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United States Coal Export Facilities

October 08, 2018
The make-up of the United States electricity generation portfolio has transformed over the past decade. In 2008, coal provided 48% of the nation’s electricity supply, but this figure dropped to 30.1% in 2017.[1][2] Natural gas extraction has become increasingly economical through hydraulic fracturing, thereby shifting the domestic demand for cheap energy away from coal. With less domestic demand from coal-fired power plants, coal mining operations have had to search for new markets to export their product.

The United States has exported 60–125 million short tons (MMst) of coal in the last decade, while importing only between 10–40 MMst (Figure 1).[3] 57% percent of the coal exported is metallurgical coal, a common product that is used in the smelting of steel. The remaining 43% percent is steam coal, which is used to generate electricity.[4] After the coal has been mined, it is sent to export terminals along the coast to be shipped worldwide. In 2017, the top two destinations of exported American coal were the European markets, accounting for 41% of total exports, and the Asian markets, accounting for 33.8% of total exports (Figure 2).[5] U.S. coal exports increased by 61% in 2017 driven mostly by demand from countries such as India, South Korea, Japan, and China. According to a Reuters analyst, the primary drivers for Chinese reliance on imported US coal are increasing energy demand, cheap coal prices, and energy diversification.[6]

Image: US Imports and Exports, Source: EIAImage: US Imports and Exports, Source: EIA

Image: Coal exports by destination, Source: EIAImage: Coal exports by destination, Source: EIA

 

Most coal export facilities are located on the east coast, where they can readily reach the European market. The only coal export terminal on the west coast is in Delta, British Columbia, Canada and it is reaching its export capacity.[7] For this reason, coupled with decreasing domestic demand, the coal industry has organized a push to invest in new export terminals in the Pacific northwest to act as a gateway into the lucrative Asian markets.

Currently, there are two such proposed projects: one in Oakland, California (the Oakland Bulk and Oversized Terminal) and the other in Longview, Washington (the Millennium Bulk project). However, local courts and agencies have increasingly cited concerns regarding the effects that the terminal and related activity could have on human health and the surrounding environment. Coal export terminals receive coal via rail, therefore an increase in rail activity and rail congestion can increase risks of train-related accidents and the potential for longer wait times for emergency vehicles and first responders. Once the coal export terminal is ready to export the coal, they rely on tankers to transport the product overseas. Tribal nations are concerned about the effect that increased tanker and ship activity along the coast is likely to have on marine wildlife. Many in the tribal nations rely on this same marine life for sustenance and/or economic activity.[8] Once the coal reaches the Asian markets, air currents will blow CO2 and other Green House Gases (GHGs) from burned coal eastward and affect regional air quality on the West Coast. Most detrimental to human health is the emission of small particulate matter (PM 2.5) that affects the respiratory system.[9]

In 2017, the Department of Ecology rejected a water quality permit for the Millennium Bulk terminal project due to environmental concerns.[10] Millennium Bulk terminal filed a lawsuit against the Department of Ecology claiming that the agency had violated federal and state laws when they denied the project based on allegedly “biased and prejudiced decision-making.”[[11]

Both the Millennium Bulk project and the Oakland Bulk and Oversized Terminal have initially been rejected for environmental concerns by the Department of Ecology and the Oakland City Council respectively. The Oakland Bulk and Oversized Terminal LLC initially made a development deal with the city in 2012 and 2013 for the export terminal on an old Army site. However, the City Council passed a law in 2016 that effectively barred, “the transport or storage of coal in the city…” due to its negative effects on human health.[12] In May of 2018, however, Judge Vince Chhabria of the U.S. District Court for the Northern District of California annulled the law. The judge ruled that the City Council lacked empirical evidence to draw adequate conclusions from a, “record…riddled with inaccuracies, major evidentiary gaps, erroneous assumptions, and faulty analyses…”[13] Oakland City Council voted 7-0 to appeal the federal judge’s decision, determining that it is well within their jurisdiction to act in accordance with the well-being and health of the city.[14]

The fate of these projects will likely influence how coal mining companies will decide to move forward with their future operations in overseas markets. Building coal export terminals on the West Coast can provide reliable jobs and economic security to the people of the region and provide economic stimulus in the area.[15] However, the growing influence of environmental considerations and climate change are changing the energy landscape in the United States. Local and state governments have the responsibility to respond to this change in the best interest of their citizens.

Student Blog Disclaimer
  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

References

  [1]https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_1_1

  [2]https://www.eia.gov/tools/faqs/faq.php?id=427&t=3

  [3]https://www.eia.gov/energyexplained/index.php?page=coal_imports

  [4]https://www.eia.gov/todayinenergy/detail.php?id=35852

  [5]https://www.eia.gov/coal/production/quarterly/pdf/t7p01p1.pdf

  [6]https://www.reuters.com/article/column-russell-coal-asia-usa/column-china-not-trump-drives-u-s-coal-export-revival-russell-idUSL4N1QA18T

  [7]https://www.reuters.com/article/us-usa-coal-exports/coal-firms-plead-to-courts-trump-for-west-coast-export-terminals-idUSKBN1FJ0KB

  [8]https://www.opb.org/news/article/northwestern-washington-tribe-calls-on-feds-to-hal/

  [9]https://www.nwf.org/Our-Work/Environmental-Threats/Climate-Change/Fossil-Fuels/Coal/Pacific-Northwest

  [10]https://www.usnews.com/news/best-states/washington/articles/2017-09-26/washington-state-rejects-permit-for-coal-terminal-project

  [11]https://www.seattletimes.com/seattle-news/backer-of-longview-coal-export-terminal-sues-washington-state-over-permit-denial/

  [12]http://www.chicagotribune.com/news/nationworld/ct-oakland-city-council-bans-coal-20160627-story.html

  [13]https://www.eenews.net/greenwire/stories/1060081871/search?keyword=oakland

  [14]https://www.eenews.net/greenwire/stories/1060083077/search?keyword=oakland

  [15]https://pdfs.semanticscholar.org/07c2/529275c1288acc78bcf2df2ea9ac128dde59.pdf

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