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US exports of coal may double
September 25, 2012
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WASHINGTON: The United States coal exports have more than doubled in the past two years to reach a record nearly 29 million tons in the first three months of the year. Roughly a quarter of that already heads to Asia, mostly via Gulf Coast ports.

The US holds the world’s largest coal reserves, but China, with the world’s third-largest share, is tapping more of its own reserves and boosting imports from Australia, Indonesia and even Colombia as its economy continues to grow. India, too, is hungry for coal.

Analysts say Powder River Basin coal must cheaply reach Asia in the coming years to catch the strong demand in China, the world’s No. 2 economy, and the rest of the region.

“The United States has no unique advantage in meeting the Asia coal hunger, and that demand will not exist forever,” said Ailun Yang, a researcher with the World Resources Institute. 

About 40 per cent of the country’s coal comes from the Powder River Basin - a high, grassy plain in eastern Wyoming and Montana where the black fuel runs in seams near the surface.

With nearly 9 per cent of US coal furnaces set to go dark in the next four years and more utilities moving to natural gas, the 100 billion tonnes of coal still locked in the region need to reach new markets or face being frozen in the ground.

Call it the Keystone of coal: a regulatory and public relations battle between environmentalists and US coal miners akin to the one that has defined the Canada-to-Texas oil pipeline.

Instead of blocking an import, however, this fight is over whether to allow a growing surplus of coal to be exported to Asia, a decision that would throw miners a lifeline by effectively offshoring carbon emissions and potentially give China access to cheaper coal.

Having long ago lost their bid to prevent the extraction of fossil fuels, environmental groups aim to close transport routes that bring those carbon fuels to market, pulling local and state politicians into the fight alongside regulators.

Mining interests won a battle last week when the Army Corps of Engineers called for a quick study of plans to open the first coal port on the west coast at Oregon’s Port of Morrow on the Columbia River, a review that will weigh impacts of hauling coal, not burning it.

Coal port skeptics say the ruling is ripe for challenge in the courts and they foresee a drawn-out fight over the review.

“I’m afraid that by choosing to perform a less stringent analysis today, the Corps will ultimately create a longer delay,” Oregon Senator Ron Wyden said in a statement. Wyden, who is due to lead the Energy and Natural Resources Committee if Democrats hold the Senate, has said he supports a full review of the project and is reserving judgment until it is completed.

Delay is something miners can ill afford.

Alpha Natural Resources Inc, one of the country’s largest coal producers, said last week i t is cutting 1,200 jobs, roughly 9 per cent of its workforce, as increased use of natural gas for power generation dents demand.

While coal foes in the Pacific Northwest can stymie the projects, the federal government will have the final say.

If President Barack Obama wins a second term, the issue will likely test his determination to curb the use of fossil fuels blamed for climate change, especially since his policies a r e partly behind miners’ yearnings for Asian markets.

Tough new Environmental Protection Agency limits on power plant emissions are often blamed, along with low natural gas prices, for the drop in domestic coal use, but burning the black rock in Asia will have the same impact on the atmosphere.

No matter who wins the election, the intensifying fight ahead over coal ports is raising Keystone-like questions about energy priorities in a time when traditional fuels are still abundant.

A Pacific Northwest coal port would aid mining giants such as Arch Coal and Peabody Energy Corp that dominate the basin and are in a worldwide race to meet Asian demand.

Last week’s decision by the Army Corps was an important victory for miners since the big impacts of coal use will not be studied.

The Army Corps, which received more than 30,000 comment letters about the Port of Morrow plans, said on its website that it generally conducts narrow reviews, “in this case, the construction of the dock facility.”

But the narrow study envisioned by the Army Corps could yet morph into a sweeping review if officials have a change of heart in light of a huge public outcry or if the courts step in.

Reuters

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