March 27, 2013, by Kieran Cooke
US coal is big business – and getting bigger, abroad if not at home
Image: US National Archives and Records Administration
EMBARGOED until 0001 GMT on Wednesday 27 March Emissions by the US of greenhouse gases are still coming down – within the USA itself. But American exports of coal, and now of shale gas, are on the rise, in effect exporting the pollution which has been avoided at home. LONDON, 26 March – The good news is that US greenhouse gas (GHG) emissions are continuing to decline. “Over the last four years, our emissions of the dangerous carbon pollution that threatens our planet have actually fallen”, said President Obama in his State of the Union address last month. The bad news is the US is exporting its polluting gases, particularly in the form of coal, like never before. Figures released earlier this month by the official US Energy Information Administration (EIA) show US coal exports reached a record of more than 115 million tons in 2012, more than double the 2009 figure. In a report examining the legal implications of increased US coal exports, the Columbia Law School notes that GHG emissions are not just a national issue. “Because the impacts of CO2 emissions are global in nature, it makes no difference from a climate change perspective whether coal mined in Wyoming is consumed in Chicago or Shanghai”, it says. Coal is far more polluting in terms of GHGs than either oil or gas, emitting higher levels of CO2 and also other toxic substances such as sulphur dioxide, nitrogen oxide and mercury. The drop in US GHG emissions – according to the EIA, total US carbon emissions have now fallen by more than 8% since peaking in 2007 – is in part due to the economic slowdown, but more so to a move from coal-fired electricity generation to less carbon-intensive natural gas, particularly gas produced from hydraulic fracturing, or “fracking”. In 2005 coal accounted for half of all electricity generation in the US: now it generates 37% of the country’s electricity, with forecasts that figure will drop to around 20% by 2030.
Attractive to importers
The move to gas has been spurred both by tougher regulations on pollution and, with gas production booming, an overall drop in energy prices. There has also been strong growth in renewable energies, particularly in solar power. US coal giants such as Arch Coal, Alpha Natural Resources and Peabody Energy have not let the decline in domestic demand faze them. Instead they’ve gone wholesale into export markets, particularly in Europe, with coal-exporting terminals on the US east coast operating at maximum capacity. High gas prices within the EU make US coal extremely competitive as an energy source. Bad weather has contributed to an uptake in demand. The collapse in price on the EU’s Emissions Trading Scheme carbon market and a vast oversupply of so-called pollution permits is another reason for the surge in US coal imports. Worries about energy security and an over-dependence on gas supplies from Russia and the countries of central Asia are additional factors driving the trade. EIA figures show Europe is now by far the biggest customer for US coal, importing more than all other markets combined. US exports to the UK jumped by about 70% in 2012. Exports to Germany, which phased out nuclear power generation in response to the the Fukushima accident in Japan, have also increased. Europe’s energy companies are taking advantage of relatively cheap coal imports while they can. EU regulations, particularly the Large Combustion Plants Directive, stipulate that older coal plants which do not meet stringent targets on lower emissions levels have to be phased out.
All eyes on Asia
While tighter regulations on pollution could result in a decline in US coal exports to Europe in the years ahead, it’s unlikely producers in Pennsylvania or Montana will be cutting back on their activities. Asia, by far the biggest coal-consuming region, where demand continues to grow, is the next target. At present the US is the world’s fourth largest exporter of coal – after Australia, Indonesia and Russia. US firms are now setting their sights on the big markets in Asia, particularly China and India. Coal lobbyists are pushing for new coal terminals to be built on the US west coast to provide easier access to Asia. Exports to China – the world’s biggest coal producer and consumer – have been growing rapidly. Last year one US coal company signed a $7 bn export agreement with an Indian conglomerate. Other deals are in the pipeline. A recent report from the UK’s Tyndall Centre for Climate Change Research looked at the growth of the shale gas industry in the US and questioned whether it had contributed to a global drop in CO2 emissions. The answer was no. Tyndall’s calculations suggest that more than half of the emissions avoided in the US power sector – through the switch from coal to gas – may have been exported as coal. “Without a meaningful cap on global carbon emissions, the exploitation of shale gas is likely to increase total emissions”, said the report. “For this not to be the case, consumption of displaced fuels must be reduced globally and remain suppressed indefinitely. In effect displaced coal must stay in the ground.” – Climate News Network
Kieran Cooke, a founding editor of Climate News Network, is a former foreign correspondent for the BBC and Financial Times. He now focuses on environmental issues