to consider the [social cost of carbon, SCC] in shaping overall federal coal activity. Applying the SCC to federal coal could also be done systematically when BLM prepares resource management plans, its basic multiple-use planning activity under the Federal Land Policy and Management Act (FLPMA). This multiple-use planning is a particularly promising place to incorporate full-cost accounting for coal—that is, the full costs and benefits of coal across its complete life cycle. It is early in the coal decision sequence, it includes all BLM lands for coverage and consistency, it creates planning areas of similar resources and recognizes differences among them, it has extensive public engagement, and it is where BLM explicitly applies its mandate to consider multiple uses and environmental trade-offs. Such incorporation gives BLM the opportunity to decide whether given federal lands are suitable for coal leasing, considering (among many other factors) the climate impacts of extracted coal.”

Such an approach might rule out coal leasing for some, but not all, potential parcels. Although a sufficiently high carbon charge might prohibit most federal coal development when considered at the royalty stage, the same charge considered at the planning stage might allow for some federal coal development, particularly on parcels that face fewer competing uses. While the ultimate fate of the proposed NEPA draft guidance remains to be seen, incorporating a carbon charge at the planning stage could present a promising option that is less likely to endanger BLM’s multiple use mandate.