If we are serious about climate change, we need to keep more than 80% of the world’s coal reserves underground at least until 2050.
This raises very difficult equity questions about who gets to extract the remaining coal, and for whose benefit. It also draws attention to the political economy of a transition away from fossil fuels extraction: who wins, who loses, and what factors can enable or hinder such a transition.
Colombia does not necessarily come first when thinking about major players in fossil fuels production. It is, however, one of the top-5 exporters of thermal coal (the type of coal used in power plants), while also exporting oil. For decades, coal and the rest of the mining industry benefited from a rather favorable institutional framework and strong support from national and local authorities. But this is changing.
Over the past few years, the country has seen important changes in the political economy of mining. The mining industry and the national government, its main supporter, are adjusting and innovating their political strategies in response to new domestic and international challenges. While some of the political dynamics of the coal sector are very specific to Colombia, there are three important lessons that can be of interest for a broader audience interested in transitions away from coal extraction.
In Colombia, mining companies have joined forces in a single business association and speak in unison about their contributions to Colombians’ well-being. This packaging of mining with oil and gas activities under the “extractive” or “mining-energy sector” banner is also very present in policy documents and high officials’ public declarations.
But coal extraction does not have the same future prospects as coltan or nickel, which are used in renewable energy technologies. The contribution of the coal mining industry to public revenues is also far from reaching the revenues generated by oil and gas. In 2014, 82 percent of royalties came from oil and gas extraction, compared with 15 percent from coal extraction, and 3 percent from other minerals.
Differentiation is not only a matter of communication. Acknowledging the distinctions across the mining industry should also lead to more differentiation in the governance of the sector. For example, like the rest of the mining industry, large coal companies in Colombia have received – and are still benefitting – from a variety of subsidies, such as tax exemptions and rebates, State-provided security services, and special licensing procedures for “strategic” projects. Coal mining, of course, plays an essential role in local economies and in balancing the country’s trade balance. But what opportunities are lost in the meantime? Is it legitimate to support an industry with gloomy (or at best, highly uncertain) market perspectives, increasing domestic pressures to halt expansion, and stricter environmental, social and economic governance?
Let’s plan, govern and talk about coal on its own.
Courts have been playing an increasingly significant role in the debate over large-scale mining and its impact on the governance of the mining sector. Climate is far from the main ground on which big mining have been brought to courts; most cases have focused on possible violations of human and indigenous rights, water contamination and availability, as well as issues with the locus of decision-making. But the results could nevertheless have climate impacts.
In Colombia, litigation has been an effective tool for opponents to challenge the status quo by exposing gaps or inconsistencies in the sector’s governance, leading to the issuance of new regulations and policies. For instance, Colombian municipalities and civil organizations have relied on the judicial channel – specifically the Constitutional Court – to challenge new mining projects. After several years of battle, the courts ruled that municipal and departmental authorities could refuse mining development on their territory.
Of course, each country’s political system is different, and the role of courts in political battles over coal and other types of mining depends on their role and reach in policy-making. The involvement of courts also is not likely to happen without resistance from more established political actors in mining or extractive policy. This is definitely true for the Colombian case, where the Constitutional Court has been repeatedly accused of judicial activism, or deciding cases on the basis of personal or political considerations rather than on existing law.
Within this context, close attention needs be paid to how distinct actors attempt to shape the reach of the judicial sector through different political mechanisms, such as the election of judges (for example in Colombia the Constitutional Court’s judges are elected by the Senate) or modifications in the formal rules of the political system that determine the modalities and limits for the judicial’ s involvement in policy-making.
As shown in Colombia, there are several factors that could lead in theory to a closure or a drastic downturn of large-scale coal production. Mitigation policies and industrial efficiency policy by coal consumers worldwide have already considerably affected the economy of the sector, while domestic political challenges abound. Even in a business-as-usual scenario, government officials and company representatives in Bogota agree that the country’s coal production will peak in the next 10 to 15 years.
Because of its weight in regional economies and the impact of corporate social responsibility investments in extraction areas, the prospect of declining coal mining activities constitutes a paramount challenge for the populations whose livelihoods rely directly or indirectly on coal extraction, and for the public institutions that will need to support and adjust to a radical shift in the socio-economic structure of these areas. The question is: Are these regions prepared? What comes next, and how can we ensure that coal areas’ inhabitants will be better off as a result?
When thinking about phasing out coal for a safe climate, it is essential to consider the implications of it on coal producing areas, especially at regional and local scales, and to start reflecting on possible alternative regional development pathways that fill gaps left by curtailing coal mining. Unfortunately, there is little evidence available on past mining transitions to rely on, and most of it is about developed countries – a recent report by IDDRI and Climate Strategies provides initial insights on factors that have contributed to a successful transition in the Netherlands for instance. We thus need to learn more about how past cases of mining closures around the world were dealt with and with which results, and draw inspiration from examples of rapid regional economic structural change.
Importantly, discussions about post-coal development cannot happen without involving those primarily concerned; imposing transition plans from the top is likely to generate strong resistances and risks misevaluating local circumstances, needs, challenges, opportunities and aspirations. Also, given that many areas with large-scale extractive activities are characterised by high levels of inequality, it is crucial that we look for alternatives that lead to substantially better outcomes in terms of social justice and equality than current and past models.
Source: This post originally appeared on Nivela. It is based on the SEI discussion brief The changing politics of coal extraction in Colombia.
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