THE NEGLECTED GREENHOUSE SOURCE:

CURBING EMISSIONS FROM UNCONTROLLED

COAL FIRES THROUGH CARBON CREDIT SALES

School of Public PolicyUniversity of Maryland

June 2008

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PREFACE

This report was prepared by the policy analysis workshop at the School of Public Policy of the University of Maryland. The policy analysis workshop is a course in the master’s program of the School. Each student devotes a full semester of course work to the study of an important public policy issue. This year there were six masters students with undergraduate majors ranging from philosophy to environmental science, and with advanced degrees ranging from a Juris Doctor to a Master of Science in Meteorology.

The combined efforts of the students amounted to more than 750 hours, including review of the literature, meetings with experts on uncontrolled coal fires and on carbon trading, and other methods of study. Professor Robert H. Nelson of the environmental policy program of the School of Public Policy supervises the environmental section of the policy analysis workshop. Laurel Ball served as a graduate assistant for the course.

The Executive Summary presents the principal findings, conclusions and recommendations. The Executive Summary and the full report are available on the web under “faculty papers” and “Robert Nelson” at www.publicpolicy.umd.edu.

Contributing Students

Guy W. ColeJames GoodwinElizabeth McNicolColleen RuddickIsaac SmithRichard M. Todaro

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TABLE OF CONTENTS

Preface…………………………………………………………………………….. iii

Executive Summary……………………………………………………………….vii

Introduction………………………………………………………………………..3

Part I – Uncontrolled Coal Fires around the World

Chapter 1 – Coal Fires: A Leading Source of Greenhouse Gases………………….13

Chapter 2 – Putting Out Coal Fires: Methods and Costs……………………………21

Part II – Paying to Extinguish Coal Fires by Carbon Trading

Chapter 3 – The Workings of Newly Emerging Carbon Markets…..........................33

Chapter 4 – Certifying a Methodology for Putting Out Coal Fires………………… 45

Chapter 5 – Establishing a Baseline Scenario for Coal Fires………………………. 57

Chapter 6 – Additionality, Permanence, and Other Methodological Issues…………67

Part III – Three Case Studies: China, Indonesia, and the United States

Chapter 7 – China and Coal Fires……………………………………………………77

Chapter 8 – Indonesia and Coal Fires……………………………………………….101

Chapter 9 – The United States and Coal Fires………………………………………113

Conclusion…………………………………………………………………………..123

ABBREVIATIONS

A/R Afforestation/ReforestationBAU Business as usualCCX Chicago Climate ExchangeCDM Clean Development MechanismCER Certified Emissions ReductionCH4 MethaneCO Carbon monoxideCO2 Carbon dioxideCOP Conference of the Parties to the UNFCCCDNA Designated National AuthorityDOE Designated Operational EntityECX European Climate ExchangeEPA Environmental Protection AgencyEUA European Union AllowanceEU-ETS European Union Emissions Trading SchemeGHG Greenhouse gasGPS Global Positioning SystemGWP Global Warming PotentialHFC HydrofluorocarbonJI Joint ImplementationLULUCF Land-use, Land-use Change, and ForestryMOP Meeting of the Parties to the UNFCCCNOx Nitrogen oxideOTC Over the counterPIN Project Idea NotePDD Project Design DocumentPFC PerfluorocarbonREC Renewable Energy CertificateRGGI Regional Greenhouse Gas InitiativeSF6 Sulfur hexafluorideSO2 Sulfur dioxideUNFCCC United Nations Framework Convention on Climate ChangeUSGS United States Geological ServiceVCS Voluntary Carbon StandardVER Voluntary Emissions ReductionWCI Western Climate InitiativeWWF World Wildlife Fund

EXECUTIVE SUMMARY

There is perhaps no more publicly neglected contributor to global climate change than coal mine and other uncontrolled coal fires. Though the figure contains great uncertainty, the authors of this report estimate that the world’s uncontrolled coal fires could contribute as much as four percent or more of total global emissions of greenhouse gases. Presently, however, most of the world’s coal fires are being left to burn out of control with little or no effort to put them out. Except for a few fires that happen to threaten the safety of citizens or valuable infrastructure, or are consuming commercially valuable coal, the necessary financial and other resources are simply not being made available.

The recent rapid emergence of carbon credit markets offers a potential solution. Carbon markets have already been instrumental in raising funds for reforestation, methane capture, and various other types of projects designed to mitigate greenhouse gas emissions. If these markets could now be extended for use in a similar fashion for extinguishing coal mine fires, it might be possible to obtain the needed financial resources to put out many or even most of the uncontrolled coal fires around the world, thereby achieving significant reductions in global greenhouse gas emissions.

The purpose of this report is to examine and evaluate the potential for using the sale of carbon credits to finance the extinction of uncontrolled coal fires. The report identifies two broad factors that will determine the general feasibility of using carbon offsets to finance projects for extinguishing coal fires. First, the projects must be able to put out coal fires at costs low enough to make the resulting carbon credits saleable at prevailing carbon market prices. Second, a coal fire credit methodology must be developed that is able to satisfy all of the accreditation requirements. There are accreditation systems both for credits generated through the Clean Development Mechanism (CDM), which was established under the Kyoto Protocol to the United Nations Framework Convention on Climate Change, and for the various voluntary credit programs in the United States, such as the Chicago Climate Exchange (CCX).

For the purposes of this report, the authors undertook case studies of three countries in which many current uncontrolled coal fires are burning—China, Indonesia, and the United States. Preliminary analysis of these case studies suggests that the costs of extinguishing coal fires would likely yield carbon credits that would be competitive in both the European Union carbon market (in which carbon credits are currently priced at around $30 to $40 per ton) and in the CCX ( in which credit prices are now around $6 per ton). Under the current Lieberman-Warner bill or other climate change legislation to create a future U.S. carbon cap and trade system, many analysts expect prices of around $25 to $50 per ton for carbon dioxide emissions allowances to emerge.

Many coal deposits are now burning uncontrolled in China. For coal fire extinction projects in China, some analysts have calculated that greenhouse reduction credits could be generated for less than $1 per ton . While the estimates are less precise for Indonesia, the available data suggest that the cost of extinguishing coal fires there

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would often be quite low, resulting in a price of carbon credits that would be competitive with other sources of credits.

There are two key conditions that are required by both the CDM and the U.S. accrediting bodies for the voluntary credit markets: the conditions of “additionality” and “permanence.” In order to satisfy the requirement for additionality, a carbon credit project must produce greenhouse gas emissions that would not have occurred but for the implementation of the carbon credit project and the revenues generated by the sale of the credits. To satisfy the condition of permanence, there must be some way of verifying that whatever greenhouse gas reductions achieved through the project will be maintained for a significant period of time into the future.

A preliminary analysis suggests that the condition of additionality will not present a large barrier for accreditation of coal fire projects. Indeed, the sheer number of uncontrolled coal fires in many countries—particularly when compared to the limited efforts these countries are now making to put them out—suggest that in the absence of carbon credit sales most of these fires will be allowed to continue burning, and thus to continue releasing large amounts of greenhouse gases into the atmosphere.

Satisfying the condition of permanence may prove more challenging in some cases, however. To satisfy this condition, one would likely need to demonstrate either of two circumstances exist: (1) the coal that was previously burning in a fire that was put out will not be put to any commercial use in the near future or (2) even if the previously burning coal will soon be put to some future commercial use, it will end up substituting for other less economical coal deposits elsewhere, and the latter deposits will therefore not be burned and remain in the ground. The ability to demonstrate the existence of either of these circumstances will vary with the individual coal fire.

Potentially Low U.S. Costs of Carbon Credits

An especially important concern is whether credits for putting out uncontrolled coal fires can be generated at a price that will be competitive in future carbon markets. As suggested above, this seems likely to be the case for many uncontrolled fires in China and Indonesia – and potentially other nations around the world with large coal resources. In the United States, while no general conclusions were possible, data was reviewed for the cost of putting out a number of current coal fires—including both underground fires and surface fires.

As shown in Table 1 below, carbon credits for putting out underground fires would typically cost in the range of $2 per ton of carbon dioxide in the United States. Carbon credits for putting out surface fires would often be less expensive to generate—less than $1 per ton of carbon dioxide in the majority of cases examined. In comparison with many other nations, labor costs in the United States are likely to be much higher. However, other costs—such as the procurement of any advanced technology that may be used, or transportation costs to the site of a coal fire—may be less. Overall, the low costs of averted CO2 emissions through the extinguishing of coal fires in the United States

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suggests that there may be a large number of uncontrolled coal fires around the world that could be put out for much less than the current trading price of credits in existing carbon markets .

Table 1 – U.S. Costs of Extinction, Underground Coal Mine Fires

State Acres Suppression Cost ($)

Calculated Suppression Cost per Ton of CO2

Colorado 176.5 10,750,000 $1.72

Kentucky 122.9 8,847,810 $2.00

Pennsylvania 1,278.10 595,539,499 $13.20*

Utah 326 20,365,071 $1.75

Virginia 50 4,037,500 $2.27

West Virginia 1,937.50 213,415,315 $3.09

Wyoming 296 1,400,000 $0.13

Costs of Extinction, Surface Coal Burning Fires

State Acres Suppression Cost ($)

Calculated Suppression Cost per Ton of CO2

Alaska 19 3,000,000 $4.50

Alabama 62.5 445,125 $0.20

Illinois 7 99,000 $0.40

Kentucky 121.7 4,232,805 $0.98

Ohio 76 730,095 $0.27

Pennsylvania 54.5 5,166,202 $2.68

Utah 8 170,000 $0.60

Virginia 9 180,000 $0.56

West Virginia 79.2 3,687,536 $1.30

Wyoming 8 220,000 $0.78

Source: Office of Surface Mining, U.S. Department of the Interior, Abandoned Mine Land Program n.d.

* Higher relative cost is likely due to the massively expensive uncontrolled Centralia, PA coal fire

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OVERALL CONCLUSIONS AND RECOMMENDATIONS

This report reaches the following overall conclusions and recommendations. Further conclusions and recommendations are presented in the individual chapters of the report.

The prospects for using carbon credit projects to extinguish uncontrolled coal fires are promising.

This report has identified two potential barriers to developing any carbon offsets projects: costs and satisfaction of accreditation requirements. Preliminary analysis suggests that both of these barriers are surmountable in the case of projects for extinguishing many uncontrolled coal fires. Early indications suggest that the cost per ton of carbon avoided in a number of these projects would be well below the going rate in the existing carbon offsets markets around the world. Furthermore, while the treatment of uncontrolled coal fires raises new challenges with regard to the accreditation requirements of additionality and permanence, these requirements can likely be satisfied in projects for extinguishing many uncontrolled coal fires.

Initial efforts to develop carbon offsets projects should give a high priority to China and Indonesia.

China and Indonesia offer excellent opportunities for developing initial credit projects for extinguishing uncontrolled coal fires. Many of the coal fires in these countries run along the surface or in relatively shallow coal seams. Accordingly, these fires can be identified, located, and extinguished with relative ease and at low cost. Moreover, the techniques for extinguishing these fires would likely rely heavily on basic human labor rather than advanced technology. Thus, significant cost savings for these projects could be achieved, since the cost of labor in China and Indonesia tends to be relatively low.

A methodology for defining and calculating the levels of carbon credits from extinguishing uncontrolled coal fires should be developed and accredited.

Since carbon credit projects to extinguish coal fires offer significant economic promise, a methodology for these projects should be developed and accredited either through the CDM review process or through the accreditation standards used for the voluntary U.S. carbon markets. The process of developing and accrediting a methodology requires access to technical expertise and may be expensive, laborious, and time consuming. Thus, the World Bank would be a good candidate for fulfilling this recommendation, since it has both experience with and the resources for developing and accrediting new methodologies. Achieving accreditation for a new coal fire methodology will require particular attention to meeting the requirements of additionality and permanence.

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There are a number of opportunities for the private sector to become involved in projects to extinguish uncontrolled coal fires. Steps should be taken to encourage private sector participation in the selling of carbon credits based on the putting out of coal fires.

The existence of carbon credit markets offers a good opportunity for introducing market forces into the process of extinguishing uncontrolled coal fires. With these credit markets, projects to extinguish uncontrolled coal fires have the potential to be privately profitable undertakings. Thus, market forces can help to provide the necessary incentives and funds to extinguish these fires. Accordingly, the relevant governmental institutions—including the governments of countries in which these fires are located and the governing body of the UNFCCC—should take steps to encourage the participation of private-sector businesses and non-profit organizations in the extinction of coal fires. Solving the worldwide problem of uncontrolled coal fires introduces a win-win opportunity in which both public and private interests can work together to their mutual benefit.

Chapter Summaries:

This report consists of three parts. Part I provides background regarding the problem of uncontrolled coal fires. Specifically, it looks at how these fires contribute to global climate change, and what technologies and other means are available for extinguishing these fires. Part II sets out the relevant theoretical considerations for incorporating projects to extinguish uncontrolled coal fires in future carbon credit markets. Part III presents case studies of three countries in which there are a large number of uncontrolled coal fires at present. These countries are China, Indonesia, and the United States. The objective of Part III is to apply the considerations discussed in the first two parts of this study to the concrete circumstances present in each country in order to assess the prospects for developing carbon credit projects based on the extinguishing of uncontrolled coal fires in these -- and potentially other -- nations.

Chapter 1 – Coal Fires: A Leading Source of Greenhouse Gases

Coal is one of the most abundant and most heavily used sources of energy in the world. Moreover, worldwide annual coal production and consumption have been on the rise; in 2005, over 6.5 billion metric tons of coal were consumed, a 55% increase over 1984 levels and a 25 % increase over 2000 levels.

In addition to coal that is intentionally burned in plants for electricity generation, the unintended combustion of coal in the form of uncontrolled coal fires is also a significant contributor to total greenhouse gas emissions. The authors of this report estimate that this contribution of uncontrolled coal fires could be as much as four percent of global greenhouse gas emissions—though this estimate involves a great deal of uncertainty. This contribution of coal fires to greenhouse gases has nevertheless received

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significantly less attention than other major sources such as power plants and industrial facilities.

Uncontrolled coal fires generally release three kinds of greenhouse gases: carbon dioxide (CO2), carbon monoxide (CO), and methane (CH4). Coal seam fires can be started though natural or anthropogenic means. Natural causes include lightning strikes and forest fires. Anthropogenic causes tend to be related to mining and the clearing of forests. Owing to the costs of putting them out, a lack of knowledge of their existence, or other factors, many coal fires are left to burn uncontrolled over long periods. This is especially true in developing nations where funding for such purposes is scarce or non-existent and governmental capacity may be limited.

Recommendations:

Globally, since uncontrolled coal fires could account for as much as 4% or more of total greenhouse gas emissions in the world, they should receive greater attention in future climate change policy discussions, and should receive greater analysis and other consideration in future IPCC reports.

Contributions from uncontrolled coal fires should be included in future world and national inventories of greenhouse gas emissions. For China, for example, the releases from uncontrolled coal fires should be included in future calculations of the total level of Chinese greenhouse gas emissions.

Chapter 2 – Putting Out Coal Fires: Methods and Costs

The basics of coal mine fire control technology focus on the removal of one or more sides of what is referred to as the fire tetrahedron: oxygen, heat, fuel, and the chemical reaction. While every technique for putting uncontrolled coal fires is based on this strategy, no single technique is appropriate for all fires. Instead, a wide variety of factors specific to each fire—such as size, depth, overburden composition, slope, and geological and geographic characteristics—will determine what method may work best and what the scope of the extinguishing project will entail.

The most successful proven method for extinguishing coal fires is to excavate the burning coal and surrounding overburden. Shallow surface coal seams can be excavated rather simply. For deeper underground fires, the excavation method is unlikely to be successful. Regardless of the technique employed, regular monitoring and maintenance are necessary. Due to the chemical nature of fires, any seepage of oxygen into the ground can cause a resurgence of fire activity, making returning to the site to verify suppression with either visual confirmation or gas emission monitoring equipment desirable.

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No two coal fires are the same, and so too, no two costs for extinguishing them will be identical. Factors that contribute to the variability of cost include the size and depth of the coal deposit, the technology employed, the amount of extinguishing material required, the remoteness of the site, and the time involved. In many cases, coal fires around the world can be extinguished for less than $5 per ton of carbon dioxide emissions averted –and in some cases for less than $1 per ton.

Recommendations:

In setting priorities for extinguishing coal mine fires, putting out surface coal fires should command the highest priority. The most cost-effective projects will typically involve surface coal outcrops, due to the lower cost of extinguishing them as well as the ability to monitor them with a higher degree of certainty.  Underground fires often require much higher costs for suppression as well as higher costs of monitoring.

The development of improved technology for controlling and extinguishing coal fires should be included in the greenhouse gas research and development programs of the United States and other nations. Compared with other areas of climate change technological innovation, greater greenhouse gas benefits might be achieved for less cost by efforts to improve (and disseminate) the techniques of coal fire extinction.

Extinction costs can be lowered by encouraging bidding by suppression contractors. As with any construction project, competition among contractors can bring down the cost to the project coordinator.  By accepting and evaluating proposals based on cost efficiency and proven success rates, the coordinating entity can ensure that it not only has a high certainty of total suppression but also it is are getting a competitive price for work completed.

Chapter 3 – The Workings of Newly Emerging Carbon Markets

According to the World Bank, carbon trading is expanding rapidly, with the total value of all carbon market transactions amounting to more than $65 billion in 2007, more than double that of 2006. In the United States there are, at present, no federal laws or regulations governing greenhouse gases (GHGs); instead credits in GHG emissions are traded on a voluntary basis (or in newly emerging regional markets that are now being planned). In Europe, the member countries of the EU are parties to the Kyoto Protocol, and an Emissions Trading Scheme (EU-ETS) there represents the largest effort to date to use market mechanisms to reduce GHG emissions. Indeed, the vast majority of all carbon credits are traded at present in the EU-ETS . The current price for an EU carbon credit (December 2008 futures) is about 25 euros (US$37.50).

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The Chicago Climate Exchange (CCX) is the largest carbon market in operation in the United States, as well as the largest voluntary market in the world. Members of the CCX may meet their targets through either internal reductions of emissions or through the purchase of carbon credits (known as Carbon Finance Instruments, or CFIs) from fellow members who have exceeded their reduction requirements. The CCX has standardized accreditation rules for eight different types of projects including agricultural methane; coal mine methane; landfill methane; agricultural soil carbon; rangeland soil carbon management; forestry; renewable energy; and ozone depleting substance destruction. It also includes energy efficiency and CDM-eligible projects. The CCX also reported a doubling of trading volume in 2007 over 2006 .

A federal climate policy is likely to take shape in the next few years. Currently,

the leading proposal in Congress is the American Climate Security Act, co-sponsored by Senators Joseph Lieberman and John Warner. It would establish a cap-and-trade system in CO2 emissions, with the aim of reducing emissions by seventy percent below 1990 levels by 2050. If the United States establishes a national cap and trade market, this is likely to add significantly to the demand—and potentially the price—of future carbon credits. Substantial funds to extinguish coal fires could be obtained by tapping into the above existing and potential future carbon credit markets.

Recommendations:

The CDM, owing to its reach, technical resources, and relative transparency, would be the best vehicle by which to create and sell carbon credits based on the putting out of uncontrolled coal fires in developing countries.

The European Union Emissions Trading Market, the Chicago Climate Exchange and other institutions for carbon credit sales and exchange should publicly state that the extinguishing of uncontrolled coal fires is in principle – assuming the requirements of additionality and permanence can be met – a satisfactory method of generating acceptable carbon credits.

The various carbon credit markets should review their rules and procedures to ensure that they are compatible with the circumstances of generating carbon credits through putting out uncontrolled coal fires.

The World Bank, Carbonfund and other public and private brokers in carbon credits should incorporate the extinguishing of coal fires within their portfolio of available projects for generating carbon credits.

Chapter 4 – Accrediting a Methodology for Coal Fires

Selling carbon credits for uncontrolled coal fire abatement is a new area of carbon finance—so new, in fact, that there have not been any such transactions to date and,

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indeed, there currently exist no accepted rules for operating a carbon credit program based on the extinction of uncontrolled coal fires.

Each of the main current issuers of carbon offsets has developed its own registration and validation processes. The main issuers include the Clean Development Mechanism (CDM) under the Kyoto Protocol and the various voluntary programs such as those of the Chicago Climate Exchange (CCX) and the Voluntary Carbon Standard. The basic parameters for implementing the CDM were agreed upon at a followup meeting of the Kyoto parties in Marrakech, Morocco in 2001. To date, over 1,000 CDM project activities have been registered, generating an average annual total of 136 million GHG emissions credits (known as Certified Emissions Reductions or CERs).

The first step in generating a CDM credit is for the project developer to draft a Project Idea Note (PIN), including the estimated amount of GHGs that the project would reduce, and the proposed sources of funding, both from the issuance of CERs and from other sources. The project developer must also identify all the individuals, corporations, non-profits, public agencies, or other organizations that will serve as project funders. Each country participating in the CDM must choose a Designated National Authority (DNA)—typically a government agency—that will be in charge of approving CDM projects and ensuring that the project meets the country’s standards for sustainable development.

The Executive Board of the CDM is in charge of developing and amending the rules for CDM projects, accrediting Designated Operational Entities, registering projects, approving new or revised methodologies, and actually issuing CERs. Other important players in the approval process are the Designated Operational Entities (DOEs). DOEs are independent organizations authorized by the CDM Executive Board both to validate that a proposed project activity meets the CDM’s standards for additionality and other criteria, as well as to verify that a specific project activity has in fact reduced GHG emissions.

The CCX is run by the Committee on Offsets, a 12-member board that reviews and approves potential offset projects. The most notable feature of the CCX’s offsets program is the lack of a specific test for additionality. Instead, the CCX says that offset projects must be “beyond regulations,” new, and best in class, if applicable. A second notable feature is that CCX offset activities are validated only once by independent third parties, not twice as in the CDM.

For voluntary markets like the CCX, a number of standards accrediting voluntary carbon offsets have been developed. First, there is the Voluntary Carbon Standard (VCS). Run by the VCS Board, the VCS issues Voluntary Carbon Units (VCUs) to any project that is an approved GHG program or are supported by a VCS methodology. The additionality test for the VCS closely resembles that of the CDM. It remains to be seen whether the VCS will be widely adopted by the various voluntary markets.

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Second, there is the VER+ Standard. Much of the VER+ architecture was borrowed from the CDM; the main differences are that eligibility criteria are the same as that of the Joint Implementation (JI) framework, and that co-benefits of project activities (sustainable development and the like) are not a motivating factor. The VER+ program is small but growing rapidly.

Third, there is the Gold Standard. This accreditation standard has a narrow focus, giving its approval only to renewable energy and energy efficiency projects. The Gold Standard offers Voluntary Emissions Reductions (VERs), the certification process for which is explicitly modeled on that of the CDM, albeit with some slight streamlining and the consideration of environmental and social co-benefits.

Recommendations:

The United States government should support the development and accreditation of a methodology for carbon credit projects to extinguish uncontrolled coal fires.

The World Bank is also well positioned to undertake the development and approval of a methodology for accrediting coal fire extinction as an accepted form of carbon market credit.

If the CDM accredits a methodology for uncontrolled coal fires, the other markets for carbon credits should adopt this methodology as at least one of the acceptable ways of defining and establishing saleable carbon credits.

Chapter 5 – Establishing a Coal Fire Baseline

In order to obtain approval by any of the accreditation systems for a methodology for generating carbon credits, there must be a clear way to determine the avoided emissions generated by the act of extinguishing a coal fire. The first step in establishing a coal fire baseline is to identify a set of currently burning coal fires. In order to establish carbon credits by future year, a projection of the path and rate of burn of a fire will also be needed. Then, this projection can be combined with an estimate of the total volume of coal presently exposed to the fire in order to develop an overall estimate of greenhouse gas emissions that would be averted by putting it out.

The coal industry has invested heavily in the development of different measurement techniques for determining the volume of coal in a seam. One method for coal seam volume estimation involves the analysis of core samples. Cost is also a function of the number of cores taken, so that certainty comes at an increasing cost. A second method involves the use of gravimetric surveys. Gravitational pull is a function of mass, not volume, so the coal generates more or less gravity than the surrounding soils. One disadvantage is that the collection of data requires frequent reading of instruments over a long period of time (potentially months) to average out interference in the

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measurements. A third method involves the use of seismic measurement. To take a seismic measurement, a mechanical pulse is generated at a point, and a shockwave radiates outward through the ground. Sensors on the surface detect the direction, time, and strength of these returning waves. Seismic measurement offers a spatial precision that no other method can match.

Given the estimated volume of coal that is burning, a rough estimate of potential future greenhouse emissions can be derived by applying a factor of 3.7 tons of carbon dioxide released per ton of coal burned. Other more precise methods are available such as remote sensing, but at present they are likely to be either too expensive or too unreliable.

Recommendations:

Seismic methods offer the greatest promise as a way to determine the volume of a coal seam on fire.

Chemical analysis methods offer the greatest promise for determining the amounts of GHGs the fires are producing, and the future timelines, at least until new techniques are developed.

The climate research and development programs of the United States and other nations should commit greater funds to modeling and other study of uncontrolled coal fires, including the development of more refined methods of estimating the future path and timeline of coal fires and the magnitudes of the future GHG emissions that could be averted by putting out these fires.

Chapter 6 – Additionality, Permanence, and Other Methodological Issues

In order for the extinguishing of a coal fire to be sold as a carbon credit, there must be a method for demonstrating that the uncontrolled coal fire would not have been put out in the absence of the financing provided by the sale of carbon credits—thus, meeting the criterion of “additionality.” One aspect of additionality involves the question of whether a private or government actor would put out the coal fire, even in the absence of carbon credits.

There are a number of ways in which one might demonstrate the unlikelihood that a private actor would extinguish a particular coal fire. For example, one might show that the mine has been abandoned or that the mine's owner has made no efforts to put out the fire. Another possibility would be to develop specific calculations showing that it is uneconomic to put the fire out—that the cost per ton of saving the coal from burning is less than the typical market value of coal reserves in that area.

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There are also a number of ways in which one might demonstrate the unlikelihood that a government agency would extinguish a particular coal fire. It might be shown that no government with jurisdiction in the area of the coal fire has any program or now makes any expenditures for the purpose of putting out coal fires. Or, it might be shown that extinguishing coal fires is not a high enough priority for the relevant government agency. In many cases, governments will focus their attention on a small subset of fires, which are often determined according to such factors as the degree of environmental damage associated with the coal fire, the total availability of government funding , and the cost of putting out any specific fire.

Putting out a coal mine fire presents an unusual feature in that it raises the possibility that the extinguishing of the fire may allow the future mining of the coal and thus the release of greenhouse gases from coal combustion in a power plant or other industrial or commercial facility. If it appears that the putting out of the coal fire would not achieve any permanent reduction of greenhouse gas emissions, no carbon credits would be allowed. It might be shown, however, that there is no coal mining activity in the surrounding area of the uncontrolled coal fire (usually a surface fire in such cases), thus demonstrating the small possibility that the coal would be mined. Even if some mining is occurring locally, it might be shown that there is no mining of similar quality coal deposits.

It would also be possible to meet the requirement for permanence by showing that, if a coal fire is put out, and this coal is then soon being mined, this will result in other coal deposits in the same region being put out of production (thus still achieving a net greenhouse gas emission reduction). Finally, permanence might be guaranteed by contractual pledges not to mine the coal in the future.

Recommendations:

While the issuance of carbon credits for putting out uncontrolled coal fires raises challenges with regard to meeting the approval requirements of additionality and permanence, these requirements can likely be satisfied for many coal fire projects. Compared with some other methods of generating carbon credits, it may be easier to demonstrate additionality and permanence for coal fire projects.

The World Bank, the World Resources Institute, private brokers in carbon market credits, and other involved parties should seek out a sample set of currently burning coal fires that could be used as demonstration projects to establish and improve methodologies for showing coal fire additionality and permanence.

Where issues of permanence arise, credits generated from putting out coal fires should have shorter lifespans; they might be lengthened if the mine owner can be persuaded to agree contractually not to mine

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the coal or to only use it for low-carbon activities when the fire is put out.

Chapter 7 – China and Coal Fires

China has the second largest amount of coal reserves and is the largest producer of coal in the world , by some estimates accounting for nearly one-third of global production . It also has a correspondingly large number of coal fires. China is an especially promising possibility for generating carbon credits by extinguishing coal fires. According to some estimates, fewer than 10 percent of China’s active uncontrolled coal fires are currently being fought .

China’s uncontrolled coal fires are primarily located in the vast coal belt that runs along the northern portion of the country. There are widely varying estimates of the number of active uncontrolled coal fires in China. The mode estimate seems to be around 200 fires. The largest and most concentrated number of coal fires are located within the coal mining belt in Ningxia Hui, Inner Mongolia (also called Nei Mongol), and Xinjiang Uygur .. These regions are characterized by their sparse population, high levels of poverty, and arid and semi-arid climates .

Most estimates place the amount being burned annually in China in uncontrolled coal fires at around 100 million tons. According to one commonly cited estimate, China’s uncontrolled coal fires account for between two and three percent of the world’s total carbon dioxide emissions . According to some lower estimates, however, carbon dioxide emissions from China’s uncontrolled coal fires could amount to as little as 0.1 percent of the total global carbon dioxide emissions.

The Deutsche Montan Technologie GmbH (DMT) has developed an estimate for the cost of carbon offsets generated by putting out coal fires in China. Using as a case study an uncontrolled coal fire in Xinjiang Uygur, the DMT estimated that the project could produce carbon credits at a cost of approximately 0.95 euros (about $1.50) per ton of carbon dioxide avoided . Other cost analyses have produced conclusions similar to that of the DMT analysis. For example, one Chinese newspaper in 2004 cited a report indicating that CDM credits generated through the extinguishing of uncontrolled coal fires in China would cost between $0.70 and $2 per ton of avoided carbon dioxide.

China is not subject to the emissions reductions requirements of the Kyoto Protocol but it is party to both the United Nations Framework Convention on Climate Change (UNFCCC). Moreover, China has been relatively active in the Clean Development Mechanism (CDM) established under the Kyoto Protocol. China’s main coordinating agency for climate change policy, the National Coordination Committee on Climate Change (NCCCC), has established a rigorous process for approving and implementing CDM projects within its territory.

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Despite the relatively large number of CDM projects being implemented in China, and despite China’s relatively high investment climate rating for CDM project development, the implementation of such projects in China has been the subject of some criticism. Nevertheless, the rapid increase in CDM projects undertaken in China suggests that their profitability somewhat outweighs the burdens involved in the approval process that foreign investors must undertake through the Chinese government.

Recommendations:

The existence of many uncontrolled coal fires in China and the urgency of extinguishing them should be included by United States and other international negotiators as important topics in future discussions of Chinese actions to address world problems of greenhouse gas emissions and climate change.

The Chinese government should be encouraged to establish transparent and workable procedures by which CDM credits for extinguishing uncontrolled coal fires can be established and certified within China.

The Chinese government should be encouraged to allow easier and greater participation of foreign private companies and other foreign organizations in projects to put out coal mine fires in China and to sell the resulting carbon credits.

Steps should be taken to compile a complete inventory of the current uncontrolled coal fires in China. This may help to address any potential permanence and additionality concerns for future carbon credit projects designed to extinguish coal fires in China.

Additional research and other studies should be undertaken to further refine cost estimates for extinguishing coal fires in China.

One or more uncontrolled coal fires in China should be chosen as demonstration projects to evaluate the feasibility of using the extinguishing of such coal fires to generate cost-effective carbon offset credits.

Chapter 8 – Indonesia and Coal Fires

Indonesia has large coal reserves and is a major international source of coal exports. In the forests of Indonesia there is a cycle of fire. The cycle is initiated when humans set fires such as burning trash heaps or setting the forest on fire with the intent to clear land. Once the forest is on fire, the cycle begins. The forest fire ignites coal outcrops which are exposed at the surface. These coal outcrops can continue to burn for decades, until all the coal is burned up, the fire runs out of oxygen, or it is put out through

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human intervention . Occasionally, fire moves through the coal seam, which can re-ignite forest fires, starting the cycle over again.

Most of Indonesia’s uncontrolled coal fires are burning underneath the tropical forest, which makes it difficult to know how many fires are actually burning. Since the 1980s, government officials have investigated 263 coal fires in Indonesia, most of which were in East Kalimantan, a province on the island of Borneo. Overall, however, it is believed there could be anywhere from 760 fires to 3,000 fires burning at present. Given the very large uncertainties, it is estimated that the total emissions from Indonesia coal fires could range anywhere from 7 million tons of CO2-equivalent to over 503 million tons CO2-equivalent.

A rough cost analysis indicates that the price of carbon credits yielded from putting out coal fires in Indonesia would be low enough to be marketable. While it was not possible to generate actual precise estimates for credit prices for coal fire extinction projects in Indonesia, the available data demonstrate that the total costs of extinguishing uncontrolled coal fires in Indonesia is often quite low.

Beyond the release of greenhouse gases, the uncontrolled coal fires in Indonesia – and the cyle of forest and coal fire which they help to perpetuate -- are associated with a number of other adverse impacts as well. Indonesia is largely covered by tropical forests, home to endangered species such as orangutans and sun bears. The loss of forest resources and the haze from the smoke has hurt Indonesia’s economy and can have a large negative impact on the health of Indonesians (as well as the citizens of other nations in some cases).

A number of factors concerning Indonesia’s government have prevented it from establishing a comprehensive policy for extinguishing uncontrolled coal fires. There has been an unwillingness of any government agency to assume responsibility for this task. Also, the government is facing many other pressing issues, and coal fires are low on the priority list. When sone coal fires were discovered that threatened homes or public buildings, the government chose to relocate people, rather than put the coal fires out.

Recommendations:

The Indonesian government should be encourage to establish transparent and workable procedures by which CDM credits for extinguishing uncontrolled coal fires can be established and certified within Indonesia.

Steps should be taken to compile a full inventory of the current uncontrolled coal fires in Indonesia. This may help to address any potential permanence and additionality concerns for future carbon credit projects designed to extinguish coal fires in Indonesia.

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Additional research and other studies should be undertaken to further refine estimates for the number of and the costs of extinguishing coal fires in Indonesia.

One or more uncontrolled coal fires in Indonesia should be chosen as demonstration projects to evaluate the feasibility of using the extinguishing of coal fires to generate cost-effective carbon offset credits.

The United States government should offer financial assistance to the government of Indonesia for the purpose of developing and implementing a program of creating carbon credits based on extinguishing uncontrolled coal fires.

Chapter 9 – The United States and Coal Fires

There are currently hundreds of coal mine fires in the United States covering thousands of acres, posing risks both to public health and safety as well as to the world climate. Both state Office of Surface Mining agencies and private mining companies have commissioned drilling, heavy equipment, and firefighting contractors to aid in the suppression operations. Three of these companies are Goodson & Associates Incorporated, USF Technologies and Services, and CAFSCO. These three have well-documented successes and have collaborated with the United States Office of Surface Mining and the National Institute of Occupational Safety and Health (NIOSH).

In the United States, the mine company’s insurance, or the Abandoned Mine Land Fund, may be available to pay for coal fire extinguishing. In December 2006, the Abandoned Mine Land Fund was reauthorized to disperse most of its budget to state governments, except for a part held by the Office of Surface Mining to manage emergency programs . In many cases, however, the state funds are inadequate to insure the successful suppression of current coal fires due to the costs of suppression, monitoring and upkeep. Instead of thoroughly committing to a small number of fires and their complete extinction, the Office of Surface Mining often provides for mitigating efforts at the most sites it can afford, in order to protect the public’s safety from fumes or overburden collapse. This leads to a number of dormant fires reigniting.

OSM estimates of the costs for putting out coal fires in the United States suggest that the price of the carbon credits generated by these projects would be low in many cases. Specifically, for coal fire extinction projects in the United States, offsets would likely cost between $0.13 and $13.20 per ton of carbon dioxide emissions averted. Underground coal projects would involve typical costs of $2 per ton and surface coal projects would involve typical costs of less than $1 per ton. These costs of generating carbon offsets would make them competitive on U.S. carbon markets.

In addition, many projects to extinguish coal fires in the United States would be unlikely to have a major problem satisfying the condition of additionality. While some

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fires are paid for by the ALM Fund, or by private insurance, the program has inventoried a large number of fires that have gone unfunded.. For these fires, it is unlikely that they would be extinguished in the absence of funding made available by the sale of carbon credits.

Recommendations:

The U.S. Office of Surface Mining should support the development of a methodology for creating carbon credits by extinguishing uncontrolled underground and surface coal fires in the United States. These credits could be sold at present in U.S. voluntary carbon markets and potentially in the future in U.S. markets created by the possible enactment of federal cap and trade legislation.

OSM should support efforts to have a methodology for coal fire extinction projects recognized and validated by the various carbon credit accreditation services in the United States voluntary markets.

State surface mining offices should designate specific coal fires in their states for which actions to extinguish the fires would meet the requirement of additionality and permanence in carbon trading markets.

OSM -- working with the states -- should establish a full inventory of existing coal fires in the United States for the purpose of facilitating future demonstrations of additionality and of enlisting private sector interest in putting out these fires in order to sell carbon credits.

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THE NEGLECTED GREENHOUSE SOURCE:

CURBING EMISSIONS FROM UNCONTROLLED

COAL FIRES THROUGH CARBON CREDIT SALES

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INTRODUCTION

There is perhaps no more underappreciated contributor to global climate change than coal mine and other uncontrolled coal fires. In China alone, according to one estimate, China’s uncontrolled coal fires alone accounted for two to three percent of the world’s total greenhouse gas emissions in 2004. If accurate, this estimate suggests that China’s uncontrolled coal fires annually release as much greenhouse gas emissions as the entire United States automobile fleet (Stracher and Taylor 2004). Extrapolating from this statistic, the authors of this report estimate that the world’s uncontrolled coal fires could account for as much as four percent or more of the annual global emissions of greenhouse gases. This figure contains great uncertainty, however.

Accordingly, the extinction of uncontrolled coal fires around the world could play a significant role in the global effort to stabilize “greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system” (United Nations Framework Convention on Climate Change 1992). Preliminary research by Chinese scientists lends support for this view. For example, a report prepared by the Xinjiang Scientific Research Institute concluded that extinguishing coal fires in the Xinjang region could by itself reduce by up to eighteen percent the total greenhouse gases that the region is projected to emit between 2005 and 2010.*

To date, the governments of countries in which these fires are located have taken mostly incremental and often uncoordinated steps towards their remediation (see, e.g., Meyer 2005). One main obstacle is that extinguishing uncontrolled coal fires can be technically challenging and expensive. This is especially true for those fires that rage deep underground, such as in abandoned coal mines. Indeed, some of these underground coal fires on the planet have been burning for centuries; no efforts have been made to suppress them due to the high cost of doing so (Prakash 2007; Stracher and Taylor 2004; Discover 1999).

In contrast, uncontrolled fires that occur along surface or shallow coal seams are typically much easier to put out. Nevertheless, many of these surface fires continue to burn in the world’s more remote areas, either because they are expensive to reach or because their presence is unknown to the relevant government authorities. Among those developing nations where these fires are especially prevalent, such as China and Indonesia, there seems to be little incentive to spend the millions of dollars necessary to suppress uncontrolled coal fires that pose no immediate threat to human safety or valuable infrastructure. Despite the fact that these fires reduce a valuable natural resource to smoke and ash, the cost-benefit analysis conducted by these countries still seems to weigh in favor of allowing most uncontrolled coal fires to burn unabated.

Thus, there is a close connection between inadequate funding and the persistence of uncontrolled coal fires, and this connection is not limited to developing nations alone.

* Mr. Jianbo Ma, phone interview with James Goodwin, April 12, 2008.

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Indeed, a number of uncontrolled coal fires continue to burn in the United States, where remediation efforts have long been hampered by a lack of funding (see, e.g., Abandoned Mine Land Program Inventory n.d.). The uncontrolled coal fire afflicting Centralia, Pennsylvania, for example, has been burning for nearly 50 years. After decades of unsuccessful attempts, federal and state policymakers concluded that it would be cheaper to evacuate a nearby community than to take the necessary steps to extinguish the fire completely (Quigley 2007; Revkin 2002).

The recent and rapid emergence of carbon credits markets offers a potential solution to obtain the necessary funds to put out many currently burning coal fires. These markets have already been instrumental in raising funds for other types of projects designed to mitigate greenhouse gas emissions. As such, a properly designed project to extinguish uncontrolled coal fires could potentially serve as a basis for carbon offsets traded in the carbon offsets market. Though significant questions concerning cost and logistics must still be resolved, the technology exists to extinguish most coal fires in both surface seams and underground mines, and it is now consistently improving as new technologies such as nitrogen-enhanced foam and gas emissions monitoring are further developed. If the funds to apply the best technologies can be made available, it could be possible to extinguish many or even most of the uncontrolled coal fires around the world, thereby realizing significant reductions in greenhouse gas emissions.

The purpose of this report is to examine and evaluate the potential of using carbon offsets as a means for generating the necessary funding to address uncontrolled coal fires throughout the world. This report first examines the extent of uncontrolled coal fires in the world and the amounts of greenhouse gases they are emitting. It then explores the methods currently available to extinguish coal fires and their costs. Based on this analysis, the report proposes a strategy of funding coal fire extinction projects through the sale of carbon credits.

Presently, the two major institutions that issue carbon credits are the Clean Development Mechanism (CDM), which was established under the Kyoto Protocol to United Nations Framework Convention on Climate Change, and the voluntary offsets programs, such as those of the Chicago Climate Exchange and other recently established sources of carbon credits in the United States. This report will review the logistical and practical issues involved in developing carbon offsets through both CDM and other sources. Finally, this report includes three case studies of coal fires in China, Indonesia, and the United States in order to examine the prospects for developing carbon offsets projects for extinguishing uncontrolled coal fires in these nations.

Uncontrolled Coal Fires

Coal is the most abundant and easily accessible fossil fuel source of energy in the world. Even in ancient times, this coal sometimes spontaneously ignited and could burn for long periods. Many millions of years ago the geology of the American West was significantly transformed by the burning of vast surface fires which converted thick coal seams into atmospheric gases, causing widespread subsidence and otherwise leaving the

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surface of the earth much altered. Even today, while no precise numbers are available, there are many thousands of coal fires burning across the world, possibly consuming as much as 300 million tons of coal per year—and releasing as much as 1,000 million tons of carbon dioxide and other greenhouse gases.

Uncontrolled coal fires can start in a variety of ways, and in some cases the origin of a specific fire may be unknown. For example, natural phenomenon such as lightning, forest fires, and a process of spontaneous combustion are common ignition sources, particularly among those coal fires afflicting shallow or surface coal seams. Spontaneous combustion occurs when minerals oxidize, thereby releasing sufficient heat energy to ignite nearby coal resources (Kuenzer et al. 2007, 43, 48; Stracher and Taylor 2004; Discover 1999). Most uncontrolled coal fires, however, are the result of human activities, such as land clearing, burning trash, and careless mining practices. In one particularly common scenario, the coal fire starts after a coal miner accidentally sparks combustible mine cases, such as methane, producing a large explosion (Stracher and Taylor 2004; Wingfield-Hayes 2000; Discover 1999). The Centralia fire mentioned above allegedly started after a waste disposal company carelessly burned trash on top of an exposed coal seam.

Coal fires are found in every nation in the world that has coal reserves. The single greatest concentration of uncontrolled coal fires is in the People’s Republic of China (“China”). By most estimates, China has over 200 active uncontrolled coal fires (Strangeland and Hauge 2007; Revkin 2002; Discover 1999). Coal fires are also active in a number of other countries, including Australia, India, Indonesia, Russia, South Africa, Ukraine, and the United States (Prakash 2007).

Beyond contributing to global climate change, uncontrolled coal fires contribute to a host of other environmental problems as well. Some of these problems include habitat destruction, including critical habitat for endangered species; the release of harmful air pollutants, including toxic air pollutants and precursors to ground level ozone and acid rain; and damage to vegetation, contributing to desertification, soil erosion, and nonpoint water pollution (see, e.g., Nelson and Chen 2007, 32; Stracher and Taylor 2004).

A number of negative economic and social impacts can also be attributed to uncontrolled coal fires. As discussed above, these fires destroy large quantities of coal each year, which for many countries is an important source of energy for lifting their citizens out of acute poverty (see Kuenzer et al. 2007, 43-44). Moreover, uncontrolled coal fires also damage buildings and important infrastructure, such as roads and utility lines; disrupt beneficial economic activities, such as agriculture; harm public health; and displace entire communities (see, e.g., Nelson and Chen 2007, 32; Kuenzer et al. 2007, 51; Finkelman 2007, 104; Hilsum 2007; Stracher and Taylor 2004).

Yet, despite all the negative consequences of uncontrolled coal fires, the countries in which they are located are often unable to assemble the necessary resources to locate, define, and then extinguish them.

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Carbon Market Funding Sources

One potentially promising source of funds for putting out uncontrolled coal fires is the Clean Development Mechanism (CDM). This program, created by the Kyoto Protocol, establishes a procedure by which developed countries can finance projects in developing countries that will reduce the developing country’s greenhouse gas emissions. Since developing countries are not bound to reduce their greenhouse gas emissions under the Kyoto Protocol, they can sell these emissions reductions in the form of Certified Emissions Reduction (CER) credits to the developed country, which can in turn use the credits as an offset it in order to meet its own greenhouse gas reduction requirements (Kollumuss, Zink, and Polycarp 2008; United Nations 2008). The United Nations has established a system for reviewing and approving methodologies for determining internationally acceptable and saleable carbon credits under the CDM mechanism. According to figures from the World Bank, the total value of carbon credit sales in the CDM market (both primary and secondary projects) reached $US 12.88 billion in 2007 and accounted for 791 million metric tons CO2-equivlent (Capoor and Ambrosi 2008).

Voluntary offsets programs offer a second potentially promising source of funding for putting out uncontrolled coal fires. One voluntary carbon market is the Chicago Climate Exchange (CCX), the largest such voluntary market in the world. Although they are under no legal obligation to do so, the participants in the CCX have voluntarily made legally binding commitments to reduce their greenhouse gas (GHG) emissions. They may meet their targets through either internal reductions of emissions or through the purchase of carbon credits (known as Carbon Finance Instruments, or CFIs) from fellow members who have exceeded their reduction requirements. Moreover, participants may also meet their requirements through the funding of offset projects.

A number of other programs have been developed to accredit carbon offsets for the voluntary markets. These include the Voluntary Carbon Standard (VCS), the VER+, and the Gold Standard. While establishing an accreditation process similar to that under the CDM, these standards are generally recognized as being either less stringent, thereby allowing for greater flexibility in the development and approval of carbon offsets projects, or (in the case of the Gold Standard) more stringent, thereby providing a greater assurance that the carbon offsets projects are producing genuine reductions in GHG emissions (Kollumuss, Zink, and Polycarp 2008).

To be economically competitive with other carbon offsets projects, the cost of extinguishing a coal fire must be low enough compared to the amount of greenhouse gas reductions the fire extinction will yield. Specifically, the cost per ton of greenhouse gas emissions avoided must be competitive with the current price of CER credits traded in the European carbon markets or of carbon offsets in the voluntary markets, such as the CCX. There has been limited analysis of this subject to date. In the case of China at least, a few cost analyses have been conducted for uncontrolled coal fire extinction projects indicating that such projects will be sufficiently cost effective to be competitive in these various offsets markets. One analysis, produced by a German research institute,

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suggested that carbon offset credits produced by projects for extinguishing uncontrolled coal fires in China could cost as little as $0.70 per ton of carbon dioxide avoided (Bandelow, Gielisch, and Schulz 2006, 56). This is well below the current price of about $35 for CERs traded in the European Climate Exchange (ECX), the largest carbon trading exchange in Europe. Although the margin is much less, it is also below the current price of about $6.25 per ton for carbon credits in the CCX for its Carbon Financial Instrument (Chicago Climate Exchange 2007). In short, based on the limited cost analysis currently available, it appears that extinguishing uncontrolled coal fires would offer cost-effective carbon offset projects in China.

An analysis undertaken for this report of the circumstances of the many surface coal fires in Indonesia offers a similarly promising conclusion with respect to the carbon market competitiveness of the greenhouse credits that might be generated there. Since 1998, the national government has been taking a more proactive approach to putting out coal fires. These firefighting efforts have largely focused on those fires that threaten public infrastructure, homes, and wildlife preserves (Whitehouse 2000, 1). These efforts might be significantly expanded with the addition of funds from sale of coal fire carbon credits. To be sure, conducting business in Indonesia raises a number of practical concerns, especially with respect to the country’s past problems of widespread corruption and poor law enforcement. These concerns notwithstanding, Indonesia seems offer a great deal of potential for hosting carbon offsets projects for extinguishing uncontrolled coal fires.

In the case of India, the prospects for developing economically viable carbon credits may be less promising, since the uncontrolled coal fires there are more likely to be in mines burning underground, and therefore to be more expensive to put out. Indeed, it may not be feasible to extinguish some of India’s uncontrolled coal fires at almost any price. Because they are often burning in highly populated areas, however, the total social costs of uncontrolled mine fires in India—including the large negative health effects of air pollution—may be quite large. In some cases, whole populations of people have had to be moved. Hence, combining funds from Indian government public health resources with the international sale of carbon credits may generate sufficient total resources to put out more of the uncontrolled coal fires in India, even when this is an expensive task.

Before firmer conclusions can be developed with respect to the marketability of coal fire carbon credits, further studies will be needed to obtain more precise estimates of the costs of coal fire extinctions and the amounts of greenhouse gases that are now being released by uncontrolled coal fires. Pilot projects in nations with diverse conditions would offer a good vehicle for conducting these studies.

Accreditation Issues – Additionality and Permanence

In addition to the practical concerns of marketability and implementation, there are also a number of conceptual concerns with which a proposal to use carbon credit sales to finance uncontrolled coal fire extinction projects must contend. Specifically, the CDM and the various accrediting standards for the voluntary markets require that all proposed

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sales of carbon reduction credits satisfy a number of requirements, including meeting the conditions of “additionality” and “permanence.” In order to satisfy the condition of additionality, a carbon credit sale must produce greenhouse gas emission reductions that would not have occurred but for the sale of the carbon credits and the provision of additional funds. To satisfy the condition of permanence, there must be some way of guaranteeing or verifying that whatever greenhouse gas reductions achieved through a project will be maintained for a significant period into the future. There is a concern that carbon credit sales for projects designed to extinguish uncontrolled coal fires may not always satisfy these two conditions.

To begin with, many of the countries with uncontrolled coal fires within their jurisdiction have successfully extinguished at least a few of these fires. This suggests that meeting the condition of additionality might be problematic in at least a few cases. Nevertheless, the sheer number of these fires—particularly compared to the limited efforts most nations are making to put them out—also suggest that the requirement of additionality would likely be met in most proposed projects that involve sales of carbon credits for the purpose of extinguishing uncontrolled coal fires in less developed nations.

The condition of permanence, however, might present a greater conceptual hurdle. If the remediation of a coal fire simply saves the coal for future use (i.e. resulting in the later combustion of this same coal in an electric power plant), the total long run greenhouse emissions from the coal deposit will not have been reduced. Approval of long run total reductions of greenhouse emissions from extinguishing coal fires thus will require demonstrating that one or another of two circumstances exist: (1) the coal that was previously burning in a fire that was put out will not be put to any commercial use in the future or (2) even if the previously burning coal will be put to some future commercial use, it will end up substituting for other less economical coal deposits elsewhere, and the latter deposits will therefore not be used and remain in the ground. Demonstration of either of these circumstances may prove difficult in some cases.

Next Steps

Efforts to extinguish coal fires for carbon credits may benefit from at first focusing on the “low-hanging fruit” of fires that occur in shallow or surface coal seams. Such fires can typically be excavated at a much lower cost than underground fires. In addition, these projects have a higher success rate and this success can be observed without expensive remote gas or other monitoring efforts. Because many surface fires are simply being allowed to burn at present, it should not be difficult in most cases to meet the requirements for demonstrations of additionality and of permanence.

Many surface fires in China and Indonesia are among the low hanging fruit in terms of world wide coal fires. Since these fires are close to the surface, they are often much easier to put out. Moreover, the methods for putting out these surface fires tend to rely on human labor rather than on advanced technology. Since human labor tends to be inexpensive in these countries, extinguishing these coal fires promises to be a relatively inexpensive endeavor as well. Accordingly, with respect to the many uncontrolled

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surface coal fires at present, the prospects for developing economically viable greenhouse credits in nations such as China and Indonesia for sale in world carbon markets would appear to be high.

References

Abandoned Mine Land Program. n.d. Inventory of Coal Mining Related Abandoned Mine Land Problems, http://192.243.130.34/scripts/stsweb.dll.

Bandelow, Friedrich-Karl, Hartwig Gielisch, and Jörg Schulz. 2007. CER-trading as a means of funding coal fire fighting in China. In Ecological Research for Sustaining the Environment in China (ERSEC) Ecological Book Series, Vol. 4 on Coal Fire Research, 51-61. Beijing, P.R. China: United Nations Educational, Scientific, and Cultural Organization.

Capoor, Karan and Philippe Ambrosi. 2008. State and trends of the carbon market 2008. Washington, D.C.: The World Bank. http://siteresources.worldbank.org/NEWS/Resources/State&Trendsformatted06May10pm.pdf.

Chicago Climate Exchange. 2007. Market Overview, http://www.chicagoclimatex.com/.

Discover. 1999. China’s on fire: Underground fires in China burn millions of tons of coal a year and release carbon dioxide into the atmosphere. October 1. http://discovermagazine.com/1999/oct/chinasonfire1697.

Finkelman, Robert B. 2007. Health impacts of coal: Facts and fallacies. Ambio 36: 103-106.

Hilsum, Lindsey. 2007. Coal fires threaten the globe. Channel 4 News, November 29. http://www.channel4.com/news/articles/society/environment/coal+fires+threaten+the+globe/1116652.

Kollmuss, Anja, Helge Zink, and Clifford Polycarp. 2008. Making sense of the voluntary carbon market: A comparison of carbon offset standards. Berlin: WWF Germany. http://assets.panda.org/downloads/vcm_report_final.pdf.

Kuenzer, Claudia, Jianzhong Zhang, Anke Tetzlaff, Paul van Dijk, Stefan Voigt, Harald Mehl, and Wolfgang Wagner. 2007. Uncontrolled coal fires and their environmental impacts: Investigating two arid mining regions in north-central China. Applied Geography 27: 42-62.

Meyer, Mike. 2005. Flaming dragon. Smithsonian 36(2): 58.

Nelson, Mark I. and Xiao Dong Chen. 2007. Surveys of experimental work on self-heating and spontaneous combustion of coal. In Geology of coal fires: Case

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studies from around the world (Reviews in Engineering Geology, vol. XVIII), Stracher, Glenn B., ed. Boulder, CO: Geological Society of America, 31-83.

Prakash, Anupma. 2007. Coal Fire, Geophysical Institute, University of Alaska-Fairbanks, http://www.gi.alaska.edu/~prakash/coalfires/coalfires.html.

Quigley, Joan. 2007. The day the Earth caved in: An American mining tragedy. New York: Random House.

Revkin, Andrew C. 2002. Sunken fires menace land and climate. New York Times, January 15. http://query.nytimes.com/gst/fullpage.html?res=9902E2DF1538F936A25752C0A9649C8B63.

Stangeland, Aage and Frederic Hauge. 2007. Coal fires in China. Oslo, Norway: The Bellona Foundation.

Stracher, Glenn B. and Tammy P. Taylor. 2004. Coal fires burning out of control around the world: Thermodynamic recipe for environmental catastrophe. International J. of Coal Geology 59: 7-17.

United Nations Framework Convention on Climate Change art. 2, May 9, 1992, 31, I.L.M. 849.

United Nations. 2008. United Nations Framework Convention on Climate Change, Clean Development Mechanism: Background, http://unfccc.int/kyoto_protocol/mechanisms/clean_development_mechanism/items/2718.php.

Whitehouse, Alfred E. 2000. Coal fire management in Indonesia. Unpublished manuscript, Office of Surface Mining/Ministry of Energy and Mineral Resources Coal Fire Project Ministry of Mines and Energy, Jakarta, Indonesia.

Wingfield-Hayes, Rupert. 2000. China battles coal fires. BBC News, August 3. http://news.bbc.co.uk/2/hi/asia-pacific/864588.stm.

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PART I – UNCONTROLLED COAL FIRES AROUND THE WORLD

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CHAPTER 1 – COAL FIRES: A LEADING SOURCE OF GREENHOUSE GASES

Coal is one of the most abundant and most heavily used sources of energy in the world. According to the U.S. Energy Information Administration (EIA), as of June 2007, the world has approximately 905 billion metric tones of economically recoverable coal, split about evenly between higher grades (anthracite and bituminous; 480 billion metric tons) and lower grades (lignite and subbituminous; 425 billion metric tons).* Economically recoverable coal is that coal which can be extracted profitably at prevailing market costs. Worldwide annual coal production and consumption have been on the rise; in 2005, over 6.48 billion metric tons of coal were consumed, a 56.5% increase over 1984 levels and a 27.2% increase over 2000 levels.

Table 1 -- Worldwide Coal Reserves, Consumption, Production, and Growth, by Region*

Region 2007 Economic Reserves

2005 Consumption Average Annual Growth

In Consumption(2000-2005)

2005 Production

N America 250,693 1,100 0.81% 1,084Central & South America

19,893 37 2.26% 66

Europe 59,658 951 0.04% 740Eurasia 227,254 379 0.49% 434Middle East 419 15 3.56% 1.2Africa 50,336 191 2.19% 248Asia & Oceania 296,889 3,208 6.58% 2,956

World 905,142 5,881 4.92% 5,531*All figures in millions of metric tons; Source: U.S. Energy Information Administration

As shown in Table 1, large economically recoverable coal reserves are found in every region of the world except the Middle East (where low cost petroleum limits any interest in possible coal development) (Energy Information Administration 2008). The United States has the largest coal reserves of any nation, about 26.82 percent of the world total, followed by China with about 12.65 percent. In the United States, coal supplies about 50 percent of total electric power; in China the comparable figure is about 75 to 80 percent of total energy consumption. Around the world, there are also large coal reserves in India (10.21% of the world total), Indonesia (0.55%), Australia (8.67%), South Africa (5.39%), Poland (1.55%), Russia (17.35%), and Ukraine (3.77%) among other nations (Energy Information Administration 2007).

Table 2 -- Worldwide Coal Reserves, Consumption, Production, and Growth for Selected Countries*

* See Appendix to Chapter 1, Table 2, for explanation of coal grades.

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Country 2007 Economic Reserves

2005 Consumption Average Annual Growth in

Consumption(2000-2005)

2005 Production

Australia 78,500 143 2.33% 354China 114,500 2,116 12.72% 1,956India 92,445 460 4.69% 413Indonesia 4,968 41 15.00% 132Poland 38,600 136 -1.17% 161Russia 157,010 234 -0.43% 271South Africa 48,750 175 1.96% 243Ukraine 34,153 62 -1.11% 60United States 242,721 1,021 0.75% 1,009

*All figures in millions of metric tons; Source: U.S. Energy Information Administration

The greenhouse gas emissions from burning coal for electric power generation and other industrial purposes has attracted wide attention. Worldwide, an estimated 20 percent of total annual greenhouse emissions are associated with the commercial uses of coal (Pew Center on Global Climate Change 2007). There are also large emissions worldwide from the unintended and uncontrolled burning of coal, although it has attracted much less attention than emissions from power plants or industrial sources. In some cases, the consequences of coal fires have received wide public attention such as the Pennsylvania town of Centralia in the United States, where a mine fire has burned for fifty years. In most cases, however, coal fires have remained out of sight and mind, receiving little attention from world energy and climate policy makers.

Researchers in Germany and the United States have estimated that uncontrolled coal fires in China alone may contribute two to three percent of total world greenhouse emissions (Stracher and Taylor 2004). Since China has 12.65 percent of world coal reserves and 35.37 percent of world coal production (Energy Information Administration 2007), and coal fires burn in many countries, even if uncontrolled coal fires affect a smaller share of the total coal reserves in nations other than China, the total additions to greenhouse emissions worldwide from coal fires is likely to be significant. Hence, although the data is very poor, an extrapolation from the known facts suggests that, conservatively, uncontrolled coal fires cumulatively in all nations may contribute as much as four percent or more of total world greenhouse emissions per year.

Measurement Difficulties

Assessing where and how large a coal fire is can aid in choosing the best method to put out the fire, and how many tons of green house gases are emitted. Surface coal fires are easier to evaluate and extinguish than sub-surface fires, though their path can be unpredictable. Coal outcrop fires move along with the contour of the terrain with the prevailing wind. The speed the fire travels through the coal is dependent on the wind and overburden type and thickness. As the coal burns, its volume decreases and the overburden can collapse, providing a new source of oxygen for the fire, which allows the fire to continue burning. While their path may be unpredictable, coal outcrop fire

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extinguishing is far less costly than underground coalmine fire extinguishing. These visual clues can help identify the location of uncontrolled coal fires.*

Sub-surface fires can be more difficult to track and extinguish. As the coal burns

it releases gases that can be detected above ground. Fissures develop ahead of the surface expression of the fire as the coal burns. Gases vent through these fissures and occasionally a flame can be seen in their depths. Other clues to a sub-surface fire are deposits of unusual minerals and the prevalence of heat-tolerant vegetation in the area.†

Another source of difficulty in assessing the scope of coal fires is that the term “uncontrolled coal fire” is not used in a uniform fashion in different reports. At times, the term is used to describe all of the coal fires affecting a particular coalmine or coal field, even if there are actually multiple isolated coal fires located in the area. (e.g. some estimate that there are sixteen isolated uncontrolled coal fires affecting the Wuda coalfield in Inner Mongolia Autonomous Region; see Meyer 2005). Other times the term is used to describe a single coal fire that has not been contained, and continues to burn.‡ Given that there is no uniform usage of the term, and given that reports rarely, if ever, specify which sense of the term they are using, it is difficult to determine with precision an exact number of individual uncontrolled coal fires. In China, however, the typical estimate seems to be around 200 separate coal fires.

Also complicating efforts at estimating the number of uncontrolled coal fires is the dynamic nature of the fires (see Kuenzer et al. 2007, 55). Some fires might split into multiple fires, while multiple fires may converge into one. Moreover, new uncontrolled coal fires may be started through natural or anthropocentric means in the same seam.

How Coal Seam Fires Burn

Coal seam fires can be started though natural or anthropogenic means. Natural causes include lightning strikes and forest fires. Anthropogenic causes tend to be related to mining and the clearing of forests.§ The clearing of forest contributes both by exposing the coal seam and because forests are often cleared using fire.

A coal seam can remain on fire nearly indefinitely, until it is starved of oxygen or burs through the entire seam (Tetzlaff 2004). Once coal catches fire, it creates a self-sustaining release of heat. The heat release, coupled with a temporary increase in the volume of the coal due to its conversion to gas, can cause the soil above to fracture, allowing the re-entrance of atmosphere to the coal seam. An underground coal fire can also cause land subsidence. As the coal burns, it becomes gas (through the reactions

* Mr. Alfred Whitehouse (Director, International Programs, U.S. Department of the Interior, Office of Surface Mining) interview with authors, March 11, 2008.† Dr. Glenn B. Stracher (Professor of Geology and Chair, Coal Geology Division, Geological Society of America, East Georgia College) phone interview with authors, February 26, 2008.‡ Throughout this report we will use the term uncontrolled coal fire to refer to individual coal fires burning, whether or not they have been contained by fire-fighters.§ See the Indonesian case study of this report for further discussion.

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detailed below) that seeps through fissures in the soil. As the gas escapes, the total volume of the coal seam is reduced and the overburden can collapse. Even if the overburden doesn’t collapse, it can become heated to the point that no vegetation can develop (Kim 2007).

Incomplete combustion is another problem associated with coal seam fires. Coal seam fires usually occur with limited access to atmospheric gases, and certainly without the ventilation systems of modern coal furnaces. The proper ventilation of industrial coal fires allows for more efficient burning of the coal, producing more energy with more carbon dioxide than other products. The conditions in uncontrolled coal fires tend to create a deficit of oxygen, forcing the combustion to produce less carbon dioxide and more methane (Schloemer 2007).

Uncontrolled coal fires generally release three kinds of greenhouse gases: carbon dioxide, carbon monoxide, and methane (Kuenzer et al. 2007, 44). By concentration, carbon dioxide is the most prevalent gas released from coal fires (Stracher and Taylor 2004). The amount of carbon dioxide released from an uncontrolled coal fire is by no means constant over the course of the fire’s lifetime*, and the amount and concentrations of carbon dioxide emitted can vary considerably from one coal fire to the next due to a number of geologic factors (Kuenzer et al. 2007, 55; Stracher and Taylor 2004). These geologic factors include the depth and density of the overburden, the chemical composition of surrounding soils, and the chemical make-up of the coal.

Carbon dioxide, carbon monoxide, and methane are greenhouse gases, the release of which presents a major environmental problem. By increasing atmospheric concentrations of greenhouse gases, uncontrolled coal fires are a significant contributor to anthropogenic global climate change. China’s uncontrolled coal fires are especially significant in this regard, given their scope and magnitude. As noted above, according to one commonly cited estimate, China’s uncontrolled coal fires account for between two and three percent of the world’s carbon dioxide emissions (Stracher and Taylor 2004). If, however, one were to assume that the amount of coal being burned in China’s uncontrolled coal fires is towards the lower range of available estimates (i.e. 10-20 million tons of coal per year), then carbon dioxide emissions from China’s uncontrolled coal fires would only amount to around 0.1% of the total global carbon dioxide emissions (Kuenzer et al. 2007, 52).

Recommendation:

Globally, since uncontrolled coal fires could account for as much as 4% or more of total greenhouse gas emissions in the world, they should receive greater attention in climate change policy discussions, and should receive greater analysis and other consideration in future IPCC reports.

* Mr. Alfred Whitehouse (Director, International Programs, U.S. Department of the Interior, Office of Surface Mining) and Ms. Sarah Evans (Foreign Affairs Officer, U.S. Department of State, Office of Global Change), phone interview with James Goodwin, March 26, 2008.

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Contributions from uncontrolled coal fires should be included in future world and national inventories of greenhouse gas emissions. For China, for example, the releases from uncontrolled coal fires should be included in future calculations of the total level of Chinese greenhouse gas emissions

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APPENDIX TO CHAPTER 1 – THE CARBON INTENSIVE NATURE OF COAL

The physical character of coal and the manner in which it is formed help to explain why the burning of coal – whether intentionally in utilities and industrial facilities or unintentionally in uncontrolled fires – is such a large contributor to world greenhouse emissions. Coal is formed through a long geological process. If dead organic matter, especially plant matter, is put into an anaerobic environment, like a bog or still pond, it will not decompose as it would in the presence of oxygen. The anaerobic environment prevents the carbon in the organic matter from being released. Under normal aerobic conditions carbon is released through decomposition, primarily as methane (CH4) or carbon dioxide (CO2). Organic matter that remains in this anaerobic environment will become coal after millions of years, a brief period in the geologic scale. When buried this way, the crushing forces of the overburden (the rocks and soil above the organic matter) force out most of the oxygen and water from the matter, leaving behind coal. Through tectonic movements, these layers of coal (also called seams) can be broken and or moved, sometimes becoming exposed to the surface (Waples 1981).

Chemically, coal is an organic structure consisting mostly of carbon (C) atoms bound into loose crystal matrices with a number of impurities. In extreme cases, the coal can become so compressed that it heats up, releases all impurities, and, under the right conditions, the crystal matrix becomes perfectly organized, creating diamonds. Impurities are primarily small amounts of hydrogen (H), oxygen (O), and sulfur (S).The amount of impurities affects the specific gravity (roughly equivalent to density) of the coal. Coal with fewer impurities has a higher specific gravity. The U.S. Geological Survey ranks coal into its different categories of quality (Anthracite, Bituminous, Subbitminous, Lignite, in order of decreasing purity) using the specific gravity measurement. This gradation scale is given below. Note that a cubic meter of anthracite might weigh 1.47 metric tons (1,470 kg or 3,240 lbs.).

Table 3- Average Specific Gravity and Average Weight of Unbroken Coal Per Unit of Volume of Different Ranks

Source: U.S. Dept. of Energy, Energy Information Administration

Combustion

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Coal fires are ignited when the coal is exposed to the atmosphere and the carbon is able to react with gases, especially hydrogen and oxygen. The purity of the coal determines the necessary temperature to combust. Anthracite can burn at temperatures as low as 50º C (122º F, 323 K), though lignite requires temperatures from 70-80º C (160-175º F, 343-353 K). Once these temperatures are reached, the primary exothermic (heat releasing) reactions detailed below can occur:

I. C + O2 CO2 + heatII. 2C + O2 2CO + heatIII. C + 2H2 CH4 + heatIV. 2H2 + O2 2H2O + heat

(Tetzlaff 2004)

Because these reactions release heat (the “kJ / mol” component), the reaction is able to replenish the heat it loses through radiation and convection and so a fire can sustain itself.

The production of carbon dioxide in equation II is the most common and most important reaction, but can only occur if there is an ample supply of oxygen in the atmosphere. Given the high heat and the hydrogen release from coal, steam can spontaneously form through reaction IV. This release of steam is also an exothermic reaction, so it contributes to the further combusting of the coal. In the absence or short supply of oxygen, reactions II and III may occur, producing carbon monoxide (CO) or methane (CH4) and more heat (Schloemer 2007).

The occurrence of reactions II and III is significant because of the effects of the products of the reactions. The IPCC estimates that methane has 25 times the radiative forcing effect* of carbon dioxide (by unit mass), but has only about 36 percent of the mass of carbon dioxide per molecule. This means that carbon released from the burning of coal has about 9 times the effect on global warming if it is combusted into methane instead of carbon dioxide (Forster et al. 2007).

For carbon monoxide, the IPCC estimates that the radiative forcing per unit mass could be from 1.0 to 3.0 times that of carbon, with a likely value around 1.9. The effect of a unit of carbon monoxide emission can be different depending on where (globally) the emission occurs (Foster et al. 2007). Since carbon monoxide’s mass is 64 percent of carbon dioxide’s, the effect per carbon atom is likely around 1.2 times higher on average for carbon monoxide over carbon dioxide. Carbon monoxide is also a toxic molecule for humans, interfering with the absorption of oxygen into the bloodstream and causing asphyxiation.

* Radiative forcing effect describes the cumulative warming effect on the atmosphere of a gas. The effect is usually given as a multiple of the effect of an equivalent mass of carbon dioxide.

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References:

Energy Information Administration. 2007. International Energy Annual, http://www.eia.doe.gov/iea/.

Energy Information Administration. 2008. Coal Reserves, http://www.eia.doe.gov/neic/infosheets/coalreserves.html.

Forster, Piers M. et al. 2007. Changes in atmospheric constituents and in radiative forcing. In Climate Change 2007: The Physical Science Basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, Solomon, Susan et al. eds. Cambridge, U.K.: Cambridge Univ. Press, 129-234. http://www.ipcc.ch/pdf/assessment-report/ar4/wg1/ar4-wg1-chapter2.pdf.

Kim, Ann G. 2007. Greenhouse gases generated in underground coal-mine fires. In Geology of coal fires: Case studies from around the world (Reviews in Engineering Geology, vol. XVIII), Stracher, Glenn B., ed. Boulder, CO: Geological Society of America.

Kuenzer, Claudia, Jianzhong Zhang, Anke Tetzlaff, Paul van Dijk, Stefan Voigt, Harald Mehl, and Wolfgang Wagner. 2007. Uncontrolled coal fires and their environmental impacts: Investigating two arid mining regions in north-central China. Applied Geography 27: 42-62.

Meyer, Mike. 2005. Flaming dragon. Smithsonian 36(2): 58.

Pew Center on Global Climate Change. 2007. Coal and Climate Change Facts, http://www.pewclimate.org/global-warming-basics/coalfacts.cfm.

Schloemer, Stefan. 2007. Innovative technologies for exploration, extinction, and monitoring of coal fires in north China: Final report on gas and temperature measurements at fires zones 3.2 & 8. Hanover, Germany: Federal Institute for Geosciences and Natural Resources. http://www.coalfire.org/images/pdf/b_schloemer.pdf.

Stracher, Glenn B. and Tammy P. Taylor. 2004. Coal fires burning out of control around the world: Thermodynamic recipe for environmental catastrophe. International J. of Coal Geology 59: 7-17.

Tetzlaff, Anke. 2004. Coal fire quantification using ASTER, ETM, and BIRD satellite instrument data. PhD diss., Ludwig-Maximillians University (Munich, Germany).

Waples, Douglas. 1981. Organic geochemistry for exploration geologists. Minneapolis, MN: Burgess Publishing Company.

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CHAPTER 2 – PUTTING OUT COAL FIRES: METHODS AND COSTS

The feasibility of putting out uncontrolled coal fires depends on the methods available for this purpose and their costs. In order to sell carbon credits in international markets, it will be necessary that the cost per ton of greenhouse gas emissions that are averted by putting out the fire is less than the market selling price of the credits. This chapter examines the methods available for extinguishing coal fires and their costs.

Coal Fire Dynamics

The basics of coal mine fire control technology focus on the removal of one or more sides of what is referred to as the fire tetrahedron: oxygen, heat, fuel, and the chemical reaction. Directly applying water, foam, chemicals, rock dust or sand can effectively contain the early stages of a coal fire. In a sub-surface mine fire, doing so within the first thirty minutes of ignition is essential to preventing a costly and dangerous, often unstoppable, coal fire. However, this method places miners in dangerous proximity to the fire zone. An indirect method must be used when access to the fire is prohibited for safety reasons, or there is a limited supply of available firefighting materials, the size of the fire, or blocked underground access. An indirect approach involves drilling boreholes through the over burden and then flooding the affected area with water, inert gases, detergent foam, or gas-enhanced foam to control and extinguish the fire.

No single technique is applicable to all fires due to the variety and complexity of coal fires. Size, depth, overburden composition, slope, and geological and geographic characteristics determine what method may work best and what the scope of the extinguishing project may entail. Even within a given site, the fire may have different attributes due to a roof having fallen or some other partitioning event, creating chambers with differing temperatures, slopes, or chemical compositions (Renner 2005). Hotter burning fires can be more difficult to douse and could move through the coal seam more quickly. A steeply sloped chamber limits access and creates difficulties for equipment. Evaluating the subsurface dimensions thoroughly is necessary to evaluate the best extinguishing method and suppression plan.

Excavation

The most successful proven method for extinguishing coal fires is to excavate the burning coal and surrounding overburden because of the direct access to the coal and the ability to evaluate the extent and progress of the fire. Remote operations lack this benefit and so are attempted less frequently and less successfully. Excavation requires heavy equipment, and therefore a road, which might not be possible in very remote regions of historic or abandoned mines or natural outcrops. More recent mining operations would likely be more accessible. Shallow surface coal seams can often be excavated rather simply in this manner.

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Underground fires, however, are usually plowed until they are cut off from unburned coal and then the encircled fire is allowed to burn out.* This excavated barrier, like a moat, prevents the fire’s forward movement and ends its supply of fuel. Any attempt to directly access the burning coal would require further quenching operations that may not be necessary. Another process involves digging up the coal from the fire and smothering it with dirt. Excavation and smothering can be performed either “wet”, when the coal is doused with water as it is excavated, or “dry,” when the coal is doused with water as it is smothered.†

The excavation process can be very expensive, more so in mines than outcrop fires. A current underground mine operation in Pennsylvania cost approximately $8 per yard of material excavated, resulting in a $10 million final cost. This is higher than typical operations in 2000 where costs averaged $5 per yard and more recently $6 per yard, due largely to this year’s hike in gasoline prices.‡

Seam outcrops are much less costly to dig up out of the ground. One shallow operation in Colorado on one-tenth of an acre cost between $25,000 and $30,000. A half acre fire in Colorado was bid at $65,000, but the fire was on a steep outcrop making it easier to plow as the over burden would fall itself.§

Chinese Methods

In China, where the cost of labor is low, the methods used for extinguishing coal fires tend to be relatively basic and labor-intensive. The most common approach for putting out underground fires involves a two-step process. First, firefighters attempt to douse the fire with a slurry mixture of water and mud (Discover 1999). In some cases, this slurry is dumped on the fire through the cracks and trenches created by land subsidence. When this option is not available, firefighters must drill holes into the ground in order to access existing shafts and seams through which they can reach the burning coal (Stracher and Taylor 2004; Wingfield-Hayes 2000). Second, once the firefighters have directly doused the burning coal with the slurry mixture, they will then cover the ground over the fire with a thick layer of soil (Stracher and Taylor 2004; Wingfield-Hayes 2000). This layer of soil helps to ensure that oxygen will not be able to reach the formerly burning coal, causing it to reignite (Stracher and Taylor 2004).In some cases, it is simply too expensive or technologically infeasible to extinguish an underground fire. Often, the more difficult coal fires are left to burn themselves out, particularly when it is unlikely that they will spread to other coal seams (Prakash 2007; Stracher and Taylor 2004; Discover 1999).

* Mr. Dave Philbin (Pennsylvania Office of Surface Mining) phone interview with Colleen Ruddick, April 24, 2008.† Mr. Alfred Whitehouse (Director, International Programs, U.S. Department of the Interior, Office of Surface Mining) interview with authors, March 11, 2008.‡ Mr. Dave Philbin (Pennsylvania Office of Surface Mining) phone interview with Colleen Ruddick, April 24, 2008.§ Mr. Steve Renner (Colorado Inactive Mines Program, Office of Surface Mining) phone interview with Colleen Ruddick, April 17, 2008.

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For extinguishing uncontrolled surface fires, China typically relies on either of two common methods. First, firefighters have sought to extinguish these fires by simply burying them beneath a layer of soil typically one meter thick (Stracher and Taylor 2004; Discover 1999). In a second more complicated approach, firefighters have used earth moving equipment to remove the burning coal, and transport it offsite, where it is then doused with water or sewage (Stracher and Taylor 2004).

Regardless of the type of fire involved, however, firefighting methods are often limited by local conditions . A lack of roads and other infrastructure in the remotest parts of China may make it either impossible or unfeasible to bring in earth moving equipment. Moreover, as mentioned above, many of the regions of China that are affected by uncontrolled coal fires have dry climates and limited water resources. Consequently, use of water to fight uncontrolled coal fires must be as efficient has possible, given the various other competing uses for water in these areas (Kuenzer et al. 2007, 54-55).

Costs in China

Cost is one of the crucial determinants of whether carbon offsets credits can be used to finance a more comprehensive effort to extinguish China’s uncontrolled coal fires. Specifically, the cost of extinguishing a particular coal fire would need to be low relative to the amount of greenhouse gas that would be avoided as a result of extinguishing the coal fire. This would ensure that the cost per ton of greenhouse gas emissions averted would be low enough to be competitive with the credits that are currently available in the carbon offsets markets. For example, currently, carbon offsets credits in the Chicago Climate Exchange, a voluntary market in the United States, typically sell in the range of $6. Likewise, the cost of carbon offsets from coal fire extinction projects would likely be competitive in the in both the European Union Emissions Trading Scheme (EU-ETS), in which certified emission reduction (CER) credits are currently priced at $30 to $40 per ton.

A number of factors suggest that extinguishing uncontrolled coal fires in China would be relatively cheap. First, many of China’s coal fires are located in relatively shallow coal seams, where they can be easily located and accessed by human laborers or with relatively simple earth moving equipment. Unlike the United States and India, there are relatively few deep coal mine fires in China that would require advanced technology for locating and then extinguishing the fires. Second, the human labor that would be needed to extinguish many of China’s uncontrolled coal fires is relatively inexpensive. Third, China has developed a great deal of experience at putting out coal fires through the relatively simple methods discussed above. During the last fifty years, China has been able to refine these methods in order to increase the effectiveness and efficiency of its firefighting efforts.*

To date, there have only been a few efforts to produce a cost analysis of coal fire extinguishing projects in China. The results of these few cost analyses all seem to agree that extinguishing uncontrolled coal fires in China would indeed provide an inexpensive

* Mr. Jianbo Ma, phone interview with James Goodwin, April 12, 2008.

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source of carbon offset credits – perhaps in the range of $0.50 to $5 per ton of carbon-equivalent greenhouse gases.

Techniques and Costs in Indonesia

Indonesia has mainly surface coal fires. One proven method of extinguishing these surface fires is simply digging out the coal and dousing it with water.* For a fire burning near a public road and two houses, first, the surrounding land was cleared of vegetation. Then boreholes were dug to a depth of 30 meters to check the thickness of the seam, and to look for cracks or fissures that the fire might jump to. Other holes were drilled around the site to determine the soil temperature around the fire. A backhoe and a bulldozer were used to literally dig the fire out of the ground. The burning coal was piled and turned, all the while being doused with water to put the fire out. Fire-fighters dug a trench between the burning coal and the rest of the seam, and the burning side was left for a few days to make sure it was not still burning. Then the trench was then filled with a non-combustible material (Whitehouse and Mulyana 2004, 3-4).

Coal fires burning in remote forests in Indonesia, or by national parks, must be put out in a different fashion. To dig out a coal seam with a backhoe or a bull dozer, there must be a road leading directly to the fire. In and around national parks roads are prohibited. In these cases workers must use hand axes to dig the fire out. In the Sungai Wain Nature Reserve sixty-eight fires were put out using this method. Workers had to walk to the fires carrying axes and portable hand pumps for water. The coal was dug out with the ax, and the seam was doused with water simultaneously; working slowly until the fire had been extinguished (Whitehouse and Mulyana 2004, 5).

The cost of putting out fires in Indonesia varies by where the fire is located, and what method is used to put it out. Typically, the budget is comprised of staff salary, labor, housing and food for workers, transportation, any relocation costs, tools, pumps, backhoe, bulldozers, and other equipment.† For one fire in Balikpapan that took 40 days to put out, the total budget was about $18,860 US dollars.‡ The low cost was partly due to the low price of labor. It took 25 fire-fighters 30 days to put out the fire, and they were paid about $1.50 US dollars per day. While this wage might seem low, it was higher than the prevailing wages in the area at the time (Fredriksson 2001, 3).

Methods for Extinguishing Underground Fires

In developing nations such as India where underground coal mine fires are common, there is little experience in putting out such fires, owing to the high costs and unpredictability of such efforts. However, if the price of carbon credits rises high

* Mr. Alfred Whitehouse (Director, International Programs, U.S. Department of the Interior, Office of Surface Mining) interview with authors, March 11, 2008.† Mr. Alfred E. Whitehouse, Director, International Programs Office, Office of Surface Mining Budget Document.‡ These figures come from the Office of Surface Mining budget document. These are 2007 dollars. The exchange rate used at 8500 Rp= $1 US dollar 1998.

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enough, and as these nations themselves experience rapid growth in national income, it may become economically feasible in the future for them to put out underground coal fires as well. There is already considerable experience with such efforts in the United States to draw upon, including the following methods.

1. Mine Fire Seals -- Methods of sealing off mine fires in order to deprive them of oxygen are problematic due to their tendency to leak oxygen. This method of applying a cover of non-combustible earthen material on the overlying ground surface on the determined extent of the fire was most popular in the United States between the 1950’s and 1970’s, due to its relatively low cost. However, surface erosion and subsidence of overburden often caused seals to experience fracturing and failure. Resulting fissures allowed the inflow of oxygen and negated the smothering effect of the seal. Because of these dangers, the seal method is most successful at sites with low gradient slopes and little snow or rainfall that would lead to large-scale subsidence.

The seals must also be extensive enough around the perimeter of the fire, so a comprehensive fire area determination is necessary. Seals are dependent upon their continued maintenance and a lack of upkeep is the most common reason why sealed fires continue to burn (Renner 2005). The Chinese government attempted to put out a long-burning mine fire in the Xinjiang province by injecting water and mud through boreholes then covered over with thousands of tons of soil. The project took approximately four years and $10 million (U.S.) to complete (Wingfield-Hayes 2000). It is not clear if the project was ultimately successful, or if the fire has re-ignited.

2. Detergent Foam -- Fire-fighting foams have the consistency of shaving cream and take up volume with moisture. The soap not only cools the surrounding atmosphere, but can also coat the coal and low its temperature. A gallon of the soap, such as Pyrocool, costs approximately $30 and is diluted at a 100 to 1 ratio. The Colorado Office of Surface Mines bids contracts out to local drilling companies who then use the foam to extinguish the fire (Renner 2005). These foams work by interfering with the chemical reactions of fire by absorbing and cooling the high-energy radiant emissions from the combustion process. They can provide a foam blanket or aqueous barrier that suppresses volatile organic vapors, eliminating flashback of the fire into areas that have already been extinguished (Pyrocool Technologies 2008). Due to the temperature lowering effects, reigniting is rarely a concern.

3. Grout Injection -- An improved new grout-based material was developed at the NIOSH Lake Lynn Experimental Mine along with a novel material placement technology (Trevits, Smith, and Brune 2007). The new system creates a mine seal in two stages. The first stage positions a pipe and a directional elbow at the bottom of the injection borehole in order to place the grout material into the mine void to fill most of the mine opening. The second stage uses two strings of pipe in the injection borehole to convey two components of a specially designed grout material to a spray nozzle.

One of the negatives of grouting systems is that while they can create barriers to block further passage of these fires, it is these barriers that make later operations of

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extinguishing more difficult. The walls compartmentalize the area, creating “chimneys” that can lead to separate isolated and hotter burning fires. * Fires burning with different properties and/or temperatures are much more difficult to evaluate and then suppress than a centralized fire.

4. Low Flow Inert Gas Injection -- This method overwhelms a fire with either nitrogen or carbon dioxide gases in order to replace the oxygen supply. Liquid or gaseous nitrogen or carbon dioxide is conveyed to the mine by tankers. The liquid is then converted to a gas at the mine site and injected into the mine through boreholes. The flow of gas must be precisely controlled, and thus the availability of tankers to transport the material to the fire site is very important. The cost and feasibility of the project is also a function of the distance the tankers must travel to the fire site. Delayed shipments due to transportation issues would disrupt the process and could potentially lead to a failure to put the fire out. In addition, bulk tankers are typically limited to good road surfaces and cannot be used in areas of rugged terrain.

5. Gas-Enhanced Foam -- Nitrogen infused foam can both rob the fire of heat and remove or displace oxygen. As the foam collapses, water is released and the temperature of the water increases by absorbing heat and eventually turns into steam. Water is released as bubbles rupture, and because this process takes time, foam can act as a water reservoir, releasing water at a rate that allows absorption into the fuel of the fire, rather than running off surfaces. The application and consistency of the mixture can be precisely regulated and it is this precision of gas, foam, downward pressures and temperature that creates inert foam capable of putting out a mine fire. The gas-enhanced foam and nitrogen system can be readily moved from one borehole location to another and can be deployed quickly by off-road equipment.

Injecting nitrogen gas or nitrogen foam is problematic when there is a large void in the mine. Too much space means there is a large amount of oxygen to displace, and more opportunities for oxygen leakage. This process is also expensive and has not been used by either the Colorado or Pennsylvania Offices of Surface Mining due to its high cost and low predictability.

6. Engine Exhaust Gases (High-Flow Rate Injection) -- When the location of the fire can only be generalized, such as in the case of a large underground area that has been mined by the room-and-pillar method, the use of jet engine exhaust gases from the GAG 3A system may be able to displace the fire’s oxygen supply. The GAG 3A system consumes aviation fuel with oxygen from the atmosphere and exhausts combustion gases, primarily carbon dioxide and water, along with nitrogen from the air (Trevits, Smith, and Brune 2007). Jet engine use can cause complications at monitoring boreholes because the engine combustion products are similar to that of a mine fire, making the gas monitoring complicated. Jet engine use might prove to be prohibitively expensive for use in China or other developing countries, especially in remote regions where access is difficult due to the size of the engine.

* Mr. Steve Renner (Colorado Inactive Mines Program, Office of Surface Mining) phone interview with Colleen Ruddick, April 17, 2008.

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Monitoring and Maintenance

In order for any of these techniques to be successful, regular monitoring and maintenance are necessary. Due to the chemical nature of fires, any seepage of oxygen into the ground can cause a resurgence of fire activity in dormant mines, making returning to the site to verify suppression with either visual confirmation or gas emission monitoring equipment necessary. Physical features and mining techniques make some mines particularly vulnerable to reigniting. For example, “stope mining” creates chimney-like rooms that extend to the surface and are susceptible to fire propagation, and hotter fires, due to the high amounts of oxygen. Knowing what mining technique was used and the extent of the ventilation system are integral in developing an abatement and monitoring technique (Renner 2005). Access to the mine fire is one of the single greatest determinants of whether the extinguishing was successful. This is why excavation is a more widely practiced method than remote foam, gas, or grout injection. Remote suppression makes knowledge of the extent of the fire extremely difficult and only through gas emissions monitoring at boreholes can success be assessed.

Costs

Due to the high costs, usually only those coalmine fires near communities are extinguished. Other fires, especially those in remote regions are left to burn. No two coal fires are the same, and so in that regard, no two costs for extinguishing are the same. Factors that contribute the variability of cost include the size and depth of the mine, the amount of extinguishing material required, and the time involved. Larger projects increase the costs of both person-hours and equipment. The overburden composition and geological conditions define what equipment is necessary. For example, drilling boreholes in stone makes for a much more difficult and time-consuming process. The accessibility of the location defines whether heavy equipment is even possible. Remote, roadless regions, or those within protected parklands, require more individuals and less equipment. Mine conditions and the temperature of the burning coal are also important factors. The more dangerous the operation, the more costly it will be, and will likely increase the time because adequate safety measures must be taken. The extinguishing costs are increasing as the price of gasoline rises due to the required heavy operating equipment. Price of excavation operations in Pennsylvania has raised $5 per yard since 1986 due largely to the increasing price of oil.*

Recommendations:

In setting priorities for extinguishing coal mine fires, putting out surface coal fires should command the highest priority. The most cost-effective projects will typically involve surface coal outcrops, due to the lower cost of extinguishing them as well as the ability to monitor them with a higher

* Mr. Dave Philbin (Pennsylvania Office of Surface Mining) phone interview with Colleen Ruddick, April 24, 2008.

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degree of certainty.  Underground fires often require much higher costs for suppression as well as higher costs of monitoring.

The development of improved technology for controlling and extinguishing coal fires should be included in the greenhouse gas research and development programs of the United States and other nations. Compared with other areas of climate change technological innovation, greater greenhouse gas benefits might be achieved for less cost by efforts to improve (and disseminate) the techniques of coal fire extinction.

Extinction costs can be lowered by encouraging bidding by suppression contractors. As with any construction project, competition among contractors can bring down the cost to the project coordinator.  By accepting and evaluating proposals based on cost efficiency and proven success rates, the coordinating entity can ensure that it not only has a high certainty of total suppression but also it is are getting a competitive price for work completed.

References:

Discover. 1999. China’s on fire: Underground fires in China burn millions of tons of coal a year and release carbon dioxide into the atmosphere. October 1. http://discovermagazine.com/1999/oct/chinasonfire1697.

Fredriksson, Gabriella. 2001. Extinguishing the 1998 forest fires and subsequent coal fires in the Sungai Wain Protection Forest, East Kalimantan, Indonesia.

Kuenzer, Claudia, Jianzhong Zhang, Anke Tetzlaff, Paul van Dijk, Stefan Voigt, Harald Mehl, and Wolfgang Wagner. 2007. Uncontrolled coal fires and their environmental impacts: Investigating two arid mining regions in north-central China. Applied Geography 27: 42-62.

Pyrocool Technologies. 2008. “Home”, http://pyrocooltech.com/home/.

Prakash, Anupma. 2007. Coal Fire, Geophysical Institute, University of Alaska-Fairbanks, http://www.gi.alaska.edu/~prakash/coalfires/coalfires.html.

Renner, Steve. 2005. Report on the status of fires at abandoned underground coal mines in Colorado. Denver, CO: Division of Minerals and Geology. http://mining.state.co.us/pdfFiles/fire_report_1cover-intro.pdf.

Stracher, Glenn B. and Tammy P. Taylor. 2004. Coal fires burning out of control around the world: Thermodynamic recipe for environmental catastrophe. International J. of Coal Geology 59: 7-17.

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Trevits, Michael A., Alex C. Smith, and Dr. Jürgen F. Brune. 2007. Remote mine fire suppression technology. Pittsburgh, PA: National Institute for Occupational Safety and Health, Pittsburgh Research Laboratory. http://www.cdc.gov/niosh/mining/pubs/pdfs/rmfst.pdf.

Whitehouse, Alfred E. and Asep A.S. Mulyana. 2004. Coal fires in Indonesia. Unpublished manuscript, Office of Surface Mining, U.S. Department of Interior.

Wingfield-Hayes, Rupert. 2000. China battles coal fires. BBC News, August 3. http://news.bbc.co.uk/2/hi/asia-pacific/864588.stm.

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PART II – PAYING TO EXTINGUISH COAL FIRES BY CARBON TRADING

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CHAPTER 3: THE WORKINGS OF NEWLY EMERGING CARBON MARKETS

The sale of carbon credits generated from the extinguishing of coal fires represents a potentially promising means for obtaining the funds necessary to put many fires out, particularly in the developing world. According to the World Bank, carbon trading is expanding rapidly, with the total value of all carbon markets being worth over $64 billion in 2007, more than double that of 2006 (Capoor and Ambroosi 2008).

Developing a program for putting out coal fires through the use of carbon markets requires an understanding of how these markets work. This chapter is divided into two sections: an overview of the workings of the voluntary US market in carbon trading and an overview of the mandatory carbon market in the EU.

In the US there are, at present, no federal laws or regulations governing emissions of greenhouse gases (GHGs); instead credits in GHG emissions are traded either on a voluntary basis or in newly emerging regional markets, in particular the Northeast. Moreover, the US is not a party to the Kyoto Protocol, which calls for developed countries to make mandatory reductions in GHG emissions by the reporting period of 2008-2012.

The member countries of the EU, however, are parties to Kyoto, and its Emissions Trading Scheme (EU-ETS) represents the largest effort to date to use market mechanisms to reduce GHG emissions; indeed, the vast majority of all carbon credits are traded in the EU-ETS (Capoor and Ambroosi 2008). Nevertheless, the EU-ETS, and indeed carbon markets in general, are not without their growing pains. Policies relating to the pricing and number of allowances issued by individual EU countries have often led to unintended consequences. The market in carbon offsets, meanwhile, has been plagued by questions of whether they are leading to actual reductions in GHG emissions.*

The Kyoto Protocol is set to expire in 2012 and it is not clear what sort of post-Kyoto process will emerge. But even if it is very different from Kyoto, some aspect of carbon market trading is likely to be included as a significant component of that future framework. Furthermore, even in the absence of a Kyoto-like international treaty, the EU will likely continue its efforts with carbon trading; and there is good reason to believe that the US will follow the lead of several states and adopt some mandatory compliance approach, of which carbon trading will likely be an essential aspect. Thus, it is reasonable to assume that carbon emissions trading in its varied forms will grow in scale and scope, regardless of what happens after Kyoto expires.

The Basics of Carbon Markets

The idea of trading pollutants for the purpose of reducing their amounts, or cap-and-trade, was first developed in the United States. The idea dates at least back to the mid-1970s (DePuis 2004). The first major cap-and-trade system stemmed from the

* These questions, known in the literature as problems of additionality, leakage, and permanence, are addressed elsewhere in this section of the report (see Wright 2007).

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Environmental Protection Agency’s Emissions Policy Statement in 1986, and became a reality when the Clean Air Act of 1990 directed the EPA to set up what became known as the Acid Rain Program, a national cap-and-trade program for SO2 and NOx, air pollutants that cause acid rain (Environmental Protection Agency 2008c). Coal-fired power plants in the United States that had traditionally emitted large quantities of SO2 now operated under a system that set an overall cap that declined over time, while individual emitters (companies or their specific plants) could trade in permits (or allowances) to emit, according to their individual needs. As the number of allowances becomes scarcer, the price becomes higher, ultimately forcing companies to adopt new technologies or simply go out of business.

This framework became the model for the European Union in setting up its own cap-and-trade system . The EPA declared a success of its cap and trade program to reduce SO2 and the later cap-and-trade program for reducing NOx (Environmental Protection Agency 2008a).

The US Carbon Market: Voluntary Carbon Offset Trading

A first example of what would become known as a carbon offset project, or paying for a reduction in GHG emissions to “offset” emissions produced elsewhere, seems to date to 1988. In that year, Roger Sant, the then-CEO and co-founder of Applied Energy Services Corp. (AES), became concerned that a new coal-fired power plant his company was building in Connecticut would emit significant amounts of CO2. Sant paid $2 million – which was approximately equal to the company’s annual profits – to help plant 52 million pine and eucalyptus trees in Guatemala the following year in a new 385-square mile forest with the idea this would “balance out” the damage from the plant’s emissions (Shabecoff 1988). This balancing out of the carbon one emits has come to be known as being “carbon neutral.” The first company purportedly to become “carbon neutral” in all of its operations was Stonyfield Farm, based in Londonderry, New Hampshire, in 1997 (Stonyfield Farm n.d.).

Planting forests, often in developing countries, was the first widespread carbon offsetting activity. The aim was to eliminate one’s “carbon footprint,” which tends to be quite high per person in rich, energy-intensive countries such as the United States. In the last few years, planting forests developed a certain Hollywood glamour factor as all sorts of celebrities had paid to have tracts of forest planted in places as far flung as Bhutan (Brad Pitt), Mozambique (Jake Gyllenhaal), and the UK’s Isle of Skye (Rolling Stones) (Bright 2007). Perhaps similar efforts could be directed to reducing the GHG emissions from uncontrolled coal fires.

Carbon Retail Offset Providers, Green-Power Marketing Firms, RECs, and VERs

Offsetting activities typically requires a middle man, an opportunity that was soon seized upon by the private sector through what became known as carbon offset providers and, in the case of dealing with larger institutions who wanted to offset their carbon footprints, green-power marketing firms that act essentially as brokers who both trade in

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emissions reductions guarantees that exist in the form of either verified reductions or certificates, the latter referring to the renewable origin of the power used.

Early on, in the case of the reforestation and/or afforestation projects, quite a few were done through the British company Forest Futures, founded in 1997 and subsequently renamed CarbonNeutral in order to reflect the wider nature of offset activities. Prior to its ratification of the Kyoto Protocol in May 2002, Britain developed its own voluntary market that included offsetting activities an individual could undertake through paying a fee to a broker or middle man.

Today there are numerous such retail offset providers in operation in the United States as well, where the carbon trading market remains all-voluntary. Examples of offset providers include NativeEnergy, TerraPass, Carbon Fund, and Sustainable International Traveler. Each of these companies allow an individual to purchase offsets for assorted activities, such as monthly driving or flying on a commercial jet, with the money going to fund projects that will “offset” that person’s carbon emissions elsewhere in the world. The price that these different companies charge to remove one ton of carbon dioxide can vary widely from $5 to $25 per ton.

In addition to the retail level offset providers, there also developed those who sell offsets to larger companies, such as utilities, or those involved in issuing and trading Renewable Energy Certificates (RECs) and Verified Emissions Reductions (VERs) on a larger scale, such as Sterling Planet, based in Norcross, Georgia. It advertises itself as a “green-power marketing firm” that won the US Department of Energy’s 2007 Green Power Leadership Award and was selected to provide the EPA with 135 million kWh of the 330 million kWh per year to which it committed in what would make it the first government agency whose power needs are met 100 percent from renewable sources (Sterling Planet 2007a; 2007b).

While the EPA’s target will in theory offset 460 million pounds of CO2, it is not an offsetting project like the tree-planting ones described above. Rather, Sterling Power “guarantees” the power EPA is using through various regional grids serving its regional offices and headquarters are coming from renewable sources through the purchase of RECs. The purchase was actually part of a larger 721 million kWh renewable energy purchase for a one-year period for a broad range of civilian federal agencies and US military installations.

Many of these activities, especially as it relates to the level of the individual and the retail broker, occur on what is known as the “over-the-counter” market. The OTC activities are sometimes described as privately brokered deals; and while it is acknowledged to possess a high level of flexibility with respect to approving offset projects, assuring rigorous standards becomes a problem. At issue are the “processes for certification and verification, or requirements to list credits on established registries. This lowers transaction costs, but it also makes it a ‘buyer-beware’ market where getting a handle on the quality of credits being bought can be difficult for consumers” (Hamilton et al. 2007).

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Efforts to get a grip on this situation got a boost in December 2006 when A Consumer’s Guide to Retail Carbon Offset Providers was published on the Web by Trexler Climate + Energy Services (TC+ES) and made freely downloadable (Trexler Climate + Energy Services 2008). In addition, the World Wildlife Fund and the Stockholm Environment Institute published a comprehensive guide that looked at the 10 main offset standards and their associated prices (Kollmuss, Zink, and Polycarp 2008). The report notes that while offset programs have the potential to be a great force for reducing GHG emissions, assuring the quality and transparency of the approval process for carbon offsets is essential to their success.

Chicago Climate Exchange

The Chicago Climate Exchange (CCX) is the largest carbon market in operation in the U.S., as well as the largest voluntary market in the world. The CCX consists of over 400 corporations, governments, and other institutions that have made voluntary commitments to reducing their GHG emissions. Members of the CCX may meet their targets through either internal reductions of emissions or through the purchase of carbon credits (known as Carbon Finance Instruments, or CFIs) from fellow members who have exceeded their reduction requirements. Each CFI contract represents 100 metric tons of CO2e (so that, loosely speaking, 1 CFI = 100 European Union Allowances, the carbon credit traded on the EU-ETS).

Like its sister exchange in Europe, the European Climate Exchange (ECX), the CCX has specified periods for emissions reductions. The specified periods are called Phase I and Phase II on both the CCX and ECX and both are associated with set targets. But in the case of the CCX, the target is contractual and not associated with a cap-and-trade system or other government-mandated policy for reducing emissions. The Phase I target was 1 percent per year reduction below the 1998 – 2001 baseline period, while the Phase II target extends the reduction through 2010 and includes an extra 2 percent reduction for Phase I members and a total 6 percent reduction by 2010 for new members who join during Phase II (Chicago Climate Exchange 2007b).

CCX issues emissions offsets to owners or “aggregators of eligible offset projects,” but only after verified mitigation has occurred. CCX has standardized rules for eight different types of projects including agricultural methane; coal mine methane; landfill methane; agricultural soil carbon; rangeland soil carbon management; forestry; renewable energy; and ozone depleting substance destruction. It also may include energy efficiency and CDM-eligible projects. The CCX reported a doubling of trading volume in 2007 over 2006 with 22.94 million metric tons of CO2 equivalent traded in 2007 versus 10.27 million metric tons the year before -- and just 1.46 million metric tons in 2005 (Chicago Climate Exchange 2008a). It further announced that the aggregate greenhouse gas emissions baseline committed to reduction under the CCX program increased to over 540 million metric tons.

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The CCX and its Chicago Climate Future Exchange (CCFE) subsidiary continue to report tremendous growth in its “carbon complex” of cash, futures, and options for the first quarter of 2008 (Chicago Climate Exchange 2008b). The monetary amount of these trades, however, is still substantially lower than the EU-ETS. This lower amount reflects both significantly less trading activity and the fact that the market itself values carbon significantly less in the US than in the EU system. Consider that the current EUA price is between 24.50 euros ($38.26) and 27.50 euros ($42.95)* while, depending on the contract delivery date, the current CCX price is about $6.50 (Chicago Climate Exchange 2007a). .

Other US Markets: RGGI, Lieberman-Warner, and Market Valuation

As stated above, despite the lack of a national policy on GHGs, regions within the US are moving forward with mandatory emissions reductions agendas, with cap-and-trade at its center. Two such planned systems include the Western Climate Initiative (WCI) and the Regional Greenhouse Gas Initiative (RGGI). RGGI is the most developed and it involves a multi-state trading scheme among utility companies in the Northeast and mid-Atlantic region of the United States. WCI was formed in 2007 after the governors of California, Arizona, New Mexico, Oregon, and Washington agreed to work on a regional strategy for addressing climate change.

A federal climate policy is likely to take shape in the next few years. Currently the leading proposal in Congress is the American Climate Security Act, co-sponsored by Sens. Joseph Lieberman and John Warner (known as Lieberman-Warner). It would establish a cap-and-trade system in CO2 emissions, with the aim of reducing emissions by 70 percent below 1990 levels by 2050. Passage of Lieberman-Warner or similar legislation would vastly increase the scope of the carbon markets in the US. At present, however, there is still much controversy over what sort of climate change policy the US should adopt, one that goes to the heart of what can be accomplished by carbon markets.

The issue of market valuation of carbon is a fundamental one in proposed efforts to curtain greenhouse gas emissions either through a cap-and-trade system or imposition of a carbon tax. Specifically, the price of carbon must be high enough that it creates large cumulative effects on demand for traditional fossil fuels and incentivizes behavior into alternative fuel sources. To date, the price of carbon (as measured per metric ton of carbon dioxide equivalent) on the voluntary market in place has undoubtedly remained too low to bring about such changes.

In his testimony before the Senate Finance Committee on April 24, 2008 on a possible cap-and-trade system, Congressional Budget Office Director Peter R. Orszag said that “an increase in the price of carbon intensive goods and services … is essential to the success of a cap and trade system.” Furthermore, he said the size of the price increase is directly related to the stringency of the cap. Under Lieberman-Warner, the CBO projects a permit price of roughly $30 a ton in 2015, which would translate to a 25 cent increase in the price of gasoline, as well as increases in other energy prices (Orszag 2008). Orszag also estimated that the permits under Lieberman-Warner would have a

* Based on April 25, 2008 exchange rate of $1.5617 to the euro.

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total value of $145 billion by 2012.

The European Union Emissions Trading System: Mandatory Compliance

The framework for the European Union emissions trading system derives from the Kyoto Protocol and the subsequent meetings known as the Conferences of the Parties (COPs) that have been held since the treaty was agreed to in 1997. Kyoto requires developed countries to reduce their GHG emissions below specified levels between 2008 and 2012 that result in a net 5 percent reduction of global greenhouse gas emissions below the 1990 base year. The Protocol places the main burden for compliance on developed nations under the oft-quoted principle of “common but differentiated responsibility” (Kyoto Protocol 1997).

The Kyoto Protocol has three “flexibility mechanisms” built into it. These include the market-based emissions trading and two carbon offset programs in which developed countries can help fund emissions reduction projects in developing (non-Annex I) countries through the Clean Development Mechanism (CDM) and in other developed (Annex I) countries through Joint Implementation (JI).

The history of the Kyoto Protocol is beyond the scope of this chapter, except to note that it was at a meeting in Bonn in July 2001 and a subsequent full-blown COP meeting in Marrakech. Morocco (COP-7) in November 2001 that the basic mechanics of what would become the EU-ETS trading system were worked out.

The EU-ETS was approved in 2003 and came into existence on January 1, 2005. It is described as “the world’s first multi-country emissions trading system and the largest scheme ever implemented” (European Climate Exchange 2008b). The currency of the EU-ETS is called the European Union Allowance (EUA). The legal framework under which the EU-ETS operates is known as the EU-ETS Directive and it grants the holder of one EUA the right to emit one metric ton of CO2e. The amount of EUAs allocated to each emitter is based on the National Allocation Plans of each of the EU’s 27 member states.

At present there are approximately 12,000 energy and industrial plants involved in the EU-ETS in five sectors, including power and heat generation, oil refineries, metals, pulp and paper, and certain energy-intensive industries. It also involves major financial institutions who play a crucial role as liquidity providers and intermediates. These include banks, hedge funds, trading houses, and brokerages.

Another key component of the system is that each EU Member State must establish and maintain a national registry that links to the other Members’ registries and a larger Community Independent Transaction Log (CITL). These are collectively called the Registries System and it forms “the backbone which in turn ensures a secure, compatible and smooth integration of all systems under one European umbrella” (European Climate Exchange 2008b). EUAs are issued to any registry created by any person or business for an affected facility. The global or aggregate emissions reductions to which the EU member states committed under the Kyoto Protocol is 20 percent below 1990 baseline

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levels by 2020.

By far the largest actual spot market for the EU ETS is the European Climate Exchange (ECX), which was launched formally in April 2005. The ECX trades in EUAs and as of March 13, 2008, according to ECX figures, its spot market has traded 1.3 billion metric tons worth of EUAs totaling 24 billion euros (US$37.7 billion) (European Climate Exchange 2008a). In addition, approximately 2.2 billion EUAs have been issued under the EU ETS. The ECX has traded approximately 85 percent of all exchange-traded EUA (Reuters 2007). The current price for a (December 2008 futures) EUA is 23.47 euros (US$36.85) (Chicago Climate Exchange 2007c).* In addition, the ECX began trading in Certified Emissions Reductions (CERs), the currency of the CDM as of March 14, 2008. The head of the ECX estimates 4 billion metric tons worth of CER are in the CDM pipeline (Reuters 2008a).

Phase I Versus Phase II Pricing Issues

As noted with the CCX, the EU-ETS has both Phase I and Phase II trading periods. Phase I represented the period from 2005 – 2007 and concluded on December 31, 2007. Phase II, representing the period from 2008 – 2012, has now begun. Significant pricing issues resulted with Phase I EUAs because of the way allowances were allocated. The price for an allowance or credit has to be set in such a way that it produces an aggregate reduction under the global cap. As it turns out, actual emissions data for the EU for 2005 subsequently revealed that the 2005 – 2007 emissions cap “had not been set at an appropriate level relative to what actual emissions were in that period” (Capoor and Ambrosi 2007, 3-4). When this was discovered, the price of EUAs crashed and never recovered, ending Phase I trading at just 0.08 euros. In addition, preliminary data released by the EU at the time of this writing showed that emissions probably rose about one percent in 2007, which prompted a rise in EUA price when the data was reported (Reuters 2008b).

More generally, Phase I of the EU-ETS (dubbed the “learning by doing” phase) is seen as having had mixed results because of the “excessive allocation” of EUAs under the various National Allocation Plans and a “reliance on projections and a lack of verified emissions data,” (a flaw that is being addressed with actual data) so that there is “strong reason to believe that the overall functioning of the EU-ETS could be improved in a number of aspects.” (European Commission 2008a)

Significant changes were adopted by the European Commission (the executive branch of the EU) on Jan. 23, 2008 to coincide with the start of Phase II of the EU-ETS. The changes include:

A single EU-wide cap on the number of EUAs instead of 27 national caps. The annual cap will decrease linearly beyond the third trading period (2013 – 2020).

* Data as of April 3, 2008; Dollar price based on exchange rate of US$1.57 to the euro.

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Auctioning a larger fraction of EUAs instead of free allocation

Harmonization of rules governing those EUAs that are auctioned freely.

Adjusting auction allowances between member states based on per capita income to redistribute more EUAs toward those with lower per capita incomes with the goal of helping the latter financially invest in “climate friendly technologies.”

Including more industries such as aluminum and ammonia producers in the EU-ETS, along with two more gases (nitrous oxide and perfluorocarbons).

Exclusion of small installations from the EU-ETS provided they are subject to “equivalent emissions reductions.” (European Commission 2008b)

Total Value of All Carbon Markets Through End of 2007

According to figures from the World Bank, the total value of carbon credit sales in the CDM market (both primary and secondary projects) reached $US 12.88 billion in 2007 and accounted for 791 million metric tons CO2-equivlent. Including Joint Implementation projects and other voluntary compliances, the total value of sales for all project-based transactions reached $13.64 billion in 2007 and totaled 874 million metric tons CO2-equivalent (Capoor and Ambrosi, 2008). This represents a doubling of the value over 2006 from US$ 6.5 billion for all project-based transactions and an increase of about 43 percent in volume of CO2-eq.

Adding in the US$50.39 billion from the various trading schemes and markets for allowances (i.e. the EU ETS, the CCX, and the New South Wales Exchange), the total value of the carbon market (both allowances and project-based) reached US$64 billion in 2007.

In terms of offsets, the 2,109 million metric tons of CO2-eq from these trading markets brought the combined 2007 of CO2-equivalent offsets to 2,983 million metric tons (Capoor and Ambrosi, 2008).

Conclusions and Recommendations:

As seen by the examples in the US and the EU, carbon markets have the potential to significantly reduce emissions, and given the high levels of interest in them, there are likely a number of avenues by which potential projects for putting out coal fires could find entry into those markets. They still have a long way to go, however, before they are implemented effectively. As a result, those who choose to undertake a carbon offset project should be aware of the difficulties confronting such an effort; this includes the workings of the carbon markets themselves as well as the process by which carbon offset projects get approved, as discussed in the next chapter.

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Recommendations:

The CDM, owing to its reach, technical resources, and relative transparency, would be the best vehicle by which to create and sell carbon credits based on the putting out of uncontrolled coal fires in developing countries.

The European Union Emissions Trading Market, the Chicago Climate Exchange and other institutions for carbon credit sales and exchange should publicly state that the extinguishing of uncontrolled coal fires is in principle – assuming the requirements of additionality and permanence can be met – a satisfactory method of generating acceptable carbon credits.

The various carbon credit markets should review their rules and procedures to ensure that they are compatible with the circumstances of generating carbon credits through putting out uncontrolled coal fires.

The World Bank, Carbonfund and other public and private brokers in carbon credits should incorporate the extinguishing of coal fires within their portfolio of available projects for generating carbon credits.

References:

Bright, Adam M. 2007. Buy now, pay later: Is it too late to buy off our carbon debt? GOOD Magazine, November 30. http://www.goodmagazine.com/section/Features/buy_now_pay_later.

Capoor, Karan and Philippe Ambrosi. 2007. State and trends of the carbon market 2007. Washington, D.C.: The World Bank. http://carbonfinance.org/docs/Carbon_Trends_2007-_FINAL_-_May_2.pdf.

Capoor, Karan and Philippe Ambrosi. 2008. State and trends of the carbon market 2008. Washington, D.C.: The World Bank. http://siteresources.worldbank.org/NEWS/Resources/State&Trendsformatted06May10pm.pdf.

Chicago Climate Exchange. 2007a. Data from Market Overview, http://www.chicagoclimatex.com/market/data/summary.jsf.

Chicago Climate Exchange. 2007b. Key Features, http://www.chicagoclimatex.com/content.jsf?id=25.

Chicago Climate Exchange. 2007c. “Home,” http://www.chicagoclimatex.com/ (under ECX tab).

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Chicago Climate Exchange. 2008a. Chicago Climate Exchange announces record volume and membership in 2007, news release, January 9. http://www.chicagoclimatex.com/news/press/release_20080110_CCFE_endyearrecord.pdf.

Chicago Climate Exchange. 2008b. Chicago Climate Exchange and Chicago Climate Futures Exchange announce record 2008 First Quarter volumes, news release, April 2. http://www.chicagoclimatex.com/news/press/release_20080403_CCX_Record_Q108.pdf.

DuPuis, E. Melanie, ed. 2004. Smoke and mirrors: The politics and culture of air pollution. New York: NYU Press.

Environmental Protection Agency. 2008a. Acid Rain Program, http://www.epa.gov/airmarkets/progsregs/arp/index.html.

Environmental Protection Agency. 2008b. Latest Findings on National Air Quality: Status and Trends through 2006, http://www.epa.gov/oar/airtrends/2007/index.html.

Environmental Protection Agency. 2008c. National Center for Environmental Economics: Section 3.2.1 Air Emissions Trading, http://yosemite.epa.gov/ee/epa/incsave.nsf/02139de58cd4f6e18525648c00670434/eaecb23255e0e5b085256636004f9269!OpenDocument.

European Climate Exchange. 2008a. About ECX, http://www.europeanclimateexchange.com/default_flash.asp?page=http%3A//www.europeanclimateexchange.com/content.asp%3Fid%3D2%26sid%3D356.

European Climate Exchange. 2008b. What is the EU ETS?, http://www.europeanclimateexchange.com/default_flash.asp?page=http%3A//www.europeanclimateexchange.com/content.asp%3Fid%3D5%26sid%3D392%26pid%3D395.

European Commission. 2008a. Proposal for a Directive of the European Parliament and of the Council amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading system of the Community. January 23. Brussels, Belgium. http://ec.europa.eu/environment/climat/emission/pdf/com_2008_16_en.pdf.

European Commission. 2008b. Questions and answers on the Commission’s proposal to revise the EU Emissions Trading System, news release, January 23. http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/35&format=HTML&aged=0&language=EN&guiLanguage=en.

Hamilton, Katherine, Ricardo Bayon, Guy Turner, and Douglas Higgins. 2007. State of

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the voluntary carbon markets 2007: Picking up steam. Washington, DC: The Katoomba Group. http://ecosystemmarketplace.com/documents/acrobat/ExecSumm_Final.pdf.

Kollmuss, Anja, Helge Zink, and Clifford Polycarp. 2008. Making sense of the voluntary carbon market: A comparison of carbon offset standards. Berlin: WWF Germany. http://assets.panda.org/downloads/vcm_report_final.pdf.

Kyoto Protocol to the United Nations Framework Convention on Climate Change, December 10, 1997, reprinted in 37 I.L.M. 32. http://unfccc.int/resource/docs/convkp/kpeng.html.

Orszag, Peter R. 2008. Implications of a cap-and-trade program for carbon dioxide emissions. Prepared statement before U.S. Senate Finance Committee, April 24, Washington, D.C. http://www.cbo.gov/ftpdocs/91xx/doc9134/04-24-Cap_Trade_Testimony.pdf.

Regional Greenhouse Gas Initiative. n.d. About RGGI, http://www.rggi.org/about.htm.

Reuters. 2007. European Climate Exchange trades 1 bln tons CO2. July 11. http://www.reuters.com/article/environmentNews/idUSL1118113620070711.

Reuters. 2008a. European Climate Exchange CER contract due Mar 14. February 26. http://www.reuters.com/article/companyNews/idUSL2643932620080226.

Reuters 2008b. EU carbon price boost from 2007 emissions data. April 3. http://www.reuters.com/article/environmentNews/idUSL0234095320080403.

Shabecoff, Philip. 1988. U.S. utility planting 52 million trees. New York Times, October 12. http://query.nytimes.com/gst/fullpage.html?res=940DE7D61731F931A25753C1A96E948260.

Sterling Planet. 2007a. Sterling Planet receives 2007 Green Power Leadership Award. http://www.sterlingplanet.com/news/newsid14/.

Sterling Planet. 2007b. Sterling Planet selected to supply US Environmental Protection Agency. http://www.sterlingplanet.com/news/newsid5/.

Stonyfield Farm. n.d. Environmental Practices: Offsets, http://www.stonyfield.com/EarthActions/Environmental%20Practices/Offset.cfm.

Trexler Climate + Energy Services. 2008. A consumer’s guide to retail carbon offset providers. Portland, OR. http://www.cleanair-coolplanet.org/ConsumersGuidetoCarbonOffsets.pdf.

Wright, David V. 2007. The Clean Development Mechanism: Climate change equity and

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the South-North divide. Saarbrücken, Germany: VDM Verlag Dr. Müller.

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CHAPTER 4 — CERTIFYING A METHODOLOGY FOR PUTTING OUT COAL FIRES

Uncontrolled coal fire abatement is a very new area of carbon finance -- so new, in fact, that there have not been any such transactions to date and, indeed, there currently exist no accepted rules for establishing a carbon offset program that takes coal fire abatement as its main activity. However, given the significance of uncontrolled coal fires as a source of greenhouse gas emissions, developing a carbon offset program for their abatement is desirable. Understanding the process by which carbon offset programs register and validate potential greenhouse gas reduction projects, then, is crucial to achieving the actual future financing of coal fire abatement through such programs. This chapter explains the registration and validation process as conducted by the main issuers of carbon offsets. This will consist principally of the Clean Development Mechanism, but also some voluntary programs such as that of the Chicago Climate Exchange and the Voluntary Carbon Standard. This chapter also discusses how these processes would apply to coal fire abatement.

Clean Development Mechanism

The basic parameters for implementing the CDM were agreed upon at a meeting of the Kyoto parties in Marrakech in Morocco in 2001. The first officially approved CDM project was a landfill-gas-to-energy project in Brazil, which was approved on Nov. 18, 2004. To date over 1,000 project activities have been registered, generating an annual average of 136 million GHG emissions credits (known as Certified Emissions Reductions, or CERs). The CDM is by far the largest of all carbon offset programs, and its tools and procedures have become the standard against which other offset programs are measured. This section describes how a proposed project activity becomes certified and generates CERs.

Key Figures in the CDM

Before describing how the process of certifying a typical CDM project operates, it is necessary to first give a brief outline of some of the key figures in the CDM process and their relative importance. A visual representation of the participants and their relationship to one another can be found in the Appendix to this section (for an in depth description, see United Nations Development Program 2003).

Project Developer

The project developer is any person or organization that designs, owns, and operates a CDM project activity, and these three roles can be divided among several participants. The project developer first drafts, by itself or with the assistance of a third party, a Project Idea Note (PIN), which is a short document describing the project activity, the estimated amount of GHGs that it would reduce, and its proposed sources of funding, both from the issuance of CERs and from other sources. This document serves as the basis for completing the Project Design Document (PDD), which is the CDM’s

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official form for proposing new project activities. The PDD goes into further detail than the PIN, and in particular demonstrates, according to CDM-approved criteria, that the project is additional; i.e., the project activity reduces GHG emissions that would not been accomplished otherwise (about which more in Chapter 6). Once the project activity is approved, the project developer is responsible for maintaining data that will help verify that the project has in fact reduced emissions.

Project Funder

Funding for a CDM project activity can be provided by individuals, corporations, non-profits, public agencies, or other organizations. Perhaps the largest funding source of CDM projects is the World Bank, whose Carbon Finance Unit acts as a broker between developed countries looking to buy CERs and developing countries looking to sell them. In addition, the Bank provides technical assistance for project developers navigating the process of getting their project activity approved; this includes developing new methodologies for demonstrating the project’s additionality.

CDM Executive Board

This ten-member body, representing both developed and developing countries, meets usually in Bonn, Germany. The Executive Board is in charge of developing and amending the rules for CDM projects, accrediting Designated Operational Entities (see below), registering projects, approving new or revised methodologies, and actually issuing CERs. The Executive Board has several subsidiary bodies that report to it, including the Methodology Panel, which reviews proposed new or revised methodologies; the Accreditation Panel, which reviews prospective DOEs; the Small Scale Working Group, which reviews methodologies for small-scale project activities; the Afforestation/Reforestation (A/R) Working Group, which reviews methodologies for A/R project activities; and the Registration and Issuance Team, which review proposals for registering new project activities and issuing CERs. In turn, the Executive Board reports to the Conference of Parties/Meeting of Parties for Kyoto (COP/MOP) and recommends to it ways of improving the CDM process.

Designated National Authorities

Under Kyoto, each country participating in the CDM must choose a DNA, typically a government agency, that will be in charge of approving CDM projects and, in the case of the host country, ensuring that the project meets the country’s standards for sustainable development.

Designated Operational Entities

DOEs are independent organizations authorized by the CDM Executive Board to both validate that the proposed project activity meets the CDM’s standards for additionality and other criteria, as well as verify that the project activity has in fact reduced GHG emissions. CDM rules prohibit the same DOE from doing both the

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validation and verification of a project activity, as such an act could create a conflict of interest. DOEs are generally private profit making entities. There are currently 29 accredited DOEs, none of which are in the United States. As an example of a DOE, the British Standards Institution (BSI) is a leading business standards organization that provides testing and certification of management systems and products in sectors ranging from agriculture to health care.

Stakeholders

The CDM process requires that project developers invite parties affected by the project activity, including local communities, businesses, and governments, to review and comment on the proposed project activity before and after receiving approval from the CDM executive board. Project developers must show, in addition to reduced GHG emissions, that the proposed project activity does not have any adverse effects, whether environmental or social, on the surrounding communities.

Example of a CDM Project: Coal Mine Methane Recovery and Utilization

One of the more common CDM project activities is the practice known as coal mine methane recovery and utilization. Methane can be found in large quantities in coal mines. Besides posing a significant safety hazard to miners, it is also a large source of GHG emissions, particularly so since methane has a GWP more than 20 times greater than that of carbon dioxide. To mitigate these effects, methane recovery and utilization projects aim to capture the methane released from the mine and use it to produce electricity for industrial purposes, local communities, or both. Because of the obvious similarities between this type of project and abatement of coal fires, examining how recovery and utilization projects go through the process of getting CDM approval can yield substantial insights into how one might design a CDM project — or any offset project, for that matter — for coal fire abatement. This section describes how one currently registered project for coal mine methane recovery and utilization in China was developed (for more about this project, see Clean Development Mechanism Executive Board 2006).

Design

The particular project activity to be discussed here is located in Anhui Province, near the town of Panji. The Pansan mine is part of a rich area of coal mining for the Chinese, and consequently is a large source of methane emissions. The project, begun in 2004 as a collaboration of the Chinese Huainan Coal Mining Group (HCMG) and the Swiss energy firm Vitol SA, intends to capture this methane in order to establish an electricity generation scheme powered by coal mine methane that will enable approximately 4,000 households currently using coal to switch to a cleaner energy source.

The methodology upon which the Pansan project activity is based is a consolidated methodology for coal mine methane recovery and utilization, drawing on previous

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methodologies developed by other firms that had done similar projects in the past.

In the first section of the PDD, the project developers first describe their proposed activity in brief, including its location, the technologies to be used, and a brief explanation of why CDM funding is necessary for the project activity to go forward. In the second section, the heart of the PDD, the project developers demonstrate that the recovery and utilization scheme they have devised is additional when compared to a baseline scenario. To establish this, the project developers rely on an existing CDM-approved methodology for determining the additionality of methane recovery and utilization from coal mines.

The methodology requires first, that the project boundaries be defined; i.e., that all known sources of GHG emissions are identified. Second, the baseline scenario must be defined; this is done through a 5-step process:

Step 1. A variety of alternative methods of draining methane from the coal mines must be identified, as well as alternative methods for generating electricity; these include draining the methane and flaring it prior to mining in the former case, and continuing to rely on coal-fired electricity in the latter case.

Step 2. The project developers must remove from consideration any options that do not meet legal or regulatory requirements; in this case, certain ways of draining the methane are eliminated due to their failure to meet safe mining requirements in China. Note that if the only legal scenario found by the project developers is the proposed project activity, then the project is not additional; the project activity would not be a true reduction of GHG emissions, but a function of local laws.

Step 3. The project developers draw up various baseline scenario alternatives, based on a combination of the remaining options listed in Step 1. Among the scenarios listed are: the business as usual case, in which methane is vented prior to mining, and no change is made to electricity production patterns; flaring the methane; using the methane for gas supply; using it for electricity; or a combination of the three.

Step 4. Once the alternative scenarios are identified, the project developers must then identify any prohibitive barriers to development. For example, flaring the methane would be costly to mine operators and have no compensating revenue stream; likewise, using the methane for gas supply would require a more developed pipeline infrastructure than currently exists. Indeed, construction of new pipeline projects are anticipating future CDM revenues, and thus are waiting for the Pansan mine project to be approved.

Step 5. Though this is an optional step, the project developers provide an investment analysis of the alternative scenarios to determine which is the most economically attractive. The analysis compares the internal rate of return (IRR) of the scenarios, as well as tests each scenario with a sensitivity analysis. In the end, the analysis finds that the alternative scenarios are not economically feasible without CDM funding.

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The proposed project activity and the baseline scenario are then assessed for their GHG emissions. The project activity’s annual emissions are the sum of the emissions generated through the conversion of methane into electricity (including emissions from the electricity consumed during the methane recovery process) and the emissions from uncombusted methane. The baseline scenario’s annual emissions are the sum of the methane emissions released from the mine and from the electricity consumed from coal-fired power plants that the project activity would replace. The project developer must also calculate any potential leakage from the project, or the releasing of emissions outside the project boundary. In this case, there is no expected leakage, as the methane recovery does not affect coal mining operations or (for now) coal prices, nor does it cause methane to be unintentionally released elsewhere. The estimated annual emissions reductions are determined by subtracting the annual project emissions and any leakage from the annual baseline emissions.

Additionality must now be determined (for more about the tool for demonstrating additionality, see Clean Development Mechanism Executive Board 2007).* The project developers first show that they are justified in submitting the project for CDM registration despite the fact that it has already commenced; they note that HCMG has been designated as an potentially important figure in employing the use of coal mine methane recovery and utilization in China, and that reducing GHG emissions is one of the benefits stated in feasibility studies of methane recovery and utilization projects. Next, the project developers demonstrate that in the absence of CDM funding, the project activity would not be financially viable. Last, the project developers must show that methane recovery and utilization is not a widely-used practice in China, and that the growth of the industry depends in large part on CDM funding.

The next major section details the monitoring methodology that the DOE will use to verify the emissions reductions from the project activity once it is implemented. This includes the same parameters used in determining the baseline scenario and estimated project activity emissions, as well how the parameters will be used to measure actual emissions reductions. Last, the PDD must state any non-climate environmental impacts by the project, which the project developers determined to be minimal, and any stakeholders’ comments, which in this case were mostly supportive.

Approval

Once the PDD is submitted, a DOE will examine it and validate that it has met CDM registration criteria. In order to validate the PDD, the DOE will typically review the document itself; make on-site visits with project stakeholders; and hold a 30-day period for public comment. If the DOE determines that the PDD meets the CDM’s standards for demonstrating additionality, as well as baseline and monitoring scenarios, then the DOE will issue a final validation report, which will be submitted, along with the PDD, to the project host country for approval. In the case of the Pansan mine project, the

* A flow chart showing the process of determining additionality can be found in the Appendix to this section.

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British company Det Norske Veritas Ltd., an accredited DOE, reviewed the Pansan project developer’s PDD and conducted on-site interviews with project stakeholders. In the end, Det Norske Veritas recommended to the CDM Executive Board for registration. The Executive Board concurred, and the project was registered March 31, 2007. The crediting period began Oct 1, 2007, and will last for a renewable 7-year period.

Implementation and Monitoring

After the CDM Executive Board has registered the project, the project developer may begin to implement the project activity. (Although in this case, as mentioned above, implementation may begin before registration, but then the project developer must show in the PDD that CDM revenues were considered when designing the project, or else the project will be rejected as not being additional.) Once in operation, the project developer must maintain records for a set period of time on the GHGs emitted by the project, consistent with the monitoring methodologies used in the PDD. The project developer may choose to have several short monitoring periods or one long period, depending on whether it wants a continuous stream of CER revenue or low administrative costs. These monitoring periods can range from a few weeks to several years, depending on the life span of the project.

A DOE, different from the first so as to avoid conflicts of interest, then evaluates the data collected by the project developer and determines if the project activity has been implemented in accordance with the original PDD. The DOE will then issue a draft report that tallies the emissions reductions made thus far and notes any potential problems with the project activity. The DOE will ask that the project developer resolve those problems before issuing a final report.

Thus far, the Pansan project has had three monitoring reports issued in nine-month intervals, conducted by HCMG with the support of Carbon Resource Management, Ltd., a British carbon offset firm. Only one so far has been verified, however; the DOE TÜV SÜD has verified the emissions reductions made from July 1, 2006 to March 31, 2007.

Certification and Issuing of CERs

The final stage in the CDM project cycle is the actual issuance of CERs. Upon receiving the DOE’s verification report, the CDM Executive Board will then certify that the project has made emissions reductions and issue CERs equal in number to those reductions to the project developer. The CERs will be entered into the CDM Registry. The project developer may then sell the CERs either directly to a country that needs to meet its emissions reduction requirements, or to an intermediary, such as one of the several carbon funds managed by the World Bank. Depending on how many monitoring periods there are, the project developer will repeat the verification and certification process several times; most CDM projects come in either a seven-year period with one renewal period or a nonrenewable ten-year period.

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As mentioned above, only one monitoring period for the Pansan project has been verified and consequently resulted in the issuing of about 76,000 CERs. This represents an approximate 88 percent reduction in GHG emissions compared to the baseline scenario for that period.

Voluntary Offset Programs

As mentioned above, the CDM is the predominant carbon offset program in operation in the world, and also functions as the benchmark for judging the performance of other offset programs. However, the process for generating credits under the CDM has a number of critics; these range from complaints about the time-consuming nature of the process to, on the other end of the spectrum, concerns that the CDM’s standards are not stringent enough. This section will describe some of the most prominent voluntary offset programs, as well as how they resemble or differ from the CDM.

Chicago Climate Exchange

As mentioned in Chapter 3, members of the CCX may meet their targets through either internal reductions of emissions or through the purchase of CFIs from fellow members who have exceeded their reduction requirements. Members may also meet their requirements through the funding of offset projects. The CCX has issued, to date, nearly 27 million offset credits since beginning operations in 2003.

The offset program for the CCX is run by the Committee on Offsets, a 12-member board that reviews and approves potential offset projects. Again, as mentioned in Chapter 3, offset projects range from energy efficiency to rangeland soil carbon (i.e., paying ranchers to employ more sustainable grazing practices). Most offset projects are in the United States.

The most notable feature of the CCX’s offsets program is the lack of a specific test for additionality. Instead, the CCX says that offset projects must be “beyond regulations,” new, and best in class, if applicable (Kollmuss, Zink, and Polycarp 2008, 68). Specific eligibility criteria have been developed for the various types of offset activity the CCX recognizes, but nothing as elaborate as the CDM’s additionality test. In addition, CCX offset activities are validated only once, not twice as in the CDM, by independent third parties.

Voluntary Carbon Standard

The Voluntary Carbon Standard (VCS) was developed by the Climate Group, the International Emissions Trading Association, and the World Economic Forum Global Greenhouse Register. The VCS Association’s main offices are located in Geneva, Switzerland.

Started in 2006, the VCS aims to “standardize and provide transparency and credibility to the voluntary carbon market” (VCS Secretariat 2007). Run by the VCS

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Board, the VCS issues Voluntary Carbon Units (VCUs) to any project that is an approved GHG program or is supported by a VCS methodology. These methodologies may be approved either by the VCS Board or by another offset program; to date, however, no VCS-specific methodologies have been approved. The VCS advises project developers to use ISO 14064-2, which provides internationally recognized standards for reducing GHGs, as a benchmark for new methodologies. Validation of projects is conducted by two independent third parties, one appointed by the project developer and one by the VCS Secretariat. Both must validate the project in order for it to be approved. Unlike the CDM, VCS projects may be validated and verified by the same entity.

Its additionality test closely resembles that of the CDM: Step 1 ensures that the project is not required by the laws of the country in which it will be implemented; Step 2 is a barrier analysis; and Step 3 is a common practice analysis. For additionality tests, the VCS advises project developers to use the GHG Project Protocol developed by the World Resources Institute and the World Business Council for Sustainable Development.

The VCS has the potential to be an important means for ensuring the reliability of emissions on the voluntary market without high costs of compliance. However, it remains to be seen whether it will be widely adopted. If the VCS is perceived to be not only low-cost, but also low-quality, then it will fail to distinguish itself in the broader market for carbon offsets.

VER+

The VER+ Standard was created by the German company TÜV SÜD, which specializes in testing and assessment services. TÜV SÜD is also a DOE under the CDM. Much of the VER+ architecture is, in fact, borrowed from the CDM; the main differences are that eligibility criteria are the same as that of the Joint Implementation (JI) framework, and that co-benefits of project activities (sustainable development and the like) are not a motivating factor. The VER+ program is small — only 25 programs have thus far been validated — but growing rapidly.

Gold Standard

The Gold Standard Foundation, based in Basel, Switzerland, is a project of a number of environmental NGOs, most prominently the WWF. Its goal is to introduce rigorous standards into both the Kyoto offset market and the voluntary offset market. The Gold Standard has a narrow focus as well, giving its approval only to renewable energy and energy efficiency projects. For the voluntary market, the Gold Standard offers Voluntary Emissions Reductions (VERs), the certification process for which is explicitly modeled on that of the CDM, albeit with some slight streamlining and a much stronger emphasis on demonstrating environmental and social co-benefits.

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Application to Coal Fires

What does the preceding survey of carbon offset programs tell us about designing a project activity for reducing coal fires? We may begin by trying to compare abatement of coal fires to existing carbon offset project activities. Eligibility requirements vary for the different offset programs, but there seem to be an established set of project activities for most offset programs: 1) Renewable energy, including small-scale hydroelectric projects; 2) End-use energy efficiency; 3) Land-use, land-use change, and forestry (LULUCF) a catchall term for everything from reforestation to no-till agriculture; 4) Capture of industrial gases, including HFC destruction and prevention of natural gas flaring; and 5) Methane capture.

Coal fire abatement does not appear to fit into any of these project types. To be sure, there are some resemblances: As evidenced above, methane capture from coal mines is a close analogue in some respects; likewise, verifying that the fires have been permanently extinguished bears some similarity to the problems encountered in afforestation and reforestation projects, and in particular avoided deforestation, as we will discuss in Chapter 6. But in the former case, the methane is captured and ends up either flared or used for electric power or heating, whereas coal fire abatement results solely in avoided emissions from coal fires; and in the latter case, the manifest dissimilarity is compounded by the fact that coal seams might be mined, all else being equal, regardless of fires, and so the question of whether GHG emissions are truly reduced by abating fires becomes even more complex than that concerning LULUCF.* Developing a project activity for coal fire abatement will undoubtedly require new methodologies and other design criteria in order to be accepted as a worthy offset project.

With respect to determining additionality, defining this for coal fire abatement projects will be tricky; much will depend on the size of the fires to be put out. To begin with, defining alternative scenarios means that we should have a good idea of how long the fires will burn without a program of abatement, something that can be hard to figure out. Another factor to consider is the type of technology that will be used to put out the fires: The less exotic the technique used, the greater the possibility that the project may fail to count as additional. These and other considerations will be addressed in Chapter 6.

One further consideration is which carbon offset standard would be best suited for coal fire abatement. We must ask ourselves: Given the novelty of this type of project, is it better take a proposal to an established body like the CDM in order to get its stamp of approval, and thus make it a “mainstream” project activity? Or is it better to go to offset programs with more flexible standards, such as the CCX, and try to build up the reputation of coal fire abatement projects that way? The trade-off lies in the accountability of CDM projects vis-à-vis voluntary projects: With the exception of the Gold Standard, which only accepts renewable energy and end-use energy efficiency, the

* On the other hand, one additional potential benefit of putting out coal fires is the improved health and safety of the miners and any neighboring communities. However, the extent of this benefit will vary depending on the particular situation of each coal fire abatement project.

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offset standards described above allow validation and verification to be done by the same entity, which could engender a conflict of interest (as both project developers and auditors have an interest in overestimating reduced emissions). In addition, many voluntary offset programs do not fully differentiate between validation (confirming that the project is additional) and verification (confirming that the proposed emissions reductions have been achieved).

At the same time, the process of certifying a CDM project activity can take two to three years, and requires a considerable amount of labor to complete, compared with voluntary programs. Nor is the CDM free from controversy with respect to accountability: Several proposed CDM projects have been criticized for allowing excessive payments for emissions reductions projects (Wara 2007). At present though, the trend in the carbon offset market is toward ensuring accountability, i.e., making sure the offset activities are a reliable source of GHG emissions reductions. This pushes us toward the CDM and CDM-like programs, which are comparatively more transparent about their methods than other standards. Coal fire abatement, then, may be a more appealing business proposition if the CDM is the vehicle by which it is carried out.

Conclusions and Recommendations :

Since carbon offsets projects to extinguish coal fires offer a lot of economic promise, a methodology for these projects should be developed and accredited either through the CDM or the accreditation standards used for the voluntary carbon markets. The process of developing and accrediting a methodology requires access to a great deal of technical expertise and is very expensive, laborious, and time consuming. Thus, the World Bank would be an ideal candidate for fulfilling this recommendation, since it has both experience with and the resources for developing and accrediting methodologies. Achieving accreditation for this methodology will require particular attention to the requirements of additionality and permanence. Further studies of existing coal fires may be necessary for determining how best to satisfy these requirements.

Recommendations:

The United States government should support the development and accreditation of a methodology for carbon credit projects to extinguish uncontrolled coal fires.

The World Bank is also well positioned to undertake the development and approval of a methodology for accrediting coal fire extinction as an accepted form of carbon market credit.

If the CDM accredits a methodology for uncontrolled coal fires, the other markets for carbon credits should adopt this methodology as at least one of the acceptable ways of defining and establishing saleable carbon credits.

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References

Chicago Climate Exchange. 2004. Offsets and Exchange Early Action Credits. In Chicago Climate Exchange Rulebook. Chicago, IL. http://www.chicagoclimatex.com/docs/offsets/CCX_Rulebook_Chapter09_OffsetsAndEarlyActionCredits.pdf.

Clean Development Mechanism Executive Board. 2006. Project Design Document for Pansan coal mine methane utilization and destruction project. http://cdm.unfccc.int/UserManagement/FileStorage/B94EMJ2MMF80644R88QZ8GKMY4UAI0.

Clean Development Mechanism Executive Board. 2007. Tool for the demonstration and assessment of additionality (Version 4). http://cdm.unfccc.int/methodologies/PAmethodologies/AdditionalityTools/Additionality_tool.pdf.

Gold Standard Foundation. 2006. The Gold Standard Voluntary Emissions Reductions (VERs) manual for project developers. Basel, Switzerland. http://cdmgoldstandard.org/uploads/file/GS-VER_Proj_Dev_manual_final%20.pdf.

Kollmuss, Anja, Helge Zink, and Clifford Polycarp. 2008. Making sense of the voluntary carbon market: A comparison of carbon offset standards. Berlin: WWF Germany. http://assets.panda.org/downloads/vcm_report_final.pdf.

TÜV SÜD. VER+: A robust standard for Verified Emissions Reductions. Munich. http://www.tuev-sued.de/uploads/images/1179142340972697520616/Standard_VER_e.pdf.

United Nations Development Program. 2003. The Clean Development Mechanism: A user’s guide. New York: UNDP/BDP Energy and Environment Group. http://www.undp.org/energy/docs/cdmchapter1.pdf.

VCS Secretariat. 2007. Voluntary carbon standard program guidelines. Geneva, Switzerland. http://v-c-s.org/docs/Program%20Guidelines%202007.pdf.

Wara, Michael. 2007. Is the global carbon market working? Nature, 445: 595-596.

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CHAPTER 5 — ESTABLISHING A BASELINE SCENARIO FOR COAL FIRES

For a methodology to be approved for generating carbon credits under any of the various accreditation systems, there must be a clear way to determine the avoided emissions generated by the act of extinguishing a coal fire. This chapter will focus on the technical feasibility and potential for estimating the avoided greenhouse gas (GHD) emissions by extinguishing coal mine fires. The general concept presented is that for each coal seam the total tonnage of coal can be estimated, and the estimate of tonnage can be combined with a model of greenhouse emissions to create a total estimate for avoided emissions from would have been released, if the fire had not been put out and the coal seam had instead burned. Various possible methods will be presented for each step, and those methods will be evaluated for their ability to meet the technical requirements of a certifiable methodology.

Identifying Coal Fires

The first step in establishing a coal fire baseline is to identify a set of currently burning coal fires. If these fires will be used to generate carbon credits, these fires should be burning out of control with little prospect that any future efforts will be made to extinguish the fires. In order to establish carbon credits by future year, a projection of the path and rate of burn of the fire will also be needed. Then, as described below, such a projection can be combined with an estimate of the total volume of coal presently exposed to the fire in order to develop an overall estimate of GHG emissions averted.

Currently, Dr. Claudia Kuenzer of Germany is researching methods for identifying coal fires remotely. Her method relies on the thermal difference of the fires relative to their surroundings. Her experiments using controlled, buried fires have proven the feasibility of remotely detecting uncontrolled coal fires. She is currently working for the Sino-German Coal Fire Research Initiative to create an inventory and analyze uncontrolled coal fires in northern China (Zhang and Kuenzer 2007).

Estimating the Volume of a Coal Seam

For the extinguishing of a coal fire to be considered a reduction in total greenhouse gas emissions, it is necessary to show the emissions that would have been created by the burning of that coal. The first step in this process is to estimate the quantity of coal present in the seam. Fortunately, the coal industry has invested in the development of measurement techniques for the volume of coal in the ground.*

Geologic Prediction

The oldest method for the estimation of coal seam volume is the observation of surrounding geologic features to predict the location and thickness of the coal seam. This prediction can be made more precise by measuring outcroppings or exposed portions of

* In general, the technical aspects of these methods have been adapted from Milsom 2003; Kearey, Brooks, and Hill 2002; and Waples 1982.

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the seam. This method is, however, the least precise method of prediction.

Core Sampling

The second oldest method of coal seam estimation is the analysis of core samples. (Kearey, Brooks and Hill 2002, 236-249). This system requires the use of heavy machinery that was, serendipitously, made possible by the coal-powered steam engines of the 19th century. The basic process is the identification of the likely location of a coal seam, drilling to an adequate depth with a specialized drill that removes a cylinder profile of the soil it drills through, and the analysis of that core.

Once a coal seam has been found, a grid of drilling samples is laid out. The U.S. Geological Service (USGS) has a published manual on methods for laying out this grid. Once the grid is laid out, surveyors mark the locations and measure their altitude. Today, however, the increasing use of global position systems (GPS) allows the automation of the surveying process.

Once the new drilling locations are identified, cores are taken and analyzed. If there are positive results, a new grid with closer drilling locations is laid out and the process is repeated an arbitrary number of times. This method can produce a fairly precise prediction of coal volumes, and the precision is a function of the number of cores taken. Unfortunately, cost is also a function of the number of cores taken, so that certainty comes at an increasing cost. If a high level of precision is required for certification of avoided emissions, the cost of this drilling could be significant. These costs would be manifested in equipment rent or depreciation and a large number of low to moderately trained workers. On the other hand, the identification of a fire (i.e., a point along the coal seam) allows the grid to begin at a high level of precision, so that there is a lower overall cost than achieving the same level of precision unguided.

Still, borehole logging should not be ruled out as a means of estimating coal seams. An article in an industry magazine in 2000 proclaimed that a “virtual revolution” has been occurring to bring borehole logging back to the forefront of technology due to reduced labor intensity through technological development (Upadhyay 2000).

Core drilling has several other drawbacks. Complex, heavy machinery must reach all of the drilling locations. Because core samples can range from 10 to 1,000 meters in depth, the machinery is substantial and the amount of displaced soil is also significant. This factor is somewhat minimized by this report’s focus on surface fires where the drilling should be shallow, though it is possible that a coal seam that is burning at the surface could go quite deep. In terms of promoting investment, however, it should be feasible to predict which seams go deep based on the structure of the exposed portion. In terms of environmental damage, however, it would be necessary to accept possibly substantial damage to the local ecosystem in order to quantify the avoided emissions.

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Gravimetric and Magnetic Surveys

During the middle of the 20th century, several new methods of surveying were developed based on the characteristics of coal relative to their surrounding soils (Kearey, Brooks, and Hill 2002, 125-181, Milsom 2003, 29-70). The most effective for the prediction of coal volume was gravimetric surveying. Gravimetric surveying relies on the relative density of coal that distinguishes it from surrounding soils. Gravitational pull is a function of mass, not volume, so the coal generates more or less gravity than the surrounding soils. By developing high-precision gravity measurement devices, it became possible to measure the change in gravity generated by coal. On average, the earth’s gravity is measured as 9.8 meters per second per second (m/s/s). A variation of 0.0001 m/s/s is referred to as one gravity unit (gu). As of 2002, scientific gravity measurements could measure with a precision of 0.01 gu, though imperfect conditions usually reduce that precision to 0.1 gu. In practice, coal seams usually cause variations of 25-250 gu, so that the current instrument capabilities can produce fairly precise estimates of the seam’s thickness.

One of the prime advantages of gravimetric surveying is that it reduces the need for secondary calculation of density and volume by immediately measuring the mass of the seam. Since mass is a direct measurement of the number of carbon molecules in the coal, gravimetric surveying provides a very clear idea of how much carbon dioxide or methane could be produced by the burning of the seam. It also requires little disruption of the local ecosystem and does not require digging or drilling.

Unfortunately, this method has several serious problems. The first is that the collection of data requires frequent reading of instruments over a long period of time (potentially months) to average out interference in the measurement. Because it takes several months to sample any point, the establishment of a grid to measure a whole seam would likely require many instruments to be monitored simultaneously, increasing both instrument and labor costs. Also, the length of the measurement time implies that it cannot be used for projects requiring quick return on investment. Another downside of gravimetric surveying is that it requires the other components of the geologic structure to be known. If the density of the surrounding stone is unknown, it is impossible to determine the gravity differential caused by the coal. This means that a traditional geological survey must also be completed, again expanding the cost, scale, and scope of the project.

Magnetic methods produce very similar results to gravimetric mapping, but instead of the force of gravitational pull, it relies on the force of magnetic pull. Just as the specific gravity of geologic components differ, so does the magnetic pull. There are two primary advantages to magnetic surveying: it can be done for much less money, and it can be done much more quickly. Magnetic sampling can even be performed from aerial vehicles, and in 2006 it was used to map the extent of subsurface coal seam fires (Schaumann et al. 2006). It does not, however, achieve a substantially more precise map of the area. It is primarily used today for prospecting of potential coal fields, followed by seismic analysis for more precise measurement of identified fields.

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Seismic Measurement

Since the late 1970s, the petroleum industry has been developing seismic measurement. (Kearey, Brooks, and Hill 2002, 21-124, Milsom 2003, 179-222) Initially, this was used to measure underground pools of liquid and gaseous petroleum products, but it was later adapted to work for solid structures, including coal.

Seismic measurement works much like echolocation or a sonogram. A mechanical pulse is generated at a point, and a shockwave radiates outward through the ground. When this wave hits the border between two materials of different density, part of the wave is transferred onward and part of it reflects off of the surface and radiates outward. Sensors on the surface detect the direction, time, and strength of these returning waves. Relying on the speed and precision of modern computers, the system performs millions of advanced matrix calculations to generate a high precision map of the underground formations. Since the 1990s, a system using the same model but with more sensors and more complex mathematics has been developed that can create three-dimensional images.

Seismic measurement has many advantages over other means of measuring coal seams. First, it offers a spatial precision that no other method can produce. It can measure the actual shapes and locations of objects remotely. Although it has lower precision than the gravimetric survey, it can also estimate the densities of the layers it encounters. Like the gravimetric survey, it does not require disturbance of the local ecosystem, and has in fact been applied to especially sensitive ecosystems for that reason. Unlike the gravimetric survey, however, seismic measurement does not require long-term monitoring, reducing the relative labor costs.

It is important to differentiate modern seismic analysis from its outdated forms in the 1970s and 1980s. Growth in instrument precision, mathematical theory, and computer processing power has resulted in a tremendous increase in the capabilities and precision of seismic measurement. It is no longer restricted to a minimum depth, nor is it restricted to two-dimensional analysis, though two-dimensional analysis is still less costly. Today, it can be used for near-surface analysis, down to even a couple meters, and can measure the distance of layers to within several millimeters, making volume calculations far more precise (Eaton 1997).

There are still several important limitations to seismic measurement. The most immediate concern is cost. The equipment is expensive, many sensors are required to be used simultaneously, and it requires highly trained operators. All of these factors increase the capital cost of measurement dramatically, though the labor costs for any individual project remain low (Gochioco 1990). In addition, the size of the seismic generator is a function of the area covered, and significant seismic pulses have been shown to cause ecosystem disruption. This disruption can be minimized by using a smaller spacing between generators so that each generator needs to emit a smaller wave.

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Analysis of Methods of Estimating Coal Seam Quantity

As potentially applied in a future CDM or other methodology for verifiably extinguishing coal mine fires and establishing the magnitudes of CDM emission credits, the actual action on the ground would be the identification of coal seam fires, the measurement of the quantity of coal at risk of being combusted, and the extinguishing of that fire. These fires could be in large working pit mines that have caught fire or in smaller seams that may never have been explored commercially. Presumably, an entrepreneurial corporation, public-private partnership, or government entity would complete this process. These projects would often need to be done in developing countries with substantial coal mine fire problems such as China, Indonesia, or India.

Given these conditions, seismic analysis appears the most promising method. Geologic prediction, as stated before, carries with it too much imprecision to be useful for verifying avoided emissions. Core sampling requires the disruption of the local ecosystem and can only provide moderate precision, which must be bought at a high cost using large quantities of capital and labor. Gravimetric sampling is perhaps the second best method, since it can provide direct measurements of the carbon sequestered in the coal vein, but it requires substantial labor costs.

The primary advantages of seismic analysis in our application are its high precision and low variable costs. The high precision and the rapidity of data production are significant because the accreditation of credits will require verifiability. The lower the precision, the fewer avoided emissions that can be promised, and the less money that is provided to finance the project, if any project is still viable at all.

The coal industry as a whole has made the same determination that higher precision in seismic surveying is worth the cost since the revenue generated from the seam is so important. The second advantage, low variable cost, is significant because fixed costs become negligible as the number of projects completed by an entity rises. The machinery is also mobile, so one entity completing multiple projects would only need to invest in the machinery once

Given that these projects would require substantial up front investment and dealings with both international diplomatic and market systems, it seems likely that a few firms would perform most of the project work, primarily large firms, since they would enjoy economies of scale. Those firms would be able to maintain large capital stocks over time, so that the variable cost would be the larger primary determinant for any individual project. Since seismic analysis has low variable costs, it would be more economically efficient, especially since its cost scales directly with size of the seam and therefore the benefits of extinguishing the seam’s fire. Seismic analysis seems to be the best recommendation for the purposes of this methodology.

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Estimating emissions

Once the quantity of coal has been estimated, the amount of emissions generated by the burning of that quantity of coal must be determined. These values can be derived through several methods, focusing either on the actual rate of emission or the qualities of the emissions.

Chemical Reaction Analysis

As stated earlier, only a few gaseous components are typically generated in large quantities by the combustion of coal, although this can vary depending on the surrounding materials and the level access to atmosphere at the site of combustion. If, however, we restrict the consideration to organic products (carbon dioxide and the other molecules that might substitute for it), we come down to a small group, primarily carbon dioxide (CO2), carbon monoxide (CO), and methane (CH4). Also, one must note that each ton of carbon could produce 3.7 tons of carbon dioxide, 1.3 tons of methane, or 2.3 tons of carbon monoxide (Tetzlaff 2004; Waples 1981).

In an absolute simplification, one could sample the coal in the seam to determine its carbon density and then multiply that by 3.7, assuming that all the coal was converted to carbon dioxide, and therefore yielded the least radiative forcing effect on the atmosphere. This would create a clear lower bound estimate of emissions credits generated per ton of coal prevented from burning. Multiplying this by the estimated tonnage of coal produced from the above surveying would produce a total minimum assessment.

The primary benefit of this method is its simplicity. Its results are indisputable as a minimum amount of carbon emissions from burning the whole seam. This may be all that is required. Suppose, for instance, that a seam is found that is quite small. The extinguishing entity could retrieve a sample of the coal, extinguish the fire, and perform a low-cost survey of the seam. This would minimize total cost, making the extinguishing of small fires more profitable.

There are, of course, several drawbacks to this method, the most obvious being a lack of precision and a strong downward bias. Significant emissions of methane might in fact be averted by putting out a coal fire, and these would not be counted for their full GHG impact. By relying on a minimum estimate, the entity foregoes the potential funding that could be earned, thus reducing the additional incentive of the credits.

The second major weakness is that it ignores all other products of the burning. Because the fires may also combust the surrounding matter (like soil and rocks) and the impurities in the coal, other gaseous products may also be produced. Many of them will have much greater global warming potential and could in theory generate a substantial number of credits. Trace molecules like volatile organic compounds have a GWP of 1.7-6.8 by mass relative to carbon dioxide, and hydrogen 5.8. The inclusion of other molecules and the relative effect of all particles would undoubtedly raise the expected the

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credits earned.

Atmospheric Composition Sampling

The actual outputs of the coal combustion can be observed to create an emissions profile for a specific coal mine fire. Dr. Glenn Stracher of East Georgia College has done extensive research on the deposition of combustion products near coal mine fires, including taking atmospheric samples around the fires and even within the fissures. These samples were then sent to a laboratory for spectrographic analysis to determine the constituent gases.* Similar work has been done by the former U.S. Bureau of Mines (Kim 2007).

Although the sampling of gases around coal mine fires is in its infancy, the processes of atmospheric sampling and spectrographic analysis are well established. In theory, one could compare the samples close to the fire and at some distance (preferably upwind) to determine the amounts and ratios of the combustion products. After taking these samples across several time periods and averaging them, one would have a decent estimate of the products of combustion that would be released in the future. By also taking a sample of the carbon density of coal, one could determine the output of each product per ton of coal burned and develop an estimate of the total amount the seam could generate of each product, and therefore the total radiative forcing effect.

Although this method offers a much more detailed analysis, it has significant problems as well. The first problem is that it would require taking samples across several time periods and waiting for them to be analyzed. This introduces a time delay in the project cycle that would decrease any profitability in extinguishing the fires, working against the overall purpose of the policy since a lower profitability reduces the economic incentive to extinguish the fires and therefore a lower incentive to reduce the greenhouse gas emissions. Second, atmospheric sampling may return widely varied results depending on the conditions and burn rates at the time of sampling, not to mention heterogeneity of the mixing of gases. This method may overall have a very low precision.

Temperature Analysis

Another method for estimating the emissions would be to monitor the temperature of the gases escaping. When the fire has access to more oxygen, it burns more rapidly and produces more oxygen-rich molecules like carbon dioxide. By watching the temperature of the gases escaping over several days and through various climactic conditions, one could estimate both the rate at which the fire would burn over time and the products that would be created based on the temperature (Kim 2007; Kuenzer 2007).

One of the greatest advantages of this process over others is that the rate of burn allows for forecasting not only of the total credits to be generated, but would also provide

* Taken from video posted to Dr. Stracher’s school website (Stracher 2008).

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a basis for distributing them over time. Since carbon credits are issued for the time at which the emissions are prevented, it is important the time of the potential emissions be estimated.

This method has a glaring weakness, however. It relies heavily on theoretical relationships between temperature, rate of combustion, and chemical production. Those relationships inherently contain large uncertainty and may not be applicable to all of the mines considered.

Remote Sensing

There is much interest now in the use of remote sensing technology to estimate the greenhouse gas emissions of coal mine fires (Gangopadhyay 2008; Zhang and Kuenzer 2007; van der Meer et al. 2004). In theory, this method uses the relative spectral profile of carbon dioxide and other greenhouse gases to measure their concentrations in the local atmosphere. By comparing the local profile against the surrounding average atmospheric concentrations, the relative emissions of the site can be estimated. This estimate might be refined by also considering the relative heat generation of the area and thereby the intensity of the fire.

This method is currently in development but has not yet reached maturity. Several scientists have proposed it and are reportedly working on it at this time, but no scholarly work has yet been presented that gives an application or a scientific evaluation of the method. Still, it is considered to be feasible by the community, and is mentioned here for prospective purposes.

Comparing Emissions Estimation Methods

For the purposes of this study, baseline chemical theory is the recommended option, though only for the immediate time period. This method has important abilities to create a scientifically certain minimum and very low costs. For the completion of a project, it essentially reduces the process of estimation to simple paperwork.

This method is recommended only for the short term for several reasons. First, knowledge of coal mine fires is rapidly advancing, as is knowledge of methods for estimating emissions. Better methods can be reasonably expected in the coming years. Investment in the extinguishing of coal mine fires under this method should also offer financial incentive for more rapid research into the technology, especially in increasing the precision and reducing the cost. Second, this method should be reevaluated in the future because it provides only for a minimum assessment of importance of extinguishing these fires. More precise measurements in the future will probably show that the effects of these fires are greater than estimated. Finding a better method for estimating emissions will increase the value of both this policy.

Conclusions and Recommendations:

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While the study of coal seam fires is just emerging, the science necessary to analyze the issue has been developing for many years, driven both by the market and scientific discovery. While there is more to be done to apply the larger concepts to this problem, current research suggests that there should be low cost, scalable, effective scientific solutions to the problems presented in implementing the policy. At the very least, there is agreement among researchers that there is no obvious technical reason that the emissions of coal seam fires can not be reasonably accurately and precisely predicted.

Recommendations:

Use seismic methods to determine the volume of a coal seam on fire.

Use chemical analysis methods to determine the amounts of GHGs the fires are producing, and the future timelines, at least until new techniques are developed.

The climate research and development programs of the United States and other nations should commit greater funds to modeling and other study of uncontrolled coal fires, including the development of more refined methods of estimating the future path and timeline of coal fires and the magnitudes of the future GHG emissions that could be averted by putting out these fires.

References

Eaton, David William. 1997. 3-D seismic exploration for mineral deposits. Keynote address, Exploration ‘97: Fourth Decennial International Conference on Mineral Exploration, Toronto, Canada, September 14-18.

Gangopadhyay, Prasun K. 2007. Application of remote sensing in coal-fire studies and coal-fire–related emissions. In Stracher 2007, 239-248.

Gochioco, Lawrence M. 1990. Seismic surveys for coal exploration and mine planning. Geophysics. The Leading Edge, 9(4): 25-28.

Kearey, Philip, Michael Brooks, and Ian Hill. 2002. An introduction to geophysical exploration. London: Blackwell Science Ltd.

Kim, Ann G. 2007. Greenhouse gases generated in underground coal-mine fires. In Stracher 2007, 1-14.

van der Meer, Freek, Paul van Dijk, Prasun K Gangopadhyay, and Chris Hecker. 2004.

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Remote-sensing GIS based investigations of coal fires in northern China; global monitoring to support the estimation of CO2 emissions from spontaneous combustion of coal. Paper presented at the 1st Asian Space Conference (ASC), Chiang Mai, Thailand, November 22-25.

Milsom, John. 2003. Field geophysics. West Sussex, England: John Wiley & Sons Ltd.

Schaumann, Gerlinde, et al. 2006. Geophysical investigations over a coal mining Area in China for risk assessment of the expansion of local coal seam fires. Paper presented at the European Geosciences Union General Assembly, Vienna, Austria, April 2-7.

Stracher, Glenn B., ed. 2007. Geology of coal fires: Case studies from around the world (Reviews in Engineering Geology, vol. XVIII). Boulder, CO: Geological Society of America.

Stracher, Glenn B. 2008. “Home,” http://www.ega.edu/facweb/stracher/stracher.html.

Tetzlaff, Anke. 2004. Coal fire quantification using ASTER, ETM, and BIRD satellite instrument data. PhD diss., Ludwig-Maximillians University (Munich, Germany).

Upadhyay, Raja. 2000. Developments in coal exploration. Pincock Perspectives, 3: 1-3.

Waples, Douglas. 1981. Organic geochemistry for exploration geologists. Minneapolis, Minnesota: Burgess Publishing Company.

Zhang, Juanzhong and Claudia Kuenzer. 2007. Thermal surface characteristics of coal fires 1: Results of in-situ measurements. J. of Applied Geophysics 63: 117-134.

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CHAPTER 6 – ADDITIONALITY, PERMANENCE, AND OTHER METHODOLOGICAL ISSUES

In order for the extinguishing of a coal fire to be sold as a GHG emissions credit, a proposed project activity must describe the proposed actions to put out a coal fire; give an accurate estimate of the carbon dioxide or other GHG emissions that would have resulted in the absence of these actions; and provide a verifiable procedure for certifying that the actions have been taken, the coal fire has in fact been put out, and that it has not reignited. There must also be a method for demonstrating that the coal fire would not have been put out in the absence of the financing provided by the sale of carbon credits – i.e., that the project activity meets the criterion of additionality.

Moreover, there must be a demonstration that other coal fires will not be ignited or left to burn because of the specific actions to put out the coal fire at hand – i.e., that the project activity meets the criterion of permanence. In the case of a coal fire that is put out, a special issue that arises is whether the extinguishing of the coal fire will then allow the coal to be mined and subsequently burned in a power plant or for some other industrial or commercial use. If that is the case, the extinguishing of the coal fire may or may not meet the criterion of permanence.

At present, there is no approved methodology (see Chapter 4) for the sale of GHG emissions credits based on the putting out of a coal fire. Chapter 5 described the methods that are available for estimating coal volumes in currently burning coal fires and then the GHG emissions averted by putting out the fire. This chapter will address the necessary steps to demonstrate that the extinguishing of the coal fire will in fact meet the criteria of additionality and permanence. Once a methodology for making such a demonstration has been worked out it detail, it would have to be submitted for the review of the CDM Executive Board or of other bodies responsible for verification of the acceptability of actions to create GHG emissions credits.

Additionality

Additionality is a central concept for carbon offset programs: It would be a waste of money to purchase offsets that fund reductions in GHG emissions that would have occurred anyway. Indeed, in the case of the CDM, where offsets count toward emissions reductions targets for developed countries, allowing non-additional projects to generate credits would lead to a net increase in emissions (Kollmuss, Zink, and Polycarp 2008).

Determining whether a project activity is additional, however, can be a difficult task, as it may require making a judgment call about what would happen without funding from sales of carbon offsets. A project developer, for example, could argue that her return on investment on a project activity is too low, and that outside funding is needed; however, such a requirement can vary in amount from developer to developer, and raises questions of what is an acceptable rate of return for carbon offset activities. Would the sale of emissions credits promote more low-carbon investment, or would it merely enrich project developers — indeed, might it not even discourage such investment, if there is

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more money to be made from carbon offsets revenue? These and other questions concerning additionality do not admit of any precise answers. Nevertheless, it is possible to highlight the most salient issues surrounding the additionality of any given project activity, which we shall do now for extinguishing coal fires.

A first question is to estimate how long, in the absence of actions to put it out, a coal fire could be expected to burn. Some underground coal fires have burned for decades and it may reasonably be assumed that they will continue to burn into the indefinite future. For these fires, specific public or private actions will normally be required to put them out in an expedient manner. For surface fires, many have been burning for years but their typical duration is shorter. It can be assumed that, in the absence of actions to put out the fire, they will continue to burn for some number of years but eventually all the coal will be used up and a surface coal fire will die out of its own accord. Routine natural events such as heavy rainfall are not normally sufficient to extinguish a surface coal fire.

For estimating the date of extinction of a coal fire, two factors will be critical – an estimate of the volume of coal available to the fire and an estimate of the path and rate of burn of the coal fire (see Chapter 5). Given these two items, one might project that, for example, 1,000 tons of coal are burning at a rate of 100 tons a year and the fire can be expected to burn itself out in ten years. Assuming other requirements of the methodology are met, the emissions credits generated would then be the GHG emissions associated with burning 100 tons of coal (approximately 330 tons of CO2, if all the emissions took that form) for each of the next ten years.

Barriers to Private Action

No carbon credits would be available if it appeared likely that actions would be taken to put out a coal fire even in the absence of the financing made available by the sale of carbon credits. The main reason a private party would act to put out a coal fire would be to save the coal for future mining. When a coal fire breaks out in an active coal mine, it is in fact common for the mining company to take actions to put out the coal fire. This normally happens soon after the fire breaks out and it is likely to be rapidly extinguished. No GHG emissions credits would be available in such circumstances since the putting out of the fire would fail to be additional.

Even where a coal fire breaks out in an existing mine, however, it might still be possible to generate carbon credits, if it can be demonstrated that the private economic incentives are not sufficient to put out the coal fire. This might be demonstrated in one of several ways:

Abandonment of the Mine-- It might be shown that, since the fire broke out, the coal company has ceased operation of the mine and is making no further efforts to put out the coal fire.

No Further Effort -- It may be possible to segregate the coal fire from other parts of the

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mine and thus to continue operations, even while the coal fire continues to burn. Application of this criterion might require that a minimum time period be specified in which the coal company has made no effort to put out the fire (say a minimum of one year).

Uneconomic to Put Out the Fire -- Application of this criterion would require the development of an estimate of the cost of putting out the coal mine fire. One of various firms that are in the business of putting out coal fires might provide such an estimate (see Chapters 2 and 9). An estimate of the volume of coal being burned would also be needed. Combining these two estimates, the cost per ton of coal saved from burning through extinguishing the fire could be estimated. This cost per ton could then be compared with market prices per ton in the market for buying and selling coal reserves. If the cost per ton of saving the coal from burning is less than the normal market value of buying and selling coal reserves, it could be assumed that it would be worth the cost for any normal private party to pay to put out the coal fire.

Barriers to Public Action

It is still possible that there might be public incentives that would be sufficient for a government at some level to take action to put out the coal fire, even in the absence of the sale of any carbon credits. Coal fires can have various adverse environmental consequences including air pollution and subsidence, and these might be sufficient to motivate a government agency to put out the fire – considerations of greenhouse emissions aside. If it appeared that this would be likely, again, the putting out of the coal fire would fail to be additional. On the other hand, additionality would be considered to have been demonstrated if one of the following could be shown:

No Government Program at any Level to Put Out Coal Fires -- It might be shown that no government that has jurisdiction in the area of the coal fire has any program or makes any expenditures for the purpose of putting out coal fires.

Not a High Enough Priority for Government Action -- Some governments might be taking actions to put out coal fires but these efforts are limited to a subset of coal fires that command a higher priority for government attention. This higher priority might reflect the degree of environmental damage associated with the coal fire, the total availability of government funding for putting out coal mine fires, and the cost of putting out any specific fire. The higher the degree of damage, the more funds available, and the lower the costs, it can be assumed that the likelihood of active government efforts to extinguish the fire will increase. Even in a nation with the large resources of the United States, however, many coal fires are not a high enough priority that any level of government has taken action to put them out (see Chapter 9). In most developing countries, efforts to extinguish coal mine fires are limited to a small minority of the coal fires currently burning.

No Past Effort -- If a coal mine fire has burned for a certain period of time, and no government has thus far made any efforts to put it out, it might be presumptively

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assumed that the fire will be allowed to burn without any short term government actions to extinguish it. In some cases, there might be a good reason to project that a government might eventually take action some number of years in the future (say five years from now). If that were the case, any carbon credits would be only for the duration of that period, and further carbon credits would require a reexamination of the issue and a new demonstration at that point in the future.

Permanence

Issues of additionality arise with respect to the methodologies for many forms of GHG emissions credits. Putting out a coal mine fire presents an unusual feature in that it raises the possibility that the extinguishing of the fire may allow the future mining of the coal and thus the release of GHGs from the coal combustion in a power plant or other industrial or commercial facility. One could argue, even, that unlike many other carbon offset activities, the additionality of a coal fire abatement project is easier to prove than its permanence. For if it appears that the putting out of the coal fire would not achieve any permanent reduction of GHG emissions, no carbon credits would be allowed.

Alternatively, it might be possible to demonstrate that a reduction of GHG emissions would be achieved but that it would be temporary and thus any carbon credits recognized should be strictly time limited (say for three years of coal burning). Such time limits would be in accordance with most carbon offset projects, which reduce only a specified amount of GHG emissions over a specified time horizon. To an extent, then, the problem of determining permanence in coal fire abatement projects is one of carbon offset programs in general: The value of the reduced emissions is cumulative, and only sustained efforts to reduce emissions over time will justify the investment in any one carbon offset activity.

With respect to coal fires, there are several ways in which one might meet the criterion of permanence, provided specific time horizons are stated:

No Mining Activity -- If there is no coal mining activity in the surrounding area of the uncontrolled coal fire (usually a surface fire in such cases), it would be reasonable to assume that the coal will not be mined in the future, if the coal fire is put out.

No Mining of Similar Coal Deposits -- Even if there is active mining going on in the region of the coal fire, it may not involve coal deposits with similar economic, geologic, and other characteristics to the fire that is burning. The coal that is burning may simply not be economic to mine. To illustrate this, let us note that nations such as the United States, China, and India possess very large reserves of coal; however, at any given time, given the economics of coal mining, only the particularly most attractive coal deposits (in terms of transportation requirements, coal quality, mining costs, labor needs, etc.) will be mined. Even if a particular coal deposit might eventually be mined, this might be decades, if not centuries from now, if it is not cost-effective to mine relative to existing coal supplies. For the purposes of generating carbon credits, this could be demonstrated by showing that similar types of (non-burning) coal deposits are not presently being

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mined.

Substitutability of Many Other Similar Coal Deposits -- Even where a coal fire involves high quality and otherwise economic coal that makes it suitable for mining, it may be possible to establish that a genuine permanent reduction in GHGs would be achieved by putting out the fire. If a region is rich in high quality coal deposits, it may be somewhat arbitrary which specific deposits are being currently being mined at any given time and which are being conserved for the future. Thus, if a coal mine fire is put out, and this coal is then soon being mined, it will result in other coal deposits in the same region not being mined. On the other hand, if the coal fire had not been not put out, these other coal deposits would then have substituted for its coal and would have been mined. In short, even if the coal burning in a fire is soon put back into production, putting the fire out may result in a net reduction in GHGs equal to the potential emissions from the mine fire.

In formal economic terms, the matter at issue here is the character of the regional supply curve for coal. If the supply curve is flat (completely “inelastic”), reflecting very large amounts of coal that could be mined for similar costs, then the total amount of coal mined at any given time will depend largely on the character of the demand curve for the region’s coal. The total amount of coal mined, and then burned intentionally in commercial facilities somewhere, will be independent of the circumstances of any one coal deposit. That is to say, if a currently burning coal fire is put out, and then it turns out to be mined, this will result in a reduced level of mining at some other coal deposits (and the coal from those deposits will then not be burned). Considering the totality of all the coal in the region, there will be a net reduction in GHG emissions from the region.

Contractual Pledges -- In some cases estimating the regional demand curve for coal may be difficult with the precision required to make a clear showing of permanence in this manner. There would be yet another way in which the condition of permanence might be met. If necessary, as part of the establishing of a legitimate carbon credit, the owner of the coal that is currently burning might sign a binding agreement that the coal will not be mined in the future, if the fire is put out. Alternatively, the coal mine owner might agree to only sell coal to power plants or other facilities that use cogeneration or carbon capture and storage (CCS), activities that would reduce the GHGs emitted from burning coal through enhanced efficiency or through burying the carbon emitted in the ground, respectively.

Both types of agreements would require special efforts to secure, given worldwide demand for coal; the coal mine owner would need to be compensated for the value of the coal not being mined, in the first case, or the opportunity cost of not being able to sell coal to any and all buyers, in the second case. Consequently, a contractual pledge with the coal mine owner would be feasible only where the price of carbon offsets was sufficient to cover the value of the coal left in the ground. .

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Verifying the Accidental Character of Coal Fires

Another methodological issue that arises with respect to coal mine fires is the method of demonstrating that the fire was in fact accidental. Given the substantial revenues that might be earned in carbon markets from putting out uncontrolled coal fires, there would be an economic incentive to start a coal fire with the intention of selling the credits for putting it out. However unlawful, it cannot be assumed that such actions would never occur. If the legitimizing of the sale of carbon credits for putting out coal fires actually resulted in an increase in GHG emissions, this would of course be a perversion of the original intent. A demonstration of “accidental character” might be accomplished in the following ways.

The Fire Began Burning Prior to the Date of Approval of the Coal Fire Methodology or the First Recorded Sale of a Carbon Credit Based on the Putting Out of a Coal Fire -- It can be assumed that it would be unlikely that any party at present would start coal fires in the anticipation that it would be possible at some point in the future to sell carbon credits for putting them out. If a coal fire methodology is approved, it might be desirable to conduct a comprehensive inventory in each nation of all known existing coal fires. It would also be appropriate to establish methods by which the historical starting point of a coal fire could otherwise be verified.

The Known Circumstances of a Coal Fire -- Besides the historic date at which a coal fire began, there may be other ways of verifying that a coal fire is accidental, even in the case of fires that have only started recently. There may be reliable eyewitnesses, for example, who can testify from first hand experience as to the circumstances that resulting in the coal beginning to burn.

Coal Fire “Detective” Work -- There may also be other ways to verify that a coal fire was accidental and not intentionally set. This issue arises in other settings where the question is whether the burning of a house of other building is a case of arson. It may be possible also to make a good estimate from an examination of a specific coal fire whether it was deliberately set.

Conclusions and Recommendations:

Selling carbon credits generated from the extinguishing of coal fires raises a number of methodological issues, some unique among carbon offset activities. As mentioned in Chapter 4, there is some resemblance to the problems encountered in avoided deforestation projects — a project type not allowed under the CDM in part because establishing additionality and permanence for such projects appeared to be so difficult. One similarity worth remarking upon here is that, like avoided deforestation, coal fire abatement will likely require a type of resource management scheme, one that is less focused on a specific project than on looking after the coal in a given project boundary.

In many cases, it will not be difficult to establish that the extinguishing of a

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particular coal fire represents a true reduction in total GHG emissions. In other cases, the factors may require more detailed and potentially complicated calculations with respect to a particular fire. Overall, however, it seems that the establishing of legitimate emissions reductions for many coal mine fires is practical and feasible. Indeed, compared with the methodological issues raised by other forms of carbon credits (e.g., deforestation credits), the difficulties and burdens associated with applying a coal fire methodology may be less imposing.

Recommendations:

While the issuance of carbon credits for putting out uncontrolled coal fires raises challenges with regard to meeting the approval requirements of additionality and permanence, these requirements can likely be satisfied for many coal fire projects. Compared with some other methods of generating carbon credits, it may be easier to demonstrate additionality and permanence for coal fire projects.

The World Bank, the World Resources Institute, private brokers in carbon market credits, and other involved parties should seek out a sample set of currently burning coal fires that could be used as demonstration projects to establish and improve methodologies for showing coal fire additionality and permanence.

Where issues of permanence arise, credits generated from putting out coal fires should have shorter lifespans; they might be lengthened if the mine owner can be persuaded to agree contractually not to mine the coal or to only use it for low-carbon activities when the fire is put out.

Reference

Kollmuss, Anja, Helge Zink, and Clifford Polycarp. 2008. Making sense of the voluntary carbon market: A comparison of carbon offset standards. Berlin: WWF Germany. http://assets.panda.org/downloads/vcm_report_final.pdf.

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PART III – THREE CASE STUDIES: CHINA, INDONESIA, AND THE UNITED

STATES

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CHAPTER 7 – CHINA AND COAL FIRES

Introduction

Uncontrolled coal fires in China are nothing new. Some coal fires in China have been burning for decades, and even in some cases for centuries (Stracher and Taylor 2004). In his journals recounting his travels to the Far East in the late 13th Century, Marco Polo mentioned what we now know were probably uncontrolled coal fires in China when he described seeing “burning mountains along the Silk Road” (Hilsum 2007; Keunzer et al. 2007, 43).

The coal fires in China include both coalfield and coal mine fires. Coalfield fires are the uncontrolled coal fires that burn on or near the surface, often having started on exposed coal seams or in open-pit or shallow coal mines. By contrast, coal mine fires are those uncontrolled coal fires that occur either in government or privately-owned mines, and can be situated deep underground or along the surface.. Coalfield fires and in some cases surface mine fires can be relatively easy to extinguish.. The underground coal mine fires are often much more difficult, or indeed impossible, to extinguish since such fires cannot be easily located nor are reached by firefighting equipment or flame retardants (Stracher and Taylor 2004).

As in other countries, the great majority of China’s uncontrolled coal fires are anthropogenic in origin. In particular, they are often attributable to mining-related activities. In some cases, mining activities are directly related to the ignition of the fire, such as when explosives or electronic equipment used for mining causes naturally occurring mine gases like methane and hydrogen to ignite (Stracher and Taylor 2004; Wingfield-Hayes 2000; Discover 1999). In other cases, mining activities serve as an indirect cause of uncontrolled coal fires. One common scenario involves an abandoned small-scale or artisanal mine that was not closed off or reclaimed properly, thereby leaving the coal seam exposed (Hilsum 2007; Kuenzer et al. 2007, 48). This exposed coal seam in turn is ignited either through a process of spontaneous combustion or by lightning or forest or brush fires (Kuenzer et al. 2007, 43, 48; Stracher and Taylor 2004; Discover 1999). Many of the uncontrolled coal fires in the Wuda coalfield, for example, are believed to have started in this fashion (Hilsum 2007; Kuenzer et al. 2007, 47). A second common scenario involves the ignition of the waste or leftover coal piles from artisanal mines. Like exposed coal seams, these piles are also susceptible to ignition through spontaneous combustion (Kuenzer et al. 2007, 48).

Coal Mines and Coal Use in China – An Overview

According to some observers, a dramatic increase in the number of uncontrolled coal fires in China in recent decades is due to ownership and operational changes in China’s coal mining sector. One particularly important change was the shift in patterns of ownership away from mines owned by the central government towards privately-owned artisanal mines that occurred during the 1980s and early1990s (Hilsum 2007). While the Chinese government has succeeded in shutting many of these mines down in

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the past decade or so, an estimated 21,000 to 23,000 still remain in operation (Ball et al. 2003, 25). As discussed below, these mines tend to have lower safety standards, especially when it comes to preventing gas explosions or other direct causes of uncontrolled coal fires (see also Hilsum 2007). While the Chinese central government has passed laws to regulate the mining practices in and safety conditions of artisanal coal mines (Gunson and Jian 2002, 17), these laws are not rigorously enforced by the central government due to a lack of resources. Such laws are also rarely, rigorously enforced by local government officials owing to conflicts of interest because they are often part-owners of such mines (Hilsum 2007). As a result, the remaining artisanal mines continue to pose the biggest threat of future uncontrolled coal fires (see Kuenzer et al. 2007, 48).

China – A Nation Dependent on Coal

China has among the largest national reserves of coal in the world. According to some estimates, proven recoverable coal reserves in China are about 11.6 percent of the world’s total at around 114.5 billion tons (Ball et al. 2003, 24). These reserves could theoretically supply China’s coal production needs for around the next 100 years (Ball et al. 2003, 24).

These reserves are largely concentrated within China’s “coal belt” that stretches across the northern part of the country. This coal belt is about 750 km wide (north-south) and about 5,000 km long (east-west) (Prakash 2007). The largest reserves are located in Ningxia Hui and Xinjiang Uygur (Stracher and Taylor 2004). Figure 1 shows coal sources by region in China. Much of these reserves are in thick coal beds located at shallow depths, rendering coal relatively easy to recover (Cao et al. 2007, 24).

Most of China’s proven reserves consist of relatively low quality coal.* Some notable exceptions include areas Ningxia Hui and Xinjiang Uygur, where exist significant reserves of higher quality anthracite coal (Stracher and Taylor 2004).

Chinese Production and Consumption

China is the largest producer of coal in the world (Keunzer et al. 2007, 43; Ball et al 2003, 10), by some estimates accounting for nearly one-third of global production (Stracher and Taylor 2004). China’s coal mining industry has grown rapidly in conjunction with the expanding economy. According to the International Energy Agency (IEA), annual coal production reached 1,402 million tons in 1996 after starting the decade at 1,051 million tons (Ball et al. 2003, 24). The rate of production actually fell for the rest of the decade and by 2000, the rate of coal production was down to 1,231 tons, having declined at an average of rate of 3.2% per year (Ball et al. 2003, 24) before once again increasing in recent years. This decline in the late 1990s seems largely attributable to the implementation of government policies designed to restructure the domestic coal mining industry (Ball et al. 2003, 11).

* Mr. Alfred Whitehouse (Director, International Programs, U.S. Department of the Interior, Office of Surface Mining) and Ms. Sarah Evans (Foreign Affairs Officer, U.S. Department of State, Office of Global Change), phone interview with James Goodwin, March 26, 2008.

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Figure 1: Chinese Coal Sources by Region

Source: Ball et al. 2003, 23

The objectives of China’s policies to restructure its coal mining industry were twofold. First, the policies sought to eliminate virtually all small, privately-owned artisanal mines. In general, these mines are relatively primitive operations, characterized by inefficiency, minimal occupational safety standards, and low capital investment (Ball et al. 2003, 11). Second, these restructuring policies also sought to eliminate the most inefficient of the large state-owned mines, either by combining them with other state-owned mines or by closing them outright (Ball et al. 2003, 11). Recent statistics show that coal production in China has increased markedly beginning in 2001 when it rose to 1,294 million tons in 2001 (Ball et al. 2003, 24), and reaching over 1,900 million tons in 2004 (Kuenzer et al. 2007, 43).

In addition to being the largest producer of coal in the world, China is also the largest consumer of coal of any country as well (Kuenzer et al. 2007, 43; Ball et al 2003, 10). Coal comprises by far the largest share of China’s energy mix, with the country deriving both two-thirds of its primary energy and three-quarters of its electricity generation from it. In the last few decades, trends in China’s coal consumption have roughly corresponded with trends in domestic coal production (Ball et al. 2003, 10-15).

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Figure 2: Total Chinese Coal Output by Mine Type

Note: These are official estimates of total production and are therefore lower than IEA estimates.Source: Ball et al. 2003, 26

Coal Mines in China

Broadly speaking, China’s coal mines fall into one of two categories, each of which can be classified according to form of ownership.

State-Owned Mines

The first category of mines—those that are state-owned—are larger in size, more efficient, safer, and more technologically advanced. There are over 2,000 such state-owned mines in China. Of these, fewer than 100 are “key state mines,” or mines that were formerly operated by the central government, but are now run by the provincial-level government in which they are located. Key state mines are often the largest and most technologically advanced of all of China’s mines. Until the early 1980s, key state mines were the dominant coal producers in China, accounting for approximately fifty-six percent of all domestic coal output. By 1996, the share of domestic coal output produced by key state mines had declined to only thirty-nine percent . Between 1996 and 2000, coal production by key state mines remained fairly constant before slightly increasing in 2001. Almost all of the coal that key state mines currently produce is directed towards state-run utilities and industries (Ball et al. 2003, 25-26).

The remaining smaller state-owned mines are known as “local state mines.” . These mines are usually operated by the provincial, prefecture or county government in which they are located. Compared with key state mines, the local state mines tend to be smaller and more technologically primitive (Ball et al. 2003, 25).

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Figure 3: Chinese Coal Production By Mine Type

Note: The production statistics used in this figure are official Chinese statistics. These are lower than the IEA estimates.Source: Ball et al. 2003, 3.

Artisanal Mines

The second broad category of coal mines in China consists of the artisanal mines. Broadly speaking, artisanal mines include all small-scale, privately-owned mines in which labor-intensive and primitive methods are used for coal recovery (Gunson and Jian 2002, 16). Artisanal mines represent the vast majority of the China’s coal mining operations, with relatively conservative estimates placing the total number somewhere between 21,000 and 23,000 (Ball et al. 2003, 25).* In China, these mines are often virtually indistinguishable from what are referred to as township and village enterprise (TVE) mines (Gunson and Jian 2002, 3), or mines operated by local township or village governments (Ball et al. 2003, 25; Gunson and Jian 2002, 17). This is because the artisanal mines are often only nominally private enterprises. Instead, in most cases, artisanal mines are operated by partnerships that include both private businessmen and local government officials. Moreover, both types of mines share a number of characteristics. In contrast to state-owned mines, artisanal and TVE mines tend to have low productivity, minimal safety standards, and little capital investment.

In 1980, artisanal mines produced only eighteen percent of China’s total domestic coal supply. Between 1983 and 1997, however, the central government encouraged the rapid expansion of artisanal mines in order to provide a source of revenue for rural

* As discussed above, China’s central government has been making a concerted effort to close down all of the artisanal mines as part of its efforts in the late 1990s to restructure the domestic mining industry. Consequently, this number of artisanal mines seems quite large. Assuming that China’s efforts at shutting down artisanal mines has been somewhat successful (as indicated by the large reduction in output from these mines in the late 1990s), the large number of remaining artisanal mines might suggest that there was well over 23,000 artisanal mines prior to the implementation of the restructuring efforts. Moreover, given that artisanal mines are often quite small operations that are located in the most remote areas of the country, these large numbers might suggest that the Chinese government lacks the enforcement capacity to shut down all of the artisanal mines located within its borders.

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economies and a steady source of energy supply. By 1996, artisanal mines were responsible for forty-five percent of China’s coal production (Ball et al. 2003, 26).

The output from artisanal mines has since declined dramatically because of efforts by the Chinese government to close them down, with production falling from a peak of 615 million tons of coal in 1996 to 197 million tons in 2001. As discussed above, this reduction in output is largely attributable to China’s economic reforms in the late 1990s that, among other things, sought to close down many of the artisanal mines. In particular, three objectives motivated the closure of artisanal mines: the promotion of safety and efficiency in China’s coal mining industry; the production of higher quality coal; and the conservation of China’s coal reserves. Various government laws remain in place to regulate those artisanal mines that have not been shut down. However, due to lack of political will on the part of local government officials, who often have a significant financial stake in the continued operations of such mines, and due to lack of enforcement resources by China’s central government, many of these laws are largely unenforced (see Hilsum 2007).

Artisanal mines are both a source of benefits and hardships for the communities in which they are located. On the one hand, most of the coal output from artisanal mines generally goes to meet community energy needs. Moreover, in many rural areas, these mines also serve as a primary source of income for local residents (Gunson and Jian 2002, 9). On the other hand, the operation of these mines often produces negative environmental and public health consequences. With lax safety standards, artisanal mines have very high levels of fatal work-related accidents. According to official statistics, more than 6,000 such fatalities occur every year (Kuenzer et al. 2007, 4). The negative environmental consequences include soil erosion, sound pollution, and dust clouds—all of which are detrimental for local agricultural activities and public health.

China, the CDM, and Global Climate Change Policy

If coal fires are to be extinguished as part of a greenhouse gas reduction strategy, this will involve consideration of China’s relationship with the United Nations Framework Convention on Climate Change, the Kyoto Protocol, and the Clean Development Mechanism (CDM) of that treaty. Any effort to combat coal fires using a CDM or CDM-like method must meet the legal and administrative requirements in place in China as relates to the issue of greenhouse gas emissions.

China is party to both the United Nations Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol (Office of National Coordination Committee on Climate Change 2005). According to the Chinese government, China intends to cooperate with the international community in the implementation of these agreements “while maintaining economic and social development” (National Development and Reform Commission 2007, 3).

China has been relatively active in the Clean Development Mechanism (CDM) program established under the Kyoto Protocol. According to United Nations statistics,

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China is host to 196 registered CDM projects, or 19.18 percent of the 1,022 projects that have been registered so far (United Nations Clean Development Mechanism. 2008b). The only country hosting more registered project is India, with 331 projects, or 32.39% of all registered projects (United Nations Clean Development Mechanism. 2008b). The CDM projects hosted by China involve a wide variety of project types, including methane capture, hydropower development, wind power generation, and hydrofluorocarbon abatement (United Nations Clean Development Mechanism 2008a). Moreover, China is currently ranked second behind only India in the CDM investment climate index for Asia (Bandelow, Gielisch, and Schulz 2006, 58). In theory, this high level of interest suggests that China may offer a relatively favorable environment for the development of CDM (or CDM-like) projects for coal fire abatement.

China and the CDM Process

CDM Project Approval and Implementation

The main coordinating agency for climate change policy, the National Coordination Committee on Climate Change, (NCCCC) has established a rigorous process for approving and implementing CDM projects within China (see generally Office of NCCCC 2005). A formal climate change bureaucracy that includes the Committee, the National CDM Board (“Board”) and the CDM Project Management Institute (“Institute”) has been established to ensure the proper functioning of this process (Office of National Coordination Committee on Climate Change 2005). The Board consists of members from a number of key agencies within the Chinese government, including the National Development and Reform Commission (NDRC), the Ministry of Science and Technology (MOST), the Ministry of Foreign Affairs (MFA), the State Environmental Protection Agency (SEPA), the China Meteorological Administration, the Ministry of Finance, and the Ministry of Agriculture (Office of National Coordination Committee on Climate Change 2005). The Board’s primary responsibility is to review the implementation of proposed CDM projects for such considerations as baseline methodology and monitoring plans as well as to monitor and report on the implementation of existing CDM projects (Office of National Coordination Committee on Climate Change 2005).

As required by the Kyoto Protocol, the NDRC also serves as China’s Designated National Authority for CDM. Accordingly, it has the responsibility of accepting CDM project applications, issuing final approval of accepted CDM project proposals, and providing formal supervision over the implementation of CDM projects within China (Office of National Coordination Committee on Climate Change 2005).

The application procedure for implementing a CDM project in China begins when a project owner—either alone or in conjunction with a foreign partner—submits the project application to the NDRC. The NDRC then circulates the application to “relevant organizations for expert review” (Office of National Coordination Committee on Climate

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Change 2005). * Once the expert review has been completed, the NDRC then submits the application to each of the Board members for their consideration (Office of National Coordination Committee on Climate Change 2005). The Board is required to evaluate each project proposal according to a number of predetermined criteria, including baseline methodology and emissions reductions, monitoring plan, and price of CER credits (Office of National Coordination Committee on Climate Change 2005). If the Board members conclude that the project should be approved, then NDRC, in conjunction with MOST and MFA, formally approves the project.

The NDRC is required to make a decision regarding the application within twenty days of its receipt—not including time for expert review—with a one-time optional extension of an additional thirty days available in cases in which a decision could not be made within the required twenty-day period. The NDRC is also required to provide a project applicant with notice of all decisions as well as the reasoning for those decisions (Office of National Coordination Committee on Climate Change 2005). After a project has been approved by the NDRC, the project owner must then obtain validation of the project for registration from a designated operational entity (DOE), as required under the Kyoto Protocol. Finally, if the project has been approved by the CDM Executive Board, then the project owner must notify the NDRC of this approval within ten days of its receipt (Office of National Coordination Committee on Climate Change 2005).

The Chinese government has also established a number of implementation guidelines that apply once the proposed project has received all the necessary approvals (Office of National Coordination Committee on Climate Change 2005). According to NCCCC rules, first, the project owner must provide the NDRC and the DOE with frequent updates concerning the implementation and monitoring of the project. Second, the guidelines authorize the NDRC to supervise the implementation of the CDM project. Third, as provided for under the Kyoto Protocol, the DOE is responsible for verifying any emissions reductions achieved by the project and submitting the required certification report to the CDM Executive Board.

Criticisms of CDM Project Implementation in China

Despite the relatively large number of CDM projects being implemented in China, and despite China’s relatively high investment climate rating for CDM project development, the implementation of such projects in China has been the subject of some criticism. Some have criticized the CER credits price floor requirement that has been established by the Board as a criterion for approval (Xianli and Jiahua 2006, 8). In essence, this criterion ensures that proposed CDM projects that produce CER credits that are too low in price will not be approved by the Board. All of the projects approved in August of 2005 had a CER credit price of around $5 per ton of carbon dioxide equivalent (CO2-eq) avoided, suggesting that the price floor was around that level. Critics are

* A project owner is a Chinese funded corporation that must be involved in the implementation of all CDM projects in China (Office of National Coordination Committee on Climate Change 2005). Entities that are not based in China can enter into partnerships with Chinese funded corporations in order to implement a CDM project.

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concerned that this price floor will eventually leave China unable to compete against a number of the other active CDM project host countries, thus preventing it from undertaking potentially important CDM projects (Xianli and Jiahua 2006, 8).

A second criticism relates to the regulatory and legal uncertainty that surrounds the approval process for proposed CDM projects. The mechanism described above is only an interim measure; no final mechanism has been formally adopted under the laws and regulations of China (Xianli and Jiahua 2006, 21). Given this failure to establish a mechanism for approval of proposed CDM projects through formal legal or regulatory means, some foreign investors have been reluctant to undertake CDM projects in China.

A third criticism has been directed towards the requirement that only Chinese funded corporations are eligible to function as a project owner for CDM projects pursued in China. This restriction on project owner eligibility limits the degree to which foreign investors can initiate CDM projects in China, and thus limits the amount of projects that might be potentially pursued there (Xianli and Jiahua 2006, 21).

A fourth criticism concerns the relative stringency of the approval process for proposed CDM projects. This stringency increases both the amount of time and the transaction costs required to obtain approval for a project. As such, these stringent barriers, while theoretically promoting the integrity of CDM projects in China, might also serve to discourage foreign investors from undertaking these projects in the first place (Xianli and Jiahua 2006, 21-22).

A fifth criticism highlights the lack of financial institutions available in China. On the one hand, this makes its difficult for Chinese investors to assemble the capital necessary to establish corporations that can serve as project owners for CDM projects undertaken in China. On the other hand, this also discourages foreign investors from undertaking projects in China, since there are no institutions to guarantee their loans in the event that a project fails (Xianli and Jiahua 2006, 21-22).

The rapid increase in CDM projects undertaken in China suggests that their profitability somewhat outweighs the burdens involved in the approval process that foreign investors must undertake through the Chinese government. Nevertheless, if the Chinese government does not adequately respond to the burdens that form the bases of the criticisms discussed above, these burdens might continue to discourage some foreign investors from pursuing potentially valuable CDM projects in China.

Putting aside bureaucratic hurdles, numerous logistical and technical problems remain before any CDM or CDM-like project could be undertaken in China for the purposes of coal fire abatement. These are discussed in the next section. An understanding of the full scope and magnitude and scope of the issues involved is necessary before any proposed linkage between the CDM and coal fire abatement is possible.

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More on China’s Coal Fire Problem: Scope and Magnitude

The two major obstacles to combating coal fires in China in terms of devising a comprehensive solution are establishing the scope and establishing the magnitude of the problem.

The first obstacle is establishing the scope of the problem. Simply getting a handle on the geographic scope (extent) of the problem can be quite difficult because in some instances, the locations of the fires are not even known by officials who would be able to set in motion efforts to combat them. This is because some new fires may be unreported by local inhabitants, and in other cases, the fires may even go wholly unnoticed, especially those that occur in particularly remote parts of China.

The next major obstacle is establishing how much coal is being burned, since any CDM project requires accurate information on emissions and emissions reductions. The issue of “how much coal?” involves the number of fires burning, the amount of coal involved, and the volume of greenhouse gases being emitted. This section looks at these issues.

Scope of the Problem: Knowing the Geographic Distribution of Uncontrolled Coal Fires

The first issue to consider is the scope or extent of the problem, specifically, knowing the geographic distribution of these fires. China’s uncontrolled coal fires are primarily located in the vast coal belt that runs along the northern portion of the country. As noted earlier, this coal belt extends about 750 km north to south and fully 5,000 km east to west across the whole of China.. Uncontrolled coal fires are found in all of the provinces and autonomous regions along China’s coal mining belt, which stretches from Heilongjiang in the east to Qinghai in the west (Stracher 2007). In most cases, however, the uncontrolled coal fires tend to be located in the remotest and difficult to reach areas of the coal belt (Telegraph.co.uk 2002).

Estimating the Number of Uncontrolled Coal Fires in China

There are widely varying estimates of the number of active uncontrolled coal fires in China. On the low end, some estimate the number of fires to be as low as fifty six (Meyer 2005). In the intermediate range, several sources estimate the number of fires to be around 200 or more (Strangeland and Hauge 2007; Revkin 2002; Discover 1999). At the high end, some researchers such as Stefan Voigt, a geographer with the Sino-German Coal Fire Initiative* estimate the number of fires in the thousands (Krajick 2005).

Similarly, there are also widely varying estimates of the number of uncontrolled coal fires affecting individual provinces and autonomous regions in China. The

* The Sino-German Coal Fire initiative is a collaborative project involving German and Chinese scientists studying various aspects of China’s uncontrolled coal fires, including issues relating to geology, mining-engineering, climatology, socioeconomic effects, and remote sensing technology (Kuenzer et al. 2007, 43).

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International Institute for Geo-Information Science and Earth Observation (ITC) in the Netherlands estimates that there are approximately ten fires in Ningxia Hui Autonomous Region, nine fires in Inner Mongolia Autonomous Region, and thirty to forty fires in Xinjiang Uygur Autonomous Region (Telegraph.co.uk 2002). Other reports suggest that these estimates are on the low end. For example, according to one report, there are sixteen individual uncontrolled coal fires affecting the Wuda coalfield, which itself is just one of many coalfields and coal mines located in Inner Mongolia (Autonomous Region) (Meyer 2005).

Similarly, another source reports that twenty-four of the coal production zones in Xinjiang Uygur (Autonomous Region) contain uncontrolled coal fires (Meyer 2005). Depending on how many fires are affecting each coal production zone, this report suggests that the ITC’s estimate of thirty to forty fires in that region is too low. Lastly, according to the Sino-German Coal Fire Initiative, the Rujigou-Gulaben coalfields in Ningxia Hui (Autonomous Region) have experienced at least twenty-five coal fires in the last few years (including twenty in the Rujigou coalfield and five in the Gulaben coalfield) (Kuenzer et al. 2007, 48). Again, this suggests that ITC’s estimate of ten fires in Ningxia Hui is too low.

The Ningxia Hui Coal Fires

Figure 4 shows an administrative map of China with its provinces labeled and Figure 5 shows the geographic distribution of coal mine and coal field fires across China (Prakash 2007). As indicated in Figure 5, the largest and most concentrated number of coal fires are located within the coal mining belt in Ningxia Hui, Inner Mongolia (also called Nei Mongol), and Xinjiang Uygur (Prakash 2007). These regions are characterized by their sparse population, high levels of poverty, and arid and semi-arid climates (Gielisch 2007, 200 and Stracher 2007).*

The most important area of uncontrolled coal fires in Ningxia Hui is the Rujigou-Gulaben coalfields (Kuenzer et al. 2007, 44-46).† The Rujigou and Gulaben are two adjacent large coalfields that contain some of China’s largest coal reserves. The Rujigou coalfield in turn contains three major mining areas: the Rujigou coal mine; the Dafeng open coal mine; and the Baijigou coal mine. Together, the Rujigou and Gulaben coalfields contain reserve prospects of almost one billion tons. The quality of this coal ranges from above-average bituminous coal to relatively high-grade anthracite. ITC is currently studying uncontrolled coal fires at the three mining areas in the Rujigou coalfield (International Institute for Geo-Information Science and Earth Observation n.d.), while the Sino-German Coal Fire Initiative is studying uncontrolled fires in both the Rujigou and Gulaben coalfields (Sino-German Coal Fire Project n.d.). There are at least seven state-owned in the Rujigou-Gulaben coalfields and at least forty-five artisanal mines (Kuenzer et al. 2007, 48).

* Mr. Jianbo Ma, phone interview with James Goodwin, April 12, 2008† To be more precise, the Rujigou-Gulaben coalfields actually straddle the border between Ningxia Hui Autonomous Region and Inner Mongolia (Nei Mongol) Autonomous Region, but most of the coalfields area lies within Ningxia Hui Autonomous Region (Kuenzer et al. 2007, 44).

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Figure 4: Administrative Map, China

Source: Mapsoftheworld.com 2006

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Figure 5: Distribution of Coal Fires, China

Source: Prakash 2007

Almost 5.4 square kilometers of the Rujigou-Gulaben coalfields are currently being affected by uncontrolled coal fires (Kuenzer et al. 2007, 48). While most of the uncontrolled coal fires in the Rujigou-Gulaben coalfields are of recent origin, some have been burning for centuries. For example, one of the uncontrolled coal fires at the Baijigou coal mine has been burning since the mid 1880s (Telegraph.co.uk 2002). The Chinese government has also had some success in putting out coal fires in Ningxia Hui. As already noted, a reportedly 180-year old coal fire at the Rujigou coal mining area was extinguished in 2007 (United Press International 2007). Because of the area’s higher quality coal, the most likely cause of most of these fires is probably direct ignition through careless coal mining practices rather than spontaneous combustion.

The Xinjiang Uygur Coal Fires

As indicated above, Xinjiang Uygur is perhaps the hardest hit area in China’s coal mining belt. According to one estimate, twenty-four of the region’s eighty-eight coal production zones (twenty-seven percent) contain at least one uncontrolled coal fire (Meyer 2005). The Sino-German Coal Fire Initiative is currently studying two uncontrolled coal fires in Xinjiang Uygur: one at the Ke-er Jian coalfield and one at the Tielieke coalfield (Sino-German Coal Fire Initiative, Study Area). Many of the largest uncontrolled coal fires in Xinjiang Uygur are located around the capital city of Urumqi. Among the most notable uncontrolled coal fires in this area are those located in the Liu Huangou coalfield (Wingfield-Hayes 2000). Some of the underground fires there have been burning for decades (Stracher and Taylor 2004). Officials estimate that

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extinguishing these fires could take as long as four years and cost at least $10 million. Another notable uncontrolled coal fire near Urumqi was reported to be over a century old when it was put out in 2003 (Meyer 2005).

The Inner Mongolia Coal Fires

Perhaps the most well known of the uncontrolled coal fires in Inner Mongolia are those in the Wuda coalfield. The Wuda coalfield has a number of uncontrolled coal fires, some of which are at least four decades old (Kuenzer et al. 2007, 44; Meyer 2005). The Wuda coalfield actually comprises three adjacent coalfields: the Wukushan in the South; the Huangbaici in the East; and the Suhai-Tu in the Northwest. Overall these fields are estimated to be thirty-five square kilometers in area and contain 630 million tons of coal, of which only 27 million tons are able to be mined (Kuenzer et al. 2007, 45, 46). This mineable coal is divided between twenty-four different seams, each ranging from one to six meters thick (Kuenzer et al. 2007, 45, 46). As mentioned above, the first fires were started through spontaneous combustion of coal seams exposed by careless mining activities.

Estimating the Magnitude of the Problem: Coal Burned, Greenhouse Gases Released, Costs To Society Incurred

The second issue involves the magnitude of the problems being created by uncontrolled coal fires. This includes the amounts of coal being burned, the amounts of greenhouse gases being released, and the costs (both economic and non-economic) to society

Amount of Coal Burned

There have been attempts to estimate the amount of coal that is lost at smaller scales, such as in the case of the coal fires in Ningxia Hui. According to one estimate, Ningxia Hui loses around 300,000 tons of coal per year through uncontrolled fires (Fields 2002, A234). This estimate seems low, however, if one considers the estimates that have been made for the amount of coal that has been consumed by individual uncontrolled coal fires in that region. According to the Sino-German Coal Fire Initiative, the Gulaben coalfield alone has lost over 600,000 tons of coal (Kuenzer et al. 2007, 48). Similarly, some reports estimate that one of the fires in the Rujigou coalfield was consuming about 1 million tons of coal by itself each year when it was extinguished in 2007 (United Press International 2007).

If these numbers are correct, they would correspond to greenhouse emissions as much as 1.98 million tons for the Gulaben coalfield and 3.3 million tons for the one Rujigou coalfield fire. Similar estimates have been made for uncontrolled coal fires in Xinjiang Uygur and Inner Mongolia. The uncontrolled coal fire located in the Liu Huangou coalfield in Xinjiang Uygur is estimated to have burned millions of tons of coal over the course of its twenty- to forty-year lifetime (Wingfield-Hayes 2000). Similarly, the Sino-German Coal Fire Initiative estimates that the uncontrolled coal fires in the

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Wuda coalfield in Inner Mongolia burn approximately 200,000 tons of coal each year, a rate that has been accelerating in recent years (Kuenzer et al. 2007, 47). Over all, the Wuda coalfield fires are estimated to have burned approximately 2 million tons of coal over the course of four decades, releasing about 6.6 million tons of greenhouse gases. Dangers associated with the coal fires and resulting subsidence have rendered an even larger amount of coal inaccessible to mining operations (Kuenzer et al. 2007, 47-48).

Estimating Greenhouse Gas Emissions from Uncontrolled Coal Fires in China

As noted above, the 2 million tons burned at Wuda over four decades has translated into 6.6 million tons of greenhouse gases (carbon dioxide equivalent) being released into the atmosphere. Uncontrolled coal fires generally release two kinds of greenhouse gases: carbon dioxide and methane (Kuenzer et al. 2007, 44). By concentration, carbon dioxide is the most prevalent gas released from uncontrolled coal fires (Stracher and Taylor 2004). The amount of carbon dioxide released from an uncontrolled coal fire is not constant over the course of the fire’s lifetime7, and the amount and concentrations of carbon dioxide emitted can vary considerably from one coal fire to the next due to a number of anthropogenic and geological factors (Kuenzer et al. 2007, 55; Stracher and Taylor 2004).

The release of carbon dioxide and methane from uncontrolled coal fires presents a major environmental problem since these are greenhouse gases. By increasing atmospheric concentrations of greenhouse gases, uncontrolled coal fires are a significant contributor to anthropogenic global climate change. Given their scope and magnitude, China’s uncontrolled coal fires are especially significant in this regard. According to one commonly cited estimate, China’s uncontrolled coal fires account for between two and three percent of the world’s carbon dioxide emissions (Stracher and Taylor 2004). If, however, one assumes the amount of coal being burned in China’s uncontrolled coal fires is towards the lower range of available estimates (i.e. 10-20 million tons of coal per year), then carbon dioxide emissions from China’s uncontrolled coal fires would only amount to around 0.1 percent of the total global carbon dioxide emissions (Kuenzer et al. 2007, 52).

Whatever the case, the carbon dioxide emissions from China’s uncontrolled coal fires are not included in the estimates for China’s annual emissions of greenhouse gases (Stracher and Taylor 2004), which are probably now the largest of any nation on earth (Hilsum 2007). New data from the Chinese government and from the IEA indicates that China either already surpassed the United States in 2007 or will surpass it some time in 2008 for total greenhouse gas emissions (Collier 2007). Scientists attribute the dramatic increase in China’s annual greenhouse gas emissions over the past couple of decades to its rapid economic growth and its large population. Owing to China’s economic and demographic factors and its reliance on dirtier burning coal for so much of its energy needs, some researchers see a real opportunity with coal fire abatement to realize some reductions in greenhouse gas emissions. According to Prof. Li Jing, a Chinese scientist

7 Mr. Alfred Whitehouse (Director, International Programs, U.S. Department of the Interior, Office of Surface Mining) and Ms. Sarah Evans (Foreign Affairs Officer, U.S. Department of State, Office of Global Change), phone interview with James Goodwin, March 26, 2008.

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who participated in the Sino-German project, extinguishing coal fires offers an ideal opportunity for reducing China’s greenhouse gas emissions, particularly compared to other policy options like increased energy efficiency (Hilsum 2007).

Estimating Economic and Non-Economic Impacts of China’s Coal Fires

China’s uncontrolled coal fire problem produces obvious adverse economic effects in addition to the public health and environmental ones. According to some estimates, the burning of coal costs China between $125 and $200 million in direct economic losses per year (Prakash 2007; Stracher and Taylor 2004). Much of the economic costs from uncontrolled coal fires are the direct losses that result from the destruction of coal, a valuable resource that China relies on for energy and economic growth (see Kuenzer et al. 2007, 43-44).

Many of the economic costs associated with uncontrolled coal fires arise more indirectly. One major indirect source of economic losses is the phenomenon of acid rain. As with carbon dioxide, uncontrolled coal fires are among China’s largest emitters of sulfur dioxide and various nitrogen oxide gases. As such, these coal fires may be a major contributor to acid rain, which has become a large problem throughout China (Stracher and Taylor 2004). Among other negative impacts, acid rain has been associated with the deterioration of building exteriors in China’s vast urban centers as well as with lowered agricultural productivity, arising from acid-related damage to soil and plants (Nelson and Chen 2007, 32).

There are also significant non-economic negative effects, particularly as relates to public health and environmental pollution. As discussed below, the air pollution generated by China’s uncontrolled coal fires has detrimental consequences for the health of China’s citizens. These health impacts result in lowered productivity rates and higher levels of employee absenteeism, which in turn produces more adverse economic consequences (Stracher and Taylor 2004).

Chinese Government Policy Toward Extinguishing Uncontrolled Coal Fires

The Chinese government has been engaged with the issue of uncontrolled coal fires for at least the last fifty years, albeit it in a disjointed way lacking a comprehensive focus. Beginning in 1954, then-Chinese Premier Zhou Enlai directed state organizations to extinguish coal fires throughout the country (Gielisch 2007, 200). Overall, however, the Chinese government never adopted a consistent or comprehensive policy for addressing uncontrolled coal fires during much of this period. According to the ITC, fewer than 10 percent of China’s active uncontrolled coal fires are currently being fought (Meyer 2005). Recently though, there are indications that the Chinese government has come to recognize the various negative environmental and non-environmental (including economic) consequences of allowing its uncontrolled coal fires to continue to burn. As a result, the Chinese government has made some concerted efforts to extinguish these fires, as discussed below.

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In some cases, these efforts are part of China’s strategy to protect its valuable coal resources upon which it relies as an important energy source (Kuenzer et al. 2007, 43-44, 54). In other cases, Chinese efforts to extinguish uncontrolled coal fires are directly attributable to growing pressure from the international community for China to reduce its greenhouse gas emissions (see Hilsum 2007).

China does seem to be making progress in extinguishing some of its coal fires. Chinese newspapers report that that the Chinese national government has undertaken a major initiative with the regional government to extinguish uncontrolled coal fires in Xinjiang Uygur. Through this joint effort, the national government has agreed to put out eight major fires in the region by 2012, while the regional government would finance the extinguishing of twenty-seven smaller fires by 2014.*

Similarly, the Chinese government is starting to pursue a policy of extinguishing some of the uncontrolled coal fires in Ningxia Hui. According to the Sino-German Coal Fire Initiative, the Rujigou coalfield in that region has experienced at least twenty uncontrolled coal fires in the last few decades, fifteen of which were extinguished in the last five years (Kuenzer et al. 2007, 48), although in fact China has been actively fighting fires in this region since 1978 (Kuenzer et al. 2007, 54). Undoubtedly, though, much of the motivation to extinguish these fires is that the coal being consumed is the highly valuable anthracite coal, rather than any concern for public health or environmental problems (Kuenzer et al. 2007, 54) or worries over climate-altering greenhouse gas emissions. On balance, China’s efforts to put out uncontrolled coal fires in the Rujigou coalfield have been largely successful. Most of the fires in this coalfield have either been extinguished or are being brought under control (Kuenzer et al. 2007, 54).

Lastly, Chinese newspaper reports indicate that China’s national government is also undertaking extensive efforts to address the uncontrolled coal fires in the Wuda coalfields in Inner Mongolia. Specifically, the national government has pledged to spend around 20 million yuan, or approximately $2.86 million to fight coal fires in the region.†

Despite all the money that the national government and regional governments are spending on these efforts, many are concerned that the funding is still insufficient to eliminate all of China’s uncontrolled coal fires. In an interview with a Chinese newspaper, the Director of the Firefighting Division of Wuda Mineral Company, a state-owned mining company in Inner Mongolia, said that budgetary limitations remain the biggest impediment to fighting China’s uncontrolled coal fires.‡

Furthermore, with poor regulation of mining practices and inadequate safety conditions in China’s thousands of remaining artisanal mines, it seems unlikely that China will have much success in preventing the outbreak of future uncontrolled coal fires.

* Mr. Jianbo Ma, phone interview with James Goodwin, April 12, 2008† Mr. Jianbo Ma, phone interview with James Goodwin, April 12, 2008.‡ Mr. Jianbo Ma, phone interview with James Goodwin, April 12, 2008.

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These artisanal mines often employ poor mining and reclamation practices, which can lead to the ignition of new coal fires (Hilsum 2007; Kuenzer et al. 2007, 48). Similarly, even when China is successful in extinguishing an uncontrolled coal fire, the illegal and unregulated activities at an artisanal mine that can easily cause the still smoldering fire to reignite (see Hilsum 2007). This undermines those rare instances of success, of which there have been some. One notable success occurred, in 2007 when Chinese officials reported extinguishing a 180-year-old coal in Rujigou coalfield in Ningxia Hui (United Press International 2007). So far, this fire has remained out. Unfortunately, however, the reverse also occurs— re-ignition of an uncontrolled fire that had been extinguished (or was believed to be extinguished). One common scenario for ignition is when illegal mining operations begin at a small rudimentary artisanal mine where a coal fire had been extinguished. This occurred at the site of a coal fire that had been extinguished in 2004 in the Liu Huangou coalfield in Xinjiang Uygur, where firefighters had spent four years putting out a fire that had burned an estimated 1.8 million tons of coal each year. Local officials believe that a small artisanal mine began operating on the site after the fire was extinguished and then accidentally reignited through careless mining practices (Hilsum 2007).

The lack of regulatory oversight in areas in which uncontrolled coal fires have been extinguished or are in the process of being extinguished has already been discussed above. To illustrate this lack of oversight, a number of Chinese newspapers have reported that local peasant farmers are beginning to disguise themselves as firefighters in order to obtain access to firefighting sites so that they can steal exposed coal.* These extreme examples demonstrate how easy it is for unregulated miners to access these sites, thereby increasing the chances that they might accidentally reignite the recently extinguished uncontrolled coal fire.

CDM Coal Fire Abatement Projects in China: Could It Work?

As the above discussion indicates, it appears that the Chinese central government is beginning to take the issue of fighting uncontrolled coal fires more seriously, as evidenced by the collaborative efforts it is undertaking with the relevant regional and local governments to fight such fires in those three regions where they are especially pervasive and deleterious. Furthermore, the Chinese government is actively involved in a number of CDM projects.

The question to which this chapter has been building is whether it is possible to unite these two approaches in the form of a CDM (or post-Kyoto Protocol CDM-like) coal fire abatement project in China to offset carbon emissions. Given the emissions and credits that would be involved, such a project has the potential to be quite lucrative.

Additionality and Permanence Issues

However, the very fact that the government is taking such an initiative to extinguish more of these fires, ironically, creates an additionality problem. That is, given

* Mr. Jianbo Ma, phone interview with James Goodwin, April 12, 2008.

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these efforts, it is possible that carbon offsets projects designed to put out uncontrolled coal fires in China might not meet the requirement of additionality, since one could argue that many of these fires would be put out even in the absence of these carbon offsets projects. However, the argument that these carbon offsets projects would not meet the requirement of additionality seems weak when one considers all of the available evidence. On the one hand, the sheer number of uncontrolled coal fires in China, the economic loss, the public health and environmental effects, and the massive amounts of greenhouse gases they emit are all serious issues that go beyond an abstract argument of additionality. On the other hand, the high costs and logistical difficulty involved in extinguishing them suggest that China will not be able to address all of the fires within its borders, thereby allowing many of these fires to continue burning for many years or even decades until they extinguish themselves.

Moreover, the evidence is not clear that China’s efforts are even part of a comprehensive effort to extinguish all of the coal fires. Rather, the efforts might simply reflect an effort by China to preserve its most valuable kinds of coal resources. This would actually leave many of the uncontrolled coal fires to burn unabated. As such, carbon offsets projects designed to extinguish many of China’s coal fires would likely meet the additionality requirement in most cases, since it seems that many of these fires would not be extinguished but for the implementation of the project.

The question of whether these carbon offsets projects would meet the requirement of permanence is a little more problematic, however. China’s policies towards uncontrolled coal fires seems limited to putting out a few of these fires, but there appear to be no policies in place to prevent these fires from being reignited by illegal or small-scale mining operations. As such, there is little guarantee that a carbon offsets project designed to extinguish an uncontrolled coal fire would result in permanent or long-lasting emissions reductions, since the extinguished fire might be reignited soon after the project’s completion. Indeed, this permanence question raises the same monitoring concerns that are being addressed for projects designed to achieve emissions reductions through avoided reforestation in places like Brazil and Indonesia. Without a better system of monitoring in place to ensure that extinguished coal fires remain extinguished, there may be sufficient concerns regarding permanence to jeopardize any attempts at having projects designed to extinguish these coal fires approved as a carbon offsets mechanism, either for the CDM or for the voluntary markets in the United States.

A Coal Fire Abatement Project Case Study: Determining CDM Viability

One notable effort was conducted by the Deutsche Montan Technologie GmbH (DMT) using as a case study an uncontrolled coal fire in Xinjiang Uygur in order to determine the viability of using the Kyoto Protocol’s CDM program to finance coal fire extinguishing projects in China (Bandelow, Gielisch, and Schulz 2006, 56). In its case study, the DMT estimated that the uncontrolled coal fire it was investigating emitted approximately 420,000 tons of carbon dioxide each year. Furthermore, the DMT estimated that this uncontrolled coal fire would continue to burn with the same intensity for ten years, yielding a lifetime emission of approximately 4 million tons of carbon

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dioxide for that coal fire. Finally, the DMT estimated that extinguishing the fire would cost about the equivalent of 4 million euros. Thus, the DMT concluded that the project could produce carbon offsets that cost approximately 0.95 euros per ton of carbon dioxide avoided, not including the additional upfront costs required to have the project accredited for the CDM program.

At the time that the DMT had conducted this analysis, CDM credits cost approximately seven or eight euros in the European Union Emissions Trading Scheme. Consequently, the DMT concluded that CDM projects involving the extinguishing of uncontrolled coal fires in China had the potential to be quite profitable (Bandelow, Gielisch, and Schulz 2006, 57). In particular, the DMT observed that there was a sufficient gap in the costs to allow for significant cost variations across coal fire projects that might result of changed economic and geologic conditions.

Other cost analyses have produced conclusions similar to that of the DMT analysis. For example, one Chinese newspaper article from 2004 cited a report that indicated that CDM credits generated through the extinguishing of uncontrolled coal fires in China would cost between $0.70 and $2 per ton of avoided carbon dioxide.*

Conclusions and Recommendations:

There is certainly no shortage of potential coal fires in China that foreign investment could play a role in extinguishing. By one estimate, fewer than 10 percent of China’s active uncontrolled coal fires are currently being fought (Meyer 2005). Limited information about specific uncontrolled coal fires in China makes it exceedingly difficult to identify mines that are particularly well suited for such foreign investment, however. In addition, there is the problem of knowing how much coal is being burned and hence how much greenhouse gases are being emitted. Then there are the technical and logistical difficulties of fighting sometimes remote coal fires. Finally, there is the bureaucratic labyrinth that envelops the whole CDM process, both with the CDM Executive Board and the Chinese government. Nevertheless, a number of factors do suggest that China’s uncontrolled coal fires offer an excellent opportunity for investments in carbon offsets projects.

As discussed above, China seems to offer a favorable investment environment for the development of carbon offsets projects. China has been relatively active in the CDM program established under the Kyoto Protocol. Moreover, China is currently ranked second behind only India in the CDM investment climate index for Asia (Bandelow, Gielisch, and Schulz 2006, 58). To be sure, there are a number of burdens that foreign investors must overcome in order to obtain approval of a proposed CDM project by the Chinese government. As described above, these burdens have been substantial enough to discourage foreign investors from pursuing such projects in China. Nevertheless, the rapid increase in CDM projects initiated in China in the last few years suggests that these burdens are not insurmountable.

* Mr. Jianbo Ma, phone interview with James Goodwin, April 12, 2008.

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In light of the two factors described above—cost effectiveness and the favorability of China for developing CDM projects—it would seem that extinguishing coal fires in China offers potential as a project for developing carbon dioxide offsets. To confirm this potential, however, further inquiry is necessary. In particular, it will be necessary to identify a few active uncontrolled coal fires in China. These fires need to be studied in order to determine the amount of coal they each now burn, the amount of coal they will burn over their lifetime, and the probable cost of putting the fire out. Making these determinations with the requisite accuracy may be beyond the capacity of current scientific knowledge and methods. Accordingly, it seems that this knowledge and these methods will also need to be further refined before a project to generate carbon offsets through the extinguishing of uncontrolled coal fires in China can be successfully undertaken. It seems that pilot projects would provide ideal vehicles for undertaking such studies.

These considerations of practicality are not the only relevant factors, however. In addition, to be potentially feasible, a proposed carbon offsets project must also meet the relevant requirements in order to be approved as a recognized mechanism under either the CDM or the voluntary offsets market in the United States. As discussed above, despite China’s policies to extinguish uncontrolled coal fires within its borders, the evidence suggests that carbon offsets projects to address these fires would likely meet the requirement of additionality. Specifically, both the large number of these fires and the apparently limited nature of China’s policies towards these fires suggest that many of them will continue to burn unabated for years or even decades in the absence of a carbon offsets project.

The requirement of permanence might be more difficult to meet, since China has not proven itself adept at preventing extinguished fires from being reignited by the careless mining practices of the illegal or small-scale mining operations within its borders. As with the proposed afforestation methodologies, China will need to demonstrate that it is capable of monitoring the sites of extinguished uncontrolled coal fires to ensure that the fires are not reignited. If this concerned is adequately addressed, and if the results of the studies described above prove favorable, then the extinction of uncontrolled coal fires in China, and elsewhere, might emerge as a valuable carbon offset project for both the CDM and the U.S. voluntary market.

Recommendations:

The existence of many uncontrolled coal fires in China and the urgency of extinguishing them should be included by United States and other international negotiators as important topics in future discussions of Chinese actions to address world problems of greenhouse gas emissions and climate change.

The Chinese government should be encouraged to establish transparent and workable procedures by which CDM credits for extinguishing uncontrolled coal fires can be established and certified within China.

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The Chinese government should be encouraged to allow easier and greater participation of foreign private companies and other foreign organizations in projects to put out coal mine fires in China and to sell the resulting carbon credits.

Steps should be taken to compile a complete inventory of the current uncontrolled coal fires in China. This may help to address any potential permanence and additionality concerns for future carbon credit projects designed to extinguish coal fires in China.

Additional research and other studies should be undertaken to further refine cost estimates for extinguishing coal fires in China.

One or more uncontrolled coal fires in China should be chosen as demonstration projects to evaluate the feasibility of using the extinguishing of such coal fires to generate cost-effective carbon offset credits.

References

Ball, Allison, Allan Hansard, Robert Curtotti, and Karen Schneider. 2003. China’s changing coal industry: Implications and outlook. Working Paper 03.3, Australian Bureau of Agricultural and Resource Economics.

Bandelow, Friedrich-Karl, Hartwig Gielisch, and Jörg Schulz. 2007. CER-trading as a means of funding coal fire fighting in China. In Ecological Research for Sustaining the Environment in China (ERSEC) Ecological Book Series, Vol. 4 on Coal Fire Research, 51-61. Beijing, P.R. China: United Nations Educational, Scientific, and Cultural Organization.

Cao, Daiyong, Xinjie Fan, Haiyan Guan, Chacha Wu, Xiaolei Shi, Yuerong Jia. 2007. Geological models of spontaneous combustioino in Wuda coalfield, Inner Mongolia, China. In Stracher 2007, 23-30.

Collier, Robert. 2007. A warming world: China about to pass U.S. as world’s top generator of greenhouse gases. San Francisco Chronicle, March 5. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/03/05/MNG18OFHF21.DTL.

Discover. 1999. China’s on fire: Underground fires in China burn millions of tons of coal

a year and release carbon dioxide into the atmosphere. October 1. http://discovermagazine.com/1999/oct/chinasonfire1697

Fields, Scott. 2002. Underground fires surface. Environmental health perspectives. 110 (5): A234.

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Finkelman, Robert B. 2007. Health impacts of coal: Facts and fallacies. Ambio 36: 103-106

Gielisch, Hartwig. 2007. Detecting concealed coal fires. In Stracher 2007, 199-210.

Gunson, A.J. and Yue Jian. 2001. Artisanal mining in The People’s Republic of China. Working Paper 74, Mining, Minerals and Sustainable Development Project, International Institute for Environment and Development.

Hilsum, Lindsey. 2007. Coal fires threaten the globe. Channel 4 News, November 29. http://www.channel4.com/news/articles/society/environment/coal+fires+threaten+the+globe/1116652.

International Institute for Geo-Information Science and Earth Observation. n.d. Ningxia Project - The DGIS-MILIEV Coal Fire Project: Test Area, http://www.itc.nl/~coalfire/activities/ningxia.html#testarea.

Investor’s Business Daily. 2006. Coals of fire. December 19. http://www.investors.com/editorial/editorialcontent.asp?secid=1501&status=article&id=251337675703461.

Krajick, Kevin. 2005. Fire in the hole. Smithsonian 36(2): 52-61.

Kuenzer, Claudia, Jianzhong Zhang, Anke Tetzlaff, Paul van Dijk, Stefan Voigt, Harald Mehl, and Wolfgang Wagner. 2007. Uncontrolled coal fires and their environmental impacts: Investigating two arid mining regions in north-central China. Applied Geography 27: 42-62.

Meyer, Mike. 2005. Flaming dragon. Smithsonian 36(2): 58.

National Development and Reform Commission. 2007. China’s National Climate Change Programme. Beijing, P.R. China. http://en.ndrc.gov.cn/newsrelease/P020070604561191006823.pdf.

Nelson, Mark I. and Xiao Dong Chen. 2007. Surveys of experimental work on self-heating and spontaneous combustion of coal. In Stracher 2007, 31-83.

Office of National Coordination Committee on Climate Change. 2005. Measures for operation and management of Clean Development Mechanism projects in China. Beijing, P.R. China. http://cdm.ccchina.gov.cn/english/NewsInfo.asp?NewsId=905.

Prakash, Anupma. 2007. Coal Fire, Geophysical Institute, University of Alaska-Fairbanks, http://www.gi.alaska.edu/~prakash/coalfires/coalfires.html.

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Revkin, Andrew C. 2002. Sunken fires menace land and climate. New York Times, January 15. http://query.nytimes.com/gst/fullpage.html?res=9902E2DF1538F936A25752C0A9649C8B63.

Sino-German Coal Fire Project. n.d. Study Area, http://www.coalfire.caf.dlr.de/projectareas/project_area_en.html.

Stangeland, Aage and Frederic Hauge. 2007. Coal fires in China. Oslo, Norway: The Bellona Foundation.

Stracher, Glenn B. 2002. Coal fires: A burning global recipe for catastrophe. Geotimes, February. http://www.geotimes.org/oct02/geophen.html.

Stracher, Glenn B., ed. 2007. Geology of coal fires: Case studies from around the world (Reviews in Engineering Geology, vol. XVIII). Boulder, CO: Geological Society of America.

Stracher, Glenn B. and Tammy P. Taylor. 2004. Coal fires burning out of control around the world: Thermodynamic recipe for environmental catastrophe. International J. of Coal Geology 59: 7-17.

Telegraph.co.uk. 2002. How China’s scramble for “black gold” is causing a green disaster. January 2. http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2002/02/01/wcoal01.xml.

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United Nations Clean Development Mechanism. 2008b. Project Search, http://cdm.unfccc.int/Projects/projsearch.html.

United Press International. 2007. 180-year-old fire extinguished. International Fire Fighting News, September 30. http://firefightingnews.com/article-WO.cfm?articleID=38639.

Wingfield-Hayes, Rupert. 2000. China battles coal fires. BBC News, August 3. http://news.bbc.co.uk/2/hi/asia-pacific/864588.stm.

Xianli, Zhu and Pan Jiahua. 2006. China’s CDM policies and their development implications: Major concerns for CDM implementation. Chinese J. of Population, Resources and Environment 4(2): 3-27. http://www.cjpre.cn/uploads/070118_ZHU%20Xianli_1_.pdf.

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CHAPTER 8 – INDONESIA AND COAL FIRES

Coal fires in Indonesia are closely linked to a chronic problem of forest fires in the past quarter century as increasing human pressures on the land have lead to rapid deforestation through the use of fires to clear jungle cover. Small scale forest fires have had a history of getting out of control under severe drought conditions. Coal fires are both a subset of this wider set of fires and are intimately bound up with them. In order to understand why and how the coal fire issue is related to the larger forest fire issue, it is helpful to consider a set of issues relating to population, geography, land use pressures, and climate in Indonesia.

Geography, Population, and Land Use Pressures Contribute to the Forest Fire Problem

Despite its vast size as a sprawling archipelago containing approximately 1.92 million square kilometers and consisting of 17,508 islands (approximately 6,000 of which are inhabited), land use is at a premium in Indonesia. This is because Indonesia currently has a population of 237.5 million, making it the fourth most populous nation in the world, as well as the largest Muslim country on the planet. The five main islands are Sumatra, Java, Borneo, Sulawesi, and Papua. The islands of Borneo and Papua are shared with other nations; Malaysia and Brunei on Borneo, and Papua New Guinea on Papua. Indonesians refer to the island of Borneo as Kalimantan, which is the name of the Indonesian state on the island (Whitehouse and Mulyana 2004, 2).

As of 2007, only eleven percent of the land was arable, and another seven percent was dedicated to permanent crops such as rubber trees and palm oil trees. While the agricultural sector accounts for a mere 12.4 % of GDP in a year, it employs 43.3 % of the population. Indonesians need land to grow crops for personal consumption, and there is a large incentive to grow plantation crops such as pulpwood, rubber and palm oil because of the ease of obtaining new land (Whitehouse 2000, 1). On islands where the majority of the land is covered by tropical rain forest, the only way to obtain farm land is to get rid of the forest.

Land clearing by burning is the most popular method of removing forest cover in Indonesia (Villarosa and Witteman 2001, 5). Fire reduces plant cover quickly, at a very low personal cost to the fire setter, and the burnt matter left behind can fertilize poor soil (Whitehouse 2000, 1). It has been estimated by the United States State Department that clear burning the forest costs two to four times less than the next best alternative, not taking into account the costs of externalities (Villarosa and Witteman 2001, 5). The difficulty is that forest fires started by untrained professionals can quickly get out of control.

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Natural forest fires

Natural forest fires are rare in Indonesia. For a natural forest fire to occur there needs to be ample vegetation for fuel, the proper wind and weather conditions, and an ignition source. It is believed that less than one percent of the forest fires in Indonesia are natural, because the forest ecosystem rarely piles up enough vegetation to burn, and there are few natural ignition sources. The evidence indicates that almost every forest fire in Indonesia has been deliberately set by an individual citizen (Villarosa and Witteman 2001, 2). While it is illegal to set some types of fires, there is little to no government enforcement of these laws (Villarosa and Witteman 2001, 7). Of 263 coal fires inventoried in Indonesia, all of them could be traced back to human-made fires (Whitehouse and Mulyana 2004, 3).

ENSO Climate Variations and Fire

There have also been climate variations in the past twenty-five years involving the El Nino – Southern Oscillation (ENSO) phenomenon that have resulted in periods of prolonged drought that have greatly exacerbated fires. The worst fire years have been 1982/83, 1987, 1991, 1994, and 1997/98; twenty-six of the last twenty-eight drought periods since 1877 have been associated with warm ENSO events (Whitehouse 2000, 1). A warm ENSO (El Nino Southern Oscillation) event refers to a particular alteration to Pacific Ocean water temperatures and to interlinked atmospheric pressure pattern changes that tend to bring drought to Indonesia.

With all of these factors in mind, the issue of coal mining, coal usage, and coal fires can be explored since, as noted above, coal fires are closely linked to the larger issue of forest fires. The next section provides an overview of coal production, consumption, and export statistics for Indonesia.

Coal Statistics for Indonesia: An Overview

With 4,968 million metric tons (MMT) of proven reserves, Indonesia ranks a distant fourth behind China (114,500 MMT), India (92,400 MMT), and Australia (78,500 MMT) in terms of coal reserves in the Asia-Pacific region (Energy Information Administration 2007; World Coal Institute n.d.). About ninety percent of Indonesia’s coal reserves are concentrated on the islands of Borneo and Sumatra, where the coal lies beneath tropical forest (Whitehouse 2000, 2).

In 2005 it is estimated that 152.2 MMT were extracted, making Indonesia the seventh ranked coal producing nation in the world. Although its reserves are relatively modest compared to some of its Asia-Pacific regional neighbors, Indonesia is a big exporter of coal, exporting 107.3 MMT in 2005, or nearly three quarters of the coal it extracted that year and 21 percent of global coal exports. Of this 107.3 MMT, about 89 MMT was steam coal and 18MMT was coking coal, ranking Indonesia second among steam coal exporting nations and fourth among coking coal exporting nation in the world (World Coal Institute n.d.).

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In terms of domestic consumption, coal is not the dominant source of energy. Based on 2004 primary energy consumption statistics, coal ranked fourth at 13 percent behind natural gas (19 percent), combustibles/renewable/waste (27 percent), and crude oil (31 percent). Overall in 2005, only 27 percent (41.3 MMT) of the coal extracted was consumed domestically, with 75 percent (31 MMT) going toward electricity production and 25 percent (10.3 MMT) used by industry. The industry portion was divided roughly evenly between non-metallic minerals (5.6 MMT) and paper, pulp, and print activities (4.3 MMT), and the rest (0.2 MMT) for iron and steel.

Coal Mining and Coal Mines in Indonesia

The Indonesian government owns the mineral rights to coal and gives out concessions to coal companies to mine it. Companies can buy Coal Contract to Work (CCOWs) permits that allow them to explore for coal and mine in a particular geographic area. There is one state-run coal mining company, and six other CCOWs produce the bulk of the rest, followed by an assortment of smaller CCOWs. The remaining companies are wholly private firms or cooperatives.

The main government-owned coal mining company is known as PT Tambang Batubara Bukit Asam Tbk (PTBA) and in 2004, the last year for which statistics were available on the Web site of the U.S. Embassy in Jakarta, Indonesia, it produced 8.7 MMT or about 6.6 percent of the total coal produced in Indonesia that year. This actually represented a drop from 10.0 MMT or 8.8 percent of the total produced the prior year in 2003 (U.S. Embassy, Jakarta, Indonesia, 2004). In 1999, PTBA produced 11.2 MMT or 15.2 percent of the country’s total coal production for that year (U.S. Embassy, Jakarta, Indonesia, 2001).

The six main CCOWs are Adaro Indonesia, Kaltim Prima Coal, Kideco Jaya Agung, Arutmin Indonesia, PT Berau Coal, and Indominco Mandiri. In 2004, they produced a combined total of 93.1 MMT or just over 70 percent of the 132.4 MMT produced that year with Adaro and Kaltim producing 24.3 MMT and 21.3 MMT, respectively (U.S. Embassy, Jakarta, Indonesia, 2004). The share produced by these six companies of the country’s total has inched up each year from 67 percent in 1999 while PTBA’s share has gone down. The remaining coal production is from an array of smaller CCOWs and from local cooperatives.

Of the seven main coal mining companies (PTBA and the six main CCOWs), three operate mines exclusively in East Kalimantan (World Coal Institute n.d.). Many of the mining operations take place in the East Kalimantan province. Kaltim Prima Coal Company operates mines around Sangatta, the capital city of the East Kutai Regency. Some of their mining operations are contracted out to other, smaller firms (Kaltim Prima Coal 2008). The P.T. Berau Coal Company is a joint venture between P.T. Armadian Tritunggal, an Indonesian company, Dan Rognar Holding B., a Dutch company, and Sojitz Corp., a Japanese company. In 1983 the venture was awarded the exclusive rights to mine in East Kalimantan, specifically in Lati, Binungan and Samburatan.

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Mining companies also provide an important source of infrastructure investment, because the companies build roads, schools, and hospitals in the remote areas in which they operate. This is especially true in the state of Kalimantan.

Coal companies such as PTBA and the various CCOWs do not attempt to extinguish fires on their concessions because the costs do not outweigh the benefits. This issue of who would put out coal fires will play into the additionality problem for any proposed carbon credit sales related to coal fire abatement through a Clean Development Mechanism (CDM) or CMD-like project in Indonesia. It would probably require the involvement of outside parties to put out coal fires in Indonesia.

Coal Fires and Forest Fires in Indonesia

A Vicious Cycle

In the tropical jungles of Indonesia there is a vicious cycle of fire involving humans, the forest, and exposed coal seams. Though the cycle is initiated by humans, once started, the cycle can be self-sustaining between forest and coal seams even without human intervention. The cycle is initiated when humans set forest fires either to clear land for agricultural or other purposes or when trash heaps are ignited. Such fires can quickly spread beyond what was intended to clear a plot of land or as a result of a burning trash heap, setting a much larger area of forest ablaze.

Such forest fires can then ignite exposed outcrops of coal. Once initiated, these coal outcrops can burn for decades if they are part of larger coal seams. They can burn until all the coal is burned up, the fire runs out of oxygen, or it is put out through human intervention (Whitehouse 2000 1). While monsoon rains can put out forest fires, they cannot extinguish coal fires (Whitehouse and Mulyana 2004, 2). The cycle goes full circle when fire moves through the coal seam, re-igniting forest fires, starting the cycle over again even in the absence of any subsequent human intervention beyond setting the original forest or trash heap fire.

Because of their origins, coal fires in Indonesia are generally in the form of burning coal seams on the surface, not underground mine fires such as those often found in India, China, and parts of the United States. Instead, in Indonesia they are exposed outcroppings of coal seams that can ignite during a forest fire.

Estimating the Number of Coal Fires in Indonesia

In one sense, coal fires are not a new problem for Indonesia; some of the fires have been burning at least since 1982. (Whitehouse 2000, 1) However, many of the fires are burning underneath the tropical forest, which makes it difficult to assess how many fires in total are actually burning. When the fires are deep in the jungle, they are often not seen by humans. Since most of the forest is uninhabited and only fires that threaten roads, homes, or public buildings are usually noticed, those fires burning away from

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towns are not catalogued. (Whitehouse and Mulyana 2004, 3) There are remote sensing techniques, but until recently, the thick canopy made aerial and satellite mapping difficult.

There have been 263 coal fires investigated in Indonesia since the 1980s. East Kalimantan is a province on the island of Borneo where tropical forest covers most of the land, and there are rich coal seams. In East Kalimantan alone, 164 fires have been inventoried. Officials at the United States Office of Surface Mining in the U.S. Department of the Interior have used these known fires to build an estimated range of the number of fires burning in East Kalimantan. It is believed there could be anywhere from 760 fires if most fires are known, and 3000 possible fires, if only very few fires have been identified. (Whitehouse 2000, 3) While this is a large range, it is important to keep in mind the cycle of fire. Even one coal fire can re-ignite a forest fire, which has the possibility of starting even more coal fires.

There is difficulty in reliably estimating how many fires are burning in Indonesia. First of all, the jungles are deep, and there are not many roads through them, making detection difficult unless the fire is near a town or a road. Second, the jungle canopy makes aerial detection next to impossible.* Thirdly, if the forest is already on fire, smoke from a coal seam fire would be indiscernible from smoke due to the forest fire. As discussed in the technology section of this report, there is work being done in Germany on remote sensing techniques. However, it is not clear how the jungle canopy would interfere in any sort of heat sensing technique.

Environmental, Public Health, and Economic Harm from Indonesian Forest Fires

The remaining tropical forests of Indonesia are home to endangered species such as orangutans and sun bears. (Whitehouse and Mulyana 2004, 2) There are estimated to be 20,000 orangutans in the wild, and 15,000 are believed to live on Kalimantan. (Whitehouse and Mulyana 2004, 5) Coal fires are often associated in a “vicious circle” with at least some of the larger set of forest fires that regularly and effectively irreversibly destroy significant swaths of Indonesia’s tropical forest. Whatever the cause, these forest fires threaten these species’ already decimated habitats in the province of East Kalimantan, and coal fires only exacerbate the problem.

Coal fires are burning near Kutai National Park and Sungai Wain Nature Reserve, both important ecological reserves in East Kalimantan. Sungai Wain contains the last unburned primary forest in the Balikpapan–Samarinda region of East Kalimantan, the area most affected by forest and coal fires. However, the fires of 1997/98 burned almost 50 percent of the reserve and the forest fire ignited 76 new coal fires. These coal fires represent a great risk for re-igniting forest fires, because the primary forest becomes more susceptible to fire after each major burn. (Whitehouse 2000, 1-2)

* Mr. Alfred Whitehouse (Director, International Programs, U.S. Department of the Interior, Office of Surface Mining) interview with authors, March 11, 2008.

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The loss of forest resources and the haze from the smoke has hurt Indonesia’s economy – and the smoke has sometimes reached other nations as well. (Villarosa and Witteman 2001, 4) Some of the coal fires threaten infrastructure such as roads and schools. (Whitehouse 2000, 1) Damage to the infrastructure not only costs money to rebuild, but there are social costs as well. The U.S. State Department has estimated that the cost of burning land to make room for agriculture has cost the Indonesian economy, and the surrounding countries, billions of dollars each year, including loses due to the extreme haze. Yet these costs only take into account economic losses, they do not include the loss of biodiversity, degraded ecosystem functions, or the increase in health costs in the long term due to exposure to chemicals from the fires. (Villarosa and Witteman 2000, 4)

Forest fires have a large impact on the health of Indonesians. The cycle of fire shows that problems associated with forest fires are also associated with coal fires. The soot from forest fires contains ash and particulate matter that is harmful to human health. Coal fire fumes contain toxic substances such as CO, CH4, and H2S (Villarosa and Witteman 2001, 3), which when breathed in can cause health issues. Coal fires eat through the coal seam, causing land subsidence above. This land can then be extremely weakened, and can collapse (Whitehouse 2000, 1); there is a potential for people to be hurt if walking above the back end of a coal fire.

Government Involvement in Coal Fires

Indonesian Government

Indonesia is a fairly young country, with a new democracy. Indonesia was originally a Dutch colony, but won its independence after World War II. Indonesia had an authoritarian government for its first four decades. Indonesia has been slowly moving towards a democracy, with a popularly elected president and vice president, a legislature and a judicial system. However, the political structure has difficulties with wide corruption. Indonesia is also having difficulties managing the military and the police force; there have been accusations of human rights violations, and there is often little enforcement of the laws on the books (Villarosa and Witteman 2001, 4).

There has been an unwillingness of any government agency to assume jurisdiction over coal seam fires. It was a widely held belief that the fires would be difficult and costly to put out, and no agency wanted to be associated with failure (Whitehouse and Mulyana 2004, 3). The government is still highly centralized, and decisions are made in Jakarta, not out in the jungles where the fires are. The government is facing many other pressing issues, and coal fires are low on the priority list (Villarosa and Witteman 2001, 5-7). When coal fires were discovered that threatened homes or public buildings, the government chose to relocate people, rather than put the coal fires out (Whitehouse and Mulyana 2004, 3).

The Indonesian government is committed to reducing greenhouse gases on a world-wide basis. President Dr. H. Susilo Bambang Yudhoyono committed Indonesia to

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an interdependent approach to emissions reductions at the United Nations “Global Voice for Climate Change” event in New York in 2007. The President asserted that greenhouse gas emissions know no boundaries, and that he believed only a collective world-wide effort would be effective against climate change (Yudhoyono 2007). Indonesia was the host of the United Nations Climate Change Conference in Bali in 2007, further showing its commitment to climate change issues (United Nations Framework Convention on Climate Change 2008b).

Role of the United States Government

After the terrible forest fire season of 1997/98, the United States Government created an inter-agency working group to aid Indonesia in the aftermath of the fires. The Office of Surface Mining (OSM), in the Department of Interior, is responsible for dealing with coal mine fires in the United States, and now has a supporting role in Indonesia as well. On August 18, 1998, OSM began its “Coal Fire Project” in Indonesia. The OSM was instrumental in showing the Indonesian government that these fires were and are manageable. The OSM initiative was funded by a $1.5 million dollar grant from the United States State Department (Whitehouse 2000, 2).

The first hurdle the OSM had to overcome was that no agency in the Indonesian government wanted to take responsibility for coal fires. Eventually OSM convinced the Department of Energy and Mining Resources (DEMR) that their agency was the natural place for dealing with coal fires. The goal of OSM was to provide the DEMR with the capability to take action against coal fires in a quick and effective manner (Whitehouse and Mulyana 2004, 3). The United States provided the funding and transfer of necessary skills to put out coal fires (Whitehouse and Mulyana 2004, 4).

The project has been successful in fighting coal seam fires. Early success was vital to show the Indonesian government that coal fires were a solvable problem. The first fire the DEMR and OSM worked on together was in the East Kalimantan Province. The project was selected because the fire was highly visible to the public, and if successfully put out the project would save two homes, and the only road connecting Balikpapan, itself a major city, to Samarinda, the capital of the Province (Whitehouse and Mulyana 2004, 3). The coal fire began due to a brush fire. The project began on October 12, 1998 and was completed by November 7 of the same year (Whitehouse and Mulyana 2004, 4). In the end the Coal Fire Project helped extinguish 52 fires, 32 of which were in the Sungai Wain Reserve (Whitehouse 2000, 3).

Benefits From Putting Out Coal Fires in Indonesia

Indonesia is a prime example of the other adverse effects from these fires, and the co-benefits from putting them out. It is possible to calculate the potential emissions from coal fires in Indonesia. The Indonesian government in conjunction with the United States Office of Surface Mining has begun to inventory coal fires. This inventory has incomplete information, but attempts to include the size of the coal seam, the location of

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the fire, when it started burning, and if the fire is out or not. The Office of Surface Mining made this data available to the authors of this report.

The following calculations assume that the coal seams burn in entirety, and do not extinguish naturally due to lack of oxygen. According to the methodology suggested in Chapter 4 of this report, we are also assuming a conservative estimate of 3.30 tons of CO2 equivalent per ton of coal. It is also assumed that the coal is bituminous.

One possible way to look at the data is to examine the total amount of greenhouse gases that would be released, if all the fires were left to burn. In this calculation we took the total volume of coal that had been burning, and is currently burning, and estimated the greenhouse gas equivalent emissions. Then, since the inventory is incomplete, we assumed that the known fires are a representative sample of all the inventoried fires.

There is information for 38% of fires that have been extinguished and 37% of the fires still burning. If, hypothetically, all the fires had have been left to burn, then about 5.0 million tons of CO2 equivalents would have been released. This calculation provides a sort of upper emissions ceiling, because it assumes that the fires that have already been put out might have been left to burn, and that the fires left burning would not be extinguished.

The actual number of fires now burning is largely unknown. If the inventory of known fires perhaps represents 70 percent of fires, say, then it is possible that the current emissions ceiling could be about 7.2 million tons of CO2 equivalent. However, if the inventory only represents 1 percent of fires, which is possible, then the ceiling could be as high as 500 million tons of CO2 equivalent. Obviously, there are very large uncertainties about the extent of uncontrolled coal fires and resulting greenhouse gas emissions in the Indonesian content.

In reality, one would also need to know the burn rate of the fire to estimate emissions with any precision over given future years. In the calculations done for this report we assumed the fires burn consistently, and completely. We did not take into account the variations in emissions that arise from hotter and faster burning, or from different chemical make ups of coal seams. These numbers do provide a brief view of the potential carbon savings from a scheme to put out coal seam fires in Indonesia.

Conclusions and Recommendations:

A number of factors suggest that Indonesia would be a good candidate for a pilot program for obtaining carbon credits generated by putting out coal fires. First, the Indonesian government has already accepted jurisdiction over coal seam fires. This is important, because for a program to succeed it will need the host country’s cooperation. Having one specific government agency to work with reduces the amount of red-tape, as well as centralizes information.

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Second, Indonesia has already successfully demonstrated that there are feasible methods available for putting out coal seam fires. With the United States OSM’s help, Indonesia put out 52 fires in the past. While the Department of Energy and Mineral Resources still needs to build up its fire-fighting capabilities, the ground work has been laid. While the Coal Fire Project has been completed, the OSM still has a mission to assist Indonesia when asked, so there is an extra support system in place.

Third, although not anywhere near complete, Indonesia has inventoried fires in East Kalimantan. With improvements in detection techniques it should be possible to obtain a more complete inventory. Having an inventory of existing fires might be an important tool against future fraud. If a coal fire was started intentionally to obtain money from selling the credits, the project would not meet validation requirements set up by the CDM. Knowing what fires existed prior to the inception of the project would help to prevent such potential abuses.

The issue of additionality was raised in Chapter 6. Although the OSM has trained the Indonesian government on how to put out coal fires, once OSM left, the project lost most of its funding. Unless the coal seam fire is in immediate danger of destroying infrastructure, the Indonesian government now lets it burn. Many fires in the forest are left to burn as well. The costs are too high, so it is likely that the Indonesian government will need outside funding to put out most current coal fires.* Hence, it should not be difficult in most cases to demonstrate additionality.

Fourth, there are biodiversity co-benefits from putting out Indonesian coal fires. The majority of the fires are in the tropical rain forest. The coal fires can spark forest fires, which can create further risks for threatened or endangered species. Scientists believe that the tropical forests hold many thousands more species than we know about (U.S. Department of State, Bureau of International Information Programs n.d.). Some known Indonesian coal fires have been alarmingly close to orangutan preserves.

Fifth, Indonesia has signed the Kyoto Protocol, and has been involved in 14 CDM projects through 2008 (United Nations Framework Convention on Climate Change 2008a). There could also be a new set of CDM projects to put out coal fires. English is also widely spoken in Indonesia, which would assist any US agency or company interested in doing a coal fire mitigation project.

Cons

There are also concerns about a CDM coal fire program in Indonesia. There is a corruption problem in some Indonesia government agencies which could complicate the successful implementation of CDM projects. Indonesia has been called “law heavy, enforcement poor” (Villarosa and Witteman 2001, 4). In 2001, the United States State Department had difficulties in working with the central government of Indonesia to address the problem of forest fires. Hosting CDM projects requires that the host country

* Mr. Alfred Whitehouse (Director, International Programs Office, Office of Surface Mining), e-mail message to Elizabeth McNicol April 29, 2008.

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work closely with NGO’s and other organizations. A CDM methodology requires outside monitoring to ensure that the carbon emissions reductions are really being achieved. If the Indonesian government did not cooperate, a whole project could unwind.

Another concern is that of permanence, and whether the Indonesian government has the capabilities to enforce the forest fire laws. If a coal fire is successfully put out, and CDM credits are created, but then a private citizen sets an illegal land clearing fire that gets out of control and reignites a coal seam, who would pay to put the fire out again? Would the credits previously purchase be voided by such an act?

There is also some concern that the fires might be too deep in the forest to be accessible to fire-fighters. In some ways Indonesia represents low hanging fruit in terms of putting out coal fires. The fires are usually close to the surface, and labor costs are low, so the costs at the site to put out coal fires is typically low. However, if the fires are in remote locations, they might involve large transportation costs that would result in high overall costs of coal fire extinction.

Recommendations:

The Indonesian government should be encourage to establish transparent and workable procedures by which CDM credits for extinguishing uncontrolled coal fires can be established and certified within Indonesia.

Steps should be taken to compile a full inventory of the current uncontrolled coal fires in Indonesia. This may help to address any potential permanence and additionality concerns for future carbon credit projects designed to extinguish coal fires in Indonesia.

Additional research and other studies should be undertaken to further refine cost estimates for extinguishing coal fires in Indonesia.

One or more uncontrolled coal fires in Indonesia should be chosen as demonstration projects to evaluate the feasibility of using the extinguishing of coal fires to generate cost-effective carbon offset credits.

The United States government should offer financial assistance to the government of Indonesia for the purpose of developing and implementing a program of creating carbon credits based on extinguishing uncontrolled coal fires.

References

AsianInfo.org. 2000. Indonesia’s Geography, http://www.asianinfo.org/asianinfo/indonesia/pro-geography.htm.

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Central Intelligence Agency. 2008. The World Factbook: Indonesia, https://www.cia.gov/library/publications/the-world-factbook/geos/id.html.

Energy Information Administration. 2007. International Coal Reserves, http://www.eia.doe.gov/pub/international/iea2005/table82.xls.

Indonesia Mining Sector. n.d. NRM-Draft Report prepared by Universitas Trisakti, Jakarta, Indonesia (on file with authors).

Kaltim Prima Coal. 2008. “Home,” http://www.kaltimprimacoal.co.id/.

P.T. Berau Coal. 2007. “Home,” http://www.beraucoal.co.id/.

United Convention on Biological Diversity. 2007. Sustaining Life on Earth, http://www.cbd.int/convention/guide.shtml.

United Nations Framework Convention on Climate Change. 2008a. CDM Statistics: Registration, http://cdm.unfccc.int/Statistics/Registration/NumOfRegisteredProjByHostPartiesPieChart.html.

United Nations Framework Convention on Climate Change. 2008b. The United Nations Climate Change Conference in Bali, http://unfccc.int/meetings/cop_13/items/4049.php.

U.S. Department of State, Bureau of International Information Programs. n.d. Forests: Our Planet’s Endangered Edens. http://usinfo.state.gov/products/pubs/biodiv/forest.htm.

U.S. Embassy, Jakarta, Indonesia. 2001. Indonesia Coal Report 2001, http://jakarta.usembassy.gov/econ/coal-2001.html.

U.S. Embassy, Jakarta, Indonesia. 2004. Indonesia Coal Report 2004, http://jakarta.usembassy.gov/econ/coal/coal-2004.html.

Villarosa, S. and W.J. Witteman. 2001. Haze policy or hazy policy. Cable from U.S. Embassy in Jakarta to U.S. State Department, August 11 (on file with authors).

Whitehouse, Alfred E. 2000. Coal fire management in Indonesia. Unpublished manuscript, Office of Surface Mining/Ministry of Energy and Mineral Resources Coal Fire Project Ministry of Mines and Energy, Jakarta, Indonesia.

Whitehouse, Alfred E. and Asep A.S. Mulyana. 2004. Coal Fires in Indonesia. Unpublished manuscript, Office of Surface Mining, U.S. Department of Interior.

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World Coal Institute. n.d. Coal Info, Coal Statistics, Country Profiles: Indonesia, http://www.worldcoal.org/pages/content/index.asp?PageID=458.

Yudhoyono, H.E. Dr. Susilo Bambang. Remarks. 2007. Speech given at the General Debate Session of the 62nd UN General Assembly. http://www.indonesiamission-ny.org/NewStatements/2c092407d.htm.

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CHAPTER 9: COAL FIRES IN THE UNITED STATES

There are currently hundreds of actively burning coal mine fires in the United States covering thousands of acres, posing risks to both public health and safety as well as generating significant volumes of greenhouse gases. In the United States, the mine company’s insurance, or the Abandoned Mine Land Fund is sometimes available to pay for mine fire extinguishing. The Abandoned Mine Land Fund is authorized by the Surface Mining Control and Reclamation Act of 1977 (SMCRA) for the purpose of the restoration of mined lands that were abandoned or left inadequately restored before its enactment. The law is funded by production fees of 35 cents per ton of surface mined coal, 15 cents per ton of coal mined underground, and 10 cents per ton of lignite collected from coal producers. As of the end of fiscal 2005, the fund had received $7.4 billion in total since 1978, and a total of $5.7 billion had been distributed to the states (U.S. Office of Surface Mining 2006).

The 2006 Amendments to SMCRA extended the Interior Department’s authority to collect Abandoned Mine Land (AML) fees through 2021. It also made the majority of the funding automatically available to States and Tribes, designating almost 83 percent of AML fee collections for mandatory distribution without the past need for specific Congressional appropriation. The Office of Surface Mining (OSM) holds the remaining portion to manage emergency programs and provide health benefits to its workers (U.S. Office of Surface Mining 2007).

Yet, despite this significant funding source, the financial resources available to states are not adequate to insure the successful permanent suppression of all coal fires – expecially given the continuing high costs of monitoring and upkeep. Moreover, instead of thoroughly committing to the complete extinction of a smaller number of fires, OSM often undertakes lesser mitigating efforts on a broader basis. This leads to a number of dormant fires reigniting. As the western United States begins to mine methane as an alternative fuel, this gas is increasingly seeping through the ground and more coal fires are likely to occur in the region.*

Hence, one can not assume that, because it is a developed nation, the United States has its coal fires all under control. While the extinguishing of some coal fires is paid for by the AML Fund, the program has inventoried many other coal fires that have been left to burn (Abandoned Mine Land Program n.d.). Putting out such fires thus could meet the test of additionality.

Some U.S. coal mines also have private insurance against fires. In such case, additionality might be difficult to establish. Nevertheless, despite potential AML and private insurance sources of funds, there is a large number of remaining coal fires, both underground and on the surface, that are not likely to receive funding and could therefore potentially create carbon credits.

* Mr. Gary Colaizzi (President, Goodson & Associates, Inc.) phone interviews with Colleen Ruddick, April 15, 2008, and April 17, 2008.

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Moreover, as shown in Table 9-1, there are substantial acreages in many U.S. states where funds are not available at present to extinguish coal fires. If the necessary funds were made available, and given the estimated costs of extinguishing the fires, the resulting carbon credits could typically be generated at a cost of around $2 per ton of carbon dioxide for underground coal fires. For surface fires, the costs would be considerably less, typically less than $1 per ton. Both figures are well below the current selling price of around $6 per ton of carbon credits in U.S. voluntary markets. (Coal fire extinctions in the United States are not now eligible as CDM projects.) If a future GHG cap and trade system is established in the United States, the market price of carbon credits will probably be much higher. Hence, generating carbon credits in the United States by extinguishing coal fires appears to be economically viable and indeed quite promising.

Regional Markets

Some of the states with uncontrolled coal fires have joined regional carbon markets that are planned to begin in 2008 and 2009. However, only Utah and Illinois have signed on as full partners to the Western Climate Initiative and the Midwestern Regional Greenhouse Gas Reduction Accord, respectively. Colorado, Pennsylvania, Wyoming, Alaska, and Ohio have joined their regions’ initiatives as observers of the process, with intention to participate as the markets evolve and stabilize.

Extinguishing historic coal fires could provide an avenue for states or municipalities as entities under their agreements to offset their emissions in terms of their agreed upon cap. The Midwestern Regional Greenhouse Gas Reduction Accord has a long-term target of reducing carbon emissions 60 to 80 percent below current levels while the Western Climate Initiative has a target of reducing emissions 15 percent below 2005 levels by 2020. Regional initiatives have yet to allocate specific caps to state entities, but as they do so, the U.S. price per carbon credit will likely increase due to the increased demand for offset projects.

In order to facilitate demonstrations of additionality, when creating coal fire extinguishing projects, it would help to have a full state level inventory of fires. States could then count the fires as part of their emissions baseline when joining regional carbon trading markets, and could reduce their emissions by extinguishing them. After the delineated baseline, no new fires should be allowed to count in the inventory of available carbon credits in order to avoid the problem of moral hazard. Mining companies might be tempted not to purchase fire insurance if the costs for extinguishing coal fires would be covered by carbon credits.

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Table 9-1 – United States Costs of Carbon Credits, Extinguishing Underground and Surface Coal Fires, by State

Unfunded Underground Coal Mines

State Acres Suppression Cost ($)

Calculated Suppression Cost per Ton of CO2*

Colorado 176.50 10,750,000 $1.72

Kentucky 122.90 8,847,810 $2.00

Pennsylvania 1,278.10 595,539,499 $13.20†

Utah 326.00 20,365,071 $1.75

Virginia 50.00 4,037,500 $2.27

West Virginia 1,937.50 213,415,315 $3.09

Wyoming 296.00 1,400,000 $0.13

Unfunded Surface Coal Fires

State Acres Suppression Cost ($)

Calculated Suppression Cost per Ton of CO21

Alaska 19.00 3,000,000 $4.50

Alabama 62.50 445,125 $0.20

Illinois 7.00 99,000 $0.40

Kentucky 121.70 4,232,805 $0.98

Ohio 76.00 730,095 $0.27

Pennsylvania 54.50 5,166,202 $2.68

Utah 8.00 170,000 $0.60

Virginia 9.00 180,000 $0.56

West Virginia 79.20 3,687,536 $1.30

Wyoming 8.00 220,000 $0.78

Source: Abandoned Mine Land Program, n.d., and report author’s calculations.

*Calculation: (short tons per acre ft * 6ft * # acres * 3.3 tons CO2) / Total CostAssumptions: The average coal seam is 6 ft thick3.3 tons of CO2 per ton of coal Types of coal per state, U.S. Department of Energy, Energy Information Administration†

? Higher relative cost is likely due to the massively expensive uncontrolled Centralia, PA coal fire

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Conclusions and Recommendations:

The Abandoned Mine Land program of OSM estimates that there are more than 4,600 acres in the United States with currently burning coal fires and no immediate plans to put them out. Provision of additional funds to pay for extinguishing these fires thus might well meet the additionality requirements for new carbon credits. The costs per ton of carbon dioxide emissions averted would be less than the current and likely future prices of carbon credits in U.S. markets.

Recommendations:

The U.S. Office of Surface Mining should support the development of a methodology for creating carbon credits by extinguishing uncontrolled underground and surface coal fires in the United States. These credits could be sold at present in U.S. voluntary carbon markets and potentially in the future in U.S. markets created by the possible enactment of federal cap and trade legislation.

OSM should support efforts to have a methodology for coal fire extinction projects recognized and validated by the various carbon credit accreditation services in the United States voluntary markets.

State surface mining offices should designate specific coal fires in their states for which actions to extinguish the fires would meet the requirement of additionality and permanence in carbon trading markets.

OSM -- working with the states -- should establish a full inventory of existing coal fires in the United States for the purpose of facilitating future demonstrations of additionality and of enlisting private sector interest in putting out these fires in order to sell carbon credits.

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APPENDIX TO CHAPTER 9 -- U.S. COAL FIRE EXTINGUISHING

COMPANIES

State surface mining agencies or private mining companies commission drilling, heavy equipment, and firefighting contractors to aid in the suppression operations for coal fires. There is a small community of coal fire extinguishing contractors in the United States who assist mining companies when their initial suppression efforts have proven unsuccessful and specialized engineering attention is required. These companies provide onsite consulting as well as chemical materials they contend can suppress coal fires efficiently and cost-effectively. Three of these companies are Goodson & Associates Incorporated, USF Technologies and Services, and CAFSCO. These three have well-documented successes and have collaborated with the United States Office of Surface Mining or the National Institute of Occupational Safety and Health. Their past experiences in extinguishing coal fires provide a valuable base of knowledge for considering the potential for future generation of carbon credits through coal fire extinction.

Goodson & Associates, Inc.

Goodson & Associates, Inc. (GAI) is a consulting firm based in Wheat Ridge, Colorado that specializes in geotechnical, geologic, and environmental engineering, and mined land reclamation services. The company has been involved in coalmine fire extinguishing, ground stabilization, backfilling, mine reclamation, and other construction related problems since its inception in 1978. Their ThermoCell product is a foam injected grout compound used in the extinguishing of coal fires (Goodson & Associates, Inc. n.d.).

ThermoCell is a high-heat resistant solid compound comprised of selectively proportioned quantities of cement, ash, water and foam mixtures. The cellular cementicious material formed is environmentally safe and non-polluting. Goodson and Associates, Inc. also boast that ThermoCell is the most cost-effective fire retardant compound due to its incorporation of fly ash waste products to form a unique, thermally efficient, inert insulation material. ThermoCell is a flowable foam injected through boreholes, fractures, or vents that sets and hardens to smother or provide a fire resistant wall. The GoodCell foam generator used to disperse the ThermoCell can produce foam at up to 40 cubic feet per minute at 12 or 110 volts. It can be self-contained when installed on a truck, making for easy transport to remote regions (Goodson & Associates, Inc. n.d.).

The president of the company, Gary Colaizzi, reported that GAI is currently in discussion with the governments of India and China to evaluate extinguishing mine fires as a profit-making venture through the carbon credit market. This progress is

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confidential, but they are examining the environmental and health benefits as well as the availability of increasing access to coal resources.*

Example of a GAI Project

The US Bureau of Mines in cooperation with the Colorado Division of Minerals and Geology contracted Goodson and Associates, Inc to test the effectiveness of ThermoCell in 1995 and again in 1999 at the IHI Mine site in Haas Canyon where an abandoned mine fire had been burning for 80 years. The area has both steep terrain and a large, underground mine void, the combination of which provided a potential for surface subsidence over the active mine fire. The coal in the Grand Hogback is highly volatile bituminous B, susceptible to spontaneous combustion. Ignited by spontaneous combustion in 1916, conventional firefighting methods had not been successful in extinguishing the 900 to 1700 degree fire. The road to the canyon changes from gravel to rutted dirt, and narrows to become rocky and steep, making accessibility difficult.

Normal grout would have exploded under the temperature conditions, but the heat-resistant Thermocell compound was able to flow through steel-cased boreholes, drilled by Agapito Drilling Company. The compound was able to encapsulate the burning coal. Due to the foam’s ability to double the grout compound, only 5,200 cubic yards were needed and were pumped through 49 boreholes and two vents. The cost of the 1999 application came to $445,125. The mine was monitored for two years, and the suppression efforts were proved successful (Feiler, Colaizzi, and Carder 2000).* Note: While after two years the monitoring showed a successful operation, a 2005 Colorado survey of mines where suppression efforts have been made deemed the IHI mine active. The conditions of the mine make it highly susceptible to fire.

USF Equipment and Services

USF Equipment and Services, based in Longview, Texas, specializes in coalmine fire safety education and consulting and mine fire research and development. USF Equipment and Services’ fire extinguishing system is The Hellfighter, a nitrogen gas injected fire fighting foam. The system uses a combination of gas, foam, down shaft pressures and temperature to smother coal fires. The Hellfighter Dispensing Unit includes a foam proportioner, Mine Foam Concentrate, a nitrogen generator, an optional power generator and an optional water pump. The system can produce up to 94,000 square cubit feet per hour of 95 percent nitrogen enriched foam (USF Equipment and Services 2005).

USF Equipment and Services was a member of the Coal and Mining Expo in Beijing, China in October 2005. The China International Technology Exchange & Equipment Exhibition on Coal and Mining has been held every other year for the past twenty-two years and has become the largest coal and mining event in Asia, attracting international attention. Eighteen countries displayed their advances in the technology and equipment of coal mining and processing industries (China Coal and Mining Expo 2005).

* Mr. Gary Colaizzi (President, Goodson & Associates, Inc.) phone interviews with Colleen Ruddick, April 15, 2008, and April 17, 2008.

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USF Equipment and Services has a partnership with both the Mining Safety and Health Administration and the National Institute for Occupational Safety and Health. USF completed a test of its products with NIOSH that was documented in detail.

Example of a USF Project

On December 25, 2004 a fire of unknown origin was discovered near the bottom of a compartment slope in Excel No. 3 Mine owned by MC Mining, LLC, a room-and-pillar mining operation. Immediate steps were taken to control the fire while simultaneously the authorities were called. Emergency response teams deemed the fire too hazardous to continue operations after attempting to extinguish it for the larger part of the evening. Temporary seals were installed to limit the inflow of oxygen to the fire zone. Several boreholes were drilled to monitor the mine atmosphere and to inject nitrogen gas and nitrogen gas-enhanced foam.

On December 28, the injection of liquid nitrogen was initiated and analysis of the gas monitoring data indicated that the sealing of the mine and the replacement of oxygen had controlled the spread of the fire. On January 2, nitrogen gas-enhanced foam was injected by USF Technologies and Services through two holes near the fire area. The water system of the mine failed periodically throughout the procedure, causing an intermittent flow. To compensate for when the flow was not working, nitrogen gas from the membrane plant was injected directly. On January 4, operations were halted to evaluate the conditions and conduct a video survey of the mine void. The nitrogen foam application resumed on the 6th

, and the next day the mine fire was evaluated and deemed successfully extinguished. The mine was reentered on January 8 and permanent seals were installed underground to isolate the area affected by the fire. Mining operations resumed February 21 (Trevits et al. 2005).

CAFSCO

Mark Cummins and Lisa LaFosse’s company CAFSCO is a Compressed Air Foam (CAF) consulting and engineering corporation that focuses on the extinguishing of coalmine fires. Cummins has 30 years of CAF experience and the claims to have the original patent on a Nitrogen foam injection method, although this claim as recently been contested by USF’s Alden Ozment in a patent infringement lawsuit.*

CAFSCO puts their cost estimates at between 10 and 15 million dollars, accounting for the mobilization, drilling, and nitrogen foam setup for the first acre of burning coal in a deep mine (LaFosse 2007). Average costs are difficult to establish with Nitrogen Foam Injection because both the drilling company and the Nitrogen generator providers are contracted and their expenses vary, especially as the overhaul is variable. LaFosse has stated that they are in the process of establishing their own coalmine fire response team that would include drilling capabilities and continuous nitrogen supply as well as surface remediation capabilities (Smith 2007). Having their own teams would

* U.S. Foam, Inc. v. Cummins Indus., Inc., No. 2:2007cv00491 (E.D. Tex. filed Nov. 8, 2007).

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greatly reduce the costs and avoid contracting companies. Like USF, they have also completed a successful mine fire extinguishing in partnership with NIOSH, the Pinnacle Mine fire (CAFSCO 2007).

Example of a CAFSCO Project:

A series of explosions occurred in the Pinnacle Mine between August 31 and September 7, 2003. After the location of the ignition was identified by the monitoring data, a jet engine from Phoenix First Response was used to lower oxygen concentrations in the mine. The GAG jet engine is based on a Soviet designed agricultural jet engine and consumes oxygen and aviation fuel then after combustion emits primarily carbon dioxide and water. The engine was initiated on October 1, and not until October 6 were inert gases from the GAG engine observant to approaching the area by the active fire. The engine ran until October 19 to attempt to maintain inert gases, after which ventilation was re-established and monitoring of fire gases continued into January 2004.

The presence of carbon monoxide suggested that the fire was still burning underground in a panel of the mine. This panel was localized and a remotely installed seal was placed in the entry. On January 30 a borehole was completed to the coal seam and injected the nitrogen-enhanced foam through a borehole by the seal. Then seals were remotely-installed by injecting a mixture of 50 pct cement and 50 pct fly ash by volume to a density of 15.3 lb/gal. The mixture was injected by an accelerator of epoxy-resin and sprayed into the mine chamber, where it was assumed the mound of slurry would close the gap between floor and ceiling. Approximately 128 yd3 of material was pumped into the void. Injection pressure readings indicated that it was not a full seal (Smith et al. 2005).

On January 29, 2004 Cummins Industries, Mark Cummins’ company affiliated with CAFSO, injected nitrogen-enhanced high expansion foam into a borehole. This foam was intended to not only act as a suppression agent, but also as a gas barrier to control ventilation and confine efforts toward the active gob of material. The foam was a batch of 1 or 2 pct in four 21,000-gallon tanks and was pumped using a 750 cubic feet per minute nitrogen membrane separation plant. Approximately 18 million gallons of foam were pumped into the mine at an average rate of about 1,500 gallons per minutes for nine days. Gas monitoring showed a significant decrease in oxygen and an increase in nitrogen. Another section of monitoring showed that both oxygen and nitrogen concentrations dropped to very low levels, and filled almost entirely with methane, indicating that this location has become isolated from mine air. The system was able to control ventilation and suppress the suspected ignition source by isolating it from oxygen. On February 7, recovery teams entered the mine began erecting temporary seals along the wall that was near the source of ignition. On May 19, 2004 mining operations proceeded.

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References

Abandoned Mine Land Program. n.d. Inventory of Coal Mining Related Abandoned Mine Land Problems, http://192.243.130.34/scripts/stsweb.dll.

CAFSCO. 2007. “Home,” http://www.cafsco.com/.

China Coal and Mining Expo. 2005. Proshow Report, http://www.chinaminingcoal.com/2007/download/China_Coal_Mining_Expo_2005_Proshow_Report-1.pdf.

Feiler, Joseph J., Gary J. Colaizzi, and Carol Carder. 2000. Foamed grout controls underground coal-mine fire. Mining Engineering 52(9): 58-62.

Goodson & Associates, Inc. n.d. About Goodson &Associates, Inc, http://goodsonassociates.com/pages/about.html.

LaFosse, Lisa. 2007. Coal mine fire extinguishment. Mine Disasters and Coal New, September 6. http://minedisasters.blogspot.com/2007/09/coal-mine-fire-extinguishment.html.

Smith, Alex C., Thomas P. Mucho, Michael A. Trevits, and Mark Cummins. 2005. The use of nitrogen-enhanced foam at the Pinnacle Mine fire. Pittsburgh, PA: National Institute for Occupational Safety and Health, Pittsburgh Research Laboratory. http://www.cdc.gov/niosh/mining/pubs/pdfs/tuone.pdf.

Smith, David A. 2007. CAFS pioneer Mark Cummins followed father’s path. Fire Apparatus and Emergency Equipment Magazine, April.http://fireapparatusmagazine.com/columns/2007/April07/Cummings_04_07.htm.

Trevits, Michael A., Alex .C. Smith, Alden Ozment, John B. Walsh, and Mike R. Thibou. 2005. Application of gas-enhanced foam at the Excel No. 3 Mine fire. Pittsburgh, PA: National Institute for Occupational Safety and Health, Pittsburgh Research Laboratory. http://www.cdc.gov/niosh/mining/pubs/pdfs/apgef.pdf.

USF Equipment and Services. 2005. About Us, http://www.hellfighter.us/index2.php#.

U.S. Office of Surface Mining. 2006. Abandoned Mine Land Fund: Status, http://www.osmre.gov/fundstat.htm.

U.S. Office of Surface Mining. 2007. Press Release, OSM announces decisions needed to distribute funds under the 2006 AML legislation, December 6. http://www.osmre.gov/news/120607.pdf.

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CONCLUSION

Uncontrolled coal fires have been around as long as coal has been on the earth. There was often little incentive to do anything about these fires. Given the abundance of coal reserves and the correspondingly low unit price of coal as a source of energy, the cost of putting out the fires would have been greater than the market value of the coal resource. Attempts to put out the fires thus tended to occur only in situations where they threatened other values – such as when a coal fire burned beneath a populated area, emitting unpleasant and unhealthy gases and raising the possibility of subsidence that could damage existing structures.

In recent years, however, the growing concern for the warming climate of the earth has brought a new factor into the picture. Uncontrolled coal fires are a significant source of carbon dioxide and other greenhouse gas emissions. Hence, there may be a strong new reason to put out the fires, sufficient to justify action where it would otherwise have been unnecessarfy..

Curbing the emissions of greenhouse gases, however, raises difficult collective action problems for the world. For most nations, their emissions will not be large enough in themselves to have much effect on the earth's climate. Their narrow incentive is to be a free rider. Even major emitters of greenhouse gases such as the United States and China do not have it within their capacity to resolve the climate change problem by their own actions.

The world has thus attempted to address the climate change problem through international negotiations such as those that produced the Kyoto Protocol. Under Kyoto, a principle was adopted that one nation could substitute reductions of greenhouse emissions in another nation, if such reductions would be less expensive. The workings of the Clean Development Mechanism represent the leading example of such a strategy beig put into practice. Businesses and governmental actors in developed nations such as Japan and the members of the European Union are paying for reductions of greenhouse emissions in developing nations such as China and India. These efforts are part of a wider spread of markets for carbon credits that are emerging in the United States as well on a voluntary basis.

Putting out a coal fire thus has acquired a large potential new monetary value -- the selling price for the carbon credit that could be earned by putting out the fire, and thus avoiding the greenhouse emissions that would otherwise have occurred. This report finds that in many cases the cost of extinguishing coal fires yields reductions of

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greenhouse gases at a cost well below the existing price of carbon credits. In other words, sufficient funds could be earned by selling carbon credits to put out many of the uncontrolled coal fires now burning across the world and that are contributing significantly to total accumulations of greenhouse gases.

There remain, however, a variety of practical problems that must be resolved before such sales of carbon credits for putting out coal fires can begin to occur. First, the International Panel on Climate Change (IPCC) and other international bodies involved in climate change negotiations must become more aware of the significant greenhouse impacts of uncontrolled coal fires. To date, there may have been less recognition of the worldwide importance of coal fires than any other significant source of greenhouse gas releases to the atmosphere. As a beginning step, coal fire emissions should be included in national and world inventories of greenhouse gas sources, and nations should be asked to take responsibility for the greenhouse emissions from coal fires within their borders.

Selling credits for putting out coal fires requires the approval of a methodology for calculating the amount of the credits available in the case of any individual coal fire. Such a methodology must be able to show that actions to extinguish a coal fire will in fact add to the net reductions worldwide of greenhouse gases over the long run -- that the conditions of "additionality" and "permanence" can be satisfied. Gaining international approval for such a methodology can be a time consuming and expensive process. At present, no private, national or international organization has been willing to assume the necessary responsibility. The United States government, the European Union, or the World Bank would be among the leading candidates for developing and taking the steps necessary to get international approval for a coal fire methodology.

Given the limited incentives to put out coal fires in the past, the funds invested in research and development of new technologies for coal fire extinction have not been large in comparison to other areas of greenhouse concern. National and international organizations could contribute by supporting such research and development and assisting in the assembly of national inventories of currently burning coal fires. These organizations could also support demonstration projects in individual nations that could provide further information on the costs of extinguishing coal fires and examples of the generation of carbon credits.

Given the longstanding status of uncontrolled coal fires as a "neglected greenhouse source," the putting out of coal fires may

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represent a "low hanging fruit" among the potential strategies for reducing world greenhouse gas emissions. This is particularly the case with respect to surface coal fires which can often be extinguished at low cost and then monitored easily in future years. Since many nations are doing little at present to put out such fires, it should also not be difficult to demonstrating that resulting carbon credits would meet the requirement of additionality.

Given all these elements, uncontrolled coal fires should be put on the active agenda of international climate change negotiations and the appropriate steps, as outlined above, should be vigorously pursued to put many of them out.

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