Coal Exports to Asia Have Green Groups on Edge

Even as the U.S. attempts to shift away from carbon-belching, coal-fired power plants, coal producers in the U.S. are gearing up to ship more of the fuel to China—which could boost their sales by hundreds of millions of dollars annually. Green groups, though, say exports of the "dirty" fuel will worsen global warming and are mobilizing to block shipments. "How are we going to get to the climate goals that scientists have said are necessary?" asks Jan Hasselman, an attorney with Earthjustice. "These decisions are being made by others, such as the coal companies, by default."

Opposition from environmentalists has coalesced around a proposal from Australia's Ambre Energy to build an export terminal on the Columbia River in Longview, Wash., where more than 5 million tons of coal a year would be loaded onto ships. The Sierra Club and three other groups have challenged the project.

Washington State's Cowlitz County on Nov. 23 granted a shoreline development permit for Ambre to convert an out-of-commission aluminum smelter into an export terminal. The environmental groups have appealed the decision, citing the health hazards of coal dust and the increase in pollution that will result from burning the fuel abroad. In their petition for review they claim that the 5.7 million tons per year of coal exported by the facility will generate more than 11 million tons of carbon dioxide annually—roughly equivalent to the emissions of two million U.S. cars. A hearing on the matter is scheduled for Apr. 11.

Millennium Bulk Terminals, the Ambre Energy subsidiary spearheading the project, did not return calls. In a Jan. 13 statement, MBT Chief Executive Officer Joe Cannon said, "We will clean up and revitalize this property and ensure that it will have a very positive economic impact in the local area."

Insufficient port capacity has hampered efforts to boost shipments of low-sulfur coal from the Powder River Basin in Wyoming and Montana—an area that accounts for some 40 percent of all U.S. coal production—to Asian markets. Japan, China, South Korea, and India are the world's top importers of coal, according to data compiled by the World Coal Assn. Yet less than 7 percent of U.S. coal is shipped from Pacific ports, U.S. Energy Information Administration figures show.

Boosting overseas shipments is a priority for the U.S. coal industry, which could soon face shrinking demand at home as a result of efforts to regulate carbon. West Coast shipments may increase by 50 million tons a year if more port facilities are built, according to Jeremy Sussman, an analyst at New York brokerage Brean Murray, Carret. At current prices of $13.75 a ton, that would add $688 million to the annual revenue of companies mining coal in Western states, such as Arch Coal (ACI), Cloud Peak Energy, and Peabody Energy (BTU)."For these companies it's a tremendous growth opportunity," says Kevin Book, managing director of ClearView Energy Partners, a policy analysis firm in Washington, D.C.

Environmentalists are seeking to turn the Ambre Energy development into a test case, in hopes of bringing a halt to other projects on the drawing board. Peabody, the No. 1 coal producer in the U.S., has said it will release plans for its own West Coast port by the end of this quarter. "What's missing is a coherent federal policy that looks at the bigger picture," says Hasselman of Earthjustice, which is representing the other environmental groups in the case. "There is a role for the Environmental Protection Agency to come in and help with some of the questions here." EPA spokeswoman Alicia Johnson said the agency is reviewing issues related to the Ambre Energy proposal.

Fredrick D. Palmer, senior vice-president for government relations at Peabody in St. Louis says a policy of restraining U.S. exports that contribute to global warming would affect a wide range of industries beyond coal. "Anything we make in the U.S. requires energy and creates carbon dioxide," says Palmer. "This is a deindustrialization philosophy applied to coal first, and it won't stand."

The bottom line: U.S. environmentalists seek to turn an Australian company's coal export terminal into a test case for slowing the global coal trade.

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