US Coal Exports
Exports Economic Contributions Report
Sep 22 2017

Japanese Engineer Makes Case for U.S. Coal Exports (Greenwire)

Posted in All News, Asia

Japanese engineer makes case for U.S. coal exports

A Japanese power plant engineer this week backed a controversial coal export terminal proposal in Washington state to supply fuel for helping replace nuclear power since the 2011 Fukushima Daiichi meltdown.

But beyond thousands of miles of Pacific Ocean separating both countries, the ongoing choppy market continues keeping American coal from Asian buyers.

Retired University of Tokyo professor Shozo Kaneko, who spent his professional career working on Japan’s cutting-edge coal plants, penned an op-ed in The Seattle Times supporting construction of Millennium Bulk Terminals’ 44-million-ton export facility near the mouth of the Columbia River.

“The Millennium project brings substantial benefits to [the city of] Longview and the state of Washington — and it also offers Japan a sound solution to its pressing energy-security challenges,” Kaneko wrote.

Backers of coal exports from western American ports have been looking for allies to help spread their message, including enlisting agricultural interests to help make the case that increased shipping capacity benefits everyone.

Japan, the world’s fifth-largest electricity consumer, has become almost entirely dependent on energy imports since the Fukushima disaster. With nuclear plants shut down, coal went from generating 27 percent of power in 2010 to 34 percent in 2015, according to the International Energy Agency.

With no coal mines in Japan since 2002, imports jumped to more than 200 million tons in 2015. Nearly all of it comes from Australia (65 percent) and Indonesia (19 percent).

The U.S. supplied just a small fraction, 4.7 million tons of mostly metallurgical coal for manufacturing steel, according to the U.S. Energy Information Administration. Only 1.1 million tons was steam coal for power plants.

But, Kaneko said, “Japan is highly interested in importing coal from the United States, a trusted ally and reliable trading partner.”

The Millennium terminal would be a conduit for the Powder River Basin spanning Wyoming and Montana and Japan, which boasts the world’s most efficient coal fleet.

Japan has specialized in researching and building ultra-supercritical and other high-efficiency, low-emission coal plants that have tight specifications demanding a uniform supply of coal.

“That’s also probably good for U.S. producers,” Doyle Trading Consultants analyst Andy Blumenfeld said.

The Powder River Basin has that type of consistent coal and doesn’t come with the geopolitical issues that hamper countries like Indonesia.

It was those attributes that spurred coal export terminal proposals up and down the West Coast during the last decade, but now Millennium is the most likely project left.

At a geographic disadvantage to countries like Australia, the U.S. has become a “swing supplier,” Blumenfeld said, meaning prices must be high for U.S. coal to crack the Asian market.

After a dismal 2016, prices are back up this year with disruptions in Australia and Indonesia. “Had [Millennium] been operable, there is certainly enough reason to believe that there’s at least 5 [million]-10 million tons of export potential out of the Powder River Basin if these prices held up,” he said.

Pinning the hopes of a project the size of Millennium on sustained high prices sounds like “a spin of the roulette wheel” to Clark Williams-Derry, energy finance director for Seattle-based think tank the Sightline Institute.

“The long-term futures prices look like coal is going to come back down to earth and come back to a point where the swing producers like the U.S. are going to get squeezed out,” he said.

Still, as Kaneko pointed out, IEA expects coal to remain integral to the world’s energy mix for decades despite Japan’s and other nation’s goals to curb carbon emissions.

“There is a viable path forward with coal: reducing emissions through advanced coal technologies and more efficient consumption,” he wrote in an analysis. “By significantly reducing CO2 emissions from coal, we can move the needle in the right direction as we also work to bring new technologies online.”

Japan is leading the push for carbon capture and storage (CCS) and in 2016 required all new coal-fired power plants to be ultra-supercritical, the most efficient available.

The Japanese government, however, has forecast a decline in coal and other fossil fuels by 2030 while nuclear enjoys a comeback and renewables surge.

In its 2016 review, IEA said CCS and other efficiency improvements, in addition to limited coal demand growth by using less coal, won’t be enough if Japan plans to reach its climate goals.

“A significant level of unabated coal use will also be incompatible with the government’s long-term target to reduce emissions by 80 percent by 2050,” the agency stated.

In August, Japan’s environment minister questioned a major new coal-fired power plant over his concerns about the country failing to meet its goals.

See article here.

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  • “Historically, U.S. companies seeking to expand their revenues focused first on increasing their number and share of U.S customers. For years, this focus served as a winning strategy for many of the most successful U.S. companies. Today, global economic trends make clear that successful companies are those that reach and sell to consumers outside U.S. borders and around the globe.”
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