Breaking News

Globalfoundries to Buy IBM's Chip Unit; IBM Sees Pretax Charge $4.7 Billion
Tweet TWEET

Coal Missing Boom as Climate Foes Clean Asia’s Backyard

Photographer: David Paul Morris/Bloomberg

A U.S. flag flies as cranes stand at the Port of Oakland in Oakland. Oakland’s rejection of Bowie’s coal terminal proposal cited concern that “stem primarily from issues of fugitive dust and climate change.” Close

A U.S. flag flies as cranes stand at the Port of Oakland in Oakland. Oakland’s... Read More

Close
Open
Photographer: David Paul Morris/Bloomberg

A U.S. flag flies as cranes stand at the Port of Oakland in Oakland. Oakland’s rejection of Bowie’s coal terminal proposal cited concern that “stem primarily from issues of fugitive dust and climate change.”

Bowie Resource Partners LLC wanted to export coal from the port of Oakland, California, promising thousands of construction jobs and a $3 million-a-year payroll in a city whose unemployment rate was almost double the national average.

Oakland’s response: No, thanks.

“We weren’t going to sell our souls here,” Jack Fleck, a retired engineer and Oakland resident who spoke out against Bowie’s plan, said by phone on May 12. “Whatever the economic benefit would’ve been, it wasn’t worth destroying the planet over.”

Oakland’s rejection marks a sea change in the fight against coal exports from the U.S. and underscores an emerging challenge for energy projects. The Sierra Club and other environmental groups have scuttled three of six coal terminals proposed in the U.S. Pacific Northwest that would have shipped as much as 146 million metric tons annually to booming markets in Asia.

Where coal projects were once fought on the grounds of local impact, opponents are uniting behind a cause more global in nature, climate change.

Their new rallying cry: Not in your backyard.

“Climate change isn’t an intangible thing anymore -- people are feeling it,” Jess Dervin-Ackerman, an organizer with the Sierra Club who lives in Oakland, said by phone May 12. “This has become about us enabling other countries to do things that aren’t in the best interest of the planet.”

Global Demand

The battle foreshadows future challenges made against energy projects as U.S. policy makers and regulators consider lifting a decades-old ban on oil exports and decide on permits to send natural gas abroad.

While U.S. coal demand has slid to the lowest level in 24 years, it’s the world’s fastest-growing energy source, forecast to rise 2.3 percent a year through 2018 and is the second-largest source behind oil, according to the Paris-based International Energy Agency.

The recent severe winter in the U.S. lifted demand for the power-plant fuel and forced utilities to eat through stockpiles, the Energy Information Administration said in its May 6 Short-Term Energy Outlook.

China will keep importing coal and much of it will come from U.S. mines via Canadian ports where companies including Westshore Terminals Ltd. and Ridley Terminals Inc. are sending as much as 3.76 million tons a month abroad. Europe, where half of U.S. coal exports go, brought in 14.9 million tons in the fourth quarter, up 4 percent from the prior three months.

China Imports

China imported about 360 million tons last year and is expected to increase its reliance on the fuel by 54 percent by 2035, according to a Feb. 27 ICF International Inc. (ICFI) report. The country has 558 gigawatts of new coal-fired power plant capacity in the works, the report shows. Its benchmark price averaged 535 yuan ($86) a ton as of May 11.

“Like it or not, the coal is here to stay for a long time to come,” Keisuke Sadamori, the director for energy markets and security at the IEA, said in a Jan. 29 presentation at the Center for Strategic & International Studies in Washington.

Still, China’s efforts to curb pollution may slow exports from the U.S. The world’s largest carbon emitter last month passed the biggest changes in 25 years to its environmental protection laws, outlining plans to punish polluters more severely.

Rising Prices

Coal futures dropped 30 cents to $63.43 a ton at 4:39 p.m. New York time on the New York Mercantile Exchange today, the lowest level in a week. Prices have gained 5.5 percent in the past year. While thermal coal is used to generate electricity, the metallurgical variety is needed in the production of steel.

Oakland’s rejection of Bowie’s coal terminal proposal cited concern that “stem primarily from issues of fugitive dust and climate change.” In deciding against the project, the city’s port directors turned down a one-time $3 million payment and as much as $19 million a year in rent.

Grant Quasha, a spokesman for Bowie based in Louisville, Kentucky, declined to comment. Trafigura Beheer BV, which owns part of Bowie Resource Partners through a subsidiary and serves as the company’s exclusive marketing agent, also declined.

In Washington state, regulators are considering the global-warming impacts of coal burned at plants in Asia as they decide on a deep-water complex that SSA Marine’s Pacific International Terminals is proposing to ship 48 million tons a year abroad. They’re also looking at the cumulative impacts of SSA’s project and an operation Millennium Bulk Terminals is proposing to export 44 million tons annually.

Oregon Delays

In Oregon, Ambre Energy Ltd.’s North American subsidiary is facing its seventh regulatory delay as it tries to strengthen its case for an export terminal. It has been seeking permits since 2012.

Wyoming’s Powder River Basin is home to the cheapest and largest reserves in the U.S. and the seaborne market has an appetite for it, James Wang, an energy research associate at ICF in Fairfax, Virginia, said in a May 12 phone interview.

“U.S. coal from Powder River Basin and Colorado can compete in international markets,” Wang said. “Permitting and foreign competition, however, will likely limit the maximum export expansion level.”

Powder River Basin coal for June delivery was unchanged at $13.30 a ton at 2:05 p.m. New York time today, data compiled by Bloomberg show. Prices have risen 18 percent in the past year.

Continued Opposition

A pact signed in October by U.S. West Coast governors signaled that coal shippers will continue to face opposition. Oregon Governor John Kitzhaber and Washington Governor Jay Inslee, both Democrats, wrote a letter last year to federal regulators asking them to consider climate change when deciding on export terminals.

“It is hard to conceive that the federal government would ignore the inevitable consequences,” they said. “These steps are needed for the U.S. to make sound decisions as the international demand for the coal resources in the U.S. continues to grow, and to ensure that we do not simply pass these tough issues on to future generations.”

A March report by Washington-based Oil Change International, a clean energy advocacy group, estimated that lifting the 1975 ban on oil exports would create 4.4 billion tons of carbon emissions, the equivalent of running 42 coal plants for a lifetime.

“We can no longer take the impacts of these fossil-fuel developments in an isolated way,” Cesia Kearns, a Sierra Club campaign representative who is fighting coal exports from Oregon and Washington, said by phone May 12. “This ties people together from different cities, different regions and even across the Pacific Ocean, to our neighbors in India and China, who are all standing up to Big Coal now.”

To contact the reporters on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net; Mario Parker in Chicago at mparker22@bloomberg.net

To contact the editors responsible for this story: Dan Stets at dstets@bloomberg.net Philip Revzin

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.