Revoking Coal Mining Permits: An Economic and Legal Analysis

Ryan Rafaty, Sugandha Srivastav & Björn Hoops (2020) Revoking coal mining permits: an economic and legal analysis, Climate Policy, 20:8, 980-996, DOI: 10.1080/14693062.2020.1719809

University of Groningen Faculty of Law Research Paper No. 25/2022

34 Pages Posted: 4 Oct 2022 Last revised: 5 Jul 2023

See all articles by Ryan Rafaty

Ryan Rafaty

University of Oxford

Sugandha Srivastav

University of Oxford - School of Geography and Environment

Björn Hoops

University of Groningen - Faculty of Law

Date Written: January 14, 2020

Abstract

Achieving mitigation targets under the Paris Agreement will depend on the early retirement of coal mines and plants over the next decade. In the absence of sufficiently stringent demand-side policies, supplyside injunctions provide a potential avenue to expedite the decline of coal. In many coal-producing jurisdictions, the law provides grounds to revoke coal mining permits. Recent plans to phase out coal use in Germany provide an interesting testing ground for this concept. We study the case of permits granted to RWE Power AG to continue operating Europe’s largest opencast lignite mine, situated at the 12,000-year-old Hambach Forest in the state of North Rhine-Westphalia (NRW). We conduct two complementary assessments: (i) a legal analysis finding that German law provides several grounds for the revocation of coal mining permits, particularly when linked to quantifiable damages to local ecosystems and communities; and (ii) an economic analysis using natural capital accounting to quantify the environmental and societal costs associated with alternative scenarios of continued and halted mining activity. We find the net present value of gains from immediately halting operations at the Hambachlignite mine to be €98–208 billion over 34-years, equivalent to 13–30% of NRW’s annual GDP. Health related savings from avoided air pollution are 6.5 times greater than costs of replacing lost capacity with new renewable energy and battery storage infrastructure and two orders of magnitude greater than costs of compensating laid-off mining workers.

Keywords: Natural capital accouting, retirement of coal mines, early closures, supply side climate policy, property rights, coal mining permits

JEL Classification: Q34, Q35, Q51

Suggested Citation

Rafaty, Ryan and Srivastav, Sugandha and Hoops, Björn, Revoking Coal Mining Permits: An Economic and Legal Analysis (January 14, 2020). Ryan Rafaty, Sugandha Srivastav & Björn Hoops (2020) Revoking coal mining permits: an economic and legal analysis, Climate Policy, 20:8, 980-996, DOI: 10.1080/14693062.2020.1719809 , University of Groningen Faculty of Law Research Paper No. 25/2022, Available at SSRN: https://ssrn.com/abstract=4218876

Ryan Rafaty

University of Oxford ( email )

Sugandha Srivastav (Contact Author)

University of Oxford - School of Geography and Environment ( email )

Oxford University Centre for the Environment
South Parks Road
Oxford, OX1 3QY
United Kingdom

Björn Hoops

University of Groningen - Faculty of Law ( email )

9700 AS Groningen
Netherlands

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