Future of coal relies on NWUnited States
Mining companies aim to export coal to China through Northwest ports.
Portland General Electric has proposed closing Oregon's only coal-fired power plant, in Boardman, by 2020, part of a slow-growth picture for U.S. coal consumption. But coal companies say prospects are good for exporting Western coal thanks to surging Asian demand.
While Oregon works to shut its only coal-fired electricity plant and reduce the state's greenhouse gas emissions, global mining companies are increasingly bullish about exporting that very same coal through Northwest ports to China.
According to Peabody Energy, "Coal's best days are ahead," fueled in part by exports of coal from the Powder River Basin in Montana and Wyoming that Portland General Electric taps for its Boardman plant. Peabody says it hopes to announce a West Coast terminal by year's end.
Ambre Energy, an Australian coal company, is exploring mine acquisitions in the basin and the purchase of the 416-acre Chinook Ventures port site in Longview, Wash., for a bulk export terminal.
The Port of Portland says it doesn't have the space for coal exports in the short-term, but its consultants cited coal as a potential long-term market if it adds terminals on West Hayden Island.
Environmentalists aren't happy. They vow to fight any new Northwest coal export terminals on global warming and pollution grounds -- at the same time they're lobbying to close Boardman and Washington's only coal-fired plant in Centralia and celebrating laws in Oregon and Washington that effectively bar new coal plant construction.
Coal is the dirtiest fuel available, says Brett Vanden-Heuvel, Columbia Riverkeeper's executive director. Global warming isn't limited by geography. Mercury from coal burning in China travels on trade winds to the Northwest.
"Before we blindly start shipping coal, we need to think about what's coming back to our shores," Vanden-Heuvel says.
Privately held Chinook Ventures didn't respond to requests for comment. Valerie Harris, director of marketing for the nearby public Port of Longview, says the port is "in the investigative stages of handling coal."
"We get two to three to four calls every week to prospect coal business through our facility," she says. "It's definitely increasing, and it's driven by China's consumption."
Globally, coal consumption increased fastest of any fossil fuel in the last decade, rising 46 percent despite concerns about climate change. In June, British Petroleum said coal provided nearly 30 percent of the world's energy in 2009 -- the highest share since 1970.
Unless strict limits on greenhouse gases are put in place, Asian growth is expected to drive a 40 percent increase in world coal consumption by 2030. The U.S. Energy Information Administration predicts that nearly 90 percent of that growth will be for China, which uses relatively cheap and abundant coal for steel making and power generation.
Over that same time, global carbon dioxide emissions will rise almost a third if current climate change policies don't change, the EIA says.
If global warming projections are right, that's not good news: To keep temperature increases in the relatively safe zone of 3.6 degrees Fahrenheit, climate scientists say, fossil fuel use needs to peak in 2020 and energy-related carbon dioxide emissions need to drop 8 percent by 2030 compared with 2007. Congress backed off on caps in carbon emissions earlier this year. The United Nations has another climate change conference in November in Cancun, Mexico, but expectations for progress are low.
Richard Morse, lead researcher for Stanford University's global coal market program, says making a significant dent in coal's growth is unlikely given China and India's reliance on it.
"The economies of China and India are growing very rapidly," he says, "and the cheapest and easiest way to produce energy in those economies is to burn coal."
The Boardman plants emits about 4 million tons of carbon dioxide a year. A coal export terminal would lead to overseas generation of 50 million tons a year of greenhouse gas, the mining reform group Earthworks estimates.
Today, the West Coast is a bit player in coal exports; less than 1 percent of the Powder River Basin's production went overseas in 2008. The main terminal for coal exports is in Vancouver, B.C., with spotty shipments elsewhere. Industry sources say limited port space is the biggest hang-up.
That could change in a hurry.
An Ambre subsidiary is investigating Chinook Ventures, former site of an Alcoa aluminum smelter, says Michael Klein, Ambre's vice president of corporate development. The company has posted jobs for executives to develop "a bulk marine terminal in Washington state." Klein declined to give more specifics, but said coal would likely be a key export from any bulk terminals the company buys, builds or leases.
The United States has the world's largest proven coal reserves, Klein notes, and coal from the Powder River Basin, low in sulfur and ash and fairly high in energy content, "certainly has the specs the Asian market is interested in."
Peabody, the largest coal producer in the United States, is looking to announce a new West Coast port space by year's end. That could mean as much as a $500 million investment in new terminals, industry analysts say.
The ports of Portland and Vancouver both say they're unlikely to see coal exports in the short-term given tight space. Other ports, including Chinook Ventures and Longview are more likely candidates.
A new facility has risks. In 2003, a coal terminal in Los Angeles closed after expected coal exports to Asia didn't materialize.
Australia and Indonesia are big coal exporters and are far closer to China. China and India also want to boost domestic coal mining.
But Australian port space is tight and its prices relatively high. Indonesia wants to keep more of its coal for domestic consumption.
Powder River Basin coal is efficiently surface-mined and inexpensive enough to compete, even tacking on costs to rail it to ports and ship it overseas, says Pearce Hammond, an equity analyst and institutional research director for Simmons & Company International in Houston.
Exports are also appealing to coal companies given slower growth in U.S. coal consumption, says Hammond, who specializes in the coal and alternative energy sectors.
"My belief is there is enough demand in the Asian market to support Powder River Basin exports," he says. "They could be exporting it right now."
Ramping up coal exports would fly in the face of the Sierra Club's nationwide "Beyond Coal" campaign. The club is among environmental groups that sued the federal government in July to block Powder River Basin leases with access to more than 400 million tons of coal, citing global warming and the damage done by strip mining.
It's also pressing hard in Washington and in Oregon, where PGE has proposed shutting its Boardman plant by 2020. Environmentalists are pushing for an earlier date.
Exporting coal would "undermine" work across the nation to reduce greenhouse gas emissions from coal, says David Graham-Caso, West Coast spokesman for the Beyond Coal campaign.
Boardman emits about 4 million tons of carbon dioxide a year, according to the Environmental Protection Agency. Sending 30 million tons of coal overseas, the expected volume from a new terminal, would effectively generate as much as 50 million tons of carbon dioxide, according to an analysis by Earthworks, a mining reform group.
Vanden-Heuvel of Columbia Riverkeeper says regulators should take the global warming impacts of coal exports into account, and governments should focus on conservation and less-polluting alternative energy sources, from natural gas to wind.
Coal companies "are seeking to get around the decisions of citizens opposing coal" by exporting it to Asia, VandenHeuvel says.
As a solution to environmental problems, coal companies cite sequestration -- storing carbon dioxide instead of releasing it to the air -- and say China is a leader in developing cleaner technology.
They also point to coal's prospects for reducing "energy poverty" in developing nations. According to the International Energy Agency, 1.5 billion people have no access to electricity today.
Industry predictions of how fast carbon sequestration will advance are optimistic, says Morse, the Stanford researcher. But limiting U.S. exports will simply lead Asian countries to buy coal elsewhere.
China has its own incentives to reduce coal use, from reducing dependence on it to cutting local pollution, Morse says.
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