What happens to America’s coal if we don’t burn it?

at 10:33 AM ET, 04/09/2012

Coal is slowly receding as America’s top power source. Thanks to a flurry of new air-pollution rules and cheap natural gas, the Energy Information Administration (EIA) projects that U.S. coal consumption will fall this year to its lowest level since 1996.

But if the United States isn’t going to use its own coal, what’s going to happen to the stuff? Since coal-burning is a major contributor to global warming, this is a crucial question. One possibility is that the United States will simply export coal abroad, for other countries to consume. There are signs this is starting to happen: Gregor McDonald flags a chart from the EIA, noting that U.S. coal exports soared last year to their highest levels in two decades:

In 2011, the United States exported even more coal to countries like Brazil, South Korea and Europe, just as its own consumption was falling. That’s evidence in favor of the idea that if the United States won’t burn its vast coal reserves, then other countries will be happy to take the coal off our hands. And if that’s true, it would mean that the government’s recent spate of power-plant regulations aren’t helping the country make much progress on climate change. After all, carbon-dioxide that’s released by burning coal will heat up the planet no matter where it’s burned.

But will exports continue to increase? There’s reason to think that 2011 was something of an anomaly. The EIA notes that U.S. coal exports from Appalachia and the Midwest surged last year because severe flooding in Australia, the world’s biggest coal exporter, hampered that country’s production. Now that Australia’s mines are up and running again, overall U.S. coal production has slumped back down to a five-year low. That suggests, conversely, that the United States’s gradual efforts to consume less coal might actually lead to less coal burned overall. More of it will just... stay in the ground.

It’s still too early to say for sure which theory is true, and whether the U.S. coal industry will be able to find enough markets abroad to make up for the fall in demand here at home. If it does, though, here’s a hint of where all that coal will go:

Asian coal consumption has gone stratospheric over the past decade, even as it’s remained flat (or declined) just about everywhere else in the world. China and India already have vast coal reserves of their own, but their appetites appear almost bottomless. At some point, China may start exploiting its own large shale-gas reserves and shift away from coal, but that hasn’t blunted coal demand yet.

So it’s no wonder that, in Washington state, coal companies are now proposing two large export terminals to ship tens of millions of tons of coal from the Powder River Basin in Wyoming out to countries like China. Whether that’s the start of a trend remains to be seen: There are a number of hurdles, particularly with respect to rail infrastructure, that will make it difficult for the U.S. coal industry to reorient itself toward exports in rapid order. (For more on that, see this paper from the Columbia Center for Climate Change Law.)

At the very least, it’s another reminder that climate change remains a global issue, one that no single country can solve on its own with a few domestic power-plant rules.

Update: Michael Levi raises a smart caveat here — increased U.S. coal exports will only worsen global warming if they supplement, rather than displace, coal production elsewhere. And there’s some evidence, as he notes, that U.S. coal exports could just displace coal elsewhere.

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