"Another Coal Export Terminal Is Terminated As Chinese Developments Could End Business Case For Remaining Three"
The fight over American coal exports continues to be dramatic. Yesterday, energy company Kinder Morgan announced that it is dropping plans to build its Port Westward Project near Port of St. Helens, Oregon. The export terminal would have transported 15-30 million tons of coal from Wyoming and Montana to Asian nations.
While the company attributed its decision to the logistics of the site rather than larger global energy dynamics or community opposition, environmental groups noted that residents of the region were stridently opposed to the terminal. “It’s clear that our citizens have no interest in seeing their region turned into a conduit for dirty coal,” as an advocate for Columbia Riverkeeper said.
Less than a year ago, six coal export terminals were under consideration in Oregon and Washington, but as of yesterday only three remain. These are: the Gateway Pacific Terminal near Bellingham, WA; the Millennium Bulk Terminals in Longview, WA; and the Morrow Pacific Project near Boardman, OR.
Coal exports from the United States to Asia are controversial for many reasons. One of these is that the coal that would be shipped abroad is primarily taxpayer-owned coal, from public lands in the Powder River Basin in Montana and Wyoming. This region produces approximately 40 percent of our nation’s coal. Recently, concerns have been raised that coal companies may not be providing taxpayers with a fair return for the extraction of their minerals, and are “dodging” royalty payments. This allegation has prompted an internal investigation at the Department of the Interior, interest by the chairman and ranking member of a key Senate committee, and concern from the governors of Oregon and Washington.
Additionally, moving the coal from the Rockies to the west coast requires significant new infrastructure, including trains that can be up to a mile long. Communities along those routes have worried about the noise, air pollution, and water contamination that come with transporting vast amounts of coal by trains. As one rancher whose property would be crossed by a new rail line put it, “They call us radical environmentalists because we want the laws enforced.”
In 2012, U.S. coal exports were expected to reach their highest levels since 1981, and the potential for continued growth is high considering that the U.S. has more proven reserves that any other country. And, Wyoming recently mined its 10-billionth ton of coal, to which the Executive Director of the Wyoming Mining Association responded, “The industry looks forward to supplying power from Wyoming coal–affordably, reliably—for the next 100 years.”
But, WyoFile’s Dustin Bleffizer recently pointed out an important paradox regarding coal exports and climate change that will be important for policymakers to keep in mind:
… resource-based economies (and every nation is a resource-based economy in one way or another) rely on sustainable environments. Dealing with catastrophic weather events and a rapidly-changing environment is hardly good business for America’s future in exports.
This seems particularly important considering that energy outlooks for key demand markets could be changing significantly. These coal export projects are banking on growing coal demand from Asia, particularly China, the world’s largest coal importer. What U.S. coal exporters should recognize, however, is that China is doing everything it can to slow demand growth. China has suffered a wave of major air pollution crises in recent years, and as a result, the Chinese citizens are upping the pressure on the leadership in Beijing to reduce particulate pollution. The result is a wave of new regulations that could have big impacts on China’s coal industry.
Beijing has already rolled out new emissions standards for coal-fired power plants and issued new particulate air pollution standards for major metropolitan areas. These regulations are already having an impact. To meet the new air quality standards, Beijing’s municipal government is already taking radical steps to switch the city’s electricity and heat generation from coal to natural gas, and other municipalities are likely to follow suit. Last year, although China added 83 gigawatts of new power generation capacity to meet the nation’s growing demand, 94 percent of that new power came from renewables and nuclear energy.
When U.S. coal companies see steep market projections for Chinese coal demand, they see a market opportunity, but when Chinese leaders look at those forecasts, what they see is an energy and pollution crisis that must be avoided at all costs. If we ignore the changes underway in China, we could wind up betting on demand that never materializes.
– CAP’s Melanie Hart contributed the China analysis.