Drawing Battle Lines Over American Coal Exports to Asia

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The Powder River Basin in southeastern Montana and northeastern Wyoming can be as beautiful as its name suggests, but that’s not why mining companies call it home. The region has one of the richest deposits of coal in the world, enough to yield more than 400 million tons last year—nearly half the coal mined in the U.S. There’s enough coal in the Powder River Basin to keep American lights burning for decades, except for one thing—the U.S. is using less and less of the stuff. Thanks to bargain-basement natural gas prices and tougher air-pollution regulations, coal-fired power plants are closing down, and the Energy Information Administration expects coal consumption in the electric-utility sector to drop by 14% this year. That’s good news for the environment—coal is a major polluter and contributor to climate change—and bad news for companies that mine coal.

But across the Pacific Ocean, the demand for coal has never been hotter, with China burning 4.1 billion tons in 2010 alone, far more than any other country in the world. That insatiable demand forced China in 2009 to become a net coal importer for the first time, in part because congested rail infrastructure raised the cost of transporting coal from the mines of the country’s northwest to its booming southern cities. In April, Chinese coal imports nearly doubled from a year earlier. Right now Australia and Indonesia supply much of China’s foreign coal. U.S. coal from the Powder River Basin could be a perfect addition to the Chinese market. Montana and Wyoming are just short train trips to ports on the Pacific Northwest coast, and from there it’s a container ship away from Asian megacities where coal doesn’t have to compete with cheap natural gas and air-pollution regulations are far weaker than in the U.S. To a wounded Big Coal, China is a potential savior.

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As I write in the new edition of TIME, there’s just one problem: right now, ports on the West Coast lack the infrastructure needed to transfer coal from railcars into container ships. (Just 7 million of the 107 million tons of U.S.-exported coal left the country via Pacific Ocean ports last year.) That’s why coal companies like Peabody and Ambre Energy are ready to spend millions to build coal-export facilities at a handful of ports in Washington and Oregon. If all those plans go forward, as much as 150 million tons of coal could be exported from the Northwest annually—-nearly all of it coming from the Powder -River -Basin and headed to Asia. Even if the U.S. kept burning less and less coal at home, it would have a reason to keep mining it.

Environmentalists and many local residents are angry about the pollution and disruption that the port projects—and the subsequent increase rail traffic—will create. But the real environmental consequence is be the additional carbon emissions that could result from the U.S. shipping hundreds of millions of tons of coal to Asia. As I write in TIME:

Environmentalists worry that by making it easy for the U.S. to ship cheap coal to Asia, the port projects would keep American mines humming even as coal use dwindles domestically. They might also encourage China and other rapidly growing Asian countries to burn more coal than they otherwise would by lowering the global price of the product. (One recent study found that a 10% reduction in the cost of coal in China would lead to a 12% increase in consumption.) By exporting coal to Asia, the U.S. would be responsible for further increasing global carbon emissions. “Will China and India have unlimited access to some of the cheapest and most plentiful coal on the planet?” says K.C. Golden, policy director for the Seattle-based NGO Climate Solutions. “That’s the most important question.”

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But that’s only true if U.S. coal adds to Asian coal consumption, rather than simply displacing more expensive sources. And exporting coal from the U.S. could actually change consumption here at home:

Some argue that if increasing demand in Asia pushes up global coal prices, it could actually help the environment by forcing more coal-burning countries to start looking for cheaper energy alternatives. In the U.S., higher coal prices could accelerate the switch from coal to natural gas, especially in parts of the Midwest that remain heavily dependent on coal. But that will depend on how Asian markets respond to the potential avalanche of U.S. coal. Chinese demand for coal has been inelastic in recent years, meaning that prices—high or low—haven’t had much impact on how much coal China burns. That’s partly because the Chinese government exerts control over the energy market, says Richard Morse, director of coal- and carbon-market research at Stanford University, making the effect on emissions of cheaper coal from the U.S. “a complex question. And it’s not just about China,” he says. “You have to net out the global impacts against the U.S. impacts.”

What’s clear is that the global rate of consumption of coal—the dirtiest fossil fuel there is—will help decide how fast the planet warms in the future. For their part, environmentalists remain convinced that stopping coal exports to Asia is a must-win battle in the war on climate change. In a fiery speech at a Portland, Ore., protest against the proposed ports last month, environmental activist Robert Kennedy Jr. urged the crowd to fight back. “[Coal companies] are coming to ship their poison, so they can poison the people in China, and that poison is going to come back here,” he said. “So don’t let them.” It’s a fight for the people of the Pacific Northwest, but the results will matter to everyone.

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