Growing steam coal exports can boost La. economy
Since the Ukrainian crisis erupted several months ago, politicians and pundits on both sides of the aisle have been clamoring for the Obama administration to expedite the approval of terminals for exporting American liquefied natural gas.
By selling some of our abundant gas supply to Europe, so the argument goes, we can punish the Russians by breaking their stranglehold on the European market. That sounds great; but realistically it will be at least a decade before the U.S. is able to export any sizable quantity of LNG to Europe.
To date, seven facilities have been approved but only two are under construction, with the first — Cheniere Energy in Cameron Parish, Louisiana — expected to start shipping LNG to Asia by 2016. And though another dozen permit applications are pending with the U.S. Department of Energy, even if all are approved securing the $5 billion to $7 billion financing for each these facilities will be challenging.
What’s more, Qatar and Algeria — located much closer to Europe than North America — are both expanding their LNG export capacities while Azerbaijan and Turkey are building a pipeline that bypasses Russia to deliver Caspian gas to Europe.
Today, the real action is occurring with coal exports. Though the Obama administration continues to demonize the coal industry, and coal-fired power generation is declining rapidly in the U.S. — partly because of new regulations and partly because of cheap natural gas — American coal exports have jumped 150 percent over the past decade.
And guess which is the fastest growing market for American coal? Europe, where more than half of the 107 metric tons of American coal exported last year was destined.
Europe imports both metallurgical and steam coal from the United States, each accounting for about 50 percent of sales. But in recent years, steam coal exports have surged as European power generators seek out cheaper fuels to combat rising electricity costs resulting from the phase out of nuclear power in some countries and a growing commitment to green energy.
So ironically, even though the European Union is proposing a 40 percent reduction in greenhouse gas emissions by 2030, the use of coal is growing.
In Germany, despite pledges to cut greenhouse gas emissions 55 percent by 2030, consumption of coal has grown 13 percent over the past four years. (In the United Kingdom, coal consumption is up 22 percent). With Germany closing its nuclear plants while simultaneously mandating huge new investments in wind and solar, electricity costs for manufacturers are now almost three-times higher than they are in the U.S. German industrialists worry the country is losing its competitive edge because of high and rising power costs. In response, several new coal-fired power plants are currently under construction and more are on the drawing boards.
With Europe re-embracing coal, and China now burning nearly as much coal as the rest of the world combined, coal is here to stay. And that offers tremendous export opportunities that can help sustain America’s coal mining industry while boosting activity at the nation’s ports — most especially the Port of New Orleans.
Though Norfolk, Virginia, is by far the largest U.S. port for total coal exports, New Orleans is number one for the export of steam coal that is used by industrial boilers and power generators. Other coal export facilities are found in Myrtle Grove, Convent and Port Sulphur. For at least the next several decades, steam coal exports from Louisiana should expand rapidly in response to growing demand from both Europe and Asia.
As coal’s use continues to expand overseas, and more U.S. coal leaves our shores to help provide affordable power and energy security to many of our allies, we should rethink our own energy policy.
The EPA and the environmental left would like to see the U.S. abandon coal altogether. That ignores coal’s growing importance overseas. A better approach is to redouble our efforts to develop and demonstrate clean-coal technology. Doing so would not only allow us to take advantage of our own vast coal resources well into the future but allow us to export that technology to a growing overseas marketplace.
Bernard L. Weinstein is associate director of the Maguire Energy Institute and an adjunct professor of business economics in the Cox School of Business at Southern Methodist University in Dallas.
See article here.