U.S. exporting coal to China: good or bad?

[Frank]

A short series of articles in the Post-Dispatch this weekend (full disclosure: I work for a company named herein) drew my attention to the fact that the Sierra Club opposes coal exports from the U.S. to China. They are fighting the creation of a coal terminal in Longview, Washington for the following reasons:

In their appeal, the coalition argues that the Cowlitz County commissioners rubber stamped the permit when they approved it on November 23. County officials ignored significant permit deficiencies when they failed to study the consequences of burning coal in Asia, failed to consider the effects of potentially increased coal mining in the Powder River Basin, and failed to analyze the effects of transporting coal thousands of miles via train and ship to Asia.

Frankly, I think they’re nuts.

Coal is going to be burned in Asia. The demand for coal in Asia (escpecially China and India) is growing by leaps and bounds, and will continue to do so for some decades. Somebody is going to provide that coal. It might as well be the cleaner coal that comes from well paid miners operating under the strict safety and environmental controls in the U.S. than the crap coal that can be dug up anywhere by some fly-by-night operation.

Increased coal mining in the Powder River Basin is also going to happen anyway. Affordable coal in Appalachia is dwindling fast. Production is expected to fall rapidly. It’s becoming uneconomical to mine Appalachia without performing such totally unenvironmental acts as mountaintop removal. Other potential mining areas such as the Illinois basin have extremely dirty coal. Powder Basin coal is currently the cleanest available in large quantities, and demand for it will continue to increase along with the world’s demand for coal in general. Environmental restoration is far easier and cheaper in the plains of the Basin than it is in other places.

The effects of transporting coal for long distances are well-known. Close to 50% of railroad traffic within the United States is already coal, and that’s just for our use here in the U.S.

And the fact is, there is currently no substitute for coal power. Natural gas is touted, but it has it’s own issues; fracking, for example. Wind, water, and solar are not capable of replacing the electrical baseload demand. The sensible choice, nuclear power, is frozen in place by unscientific and ignorant fear and paranoia.

Coal burning plants certainly need to burn cleaner. I fully support environmental regulations that require them to do so, and I fully support the retirement of plants that are not able to improve their quality of waste. But coal isn’t going away soon. Coal is the world’s most abundant power resource. We need to make its use as safe as possible, not do away with its use.

If the Sierra Club gets what they want, they’ll be sorry they asked for it. China, et al, will simply expand their mining of their own readily available coal; dirtier coal that intrinsically pollutes more and kills more miners and leaves more environmental devastation in its wake.

[Mr.Excellent]

Agreed that the Sierra Club’s position seems very strange - especially since China has loads of low-quality coal (worse for the environment) that it could mine and burn whenever it wished. In that context, this almost seems like an environmentally savvy move on China’s part. If it weren’t for the environmental benefit, this would seem roughly as sensible as a program by Newcastle’s local government to import coal.

[Frank]

@Mr.Excellent

If it weren’t for the environmental benefit, this would seem roughly as sensible as a program by Newcastle’s local government to import coal.

Still, they wouldn’t buy it if we couldn’t sell it at a cost than is less than they can mine it for. That we think we can is due to economies of scale.

[Try2B_Comprehensive]

Wind, water, and solar are not capable of replacing the electrical baseload demand.

I disagree with you here. But look, I could almost change my name to ‘Mr. Green’. I want to see mass-scale green energy as much as just about anybody. But for now and the near future, the statement is correct. I think the overall argument stands up.

It’d be nice to export something to China for a change. We certainly have trainloads of coal. If they can be persuaded to toss in a few trunks full of rare earth metals in the bargain, we get closer to the best-case scenario AFAICT. Let’s be China’s Saudi Arabia of coal. We’ll be pals, and that way they won’t attack us for at least 50 years.

[Really_Not_All_That_Bright]

@Frank

And the fact is, there is currently no substitute for coal power. Natural gas is touted, but it has it’s own issues; fracking, for example. Wind, water, and solar are not capable of replacing the electrical baseload demand. The sensible choice, nuclear power, is frozen in place by unscientific and ignorant fear and paranoia.

Nuclear power isn’t frozen in China. There are 11 functioning nuclear plants and plans for 54 more.

[BrainGlutton]

@Really_Not_All_That_Bright

Nuclear power isn’t frozen in China. There are 11 functioning nuclear plants and plans for 54 more.

Then why do they want coal?

[penultima_thule]

@Frank

Somebody is going to provide that coal. It might as well be the cleaner coal that comes from well paid miners operating under the strict safety and environmental controls in the U.S. than the crap coal that can be dug up anywhere by some fly-by-night operation.

Indeed somebody does supply that coal, and not a crap coal, slave wage paying, dug from anywhere location either.

Australian Coal Association Exports 2008-2009

Total world trade in hard coal in 2008-09 was 941 million tonnes, comprising 730 Mt of thermal (steaming) coal and 211 Mt of metallurgical (coking) coal.

Australia maintained its position as the world’s largest coal exporter with exports of 261 Mt in 2008-09, or 28% of the world total - see charts below.

In terms of thermal and metallurgical coal markets, Australia’s share in 2008-09 represented 19% and 59% respectively of total world trade.

Of course, “cleaner coal” (a misnomer of iconic status) has everything to do with the nature of the coal itself, not the wage status of those who mine it.

[penultima_thule]

Originally Posted by **Really Not All That Bright **
Nuclear power isn’t frozen in China. There are 11 functioning nuclear plants and plans for 54 more.

@BrainGlutton

Then why do they want coal?

For the same reason the PRC considered it was economically necessary to put the Three Gorges dam on the Yangtze.

The energy cost of modernising an economy of 1.4bil people.

Mind you, I’ve never heard of steel production from a nuclear powered blast furnace.

[JoelUpchurch]

@BrainGlutton

Then why do they want coal?

The Chinese demand for electricity is exploding. Even with building nuclear power, hydro and coal full out, they have problems keeping up with demand. They are starting construction on a new nuclear plant every month and I expect them to get up a nuclear plant a week by 2020. Even at that rate, it is going to take decades for them to get to the point where they can stop building new coal plants. It might be faster if they can retrofit coal plants to use nuclear reactors.

What I find bizarre that haul coal by rail over a thousand miles and across the Pacific ocean and have a competitive price. This may be artificial, since the Chinese government has imposed domestic price controls on coal.

[Try2B_Comprehensive]

The wiki on coal power in China is pretty informative. A few quotes:

The People’s Republic of China is the largest consumer of coal in the world,[1] and is about to become the largest user of coal-derived electricity, generating 1.95 trillion kilowatt-hours per year, or 68.7% of its electricity from coal as of 2006 (compared to 1.99 trillion kilowatt-hours per year, or 49% for the US)

On July 6, 2008 in central and northern China, 2.5% of the nation’s coal plants (58 units or 14,020 MW of capacity) had to shut down due to coal shortages. This forced local governments to limit electricity consumption and issue blackout warnings. The shortage is somewhat attributed to the closing of small dangerous coal mines

Quick math says China currently has 2300+ coal plants.

Demand for coal in China continues to increase, and it is estimated that it will be around 3.06 billion tons in 2010. Furthermore, it is expected that demand will soon exceed production due to factors such as a government crackdown on mines that are unsafe, polluting, or wasteful.

China’s largest open-pit coal mine is located in Haerwusu in the Inner Mongolia Autonomous Region…With a designed annual capacity of 20 million tonnes of crude coal, it will operate for approximately 79 years. Its coal reserves total about 1.73 billion tonnes. It is rich in low-sulfur steam coal…Transport of coal from this region to seaports on China’s coast has overloaded highways such as China National Highway 110 resulting in chronic traffic jams and delays.

Looks like they need coal to produce the steel to build their railroads so they can transport their coal around like we do.

This issue can give the US an incentive to switch to more wind, solar, and etc. Even if it costs an extra 1-2 cents more per kwh with green tech, it might make economic sense when the displaced coal is sold. So, we get greet tech jobs and coal miners keep their jobs. Everyone wins!

[emacknight]

Wait, the US is exporting to China? Where is **Le Jacquelope ** to stop this? You do realize this means Americans are stealing Chinese jobs! Clearly China should put in tariffs to raise the price of coal, and then something happens, and then everyone’s wages go up. It’s perfect. Those higher wages will cause factories will move back to the US, and then all our wages will go up.

Economics is fun.

[DSeid]

@BrainGlutton

Then why do they want coal?

Because it is not possible to build nuclear fast enough. China at least understands that there is no need for an “or” debate; it is all of the above.

China is leading the world in building wind power, expanding solar capacity, and building new hydro, in addition to its new nuclear build-out. Their plan is to have “15% of total primary energy from renewables by 2020”. (See here for a review.)

But they still have a lot of coal fired plants and even going all out with both new nuclear and new renewables (and having a tariff for using biomass co-fired with coal) coal is the current backbone. And China burns half of the world’s coal production.

Nuclear is no panacea. Not in China and not in America. It is part of a basket of answers.

[Una_Persson]

Yeah…I’m going to make a couple of statements on this.

1. I could see the Sierra Club being bothered about the coal terminal just from the standpoint of how dirty coal terminals are. I’ve personally toured coal terminals in many countries and can attest to this. I’ve also worked on a project to build a new coal terminal in South America which was cancelled due to the inability of the client to ensure that windage would not contaminate other goods and products (especially grains) which were also being transloaded at the terminal.

2. There was a comment above about coal for steel - as a related FYI, coal from the US PRB region is not good for making steel. This coal would be shipped over for power production, not coking. I could write a book on the reasons but the main ones are high volatile matter content and high moisture.

3. I personally doubt, speaking from my experience and the studies we’ve done in-house, that any major amount of US coal will ever be exported to any other country (Canada and Mexico possibly, repeat possibly excepted). There are so many political and logistical barriers involved. There is also, thanks to a USGS report issued last year, some serious question now over the actual economically recoverable reserves which are available in the PRB. I think the data needs further review but the thought that “we have 150+ years of coal just from the PRB” will likely need scaling back.

China can get good coal from Australia, true, but it’s quite dear as well. And in about 20 or 30 years China is going to likely be competing with South Africa and SE Asia for Australia’s coal. They can burn Indonesian sub-bituminous coal but there is strong demand for that all over the world. You’ll see things on blogs and wikis about Vietnam and Cambodia possibly having “huge” coal resources, well, yeah, it’s sort of like Afghanistan - the data is so fucked up no one really knows how much is there (IMO they will not be able to develop much without essentially strip-mining hundreds of square miles of rain forest and agricultural land.)

What I find bizarre that haul coal by rail over a thousand miles and across the Pacific ocean and have a competitive price. This may be artificial, since the Chinese government has imposed domestic price controls on coal.

When I was working for a utility on the east coast of the US who was having a fight with the local union coal mines, we discovered that it was cheaper to mine coal in Indonesia and send it all the way to the eastern US than to get it from 5 miles down the road. Coal, in some countries, is dirt cheap, and ocean transport is also not nearly as expensive as you’d think.

[DSeid]

And allow me to use Una’s comment as a reason to add natural gas to the list of power generation sources that China is trying to rapidly expand.

Zhao Yujian, head of the Pipeline Bureau of the CNPC, said at the new pipeline’s completion ceremony that the 896-km-long pipeline can pump as much as 15 billion cubic meters of natural gas annually.

The new pipeline will boost the gas supply to Beijing and other areas in the Bohai Rim region, including Shandong, Tianjin and Hebei.

The first and second Shaanxi-Beijing pipelines have a total capacity of 20 billion cubic meters per year and are confronting great pressure as demand for gas climbs especially in winter.

China won’t turn its nose up at anything that can feed its rapidly growing need for energy.

[Throatwarbler_Mangrove]

China has to buy American and French technology for their nuclear power plants, at high cost, so they really can’t win.

http://www.pittsburghlive.com/x/pittsburghtrib/s_575073.html

[Frank]

@Una_Persson

1. I could see the Sierra Club being bothered about the coal terminal just from the standpoint of how dirty coal terminals are. I’ve personally toured coal terminals in many countries and can attest to this. I’ve also worked on a project to build a new coal terminal in South America which was cancelled due to the inability of the client to ensure that windage would not contaminate other goods and products (especially grains) which were also being transloaded at the terminal.

That’s very true. Coal terminals are dirty. While steps can be taken to mitigate the effects, I think I’d tend to agree that I wouldn’t want one right next to where bulk foodstuffs where being shipped. That’s not the case in the proposed facility, as far as I know.

[QUOTE=Una Persson]
3) I personally doubt, speaking from my experience and the studies we’ve done in-house, that any major amount of US coal will ever be exported to any other country (Canada and Mexico possibly, repeat possibly excepted). There are so many political and logistical barriers involved.
[/quote]

Certainly, that’s possible. We’re seeing an example of the political and logistical barriers in this very project. But as world-wide demand for coal is expected to continue to grow at an astonishing rate, I think the prices will rise to a level that allows the PRB to export at a profit.

And no, I’m certainly not talking about met coal, only thermal.

[DSeid]

@Throatwarbler_Mangrove

China has to buy American and French technology for their nuclear power plants, at high cost, so they really can’t win.

http://www.pittsburghlive.com/x/pittsburghtrib/s_575073.html

Things have been changing some since that 2008 article was written.

In 2007, China released its long-term development plan for its nuclear power industry (2005-2020), pledging to pump 450 billion yuan (67 billion US dollars) into the sector.

The planned investment, however, will double as the government is speeding up construction of nuclear power plants.

China currently has 23 generator units for nuclear power plants under construction, mainly in the coastal provinces of Liaoning, Jiangsu, Zhejiang, Fujian and Guangdong.

The localization rate stands at 50 percent for nuclear power equipment installed in China, which means half of the country’s investment in the industry has gone into the pockets of foreign manufacturers.

He Zhongqi, a Chinese expert on the nuclear power industry, has urged domestic manufacturers to increase their capabilities in nuclear power technology research and development through the study of advanced foreign technology, in order to be competitive in both the domestic and international market.

In addition to the nation’s nuclear industry flag-carrier, China National Nuclear Corporation (CNNC), all major power groups in the country have established their own nuclear-energy departments to enter the capital-intensive but lucrative market.

[Magiver]

@Throatwarbler_Mangrove

China has to buy American and French technology for their nuclear power plants, at high cost, so they really can’t win.

http://www.pittsburghlive.com/x/pittsburghtrib/s_575073.html

China isn’t buying coal, they’re buying coal mines. the difference is that when power plants bid on coal, the price goes up and the profits move overseas. It’s a world market and the spoils go to investment rich entities.

American coal miners are the new railroad worker in China.

[Una_Persson]

@Frank

That’s very true. Coal terminals are dirty. While steps can be taken to mitigate the effects, I think I’d tend to agree that I wouldn’t want one right next to where bulk foodstuffs where being shipped. That’s not the case in the proposed facility, as far as I know.

I used food as an example, but due to insurance reasons alone, if nothing else, coal terminals get the blame for anything which goes wrong and contaminates another product. Given you need a deepwater port to ship coal economically isn’t the proposed facility already used by several other shipping companies?

But as world-wide demand for coal is expected to continue to grow at an astonishing rate, I think the prices will rise to a level that allows the PRB to export at a profit.

And no, I’m certainly not talking about met coal, only thermal.

I…well, the best way to put it is, I have no citations or additional evidence to offer at this time, but I disagree. I’ve seen so many proposals for shipping PRB coal large-scale on the West coast fail that I just have a hard time seeing it ever happening. There’s only been limited success shipping via the eastern routes and the volume is highly limited. There is also a serious concern about the US EPA requiring covered coal cars “soon” (due to the high propensity of PRB coal to dust), which will slow down the absolutely astonishing turnaround rate in the PRB on the BNSF and UP lines right now. A covered car mandate could cut capacity down by anywhere from 10% to 25% (I suspect it’s much closer to 10%) and building new main rail lines to the west will be problematic due to environmental concerns.

[Try2B_Comprehensive]

@Una_Persson

When I was working for a utility on the east coast of the US who was having a fight with the local union coal mines, we discovered that it was cheaper to mine coal in Indonesia and send it all the way to the eastern US than to get it from 5 miles down the road. Coal, in some countries, is dirt cheap, and ocean transport is also not nearly as expensive as you’d think.

Sounds like you’re just taking another swipe at unions here, Una. You are surely aware that Wyoming coal is dramatically cheaper than, say, Virginia coal, see here.

That aside, I think there was a discussion about exporting coking coal a while back ($200 per ton?). Are there special barriers to this practice? (eg: is it treated as something like a strategic resource?) China will surely be keen to acquire more of this from whatever source they can. Or… well, I could be wrong, I’m no coal expert…