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Business Case for Coal Mine Methane (CMM) Capture and Carbon Offsets 

Authors: Boyd Cohen, Ph.D & Pedro Camanho - CO2 IMPACT


This review gives an overview of coal mine methane (CMM) capture, describes the problem with and the solutions for CMM, and discusses carbon offsets.


Methane is consistently found in underground coal reserves. The deeper the coal, the higher the pressure and the greater amounts of methane can be found. Methane is a significant cause of mining disasters around the globe. Accumulated methane, without adequate ventilation results in explosions in underground coalmines, frequently leading to the mortality of miners, as well as operational losses for the mine, and of course damaging the public opinion of coalmine operators. According to the Center for the Study of Responsive Law, "more coal miners have lost their lives from cave-ins and lung disease since 1900 than all the Americans who died in World War II." (i)

Furthermore, as underground coal mines extract coal, the methane gas is released into the atmosphere directly or through methane ventilation systems. This methane release also contributes to climate change. Methane gas is 21 times as potent (Global Warming Potential=21) as carbon dioxide (CO2). Globally it is estimated that CO2 equivalent emissions resulting from coal mining is nearly 400 million tons per year and is estimated to grow to 450 million tons by 2020 (according to the US EPA, Methane to Markets). (ii)


Figure 1: Estimated Global CMM Emissions, 2005. Total = 388.14 MMTCO2E For obvious reasons, most underground coal mines around the world consider methane to be a significant problem and cost to the operations. To mitigate the risk of explosions, mine operators pay significant amounts of money to install methane ventilation systems to monitor and extract methane from the underground mines. The costs to develop and operate ventilation systems run in the $ millions.

CO2 IMPACT is focused on assisting underground coal mine owners in the Americas to transform methane problems into profits. CO2 IMPACT facilitates coal mine methane (CMM) projects with its clients via its solutions partners, and then assists its clients to monetize the carbon reductions through the development, certification and sale of carbon offsets.

The key solutions include pre-drainage, post-drainage and VAM.

Pre-drainage: Extracting the methane prior to the commencement of mining operations. Pre-drainage if done 5+ years prior to mining a new coal seam, can lead to the capture of up to 90% of in-situ methane. Pre-drainage drastically reduces gas flow from worked seam which is important in reducing outburst risk, reducing downtime and lowering ventilation costs. Methane from pre-drainage wells is usually very high quality (90% + per volume) and suitable for natural gas pipeline injection after minimal treatment or for the generation of power and heat. At some mines, downtime is considerable, causing expensive losses to the mine. Ventilation cost cuts can be up to half of the original cost of the ventilation system. In one study, a mine with 400 ft3/ton of methane using vertical wells to pre-drain will result in an estimated US$ 11 million over 20 years in reduced ventilation costs, not including carbon and energy revenue (iii) (U.S. Environmental Protection Agency, 1999).

Figure 5.1: Schematic of Pre-Mine Drainage from Lateral Wells Drilled from the Surface

Figure 5.1 shows a potential drilling configuration that can be used to drain gas from coal before mining commences. In this schematic, two minable seams will be drained by first drilling a pilot well from which two lateral well bores are drilled into each of the seams. After the lateral wells are placed, another vertical well is drilled to intersect the laterals. Water and gas is produced from the vertical well and the pilot well is shut?in or abandoned. (iv) (Methane to Markets Partnership, 2010)

Pedro Camanho at a monitoring station of a pre-drainage well in an Alabama coal mine

Pedro Camanho at a monitoring station of a pre-drainage well in an Alabama coal mine.

Post-drainage: Extracting methane from gob areas that have already been mined also can result in methane capture and carbon offsets. This procedure is also used with abandoned coal mines. Post-drainage CMM has concentrations of 30%-70% which is suitable for some power/heat generation and it can be upgraded to supply a different kind of power plant or even for natural gas pipeline injection. As of 2006, 23 U.S. mines employ post-drainage with 13 of them selling the recovered gas into pipelines while three use the methane for power/heat generation (U.S. EPA, 2009) (v).

Elizabeth Obediente from CO2IMPACT at a methane upgrading facility at a coal mine in Alabama.

Elizabeth Obediente from CO2IMPACT at a methane upgrading facility at a coal mine in Alabama. The gas is stripped of impurities and upgraded to 96% methane per volume and then compressed and then sold to the natural gas pipeline.

Ventilation Air Methane (VAM): Ventilation systems extract diluted methane out of underground coal mines and normally vent the mixture into the atmosphere. VAM projects extract the diluted methane and either destroy the methane (by converting it to CO2) or recover the energy from the methane. VAM accounts for just over 60% of U.S. methane emissions from coalmines, which makes it a large area of potential carbon revenue (vi). The VAM setup is done with safety in mind and does not in any way interfere with the ability of the mine to exhaust the methane out of the mine face. For a VAM system to operate it requires a minimum concentration of .2% methane per volume. The revenue for the destruction of the methane in VAM depends entirely on the carbon market. If carbon offsets are valued at US$ 10 minimum, methane concentration levels of around 0.45% would be required to turn a profit. For power generation, concentrations of at least 0.7% are required. Below that electricity generation is unfeasible but heat generation (for in-house use such as boilers) is still feasible. VAM stands to be one of the best options for carbon projects in coal mines due to its relative simplicity and low cost. The down side is that for most projects no heat or power will be generated and as such the revenue is solely dependant on carbon. The challenge, thus, is to find a mine that has the right concentration and volume of methane when the carbon markets meet minimum price thresholds to provide sufficient ROI. VAM units cost about $20-$30 USD per scfm.

This is a Regenerative Thermal Oxidizer from MEGTEC capable of handling 60,000 scfm of VAM. At a methane concentration of about 0.7% a unit this size generates 50,000 carbon credits per year. This unit costs about US$ 1,5 million.

This is a Regenerative Thermal Oxidizer from MEGTEC capable of handling 60,000 scfm of VAM. At a methane concentration of about 0.7% a unit this size generates 50,000 carbon credits per year. This unit costs about US$ 1,5 million.


Once extracted, coal mine methane can then be used for on-site energy consumption by the coal mine or in some cases can even be filtered and sold into the gas supply. The most common use of the methane is cogeneration where electric power (usually dozens of megawatts) is used to supply in-house demand while the heat is captured and supplied to the miners homes. Making use of the energy displaces grid electricity which generates further carbon credits. Often methane recovered is used to enable its employees to take hot showers on site. Methane can be a source of fuel for vehicles, or for the ventilation system. Methane captured can also be used to dry humid coal. In all of these situations, if the methane recovered is replacing another dirtier energy source (e.g. burning coal to dry coal), than the use of the recovered methane creates an additional carbon offset project through a "fuel switch" program.


Coal mine methane capture is relatively new to the coal mine industry and as such, poses perceived risks to mine operators. Even if the returns may be sufficient due to avoided losses, reduced costs of ventilation systems (degasifying mines reduces the size requirements of ventilation systems and also the energy costs for pumping out the air), the relative newness of coal mine methane capture in most regions of the world poses perceived technological barriers. In Colombia, a well-known expression is "hay que ver para creer" (you have to see it to believe it). Many coal mine operators are naturally cautious about adopting new technology particularly as it relates to something so important as methane abatement.

This is where carbon offsets come in to the picture. Carbon offsets are created when a company increases its efficiency or otherwise reduces (or sequesters in the case of forestry projects) the total amount of CO2 equivalent emissions released into the atmosphere. There are various certification programs that exist to verify the quality and quantity of emissions reduced from these projects. The most common and by far the largest certification program in the world is the Clean Development Mechanism (CDM). In 2009, the CDM and associated allowances were valued at nearly $140 billion. The variable value of one ton of certified emissions reduction (CER) can be determined by visiting several websites including BlueNext (www.bluenext.eu) and Point Carbon (www.pointcarbon.com).

Carbon reduction projects normally have a life of 10 years, meaning that if your project reduces 40,000 tons per year; that project would generate 400,000 tons for the life of the project. At today's prices (12.29 Euros, $17.25/ton), a project of this magnitude would generate $6.9 million in additional revenue for the coal mine, aside from the additional benefits accrued including mitigating the risk of explosions and the potential cost savings from the ventilation system and the use or sale of the recovered methane. 40,000 tons per year of certified emissions reductions is quite a small project as far as coal mine methane projects, as there are some in the CDM market in China that exceed 1 million tons/year. Of course those projects are also earning carbon offsets for the generation of "green" electricity to the high volume of quality methane recovered from their coal mines.

It is important to keep in mind that CDM projects must be completed in developing countries. But again, there are numerous certification bodies for carbon offsets beyond the CDM that projects could apply for. For example, in the US and Canada, the Western Climate Initiative (WCI) appears to be gaining strength as a regulated cap and trade system. The recent defeat of Proposition 23 which aimed to curb the cap and trade system in California, has given impetus to the WCI as a ground up approach to cap and trade in North America and will create a whole new market for offsets generated in North America. It is expected that companies and governments in the WCI region will purchase 235 million tons of carbon offsets between 2012 and 2020. (vii)

The process to generate and sell carbon offsets is somewhat complicated as it requires determining baselines, estimating reductions based on approved methodologies from the various certifying bodies, developing detailed documentation of the project's objectives and outcomes, identifying, financing and implementing the appropriate technology, validating and verifying the project through approved 3rd party auditors, monitoring the project for the life of the project and of course securing the sale of the carbon offsets. Carbon originators, like CO2 IMPACT, or ERA (Ecosystem Restoration Associates) for forestry projects, manage this whole process from start to finish for project owners, in this case, the mine owner.


Methane in coal mines has posed problems for mining companies for the past century. Luckily, in the 21st century new solutions have emerged which can turn the methane problem into methane profits. There are a range of solutions, many of which can be implemented in an integrated way, such as pre-drainage, VAM and on-site energy generation from the captured methane. While there are still challenges to executing these projects around the world, such as the ongoing battle in some jurisdiction over who has the rights to the gas (the owner of the title to the minerals or the owner of the gas rights in the region), coal mine methane solutions not only significantly reduce the risk of mine disasters and tragic loss of life, they can also lead to new revenue streams and costs savings in the operation of the mine. Carbon offsets, a relatively new commodity, can significantly enhance the ROI of these projects. The U.S. EPA has even developed a tool to enable coal mines to estimate the ROI for CMM projects: http://www.epa.gov/cmop/resources/cashflow_model.html

Expect CMM to go mainstream over the next 10-20 years due to all of these benefits.

(i) Shaw, C., Undermining Safety: A report on Coal Mine Safety, Center for Study of Responsive Law.
(ii) Underground Coal Mine Methane Recovery and Use Opportunities, Methane to Markets, http://www.methanetomarkets.org/documents/coal_fs_eng.pdf
(iii) Guidebook on Coalbed Methane Drainage for Underground Coal Mines, U.S. Environmental Protection Agency. (1999). http://www.epa.gov/cmop/docs/red001.pdf
(iv) Best Practice Guidance for Effective Methane Drainage and Use in Coal Mines, Methane to Markets Partnership. (2010). http://www.unece.org/energy/se/pdfs/cmm/pub/BestPractGuide_MethDrain_es31.pdf
(v) Coal Mine Methane Recovery: A Primer, U.S. EPA. (2009), http://www.epa.gov/cmop/docs/cmm_primer.pdf
(vi) Managing Methane, World Coal, Ruby Canyon Engineering and EPA. http://www.epa.gov/cmop/docs/World-Coal-article_May2010.pdf
(vii) Updated Economic Analysis of the WCI Regional Cap-and-Trade Program, Western Climate Initiative, July 2010.

*Boyd Cohen is a former assistant professor of sustainable development at the Instituo de Empresa (Madrid, Spain), the University of Victoria and Simon Fraser University. He is also the co-author of a forthcoming book entitled Climate Capitalism and is the co-founder of CO2 IMPACT.

Pedro Camanho is a graduate of UBC and a Senior Carbon Analyst at CO2 IMPACT.

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