Coal Exports to China Surge (Carbon Leakage with a Vengeance — No Escape from Law of Unintended Consequences)

In “Nations that Debate Coal Use Export It to Feed China’s Need,” New York Times reporter Elizabeth Rosenthal exposes a huge unintended consequence of Kyotoism’s assault on coal-fired power plants: U.S. and Australian coal companies are shipping their product to Asian countries, especially China, which in 2008 outstripped the United States as the world’s top emitter of carbon dioxide (CO2).  

Rosenthal explains why this situation drives climate activists up the wall:

Traditionally, coal is burned near where it is mined — particularly so-called thermal or steaming coal, used for heat and electricity. But in the last few years, long-distance international coal exports have been surging because of China’s galloping economy, which now burns half of the six billion tons of coal used globally each year.

As a result, not only are the pollutants that developed countries have tried to reduce finding their way into the atmosphere anyway, but ships chugging halfway around the globe are spewing still more.

This is “carbon leakage” with a vengeance. “Leakage” refers to emissions that migrate overseas as domestic firms offshore production and jobs to countries with less restrictive controls on carbon-based energy. Up to now, nearly all the discussion has focused on “energy-intensive, trade-intensive” industries such as producers of iron, steel, aluminum, copper, cement, glass, ceramics, and paper. Such energy-intensive manufacturers can pick up and leave if domestic climate policy puts them at a competitive disadvantage, and climate campaigners don’t want to be blamed for destroying American jobs.

Policymakers have not considered coal industry jobs in this context, however, because coal mines are pretty much stuck where they are. Besides, Al Gore and the Repower America campaign say we should replace all U.S. electric generation with “zero-carbon” energy by 2018. Who needs coal!

In a House Ways and Means hearing last year on the Trade Aspects of Climate Legislation, not one witness mentioned that carbon policies, especially a de-facto ban on new coal-fired power plants, would ramp up coal exports to China, fueling industries that typically emit much more CO2 per unit of output than do their U.S. counterparts.

David Hamilton of the Sierra Club, for example, saw carbon leakage to China as a big problem, but did not say a word about his organization’s “Stopping the Coal Rush” campaign much less whether it might stimulate a surge in coal exports to the (ahem) People’s Republic. Sierra Club now regards this as a big problem, as Rosenthal reports: 

“This is a worst-case scenario,” said David Graham-Caso, spokesman for the Sierra Club, which estimates that its “Beyond Coal” campaign has helped to block 139 proposed coal plants in the United States over the last few years. “We don’t want this coal burned here, but we don’t want it burned at all. This is undermining everything we’ve accomplished.” [Emphasis added.]

This photo from the NYT article shows Australian coal waiting to be shipped to China:

Rosenthal quotes Vic Svec, senior VP of Peabody Energy, the world’s largest coal company, as saying, “Coal is the fastest-growing fuel in the world and will continue to be largely driven by the enormous appetite for energy in Asia.”

Here are some key facts she reports (in her words):

• This summer an Australian company signed a $60 billion contract with a state enterprise, China Power International Development, to supply coal to Chinese power stations beginning in 2013 from a vast complex of mines, called China First, to be built in the Australian outback. It was Australia’s largest export contract ever, the company said.
• For Australia, coal exports to China grew to $5.6 billion from $508 million between 2008 and 2009, government statistics show. While it still sends more coal to its longtime customers Japan and Korea, that balance could shift as Australian coal giants sink billions into new projects like China First.
• Last year, the United States exported only 2,714 tons of coal to China, according to the United States Energy Information Administration. Yet that figure soared to 2.9 million tons in the first six months of this year alone — huge growth, though still a minuscule fraction of China’s coal imports.
• The growth and shifts in coal exports to China are impressive, flowering even during the recession. Seaborne trade in thermal coal rose to about 690 million tons this year, up from 385 million in 2001.
• The price rose to $60 from $40 a ton five years ago to a high of $200 in 2008. Coal delivered to southern China currently sells for $114 per ton.
• China, which was a perennial coal exporter until 2009, the first year that it imported more than it sent out, is expected to import up to 150 million tons this year.
• Another emerging customer is India, whose coal imports rose from 36 million tons in 2008 to 60 million tons in 2009, the last full year for which data is available.