Cheap natural gas and strict pollution regulations have depressed coal consumption in the United States but there is yet a market for the industry overseas, if state governments on the Pacific coast don’t block export opportunities.
Coal’s share in American electricity production has dropped from almost 50 percent as recently as 2007 to just over 37 percent last year. The Energy Information Administration expects a slight increase this year as gas prices rise but long-term, emission standards and shale gas seem to doom coal’s chances of revival in America.
Improvements in drilling techniques have unlocked vast shale gas and oil deposits across northeastern United States in areas that used to be dominated by coal and steel production. Coal companies are moving west, to Montana and Wyoming where there is yet plenty of coal to be found. They don’t intend to sell at home. It’s Asia’s soaring demand that is luring them westward.
Japan, forsaking nuclear energy in the wake of 2011’s Fukushima power plant disaster, will have to import more fossils, including coal, to meet demand. India, similarly, lacks the domestic resources to fuel its booming economy. China, despite having the second largest proven coal reserves in the world, became a net importer of the stuff in 2009 and depends on coal for almost 80 percent of its electricity needs.
Yet America hardly sells across the Pacific. Less than 7 percent of American coal exports leaves the country via Pacific Ocean ports. Most coal is sold to Europe or exported through Canada.
There are plans to build four new export terminals in the states of Oregon and Washington to ship up to one hundred million more tons of coal across the ocean each year. But local and state governments are reluctant to give them the green light. Many Democratic Party politicians share environmentalists’ concerns about coal. According to a spokeswoman for the Sierra Club quoted in Politico, the ports would send the country “over the climate cliff if they are developed.” The group threatens to sue the BNSF Railway freight company, which transports coal to the coast, for polluting Washington state’s waterways.
“And greens are drawing grassroots support to oppose terminals from a wide swath of local interests,” reports the political news website. Realtors and homeowners are worried about declining housing prices. Residents are anxious about increased train traffic. Farmers and tourist services fear air and water pollution.
The naysayers have bigger concerns. According to The Economist, they fear that shoveling millions of tons of coal to China every year will lower prices there and encourage it to prolong its reliance on a “filthy” fuel.
It is doubtful whether increased American exports would have such a significant effect. For one thing, China’s domestic market is so big, writes the British newspaper, “that a modest decline in import prices would be unlikely to make much difference at the margin.”
Governors Jay Inslee of Washington and John Kitzhaber of Oregon, both Democratic Party members, have nevertheless appealed to President Barack Obama’s administration to intervene and study the global environmental impact of building the terminals. “We cannot seriously take the position in international and national policy making that we are a leader in controlling greenhouse gas emissions without also examining how we will use and price the world’s largest proven coal reserve,” they argued in a letter.
The president previously blocked the construction of the Keystone XL Pipeline extension to carry oil from Canada to Houston, Texas but may be tempted to reverse that decision after two environmental reviews from his own State Department concluded that not building the pipeline would have little effect as Canada will develop its Alberta oil sands “with or without the proposed project.”
That logic doesn’t necessarily apply to coal. Exporting more through Canada is not an attractive option.
The debate about whether to build the Pacific ports is nevertheless reminiscent of the Keystone controversy. In both cases, President Obama and his party are torn between two constituencies: environmentalists, who are opposed to building both, and labor unions, which are in favor because the projects promise “good union jobs,” according to a local union representative quoted in The Economist.
SSA Marine, the shipping terminal operator that seeks to build in Washington, claims it would provide more than 4,000 construction jobs and over a thousand long-term.