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The Declining Value Of Coal Just Killed Another Export Terminal

By Kiley Kroh

"The Declining Value Of Coal Just Killed Another Export Terminal"

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A coal train moves through Seattle.

A coal train moves through Seattle.

CREDIT: AP Photo/Elaine Thompson

On Monday, the Port of Corpus Christi announced it was scrapping plans to build a coal export terminal, scoring a major victory for environmentalists and offering further proof of the declining market value of coal. According to a press release from the Sierra Club, New Elk Coal Company signed a lease with the port in 2011 and will pay a one-time fee to cancel it.

The minutes from the port’s agenda attribute New Elk’s lease termination to “a decline in the coal market.” New Elk and its parent company, Cline Mining Corporation, “are no longer interested in developing this site and due to financial difficulties have requested early termination of the lease,” according to port documents (see page 139). Western coal companies have touted plans to transport coal hundreds of miles from their mining operations by rail to ports along the Gulf, where the coal would then be stored in open piles and then loaded on to ships bound for overseas markets, like China, India, and Europe.

New Elk’s decision matches a recent Goldman Sachs report which concluded, “The window to invest profitably in new mining capacity is closing.” The report cites three main reasons for coal’s decline: 1) environmental regulations that discourage coal-fired generation, 2) strong competition from gas and renewable energy and 3) improvements in energy efficiency.

As demand for coal decreases domestically, companies are increasingly desperate to ship their product overseas to energy-hungry nations like China and India. The Goldman Sachs report points out this might not be the smartest move, however, considering near-term demand for coal imports in China is collapsing.

Looking forward, the Sierra Club says it will continue to challenge the expansion and development of 12 coal export terminals proposed for Gulf Coast states, as well as multiple projects in the Pacific Northwest. Several proposals in Washington and Oregon have been met with stiff opposition from residents. As the LA Times reported in May, “three of the original six proposed coal export terminals that have locked Oregon and Washington in controversy are now either shelved or off the table.”

The most recent was Kinder Morgan’s announcement that it was dropping plans to build its Port Westward Project near Port of St. Helens, Oregon. The project would have transported 15-30 million tons of coal from Wyoming and Montana to Asian nations.

Exporting coal from western states to Asia is controversial for many reasons. One of these is that the coal that would be shipped abroad is primarily taxpayer-owned coal, from public lands like the Powder River Basin in Montana and Wyoming. This region produces approximately 40 percent of our nation’s coal. And according to Reuters, western states that rely on receipts from coal sales to fund their governments are becoming increasingly alarmed that coal companies may not be providing taxpayers with a fair return for the extraction of their minerals, and are “dodging” royalty payments.

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 expressed concern about the noise, air pollution, and water contamination that come with transporting vast amounts of coal by trains. According to BNSF Railway’s own estimates, 500 pounds of coal can blow off a single open car en route.

Even though plans for new coal export terminals are hitting the wall, the U.S. is still exporting a massive amount of coal. In March, the Energy Information Administration (EIA) released data showing U.S. coal exports hit a record 126 million short tons in 2012, a 17 percent increase over the previous year. And as National Geographic points out, “The United States clearly is using less coal: Domestic consumption fell by about 114 million tons, or 11 percent, largely due to a decline in the use of coal for electricity. But U.S. coal production fell just 7 percent.”

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