Legal and Regulatory Status of Abandoned
Mine Methane in Selected Countries:
Considerations for Decision Makers
EPA Publication No:
430R19003
March 2019
oEPA
United States
Environmental Protection
Agency
/Global
Methane Initiative
Coalbed Methane
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Legal and Regulatory Status of Abandoned
Mine Methane in Selected Countries:
Considerations for Decision Makers
In support of the Global Methane Initiative
Funded by the U.S. Environmental Protection Agency
A Denysenko
M Evans
N Kholod
N Butler
V Roshchanka
March 2019

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This page intentionally left blank
iii

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Executive Summary
Globally, the coal mining industry accounts for about 8% of total methane emissions (EPA,
2012). Coal mines capture methane mostly for safety reasons because methane can be
dangerous for underground mining. However, after closure, underground coal mines continue
to release methane into the atmosphere. This methane is known as abandoned mine methane
(AMM). AMM is an important but often overlooked source of methane emissions.
There are a number of potential uses for recovery and utilization of AMM. Depending on the
quality of the coal mine gas and other factors, options for commercial methane utilization
include:
1.	Electricity production;
2.	Combined heat and power for industry and/or urban areas;
3.	Supply to commercial natural gas market via existing pipelines;
4.	Monetized benefits of reducing greenhouse gas emissions.
Because of the value of these assets, methane recovery and utilization from abandoned mines
can boost local economic growth, create new jobs, reduce air and water pollution, and increase
national energy supply. In addition, implementation of AMM projects also contributes to
climate protection. AMM projects present interesting opportunities and challenges but
enabling conditions have received less consideration for their part in making these projects
successful.
Although methane utilization provides multiple economic and environmental benefits, AMM
projects often face several implementation challenges. The policies that countries adopt can
play an important role in overcoming technical and market barriers. For example, providing
clear rules on ownership of AMM rights places AMM on equal footing with conventional gas
projects. Likewise, some countries have developed incentives or tax policies to promote AMM
utilization, recognizing the technical constraints that some projects face as well as the societal
benefits of AMM utilization.
This report was funded by the U.S. Environmental Protection Agency (EPA) in support of the
Global Methane Initiative (GMI). GMI is an international, public-private partnership that
promotes cost-effective, near-term methane recovery and use. It works through partnerships
between developed and developing countries, with participation from the private sector,
development banks, and nongovernmental organizations.
Specifically, this report presents case studies on several countries that have successfully
developed an enabling environment for AMM recovery and utilization. The experiences of
Australia, Germany, the United Kingdom, and the United States can provide valuable lessons for
other countries wishing to utilize the potential of AMM. Examples from these countries show
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that supportive legal and regulatory framework can facilitate utilization of methane from
abandoned coal mines.
Based on these case studies, some specific policies can help facilitate AMM capture and
utilization projects:
1.	Enacting clear procedures for obtaining AMM ownership rights for mines that are
already abandoned/closed;
2.	Allowing for the transfer of the methane rights from the mine to a third-party (gas
developer);
3.	Including AMM as a renewable energy resource in new legislation or by amending
existing one;
4.	Setting royalties at a level that encourages investment;
5.	Offering reduced taxes or targeted financial and fiscal incentives to stimulate AMM
projects.
Ownership rights are the most important and challenging issue in the regulatory framework.
Clearly defined ownership rights can help companies mitigate risks in their contractual
arrangements. For example, transferring ownership of AMM to a third-party that can monetize
the emission reduction credits can diversify revenue and reduce the project's financial risk in
certain situations. Countries with successful AMM projects have created an enabling
environment by eliminating restrictions on transferring rights to the gas, regardless of whether
it will be sold as gas or converted to electricity. Regulatory and fiscal incentives in the form of
reduced royalties, feed-in-tariffs or supplier obligations, as well as an ability to monetize
emission reductions can further improve the economic feasibility of AMM projects.
Countries with significant underground coal production today will face increasing AMM
emissions in the future. Development and enforcement of a clear and favorable legal
framework will not only maximize AMM utilization but can also provide an additional resource
for the country's energy mix.
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Contents
Executive Summary	iv
1.	Introduction	1
Regulatory Environment	1
The Role of Geology and Technology	1
Policies and Markets	2
Case Studies and Analysis Methodology	2
2.	Australia	4
Overview	4
Ownership/Property Rights	5
Incentives	5
Royalties	6
3.	Germany	7
Overview	7
Ownership/Property Rights	9
Incentives	10
Royalties	10
4.	United Kingdom	11
Overview	11
Ownership/Property Rights	12
Incentives	12
Royalties	13
5.	United States	13
Overview	13
Ownership/Property Rights	14
Incentives	16
Royalties	16
6.	Conclusions	17
7.	References	19
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1. Introduction
The coal mining industry accounts for 8% of total methane emissions from human activities
(EPA, 2012). Coal mine methane (CMM) is released during the process of coal mining. When
underground mines cease operations and are abandoned, they still liberate methane for
decades to come. This methane is known as abandoned mine methane (AMM) (EPA, 2008).
Coal mines capture CMM mostly for safety reasons because high concentrations of methane
can be dangerous for underground mining.
CMM and AMM are also valuable energy resources. Capturing and utilizing methane from
active and abandoned mines can increase a country's energy supply. Many countries develop
commercial projects to exploit CMM and AMM to supply gas, generate power and heat, or a
combination of these. Since methane's global warming potential is 28-34 times stronger than
that of CO2 over a 100-year timeframe, its commercial utilization also contributes to climate
protection efforts.
This report was funded by the US. Environmental Protection Agency in support of the Global
Methane Initiative (GMI). GMI is an international, voluntary public-private partnership of more
than 40 partner countries that aims to facilitate the development of methane recovery and
utilization projects. This report focuses on opportunities in the coal mining sector, highlighting
policy options for developing supportive regulatory environments for AMM recovery and
utilization.
Regulatory Environment
The ten largest coal-producing countries account for more than 90% of world's coal production
(Table 1). In most countries, industry lacks a uniform legal framework governing methane
extraction and utilization from coal mines. Coal mines need the CMM rights to be part of the
coal leases to safely and economically pursue CMM emission reduction projects. However, the
costs associated with obtaining and maintaining a gas lease for a CMM/AMM project can be
burdensome. Ownership regulation can create obstacles to recovery and utilization of AMM.
Few countries clearly define AMM ownership rights by demarcating coal mine methane from
other gas leases or coal leases. Outlining what AMM is from a legal standpoint can be critical,
especially when this methane is considered a resource.
The Role of Geology and Technology
Although several countries have successfully developed and implemented projects to capture
and utilize CMM/AMM, there are geographical and technical challenges to commercial recovery
and utilization of methane. Options for commercial methane utilization include power
generation or injection into existing pipeline infrastructure. If pipelines are close enough to the
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site, and the quality and volume of methane are high enough to meet technical requirements,
the developer can directly sell and supply CMM/AMM to the market via gas pipelines.
Alternatively, the developer can generate electricity using mine gas even with a methane
concentration of just 35%. In both cases, close proximity to existing gas pipelines and power
lines improves the economic viability of the AMM projects (Ruby Canyon Engineering Inc,
2016).
After ceasing operation, coal mines usually become flooded with water. Once this happens,
emissions from a mine, or the flooded portion of the mine, typically stop. The rate of the AMM
emissions from an abandoned mine is highest immediately after the mine closure. The emission
rate of AMM decreases to a significantly lower level over a period of 8-10 years. Thus, AMM
capture and utilization are most effective with respect to economic and environmental
concerns immediately following the closure of mines. UNECE (2017) and Ruby Canyon
Engineering Inc (2016) provide additional information on technical constraints that affect
deployment of CMM/AMM projects.
Policies and Markets
Factors important for successful deployment of AMM projects include mine safety regulations,
the licensing process, ownership rights, environmental regulations, taxation, and fiscal
regulations. For example, without clear rights to the methane, investors will not develop the
projects; complicated licensing procedures can also make investors wary.
Domestic energy prices likewise play an important role. For example, low electricity prices can
make power generation run on AMM less attractive, while relatively high natural gas prices can
encourage AMM recovery and supply to the natural gas market. In addition, any form of energy
subsidies can hinder the economic performance of AMM projects.
Creating a supportive policy environment increases project feasibility and expands potential
markets for AMM. A clear legal status and procedures for obtaining rights to the methane are
essential for commercializing methane production. Tax incentives, royalty relief, and other
fiscal instruments improve project economics and can facilitate development of AMM projects.
Feed-in-tariffs and utility obligations can further boost investments in AMM utilization and
recovery projects. Thus, understanding and adapting to local circumstances are crucial to create
an enabling environment for AMM projects.
Case Studies and Analysis Methodology
This report provides an overview of AMM regulations in key coal-producing countries and
recommendations on ownership and royalties for countries that want to implement AMM
utilization projects. The report aims to provide guidance to countries and jurisdictions that want
to clarify their regulations regarding AMM in order to better capture and utilize it. Through
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work in Kazakhstan and other countries, GMI saw the importance of clear information on policy
best practices regarding AMM ownership and promotion in support of new policies and
legislation.
This report contains case studies from four countries - Australia, Germany, the United
Kingdom, and the United States. Using the latest available data, it provides an overview of
AMM emissions. In addition, this report focuses particular attention on policies in each country
that affect AMM projects, including rules on property rights and royalties.
While there are many technical constraints that can hinder development of AMM projects, this
report focuses only on policy aspects. Specifically, the report summarizes the existing policy
framework in each country and draws conclusions regarding two policy assessment criteria that
might be of interest to countries with coal resources:
•	Ability to produce AMM as a resource (e.g., what policy factors and/or market features
encourage or hinder AMM production?);
•	Administrative ease (e.g., how easy is it to assign ownership or rights to AMM?).
Several factors are used to evaluate each country's progress. For example, several policies can
impact a country's ability to produce AMM as a resource, including: 1) clarity of ownership
rights and licensing process; 2) existence of any financial, fiscal, or regulatory incentives; 3)
whether AMM is defined as a renewable resource for incentives; 4) presence of any other
regulations, e.g., safety requirements, which encourage AMM production. A similar approach
has been used in assessing the criteria "Administrative ease". An assessment of this criterion
also accounts for ownership and leasing rights, meaning how easy it is to transfer and/or obtain
AMM methane rights after the coal mine closure. This report also provides data on the
percentage of AMM emissions that each country utilizes1.
While this report focuses on the policy environment and policy choices, it is important to
recognize that geology also plays an important role in defining how policies work in this area.
Geological conditions in the United States and Australia are significantly different from those in
Germany and the United Kingdom. Because of these differences, coal mines in Australia and the
United States have higher gas quality and lower production costs compared to Germany and
the United Kingdom. In the majority of cases, there is no royalty fee on methane captured for
1 To calculate the percentage of AMM utilization rate, we first sum aggregate fugitive GHG emissions from
abandoned underground mines that each country reported to the UNFCCC
(httpi//di,unfccc,int/detailed data by party) together with annual avoided GHG emissions from abandoned mines
that countries reported to the International CMM Database. This is a database that the U.S. Environmental
Protection Agency developed (https://vww.globalroethane.org/coal-rojneg/cmro/index.aspx). In case there is
more recent and reliable source for avoided emissions and deployed AMM projects, we use this source instead of
the Database. We then divided avoided GHG emissions (only from active AMM projects) by the sum of avoided and
aggregate fugitive GHG emissions reported to the UNFCCC.
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safety reasons. For commercial projects where safety is not an issue, royalties are usually
required. The amount of such royalty fees can define whether AMM projects will be profitable
or not. Hence, many jurisdictions choose to levy small royalty fees or offer rebates on them for
AMM to encourage project development.
2. Australia
Overview
Australia is the world's fifth largest coal producer and second largest coal exporter. The
majority of coal mines in Australia are surface mines. As of 2015, there were 123 operating coal
mines, 78 of which are surface mines, while the remaining 45 were underground mines
(Australian Government, 2017). There are, however, thousands of abandoned underground
mine sites in the country. Coal and gas licenses and applications cover about 37% of Australia's
land.
Queensland and New South Wales (NSW) account for 97% of Australia's total coal production.
As Australia does not have a national legislative framework regarding ownership and licensing
of CMM and AMM, each state sets its own regulations (Global Methane Initiative, 2015).
Australia's abandoned mine methane emissions deceased by more than 50%, from 0.969 Mt
CChe in 2000 to 0.420 Mt CChe in 2015 (Figure 1). Total AMM emissions are expected to
increase through at least 2020 due to an overall increase in underground coal mining
(Australian Government, 2016).
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
¦ Mining Activities (CMM) ¦ Abandoned Underground Mines (AMM)
Figure 1. Australia's reported methane emissions from active and abandoned coal mines by
year, Mt C02e
Source: UNFCCC (2017).
4

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According to the International Coal Mine Methane Projects Database, developed by the U.S.
Environmental Protection Agency's Coalbed Methane Outreach Program, as of October 2017,
there have been five AMM projects in Australia. Two are currently operational and both are
located in New South Wales. Together they reduce methane emissions by 0.187 Mt (Xhe
(Global Methane Initiative, 2017). This constitutes 31% of total AMM emissions in Australia.
Ownership/Property Rights
The federal and state governments in Australia consider AMM as a petroleum product; they
grant rights or licenses, called petroleum titles, to explore for or produce petroleum (Allnutt
and Yoon, 2015).
In New South Wales, the land surface belongs to landholders, while the State of New South
Wales owns subsurface resources (NSW Government, 2017a). The Mining Act 1992 is the
primary regulation for coal mining and methane extracted during mining (NSW Government,
1992). AMM is considered a petroleum product and therefore falls under the regulation of the
Petroleum (Onshore) Act 1991 (NSW Government, 1991). When a coal mine ceases operations,
a company interested in capturing and utilizing the AMM should apply for a petroleum title.
In Queensland, a coal mining lease does not provide rights for commercial utilization of the
methane contained in the strata. The Mineral Resources Act 1989 allows a company to capture
methane only for safety reasons and utilize it on site. Once a coal mine ceases operation, a
company interested in extracting and utilizing AMM should apply for a license under the
Petroleum and Gas (Production and Safety) Act 2004 (EPA, 2014), which can overlap with the
coal mining lease, regulated separately by the Mineral Resource Act 1989. The Mineral
Resource Act prohibits the holder of a mining lease from flaring or venting coal mine methane
unless specific conditions are met. Specifically, a mine lease holder must utilize the gas unless
that is not economically or technically feasible, or utilizing the gas would create safety risks
(Queensland, 1989).
Incentives
Currently, Australia has no incentives for AMM production. However, some of Australia's states
had incentive programs in the past that provide useful lessons learned.
Queensland is Australia's largest state in terms of coal production. In order to diversify the
state's energy production mix and decrease emissions, the Government of Queensland enacted
the Gas Electricity Certificate (GEC) scheme. The scheme commenced in 2005 and was active
until the end of 2013. It aimed to establish a mature gas industry by encouraging gas-fired
electricity production (Queensland Parliament, 2013). The program required electricity
suppliers to produce some of their power from gas, including abandoned mine methane, and
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the GECs certify the source of the power (Queensland Parliament, 2013). To encourage
compliance, the Electricity Act also introduced penalties for suppliers, who fail to meet targets.
The share of gas-fired generation reached 20% by the end of 2013, exceeding the program's
initial target of 18% by 2019. Once producers met the GEC targets, the Government of
Queensland withdrew the requirements to certify the source of production. Another argument
to repeal the scheme was that it duplicated the expected impact of the Carbon Pricing
Mechanism, introduced by the Australian Government in 2012 (Ashurst, 2013), though this
mechanism was soon after cancelled. Overall, due to the Gas Electricity Certificate scheme, the
share of gas-fired electricity generation increased from 2.4% in 2005 to 20% in 2013-2014
(Australian Government, 2015)2.
Royalties
The royalty rate is 10% of the gross value of the petroleum at the wellhead (NSW Government,
2017b). The wellhead value is calculated based on the revenue from the sale of the petroleum
minus certain deductible costs incurred downstream (NSW Parliament, 2012). The New South
Wales Government also provides a 5-year exemption for stand-alone coal seam gas operations
(Global Methane Initiative, 2015).
Table 1. Business Environment for AMM in Australia
Criteria
Description
Ability to
produce AMM
as a resource
-	Active AMM projects utilize 31% of total AMM emissions;
-	AMM is not defined as a resource in the national and state regulatory
framework;
-	Some states have restrictions on flaring and venting AMM.
Administrative
ease
No uniform national legislative framework on AMM ownership.
Each state sets its own arrangements. However, in New South Wales and
Queensland, companies interested in capturing AMM should apply for
petroleum licenses once a coal mine ceases operations.
2 It should be noted that the share of gas-fired generation in Queensland decreased from 22% in 2014 to just 12%
in 2016. Several factors contributed to that decline, but the primary reason was an increase of gas prices due to
rising demand from the LNG industry Australian Energy Regulator, 2017. State of the energy market, Australian
Competition and Consumer Commission 2017. Melbourne, Victoria. Available at
https://www.aer.gov.au/svstem/files/AER%20State%20of%20the%20energv%20market%202017%20-%20A4.pdf..
Other factors include repeal of the Gas Electricity Certificate in the end of 2013 and phase-out of the fixed carbon
pricing, introduced under the Carbon Pricing Mechanism in 2012.
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3. Germany
Overview
In 1982, the German government reviewed the legislative framework for mining, developing a
single, unified Federal Mining Act (German Environment Agency, 2014). In 2007, the federal
government, in close cooperation with regional authorities and unions, decided to phase out
subsidies for coal production by the end of 2018 (BMWi, 2017b).
The Federal Mining Act provides a legal framework for ownership issues that defines rules and
procedures for all parties (U.S. EPA, 2009). The former coal mine operator has the right of first
refusal on the rights to AMM.
German's Renewable Energy Sources Act provides a feed-in-tariff for previously authorized
projects to generate electricity using CMM or AMM. Power grid operators are also obliged to
provide priority dispatch to sources run on CMM or AMM (EPA, 2014). The feed-in-tariff for
methane-based power generation has been a primary factor driving active development of
CMM and AMM recovery and utilization projects (UNECE, 2017). Recently, this program has
moved from a feed-in-tariff to a market support mechanism for AMM.
AMM emissions in Germany had been increasing from 1990 and peaked in 2000. Since then
there had been a decrease in methane emissions from 5 Mt CChe in 2000 to just 18,000 t CChe
in 2015 (Figure 2).
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
¦ Mining Activities (CMM) ¦ Abandoned Underground Mines (AMM)
Figure 2. Germany's reported methane emissions from active and abandoned coal mines by
year, Mt CChe.
Source: UNFCCC (2017).
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According to the International Coal Mine Methane Projects Database, Germany has deployed
more than 35 AMM projects and all of them involve electricity generation or combined heat
and power (Global Methane Initiative, 2017). As of 2016, there were 94 AMM-fired CHP units
(one project usually involves several CHP units) with a combined installed capacity 120 MWe
(Figure 3).

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¦ Active mines ¦ Abandoned mines
Figure 3. Number of power generation and CHP units in Germany
Source: Clemens Backhaus (2017).
These AMM projects generate more than 500 MWh of electricity and 75 MWh of heat annually,
while avoiding 2.3 Mt of CChe emissions (Figure 4).

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¦ Abandoned mines ¦ Active mines
Figure 4. Avoided CO2 emissions due to CMM/AMM utilization projects.
Source: Clemens Backhaus (2017).
8

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Most of the AMM projects commenced in the early 2000s, which coincides with an update in
the country's renewable energy policy, creating a special feed-in-tariff for AMM and CMM-fired
power. At the same time, annual reported greenhouse gas (GHG) emission from abandoned
mines dropped from 5 Mt CChe in 2000 to just 18,000 t CChe in 2015 (UNFCCC, 2017). Using
these data, we estimate that active AMM projects utilized 99% of total methane emissions from
abandoned mines in Germany in 2015.
Drawing on the information above, there appear to be two main reasons for the decline in
AMM emissions: increased utilization and decreased coal mining (which overtime has limited
the number of new abandoned mines).
Ownership/Property Rights
The legal framework set by the Federal Mining Act provides rules for the licensing process,
transfer of ownership, and royalties. Specifically, the Federal Mining Authority oversees issues
related to exploration, extraction, and utilization of the methane. As a result, no endemic
disputes over methane rights have been recorded and Germany is a world's leader in
CMM/AMM utilization (U.S. EPA, 2009). The Federal Mining Act treats mine gas as a freely
mineable mineral resource (BMWi, 2016).
To explore and extract mineable resources, including methane, companies have to apply for
exploration and extraction licenses, respectively. An extraction license grants exclusive rights to
extract and acquire ownership to the resources, specified in the license (BMWi, 2016). The law
does not have separate rules for AMM or CMM licenses; companies simply follow the regular
processes for petroleum licenses. When a coal mine operator obtains a coal license, it
automatically includes a license to the gas. Once a mine is abandoned, the former mine
operator must re-apply for an AMM license. The former operator does get the first right of
refusal in case multiple companies are interested in the AMM license.
The Federal Mining Law provides details on license application procedures as well reasons for
rejecting license applications. The maximum initial duration of exploration licenses is five years
while extraction licenses can exceed 50 years (BMWi, 2016).
Germany has developed a regulatory framework and favorable economic incentives that enable
exploration, extraction, and utilization of coal mine methane. Well-defined property rights,
which include the ability to transfer those rights, minimize legal disputes over ownership of coal
mine methane (U.S. EPA, 2009).
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Incentives
As noted, the number of AMM projects in Germany grew significantly in 2004, when the
Renewable Energy Sources Act (hereinafter reffered to as EEG based on the German acronym3)
was revised to provide feed-in-tariffs for AMM and CMM-fired power. The special tariff was
guaranteed for 20 years from the date when a new source applied. The EEG also gives priority
dispatch to all renewable sources. However, in 2016 Germany revised the EEG again. According
to the new regulation, the Federal Network Agency will pay a market premium for AMM and
CMM generated power. The market premium is the difference between the fluctuating market
price and fixed reference values (see below) (BMWi, 2017a). The updated EEG establishes the
following reference values for electricity from CMM and AMM projects:
•	6.54 € C/kWh for installed capacity up to 1 MW;
•	4.17 € C/kWh for installed capacity 1-5 MW;
•	3.69 € C/kWh for installed capacity above 5 MW (BMWi, 2017c).
The updated EEG specifies that starting in January 1, 2018 the reference value for electricity
generated from CMM and AMM will decrease annually by 1.5% from the values in the
preceding calendar year. The EEG also requires plant operators to sell electricity directly to
customers to receive the market premium (BMWi, 2017c).
Royalties
The Federal Mining Act regulates royalty payments. There is a small field royalty on exploration,
ranging from 5 to 25€ per km2 of licensed area per year (Federal Law Gazette, 2016).
In addition, an extraction license holder must pay a mining royalty of 10% of the average
market value of extracted resources (BMWi, 2016; OECD, 2013). All forms of commercial
energy, including electricity and gas sales are subject to a value-added tax of 19% (OECD, 2013).
iness Environment for AMM in Germany
Criteria
Description
Ability to
produce AMM
as a resource
-	Active AMM projects utilize 99% of total AMM emissions;
-	Clearly defined gas property rights;
-	Existing AMM projects eligible for feed-in-tariff, but new projects are not;
-	Safety regulations require mine sealing;
-	Priority dispatch for power plants run on AMM/CMM.
Administrative
ease
Regulatory framework provides clear guidance for licensing process,
property rights, and transfer of ownership.
3 In German, the title of the Renewable Energy Source Act is Erneuerbare Energien Gesetz or EEG.
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4. United Kingdom
Overview
The United Kingdom (UK) has a long history of developing CMM mitigation projects, and the
first AMM project was developed in the 1950's. The UK Government owns the methane
associated with coal, and it regulates rights to this methane through its licensing process. Since
the UK Government considers methane from coal mines as a petroleum product, it is regulated
not by the Coal Authority, but by the Petroleum Act of 1998 (U.S. EPA, 2009). However, any
activities and access to the coal reserves require the consent of the Coal Authority.
Abandoned mine methane emissions in the United Kingdom decreased from 1.4 Mt CChe in
2000 to 0.441 Mt C02e in 2015 (Figure 5).
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1.09 (.94
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0.13 0.5 5 
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Ownership/Property Rights
The UK regulatory environment for AMM ownership is straightforward with clear definitions for
methane during the active period of coal production and after a mine's abandonment (Global
Methane Initiative, 2015).
The UK Government owns the methane associated with coal mines and regulates the rights to it
in accordance with the Petroleum Act of 1998. The UK Oil and Gas Authority (the successor to
the Department of Energy and Climate Change) auctions rights to methane recovery during the
"Licensing Round." However, before any production activities, the developer should acquire the
consent of the UK Coal Authority.
There are two main types of licenses for capturing and utilizing coal mine methane: 1) Methane
Drainage Licenses (MDLs) and 2) Petroleum Exploration and Development Licences (PEDLs).
MDLs apply during the coal production period; they grant the right to capture and utilize
methane for safety reasons. In practice, this means that any gas extracted for the safety of the
mine may be eithervented or utilized.
Unlike MDLs, PEDLs are used for commercial production of oil and gas resources, including
abandoned mine methane. Companies do not usually use PEDLs to extract gas in the same
strata of mining operations due to safety reasons.
When a mine ceases production, the holder of the MDL must apply for a PEDL to maintain
access to the gas. In addition, a company should seek approval from the UK Coal Authority
before any production activities.
The UK Coal Authority maintains the Abandoned Mines Catalogue4, a search tool to determine
the relevant abandonment plans. It contains coal and other mineral abandonment plans,
covering both surface and deep mining operations (UK Coal Authority, 2014).
Incentives
The license fees are relatively low, and no gas royalty fee per unit volume produced is levied,
mainly because in the UK the costs and risks involved in AMM exploitation are relatively high. A
royalty would disincentivize exploitation of the resource. Since there are no royalties, the
government derives its revenue primarily through energy taxes. The government applies the
standard national value-added tax rate of 17.5% to the sale of AMM-related electricity and gas.
CMM and AMM projects are subject to an exemption from the Climate Change Levy. When
4 Coal mining data: abandoned mines catalogue. Available at: https://www.gov.uk/goyernment/publications/coal-
mining-data-abandoned-mines-catalogue.
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methane is used as a fuel for power generation, this fiscal instrument provides an incentive of
£4.41 per MWe (Global Methane Initiative, 2015).
Royalties
The United Kingdom does not charge royalties for extracting AMM. The UK Oil and Gas
Authority auctions PEDL licenses to developers who want to win the gas rights. Subsequently,
the government levies a nominal annual license (or rental) fee upon the PEDL owner, where the
PEDL owner is required to submit an annual report to demonstrate that the resource is in the
process of being exploited. When the license owner fails to exploit the resource within a set
period, the owner should return the PEDL to the government. License fees increase each year
on each square kilometer licensed; this incentivizes developers to increase exploitation of
retained acreage (Thomson Reuters, 2016).
Business Environment for AMM in the United Kingdom
Criteria
Description
Ability to
produce AMM
as a resource
-Active AMM projects utilize 58% of total AMM emissions;
-	Clearly defined ownership rights;
-	Tax exemptions for power generation from CMM/AMM as fiscal
incentives;
-	AMM requires petroleum license and consent of the UK Coal Authority.
Administrative
ease
The Coal Act of 1994 and Petroleum Act of 1998 clarified the gas ownership
issues.
ed States
Overview
The United States is the world's third largest coal producer after China and India. U.S. coal
production concentrated in three coal basins: the Appalachian Basins of the Eastern United
States, the Rocky Mountain Basins in the Western United States, and Arkoma Basins of the
South/Southeast (Global Methane Initiative, 2015).
In the United States, there are about 7,500 abandoned mines, 524 of which are "gassy"5 (Table
4).
5 4. Number of abandoned "gassy'" mines grouped by class in the United States as of 2015
Class
Sealed
Vented
Flooded
Total Known
Unknown
Total Mines
Total
148
54
100
302
222
524
Source: EPA (2017).
5 A coal mine is considered as "gassy" if it releases more than 2,830 cubic meters of methane every day.
13

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Abandoned mine methane emissions decreased from 8.8 Mt CChe in 2000 to 6.4 in 2015 (EPA,
2017). Eighteen AMM recovery and utilization projects at 40 mines contributed to the
reduction in emissions over this period.
The vast majority of AMM projects in the United States involve injection into gas pipelines
(Table 5).
Table 5. Summary of CMM and AMM projects in the United States
Type of mine
Number of
Number of
End Uses

mines with
projects
Pipeline
Power
Heater
Boiler
Flare
VAM

projects


generation

/Dryer


Active
15
20
13
1
2
1
2
1
underground








Abandoned
40
18
15
2
0
0
1
0
underground








Source: EPA (2018a).
In 2015, 2.6 Mt CChe emissions at abandoned mines were recovered and utilized, which
resulted in 6.4 Mt CChe of net AMM emissions (EPA, 2017). Hence, AMM recovery and
utilization projects avoided almost 29% of the methane emissions from abandoned mines.
80
70
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
¦ Mining Activities (CMM) ¦ Abandoned Underground Mines (AMM)
Figure 6. Reported emissions from active and abandoned coal mines in the United States, Mt
CChe
Source: UNFCCC (2017).
Ownership/Property Rights
The legal framework governing AMM ownership varies across the United States and depends
on the regulatory framework in each state, as well as whether or not coal mines are located on
14

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Federal lands. In the Western U.S. states, where many of the coal mines occur on Federal lands,
the Federal Government and states usually issue coal leases without automatically granting
rights to the associated methane. Conflicts may arise where there are multiple lease holders in
the same area (for example, covering resources at different depths, such as AMM, coalbed
methane, and natural gas). To encourage the capture of methane released during and after coal
production, the U.S. Bureau of Land Management (BLM) can renegotiate coal leases and allow
the capture and destruction of methane (BLM, 2017).
On Federal lands, AMM developers typically follow the procedures for a conventional natural
gas lease. Because of potential conflicts between the AMM lease holders and other resource
lessees, AMM projects on federal lands can be legally expensive to develop, which reduces
investments (Ruby Canyon Engineering Inc, 2016).
On private lands, the coal owner has the right to capture gas from abandoned mines once the
appropriate environmental permits are secured. This is the case in Illinois, where the majority
of U.S. AMM projects are located. Once a lease expires, the methane rights also expire in most
cases. Environmental permitting can also differ by state and land ownership.
Deployment of AMM projects has been especially prominent in states where coal lease holders
have the right to capture and utilize AMM. For example, 9 out of 26 total AMM projects
registered in Illinois. One AMM project, located in Southern Illinois, captures and utilizes AMM
from 14 abandoned mines ( EPA, 2018a). Figure 7 shows a regional distribution of AMM
projects in the United States.
Colorado, 1
Alabama, 1 .
Pennsylvania, 1
Indiana, 1
Illinois, 9
West Virginia, 6
Virginia,5
Figure 7. Operational AMM projects in the United States as of 2017.
Source: Global Methane Initiative (2017).
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Incentives
Currently, there are no federal incentives to promote AMM usage or utilization. However,
several states define methane from abandoned mines as a renewable (or alternative) energy
source. This qualifies electricity produced from AMM for state Renewable Portfolio Standards,
which then gives utilities a strong incentive to invest in AMM. As of 2016, three out of six states
with significant coal production included AMM in their Renewable Portfolio Standards. These
states are Pennsylvania, Ohio, and Utah. Some states also provide royalty relief. In addition,
several carbon markets in the U.S. provide opportunities to for CMM and AMM utilization
projects (EPA, 2018a). For example, California introduced a greenhouse gas cap-and-trade
program that includes abandoned mine methane projects as a source of emissions offsets
(California ARB, 2014).
Royalties
On Federal lands, if a mining company uses the leased gas for power production or sells it to
another company, it must pay royalties to the U.S. BLM. Royalty rates for gas leases on Federal
lands are typically 12.5% of the value of resource at the wellhead (GAO, 2017). To encourage
capturing and utilizing CMM, agencies that administer Federal and state lands can provide
regulatory incentives to the lessee in a form of a royalty reduction (EPA, 2016a). On private
lands, royalties are also usually about 12.5% (EPA, 2016a). In addition to royalty payments,
private property owners may also receive signing bonuses and annual lease payments. Mines
that remove methane to ensure worker safety and meet safety standards, do not generally pay
royalties on methane. A 2018 rule stipulates that the BLM incentivize the beneficial use of gas by
making gas used for operations and production purposes royalty-free (BLM, 2018).
Table 6, Business Environment for AMM in the United States
Criteria
Description
Ability to produce AMM
as a resource
-	Active AMM projects utilize 29% of total AMM emissions;
-	No uniform AMM ownership legislation;
-	Widespread access to gas pipelines;
-	Royalty relief in some states;
-	In some states, AMM included in Renewable Portfolio Standards
and eligible for GHG offsets.
Administrative ease
Varies depending on the location and land ownership, but often
hard to work. Where AMM ownership rights rest with coal estate,
it is easy to work on AMM.
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6, Conclusions
Many countries have developed and implemented effective AMM regulations and several
policy factors play an important role in making AMM projects a success. Table 7 below
summarizes key AMM regulation and policies in the four countries analyzed.
Table 7. Comparison of AMM regulation and policies in selected countries
Country
Royalties
Ownership
Ability to produce AMM/Summary of
Administrative



AMM policy
ease
Germany
10% of
Federally
- Active AMM projects utilize 99% of
Regulatory

the
owned
total AMM emissions;
framework

market

- Clearly defined gas property rights;
provides clear

value

-AMM is a renewable resource, eligible
guidance for



for market premium;
licensing process,



- Safety regulation requires mine sealing;
property rights,



- Priority dispatch for power plants run
and transfer of



on AMM/CMM.
ownership.
United
No
Central
- Active AMM projects utilize 58% of
The Coal Act of
Kingdom
royalties,
Government
total AMM emissions;
1994 and

but fairly

- Clearly defined ownership rights;
Petroleum Act of

high

- AMM and CMM exempted from
1998 clarified the

taxes;

Climate Change Levy;
gas ownership

Licenses

-AMM requires petroleum license and
issues.

auctioned

consent of the UK Coal Authority.

Australia
10 of the
State
- Active AMM projects utilize 31% of
No uniform

value at
Government
total AMM emissions;
national legislative

the

- AMM is not clearly defined as a
framework on the

wellhead

resource; Flaring is prohibited;
AMM ownership.

minus

- In New South Wales, CMM is exempt
Each state sets its

certain

from royalties;
own arrangements.

downstre

- In New South Wales, venting is


am costs

prohibited.

United
12.5% of
Private
- Active AMM projects utilize 29% of
Difficult to work on
States
the value
(East);
total AMM emissions;
federal land where

of the
Mostly
- AMM ownership rules vary by state
resource rights

resource
federal
and ownership of the resources;
may be divided

on federal
(West)
- Widespread access to gas pipelines;
among multiple

lands, at

- Royalty relief in some states;
lessees.

or near

- In some states, AMM included in
Where AMM and

12.5% on

Renewable Portfolio Standards and
CMM ownership

private

eligible for GHG offsets.
rights rest with

lands


coal estate, easy to




work on AMM.
17

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Examples from these countries shows that the proper legal and regulatory framework,
combined with financial or fiscal incentives can facilitate utilization of methane from
abandoned coal mines for the natural gas market (as in the United States), power generation
(mainly in the UK and Australia), and combined heat and power (as in Germany).
While geology plays an important role in setting the limits to AMM utilization, ownership rights
are the most important and challenging issue in the regulatory framework. Countries with
successful AMM projects have market rules that make it easy to sell gas or gas-fired power to
third parties and allow for the easy transfer of rights to the gas.
Royalties also play an important role in the economic feasibility of a project. High royalty rates
can discourage developers from pursuing AMM projects. Royalty payments usually vary from 5
to 13% percent depending on the country's specific circumstances, regulatory environment, gas
field location, and wellhead value of the gas. High royalty payments can discourage AMM
developers in countries with high AMM production costs. To incentivize unconventional gas
development, regulators can offer special terms such as discounting royalty rates for such
projects.
Examples of policies that countries and local jurisdictions have used to promote AMM
utilization include:
1.	Enacting clear procedures for obtaining the AMM ownership rights for mines that are
already abandoned;
2.	Developing rules that make it easy to transfer gas rights to AMM project developers
both when mines close and at other stages in an AMM project;
3.	Defining AMM as a renewable resource so that it is eligible for renewable incentives;
4.	Setting royalties at a low level to encourage investment, especially in areas with
difficult geological conditions;
5.	Requiring proper sealing of the mine after closure.
Development and enforcement of a clear and favorable legal framework will not only maximize
AMM utilization but also can provide an additional energy resource for country's energy mix.
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