The real cost of coal mines to people and planet

The article explores the hidden costs of coal mining on both people and the planet. As the world transitions towards renewable energy sources, the longer it takes to phase out fossil fuels like coal, the more severe the climate change impacts become, resulting in estimated global losses and damages of US$2.8 trillion (£2.1 trillion) from 2000 to 2019, according to the UN Environment Programme.

Loss and damage refers to the social, economic, cultural, and environmental harms experienced by people or communities due to disruptive events, such as coal mining. This damage is often not avoidable or mitigable and should ideally be compensated. The study investigates how the opening of new coal mines hinders the transition away from a global economy dependent on fossil fuels.

The researchers examine how loss and damage is calculated in communities affected by coal mining and who bears the financial burden. Current calculation methods, such as the market replacement price model, only compensate the owner of the lost asset with the local market price at the time of loss. The researchers propose a more holistic approach, considering each fossil fuel asset's life cycle, including establishment, working, decommissioning, and their combined effect on climate change.

They argue that if coal mine owners were held accountable for all loss and damage throughout the asset's life cycle, coal would become a less attractive investment compared to renewables, accelerating its phase-out and reducing later climate change costs. The study applied this fairer, more realistic accounting method to households near an open-pit coal mine in Somkhele, South Africa.

The mine has been operational since 2007, and the researchers estimated that households lost over R80 million (£3.7 million) in land, crops, and cattle between 2007 and 2018. However, only 22% of the affected households reported receiving any compensation, which amounted to only 4.7% of the losses they experienced. The gap between the compensation paid by the mining company and what the households deserve is due to different methods of measuring the value of loss and damage.

The researchers modeled the continued losses of income from lost livestock and crops, using herd size projections and predicted future corn prices to estimate the compensation owed by 2038. This compensation is expected to reach at least R157 million (R3.6 million paid so far). The researchers argue that coal assets should be valued as ongoing commercial businesses, considering the future income they can generate, rather than just their market price at the time of loss.