The Plan To Revive Big Coal’s Fortunes Isn’t Panning Out

CREDIT: AP PHOTO/ELAINE THOMPSON, FILE
CREDIT: AP PHOTO/ELAINE THOMPSON, FILE

Six years ago, coal companies like Arch Coal, Ambre Energy, and Peabody Energy had an idea. Domestic demand for coal was slumping, but they saw lifelines between the Powder River Basin of Montana and Wyoming, where coal was plentiful and relatively cheap to mine, and Asian markets, where economic growth was expected to drive a 40 percent increase in global coal consumption was by 2030.

“Coal’s best days are ahead,” Peabody Energy said in 2010. China’s transition from a net-exporter to a net-importer of coal had recently sent prices rocketing, and energy companies were eager to turn profits in a rapidly expanding overseas market. Two years earlier, just 1 percent of the Powder River Basin’s coal production was exported. But if a network of railroads could carry more coal from Montana and Wyoming to the deep water ports of the Pacific Northwest — the cheapest, most direct line to Asia — coal companies could ship the coal to ballooning markets elsewhere.

All the coal companies needed were a network of export terminals that could handle the more than 100 million of tons of coal that would be exported annually.

Beginning in 2010, coal companies applied for permits to build six coal export terminals along the West Coast. But met with staunch opposition from local communities and environmental groups — as well as the global decline in coal consumption — many coal export terminals have struggled to become a reality.

Another blow for coal export projects

According to the U.S. Energy Information Agency, the United States produced 896 million short tons of coal in 2015. Of that, about 74 million short tons were exported — just around 8 percent. Of that, 7.2 million short tons were exported through ports along the West Coast. The largest, Seattle, exported 4 million tons — five percent of the grand total of U.S. coal exported.

But 4 million tons a year pales in comparison to what might have come through the deep ports of the Pacific Northwest if just a handful of the proposed terminals were to become fully operational. The two largest proposals — one near Bellingham, Washington, and another near Longview, Washington — could potentially ship a combined maximum of 101.41 million short tons of coal a year, more than the entire sum of coal exported by the United States in 2015.

This week, one of those proposed coal export terminal suffered a potentially fatal blow, with the Army Corps of Engineers denying a permit for the proposed Cherry Point export terminal near Bellingham, WA. The Corps concluded that it would significantly harm the treaty-protected lands and fisheries of the nearby Lummi Nation. That leaves just one proposed coal export terminal, in Longview, Washington, on the table.

A map of proposed coal export terminals. All but Longview have been rejected. CREDIT: Sierra Club
A map of proposed coal export terminals. All but Longview have been rejected. CREDIT: Sierra Club

Bellingham’s Gateway Pacific Terminal, a $665 million dollar project, would have been the largest coal export facility on the West Coast. The proposal faced strong opposition from the Lummi Nation, who argued that the terminal — which would have been built on an industrially-zoned piece of land at Cherry Point, just west of Bellingham and 100 miles north of Seattle — violated federal treaty rights from 1855 that guaranteed the tribe rights to its “usual and accustomed” fishing grounds. The terminal would have required extending docks across some 144 acres of water, which the tribe argued would have impeded their ability to access the fishing grounds. Beyond impacting the fishing grounds, the tribe also argued that the export terminal would have been constructed on sacred land. Lobbying against the terminal, Lummi Nation Chairman Tim Ballew II once told the Army Corps of Engineers that it would have been akin to building a freeway inside of the reservation.

Northwest Tribe Says Proposed Coal Terminal Would Be ‘Like Putting A Freeway Inside The Reservation…Climate by CREDIT: AP A Pacific Northwest tribe with fishing rights dating to the mid-19th century has sharply…thinkprogress.org“The Cherry Point denial, by the Army Corps, is a setback for coal in general, but also sends a signal to Longview and the last remaining export terminal there,” Brett VandenHeuvel, executive director of Columbia Riverkeeper, told ThinkProgress. “I’m hopeful that the Army Corps as well as the state agencies will get the same message and reject the export terminal in Longview.”

Which proposals remain?

In 2011, at the peak of proposed coal export terminals throughout the Pacific Northwest, there were six projects that could have shipped, cumulatively, more than 100 million tons of coal a year from the Powder River Basin to Asia. Now, just one proposal within the Pacific Northwest remains.

If completed, Longview’s $680 million proposed terminal would ship a maximum of 44 million metric tons of coal from the city, located just about two hours north of Portland, Oregon. The project was the first coal export terminal to be proposed in the Pacific Northwest, and has been stalled for years by legal challenges and community opposition. In late April, the Washington State Department of Ecology finally released its long-awaited draft Environmental Impact Statement (EIS), which found that the terminal, if constructed, would have a “significant and unavoidable” impact on the climate — the equivalent of adding 8 million cars a year to the roads over a 30-year period.

Proposed site of the Longview export terminal. CREDIT: Natasha Geiling
Proposed site of the Longview export terminal. CREDIT: Natasha Geiling

“That EIS was interesting because it really said that there are some very serious concerns, including contributing to global warming very significantly,” Jan Hasselman, a staff attorney EarthJustice, told ThinkProgress. The draft EIS now enters a period of public comment, and the Department of Ecology hopes to release its final EIS sometime next year.

Outside of the Pacific Northwest, there are two more coal export terminal projects currently being considered — one that would ship 8 million tons of coal from Oakland, California, and another that would ship four million tons of coal from Vancouver, B.C.

Karen Campbell, a staff lawyer with Ecojustice, is representing a community-backed legal challenge to the Vancouver terminal, which has already been permitted but has not begun construction. She said that opposition to the project has been “strong and consistent,” coming both from community groups as well as First Nations tribes.

“One of the things that is becoming really clear to us is after Oregon and Washington are having more success in stopping these coal terminals, it makes the imperative on us to stop this project from happening even more critical,” she said. “It’s really important that this project never go ahead.”

In Oakland, community opposition to the proposed coal terminal, which would be built as part of the redevelopment of an old army base, is also strong. Oakland residents already struggle with poor air quality and its deleterious impact on health — residents near the Port of Oakland are twice as likely to visit the emergency room due to asthma than other residents in the county. So the idea of a coal export terminal, with the coal trains and coal dust that it would bring, has not been viewed favorably by many within the community, according to Cesia Kearns, a Beyond Coal organizer with the Sierra Club. A Beyond Coal poll conducted last year found that 76 percent of Oakland residents opposed the terminal.

Last week, the Oakland City Council commissioned a report from an independent consulting firm looking at the potential health and safety impacts of constructing the coal terminal. According to Kearns, the ultimate goal is for the city council to use the study to enact a ban on coal exports.

“The fact that there is already a lot of pressure on air quality, adding more trains coming through Oakland communities is not acceptable,” she said.

‘You just can’t make money shipping rocks halfway around the world’

But as EarthJustice’s Hasselman points out, community opposition is only one half of the recipe for the coal export terminal’s precipitous decline.

“At today’s prices, you just can’t make money shipping rocks halfway around the world,” he said, noting that the market outlook for coal export isn’t as sunny as it might have been five years ago.

China Redoubles Its War On CoalClimate CREDIT: ANDY WONG, AP Since China peaked its coal usage in 2013, its been waging a fierce war against the…thinkprogress.orgThe wave of coal export terminal projects were proposed in 2010 or 2011, a few years after China went from being a net-exporter of coal to a net-importer. That caused global coal prices to skyrocket, and coal companies sought to capitalize on the high prices coal could fetch. But instead of continuing to grow, China’s coal market has been contracting, lead by revitalization of their domestic infrastructure and mines and a concerted effort to cut back on air pollution. Today, China is about even as a coal importer and exporter, which has caused coal prices to drop and coal exports to become less financially rewarding.

“In some sense, the projects have collapsed under their own weight,” Hasselman said.

Proposed site of the Longview export terminal. CREDIT: Natasha Geiling
Proposed site of the Longview export terminal. CREDIT: Natasha Geiling

At the same time, coal companies have been battling their own financial woes. In the last year alone, six publicly listed coal companies — including giants like Arch and Peabody — have filed for bankruptcy. Those bankruptcies could also threaten the feasibility of the export terminals; Arch is a co-owner in the Longview project, leaving a chunk of promised financing for the terminal — even if it were to be approved and permitted — up in the air.

Still, fossil fuel companies aren’t walking away from the projects just yet. Following the release of the draft EIS in Longview, Millennium Bulk Terminals — the company behind the proposal — released a statement calling the assessment “a major milestone.” And even when rejected, coal companies continue to fight for the projects — Ambre Energy, the Port of Morrow, and the State of Wyoming are currently appealing a 2014 State of Oregon decision to reject a coal export permit in Boardman, Oregon. It’s possible that something similar could happen with the Cherry Point terminal in Washington — developers yesterday said that they were “considering all action alternatives,” which could include legal appeals.

“The coal companies are not walking away. Even after they have been rejected, they continue to fight. They are still taking these very seriously,” VandenHeuvel said. “They must see it as economically viable in the future, and that’s why we need to stand up to it now.”