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Collection: Northwest Coal & Oil Exports

Why Big Coal’s Collapse Matters To The Northwest

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A few weeks ago I wrote about the astonishing and unprecedented nosedive in domestic demand for coal. That collapse has been good news for the climate and human health. But it’s been terrible, horrible, no good, very bad news for Big Coal.

Just how terrible?

Simply put, the coal industry is in freefall. Mining companies are shuttering operations left and right. A quick Google scan turns up recent coal mine closures in Indiana, Virginia, West Virginia and Pennsylvania, and reports of layoffs and mine closures throughout Appalachia.  At the same time, power companies are shuttering a raft of coal-fired power plants, including facilities in South Carolina, West Virginia, Wyoming, Virginia, Texas, Ohio, Pennsylvania, and Maryland, as well 10 aging plants in the Midwest and East. I’m sure that a few more minutes on Google would turn up examples that I missed.

And the financial markets are certainly noticing the same trends we are. Stock prices for major domestic coal companies went into a nose dive just over a year ago, and have dipped even lower this year. See, for example, this chart from Yahoo Finance:

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Recent Coal Export Trends: Q2 2012

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Here’s data from the latest coal report from the US Energy Information Administration, taking us up through the second quarter of 2012: [Update 12/28/12: The green line labelled is in error on this chart. The San Diego Customs District exported virtually no coal products in Q2 2012.] In the Western Customs Region, depicted above, three Districts … Read more

Uncertainty and Risk in Asia’s Coal Markets

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In the US, demand for coal is cratering. As a result, coal interests are now looking to Asia with growing desperation. These firms hope to build new ports in Oregon and Washington that will allow them to ship coal to Asian markets. The coal industry claims that Asia offers stable and lucrative markets for American … Read more

Coal’s Unprecedented Collapse

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The US Energy Information Administration released new numbers today, with shocking news for the coal industry: the nation’s electric utilities used 18 percent less coal in the first half of 2012 than they did in 2011, and 27 percent less than they did during the peak year, 2008.

In short, big coal companies are in the middle of a free-fall, and nobody’s sure when they’ll hit bottom.

The chart to the right shows one way of looking at the trends: it depicts the minimum monthly coal consumption by the US electric power sector over a rolling 12-month period. And as of April of 2012, monthly consumption had fallen to its lowest level since 1986!

In all my years of examining economic and environmental trends, I’ve never seen anything like this. Gasoline consumption might shift by a few percentage points per year at most. Coal consumption trends had been very much of that ilk: consumption would shift slowly, but with a long-term trend towards steady growth.

So a drop of this magnitude is a proverbial “black swan“—an unforeseeable event with dramatic, world-changing consequences.

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The Myth of Low Carbon Coal

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One of the stranger things I’ve heard mentioned recently is that exporting coal would somehow reduce carbon emissions. This is nuts.

All coal is extremely carbon intensive—Powder River Basin coal included—and there is very little difference between coals. The low-carbon-coal argument is just a version of low-tar-cigarettes-are-healthy propaganda, only with less factual support.

So in the spirit of myth-busting, here are the facts about the carbon-intensity of major energy sources.

As is obvious from the chart, even the lowest carbon coal has an extremely high carbon footprint. For example, the subbituminous coal characteristic of the Powder River Basin—proposed for export via the Northwest—is 32 percent dirtier than diesel and 82 percent dirtier than natural gas.

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Fish vs. Coal

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Leaping salmon

The Army Corps of Engineers has some explaining to do.

They’ve just announced that, at least for the time being, Ambre Energy’s proposed coal export terminal on the Columbia River only needs a streamlined environmental assessment, rather than a more comprehensive environmental impact statement. Which means, as Scott Learn from The Oregonian writes, that Ambre’s project “is staying on the fast track.”

It’s hard not to think that the Corps is caving to pressure from the coal industry here. Let’s leave aside, if you will, the potential risks to human health—such as coal’s well-known problem with spontaneous combustion, or the many impacts on rail-side communities from coal dust. Ambre’s own consultants, in a biological assessment prepared earlier this year for the company, admitted that the Morrow Pacific coal export project will have signficant impacts on threatened and endangered fish populations and their habitat.

Here are some choice quotes from the coal industry’s own report:

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Is a Coal Bubble Bursting in China?

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In spite of all the US coal industry spin about a global coal “super-cycle,” it looks like China’s prodigious appetite for coal is fading.

In case you missed it, there was a must-read story in the Financial Times this summer, Fading fortunes: China’s demand for big coal wanes. As the FT piece shows, even coal traders now admit that China’s coal boom isn’t living up to the hype.

As one manager put it:

“There is a lot of coal floating out at sea…We stopped importing at the end of May,” he added, citing weak coal demand because of a slowing economy…

The article goes on to describe a China that—like the United States in some respects—is moving to reduce its energy intensity, and boost natural gas and renewable energy production. Chinese policymakers are even eying carbon pricing. All of that spells bad news for would-be coal exporters in the Northwest.

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What China’s Newspapers Are Saying About Coal

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With all the debate over what proposed coal export terminals would mean for the Northwest, it’s useful to evaluate what coal exports would mean for China. It’s China, after all, where the bulk of the Northwest’s coal shipments would be headed. And it’s in China where recent news accounts have pointed to falling prices and glutted demand.

China has ample reserves of coal. Historically, the country met virtually all of its demand for coal with domestic resources, but in 2009 it became a net coal importer. (China currently supplies perhaps 5 percent of its coal use with imported coal.) Consumer of roughly half of all the coal used worldwide each year, China’s shift sent ripples through the global coal trade, a phenomenon that’s been scrutinized in some detail.

Less well understood is how coal imports are affecting the Chinese coal industry. Toward that end, here are excerpts from a July 28 article by Lü Mengqi on the Chinese-language news website Chinanews.com translated by Stevan Harrell:

China’s coal prices are continuing to drop, sales losses in many regions are quite severe, and the adverse affect of imported coal on China’s coal market is rapidly magnifying.

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Another Deadly Coal Train Derailment

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This one outside Baltimore, killing two 19-year-old women who were students at universities in the area. USA Today and the Baltimore Sun have the awful story.

This marks at least the second deadly coal train derailment in the US this summer after two people were killed in Chicago on July 4 when a coal train tumbled off an overpass and crushed the car they were traveling in.

At National Wildlife Federation, Peter LaFontaine has put together an interactive map documenting the dozen-plus coal train derailments in 2012.

Why is the US Government So Bullish On Coal?

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US energy policies prop up coal consumption in a variety of ways, some clear and some less so. For example, the Bureau of Land Management has lately come in for a drubbing for leasing public lands to coal mining companies at comically low rates, and to the detriment of taxpayers.

Official bullishness on coal extends to other government agencies too, such as the Department of Energy, which produces the nation’s energy forecasts. If you sift through the new coal projections in the EIA’s Annual Energy Outlook 2012 you’ll find something rather curious: the US government has a more favorable outlook for coal than virtually any other major forecasting institution.

Take a look at US projections for coal exports, and you’ll see that they are more aggressive than any other major forecast:

Where most models—including even the US government’s circa 2010—see declining coal exports, the Energy Department projects growth that would reach record-setting levels and then continue to grow for more than 20 years.

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