House panel hears about coal export fight in the Pacific Northwest

Growing U.S. coal exports present a good opportunity for the U.S. economy – if those exports aren’t artificially limited due to environmental group opposition and slow regulatory approval processes, said Hal Quinn, president and CEO of the National Mining Association (NMA).

Quinn was one of several officials testifying June 18 before the Energy and Power Subcommittee of the House Energy and Commerce Committee. The hearing was entitled: “U.S. Energy Abundance: Regulatory, Market, and Legal Barriers to Export.”

NMA is the national trade association representing the producers of most of the nation’s coal, metals, industrial and agricultural minerals; manufacturers of mining and mineral processing machinery, equipment and supplies; and engineering and consulting firms, financial institutions and other firms serving the mining industry.

In a report released recently by NMA, “U.S. Coal Exports: National and State Economic Contributions,” Ernst & Young documented the valuable contributions that the economy derives from U.S. coal exports, Quinn noted. Last year, the U.S. coal industry exported a record of more than 125 million tons of coal, supporting 168,430 jobs at mines, railroads, ports and many other businesses that make up the export supply chain.

For every million tons of U.S. coal exported an estimated 1,320 total jobs are added to the U.S. economy. These high-wage jobs pay nearly 50% more than the national average in wages.

The share of U.S. coal that is exported abroad has been increasing in recent years, as developing economies around the world take in more coal for both steel and power production, Quinn noted. From 2000 to 2010, U.S. coal mines exported about 5% of total production on average but more recently the share of coal exported has doubled to average 10% of production. In 2012 the U.S. produced more than 1 billion tons of coal, of which 125.7 million tons (12% of total production) was exported.

In 2011, U.S. coal exports accounted for 8.4% of world seaborne coal shipments, up from 5.7% in 2007. Of the 125.7 million tons of U.S. coal exports in 2012, 56% was met coal for steel production and 44% was steam coal for electricity generation. Some of the extra steam coal exports lately have been low-Btu coals out of the Powder River Basin, which before had not moved much in the export market. The U.S. ranks second in the world in metallurgical coal exports.

Quinn says coal is a key to economic development in many countries

“Coal is powering the historic transformation of developing countries from agrarian societies to commercial powers,” Quinn wrote in his prepared testimony. “The ongoing build out of humanity is occurring for the most part in the developing world through industrialization and urbanization that is unprecedented in both scope and pace. Much of this transformation depends upon a coal-centric infrastructure that requires coal for steel, cement and, of course, electricity. “

Over the next four years, more than 300 GW of coal-based electricity generation is expected to be constructed globally in order to drive economic growth, Quinn noted. Steel consumption will increase as these emerging economies accommodate the migration of their populations from rural areas to urban centers. This rising and growing middle class with greater purchasing power will in turn provide new markets for goods and services made in America.

China, the world’s second largest economy, is building and lighting up scores of giant new cities with coal, Quinn pointed out. Coal now generates 65% of India’s electricity. The country’s fast-rising middle class is driving plans to double the size of its power grid by 2025. Also, Vietnam plans to add more than 30 GW of coal-based power this decade. Thailand, Taiwan, Indonesia, Malaysia and the Philippines are on a similar path.

Japan is expected to increase its coal imports to replace part of its nuclear capacity shut after the Fukushima nuclear accident. South Korea has increased its coal imports by 45% over the past five years. Europe is turning to more coal in response to natural gas prices that are three times those in the U.S. and because of rising concerns about the future of nuclear power on the continent, Quinn said.

The U.S. has the most of what the rest of the world needs, he added, which is a recoverable reserve base of 262 billion tons of coal and a demonstrated reserve base of 484 billion tons.

Two leading coal export countries—Australia and Canada—have demonstrated that permitting major projects can be both timely and thorough, Quinn said. “Yet, they both continue to strive to improve the efficiency and timeliness in reviewing and permitting major infrastructure projects including coal export facilities,” he added. “They understand that we are in a global competition for investment and that an effective and efficient permitting process provides a competitive advantage.”

Valid concerns about coal export projects should be fully addressed, Quinn added, in an apparent reference to several coal export terminal projects in Oregon and Washington that have run into stiff environmental group opposition and a go-slow regulatory review regime. “At the same time, they should not serve as an excuse to trap projects in a limbo of duplicative, unpredictable and endless review without a decision point,” he said. “We should not confuse the length of the process with the rigor of review. Predictability and reliability in our regulatory system are essential elements for supporting long term investments that produce high-paying and highly skilled jobs.”

Seattle mayor wants coal plans brought to a screeching halt

Another hearing witness, Seattle Mayor Mike McGinn, slammed the coal export proposals in his June 18 testimony.

“My message to you today is twofold: 1) Coal exports will have serious negative impacts on local communities as well as on the environment, both locally and globally; and 2) The Leadership Alliance Against Coal is opposed to the permitting and development of any new coal export facilities on the West Coast,” McGinn wrote in his prepared testimony.

“In Washington State and across the Pacific Northwest, coal companies are joining with railroads and international shipping companies to propose new export facilities for coal,” the mayor added. “Terminals are proposed north of Bellingham, Washington and near Longview, Washington as well as in Oregon and British Columbia. As they travel to Northwest ports from the Powder River Basin, coal trains will leave behind coal dust and diesel exhaust along the rail lines. Coal train traffic will clog our railroads, ports, and roads, risk our families’ health, pollute our air and water, hurt local economies and contribute to climate change. In our cities, these coal trains will create unacceptably long delays for residents, visitors, freight, first responders, and others who are trying to cross the busy rail corridor. On Washington State tribal lands, coal trains will cause those same disruptions, but will do additional damage to cultural heritage and treaty rights.”

McGinn said there is a need for an area-wide Environmental Impact Statement to evaluate the local, regional and global impacts of coal exports. “The geographic scope of the EIS should be broad and all potential impacts in local communities, from increased health risks to traffic delays, from the disruption of freight movement to the impacts on our local businesses should be considered,” he added.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.