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U.S. Coal Industry Eyes Overseas Market


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13 July 2012, 10:50 AM
Shifting economic realities push drive for West Coast coal export terminals
Longview, Washington.

(Editor's Note: This is the second blog in an ongoing series about proposed coal export terminals in the Pacific Northwest. Upcoming blogs will examine the potential impact coal export terminals could have on the region's health and environment.)

There are a whole lot of coal companies mining a whole lot of coal in Wyoming and Montana’s Powder River Basin. Although U.S. demand for coal is shrinking—thanks in part to Earthjustice’s successful campaign to shutter polluting coal-fired power plants—there are a whole lot of coal-fired power plants in Asia and a whole lot more planned for future construction.

You can probably see where this is going.

Considering the circumstances, it doesn’t take a trained economist to deduce that Powder River Basin mining companies are keen on selling Asia as much coal as possible. The only problem, from industry’s perspective, is how to transport the coal to the continent. Obviously, American coal will sit on a big boat during the last leg of the trip, but it’s the process leading up to the voyage across the Pacific that’s proving to be the sticky wicket.

After being mined, the coal must be transported by rail to coastal shipping ports. Right now, on the western coast of North America, there are two coal export terminals in British Columbia (Vancouver and Prince Rupert) and one small terminal in Seward, Alaska. There simply isn’t enough capacity at these terminals to ship the amount of coal that Powder River Basin mining companies want to send overseas. As a result, the coal industry is frothing at its proverbial mouth to build new export terminals in Washington and Oregon.

Oregon Public Broadcasting's environmental news outlet Ecotrope recently posted a fascinating interview with coal industry analyst Darren Epps. Epps discusses the economic factors driving the push to export American coal to Asia, the logistical issues with railroad shipping, and the struggle of constructing coal export terminals in the Pacific Northwest. He sums up the situation thusly:

There’s really nowhere to ship Powder River Basin coal right now. The terminals in Vancouver (BC) and farther north near Alaska near Prince Rupert in British Columbia are at capacity. They’re expanding as fast as they can, and it’s really not economical to ship it by rail all the way up to Prince Rupert in British Columbia. So, the economics of transportation—and it’s not cheap to haul this coal—make it really difficult to earn any money at all by shipping it that far. What would be much cheaper, much more economical, is to ship it off the U.S. West Coast. And…domestic consumption has lowered. I think domestic coal is closer to 40 percent now of U.S. generation. So exports are the real market for coal right now.

To be sure, Asia’s growing demand for coal is shaking up the global market. As Sightline Daily’s Eric de Place reports, China is responsible for burning about half of the world’s coal supply and its rate of use is growing at a rapid, exponential pace. China’s soaring demand is today’s reality, but de Place asks a vital question: “Is China’s coal import growth an indication of a radical but fundamental shift in the global coal trade? Or do the trends in China indicate an unsustainable economy with severe risks of volatility?”

As de Place is well aware, this isn’t the first trip around the block for coal export terminals on America’s West Coast. Back in 1982, Portland, Ore. was swept up in coal export hysteria. Demand in Asia was strong and the Port of Portland decided to construct a coal export terminal to get a piece of the supposedly lucrative action.

The port and investors shelled out $25 million to build a terminal and subsequently inked a 25-year lease with Pacific Coal. After only two years, the project went the way of the dodo bird. The Asian coal market turned out to be unstable and prices took a nose dive. In the end, with taxpayers left holding the bag, the Port of Portland never shipped a single ounce of coal across the Pacific.

The Portland boondoggle cooled excitement over West Coast coal export for about 10 years. But during the early 1990s, the Port of Los Angeles decided it would try to accomplish what The City of Roses could not. A coal export terminal was constructed in Los Angeles, but problems were abundant from the get go. Due to excessive coal dust, two fires broke out at the terminal, further fueling the fears and concerns of surrounding communities. And, once again, the Asian market proved to be less robust than expected. So, just six years after it opened, the Port of Los Angeles coal terminal was shuttered.

But that couldn’t happen again, right? Emerging Asian economies have an insatiable appetite for coal…right?

Well, this past spring Reuters reported that three Chinese companies deferred or defaulted on a series of iron ore and coal imports. According to the news agency:

China is the world's biggest consumer of iron ore, coal and other base metals, but recent data has shown the economy cooling more quickly than expected, with industrial output growth slowing sharply in April 2012… Some analysts said they were bearish regarding China's prospects of steeply ramping up coal imports any time soon.

But past failures and a potentially fickle market might be ignored by a coal industry facing falling share prices and shrinking profits. According to Grist’s David Roberts, “The health of the U.S. coal industry hinges on its ability to increase exports to China and India.” If Roberts turns out to be right, then we’re in for one hell of a fight. One side will be struggling to keep an antiquated, polluting technology alive, while the other will be fighting to protect the health of Pacific Northwest communities and prevent runaway climate change. Let’s hope that the good guys win.

Having just taken an "Overview of Environmental Science" class at our local Community College and learning just how "interdependent" we who "share" the Earth are, it is of GREAT concern to me just what the consequences/cost of "ignorance" can be! Just the simple fact of learning that the wind(over which we have little to NO control) blows FROM the West to the East means that much of the huge amount of fossil fuel pollution produced by the manufacturing of everything "made in China" will BLOW BACK IN OUR FACES/LUNGS should be enough to stop this coal-train traffic dead in its tracks, LITERALLY!
No amount of money( purported job income) will replace or compensate for the exponential price we WILL PAY for the certain health and environmental degradation that WILL happen... Just because we can't see it doesn't mean it's not here to suck the life out of us, our family/friends and spectacularly beautiful part of the country! If you learned that you have a life-threatening disease who would NOT research and learn as much about it as possible, to try to heal/cure yourself, instead of just lay down and wait for death?! Fellow Earth/Global dwellers/World citizens, Please take the time, make the effort to widen your gaze/perspective around this crucial matter that does affect us ALL, whether we put on self-serving blinders or not..! Consider too the health/well-being of those in China whose country seems to care little about their own citizens but just thinks of the power of money to enlarge its empire... Do we want to support that goal? We need to "think outside the box" of corporate financial gain, as it is clear that it is NOT in the Best interest of us or our Earth/World, to pursue this effort whose impact will fall on us in the worst possible way! I join Shirley Barclay(above) in PRAYING and doing all we can to STAND TOGETHER to change our World for the better! Let's CARE for this GIFT that allows us to LIVE so WELL!

It is time to shut down all coal plants and end all coal mining. This can be done if we consume less, embrace renewables and make pollution reduction a priority over grid reliability. In addition we implement the principles of ecological economics. Efficient allocation but always in the context of just distribution and appropriate scale.

We have to preserve our planet. We are slowly killing our planet

David, it would be great if you could report on how people and communities in the Pacific NW are fighting back to stop the coal trains and terminals. In Bellingham, WA and Eugene, OR we are putting community rights initiatives/ordinances on ballots to stop trains traversing our cities. We are working with Community Environmental Legal Defense Fund (CELDF) who has been successful in helping communities all across the country to stop environmental harms by putting into law their inalienable right to govern themselves and what takes place in their communities. Please check out the web sites of Coal Free Bellingham (http://coal-free-bellingham.org/) and No Coal Eugene (http://nocoaleugene.org/). Then if you want to know more, check out CELDF.org. It would be great if Earthjustice could help communities to engage and fight for the environment in their own back yards. By getting together and collectively exerting their rights to govern themselves, communities can in fact protect themselves from corporate harms. This is a people powered movement whose time has come. The people in over 160 communities have stopped fracking, CAFOs, sewage sludge on farmland, etc. with these rights based ordinances. We in the PNW can do the same with the coal trains and terminals. Please help spread the word! Dana Allen Oregon

I do not in any way support coal terminals for Asia or anyplace else being built anywhere in this country. When will we ever learn that money is not everything, that life matters in all forms and that we must stop the rush to control and embrace the process of thinking about the value of life in all it's forms on this planet? That includes the people who have very little, the wild life, the water, the air, the sea, the land everything. When will we wake up to the fact that we are all connected and dependent on the balance of keeping each other and life, as we know it wherever we find it, aware that it has imeasurable value? And how long can we rape and pillage our mother earth in the belief that because we can it is alright? We can burn, pollute, and pillage her and it is alright. We steal from her and feel justified. We take what we want and change what we want because we can and feel entitled to do so because we can. We ignore the signs of trouble because then we have to look at our parts in all this because we can and do not want to see the effects and cost to this earth and to us all. We think the "Money Makes The World Go Around" and it does not. Life and this Universe we live in does that. It is always bigger than we are and part of the Great Mystery. And, we think we can control that too. So,Then, if we care, say No, and try to intervene, then we don't by definition know what we are talking about and don't understand how important it is and are overruled. Then we are told it is for our own good and the ones in power and control do it anyway. When will we just simply say no and hold to that? So, from me to those in power STOP!!!! Wake up and touch the heart of life and hold it Sacred. Then care about life and we all will have the possibility of all that this reverence brings. Hear my words and my prayer. Thank you Shirley Barclay

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