Should We Ship American Coal to China? [View all]

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http://www.slate.com/articles/business/moneybox/2012/05/coal_export_terminals_and_china_should_the_u_s_ship_its_dirty_coal_to_china_.html


Coal producers want to send their product to China. Environmentalists want to stop them.
Uriel Sinai/Getty Images.

Coal, long king of the U.S. energy game, faces a troubled future here. Its problems started years ago when local activism began making it exceptionally difficult to open up any new coal-fired power plants, and caused some old ones to close as well. Coal dodged a bullet when the Republican Party had a sudden post-2008 mass conversion away from belief in climate change (was it so long ago that candidate John McCain vowed to “make global warming a priority” in his administration?), but the success of natural gas has created a whole new set of problems. The application of new fracking techniques has sent gas prices plummeting, upending the economics of coal. And while environmentalists don’t like fracking, almost everyone agrees that gas is more eco-friendly than coal. Its cost advantage gone, coal appears cornered. Then in March came the EPA’s New Source Performance Standards for carbon dioxide which essentially make it impossible to build new coal plants absent the arrival of some miracle carbon capture technology.
But there is a new hope for U.S. coal: China.

Everyone who’s been able to sell commodities to China over these past few years is doing great, whether minerals from Australia or soy beans from South America. China’s insane growth, robust manufacturing, and soaring domestic investment fuel a voracious appetite for basic inputs, including coal. As Grist’s David Roberts puts it, “the question for the U.S. coal industry is: Can exports rise fast enough to offset declining domestic demand?”

On paper, the fundamental outlook for the coal export industry looks really good. According to the U.S. Energy Information Administration, in 2011 just seven out of 107 million total tons of export coal left the country via Pacific Ocean ports.

For now, in other words, we are mostly shipping coal across the Atlantic to Europe. But China is where the growth is. And there’s plenty of coal underground in the Powder River Basin of Wyoming and Idaho. Given domestic trends, most of this coal may never see the light of day. But it’s conveniently located for the Pacific export market, and freight railroads are already shipping it west in bunches, annoying the areas it passes through in the process. The problem for the coal mines and the rail operators who love them is that the west coast simply doesn’t have much infrastructure in place to get coal off the railcars and onto boats. For America to really emerge as a major coal supplier, we need suitable port facilities—which is exactly why plans are underway to build six major new outlets in Oregon and Washington.