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The port of Norfolk, Virginia, seen here in
1970, is the largest U.S. facility for exporting coal. It saw a surge of
activity last year as U.S. coal exports increased 17 percent to set a
new record.
Photograph by Charles Rotkin, Corbis
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Published March 15, 2013
Ready for some good news about the environment?
Emissions of carbon dioxide in the United States are declining. But
don't celebrate just yet. A major side effect of that cleaner air in the
U.S. has been the further darkening of skies over Europe and Asia.
The
United States essentially is exporting a share of its greenhouse gas
emissions in the form of coal, data show. If the trend continues, the
dramatic changes in energy use in the United States—in particular, the
switch from coal to newly abundant natural gas for generating
electricity—will have only a modest impact on global warming, observers
warn. The Earth's atmosphere will continue to absorb heat-trapping CO2,
with a similar contribution from U.S. coal. It will simply be burned
overseas instead of at home.
"Switching from coal to gas
only saves carbon if the coal stays in the ground," said John
Broderick, lead author of a study on the issue by the Tyndall Center for
Climate Change Research at England's Manchester University. (Related
Quiz: "What You Don't Know About Electricity")
The U.S. Energy Information Administration (EIA) released data this week showing that United States coal exports hit a record 126 million short tons
in 2012, a 17 percent increase over the previous year. Overseas
shipments surpassed the previous high mark set in 1981 by 12 percent.
The United States clearly is using less coal: Domestic consumption fell
by about 114 million tons, or 11 percent, largely due to a decline in
the use of coal for electricity. But U.S. coal production fell just 7
percent. The United States, with the world's largest coal reserves,
continued to churn out the most carbon-intensive fuel, producing 1
billion tons of coal from its mines in 2012.
Emissions Sink
The
EIA estimates that due largely to the drop in coal-fired electricity,
U.S. carbon emissions from burning fossil fuel declined 3.4 percent in
2012. If the numbers hold up, it will extend the downward trend that the
U.S. Environmental Protection Agency (EPA) outlined last month in its
annual greenhouse gas inventory, which found greenhouse gas emissions in 2011
had fallen 8 percent from their 2007 peak to 6,703 million metric tons
of CO2 equivalent (a number that includes sources other than energy,
like methane emissions from agriculture). In fact, if you don't count
the recession year of 2009, U.S. emissions in 2011 dropped to their
lowest level since 1995.
President Barack Obama counted the trend
among his environmental accomplishments in his State of the Union
address last month: "Over the last four years, our emissions of the
dangerous carbon pollution that threatens our planet have actually
fallen."
The reason is clear: Coal, which in 2005 generated 50
percent of U.S. electricity, saw its share erode to 37.4 percent in
2012, according to EIA's new short-term energy outlook.
An increase in U.S. renewable energy certainly played a role;
renewables climbed in those seven years from 8.7 percent to 13 percent
of the energy mix, about half of it hydropower. But the big gain came
from natural gas, which climbed from 19 percent to 30.4 percent of U.S.
electricity during that time frame, primarily because of abundant supply
and low prices made possible by hydraulic fracturing, or fracking.
(Related: "Natural Gas Stirs Hope and Fear in Pennsylvania" and interactive, "Breaking Fuel From the Rock")
The trend appears on track to continue, with U.S. coal-fired plants being retired at a record pace.
But
U.S. coal producers haven't been standing still as their domestic
market has evaporated. They've been shipping their fuel to energy-hungry
markets overseas, from the ports of Norfolk, Baltimore, and New Orleans.
Although demand is growing rapidly in Asia—U.S. coal exports to China
were on track to double last year—Europe was the biggest customer,
importing more U.S. coal last year than all other countries combined.
The Netherlands, with Europe's largest port, Rotterdam, accepted the
most shipments, on pace for a 24 jump in U.S. coal imports in 2012. The
United Kingdom, the second largest customer, saw its U.S. coal imports
jump more than 70 percent. (Related: "Natural Gas A Weak Weapon Against Climate Change, Study Says")
The
hike in European coal consumption would appear to run counter to big
government initiatives across the Continent to cut CO2 emissions. But in
the European Union, where fracking has made only its initial forays and
natural gas is still expensive, American coal is, well, dirt cheap.
(Related: "U.K. Dash for Gas a Test for Global Fracking")
European
utilities are now finding that generating power from coal is a
profitable gambit. In the power industry, the profit margin for
generating electricity from coal is called the "clean dark spread"; at
the end of December in Great Britain, it was going for about $39 per
megawatt-hour, according to Argus.
By contrast, the profit margin for gas-fired plants—the "clean spark
spread"—was about $3. Tomas Wyns, director of the Center for Clean Air
Policy-Europe, a nonprofit organization in Brussels, Belgium, said those
kinds of spreads are typical across Europe right now.
The EU has a
cap-and-trade carbon market, the $148 billion, eight-year-old Emissions
Trading System (ETS). But it's in the doldrums because of a huge
oversupply of permits. That's caused the price of carbon to fall to
about 4 euros ($5.23). A plan called "backloading" that would
temporarily extract allowances from the market to shore up the price has
faltered so far in the European Parliament. "A better carbon price
could make a difference" and even out the coal and gas spreads, Wyns
said. He estimates a price of between 20 and 40 euros would do the
trick. "But a structural change to the Emissions Trading System is not
something that will happen very quickly. A solution is years off."
The Tyndall Center study
estimates that the burning of all that exported coal could erase fully
half the gains the United States has made in reducing carbon emissions.
For huge reserves of shale gas to help cut CO2 emissions, "displaced
fuels must be reduced globally and remain suppressed indefinitely," the
report said. (Related Quiz: "What You Don't Know About Natural Gas")
Future Emissions
It
is not clear that the surge in U.S. coal exports will continue. One
reason for the uptick in coal-fired generation in Europe has been the
looming deadline for the EU's Large Combustion Plant Directive, which
will require older coal plants to meet lower emission levels by the end
of 2015 or be mothballed. Before that phaseout begins, Wyns says, "there
is a bit of a binge going on."
Also, economic factors are at
work. Tyndall's Broderick said American coal companies have been
essentially selling surplus fuel overseas at low profit margins, so
there is a likelihood that U.S. coal production will decrease further.
The U.S. government forecasters at EIA expect that U.S. coal exports
will fall back to about 110 million tons per year over the next two
years, due to economic weakness in Europe, falling international prices,
and competition from other coal-exporting countries. The Paris-based
International Energy Agency (IEA) calls Europe's "coal renaissance"
a temporary phenomenon; it forecasts an increasing use of renewables,
shuttering of coal plants, and a better balance between gas and coal
prices in the coming years.
But IEA does not expect that the
global appetite for coal will slacken appreciably. The agency projects
that, by 2017, coal will rival oil as the world's primary energy source,
mainly because of skyrocketing demand in Asia. (Related: "Pictures: A Rare Look Inside China's Energy Machine")
U.S. coal producers have made clear that they aim to tap into that growing market.
Currently,
U.S. exports to Asia are somewhat constrained because there is little
port capacity for big coal ships on the U.S. West Coast, and because
metallurgical coal, the high-heat content rock that is used for
steelmaking, is mined exclusively on the U.S. East Coast. Nevertheless,
demand for U.S. "met" coal is so great in Asia that the shipments make a
round-the-world journey from Appalachia. They are sent by train to the
port of Baltimore, where they steam to sea through the Chesapeake Bay,
then south across the Atlantic Ocean and around Africa's Cape of Good
Hope to reach Asian ports.
Whether U.S. exports to Asia expand
will depend largely on the fate of controversial proposals to expand
port capacity in Bellingham and Longview, Washington, and Corpus
Christi, Texas. (Related: "Seeking a Pacific Northwest Gateway for U.S. Coal"
) Those new ports would allow easier transport of the abundant coal of
the Powder River Basin of Wyoming and Montana, which is especially well
suited for generating electricity. Powder River Basin coal is prized
because it is low in sulfur and can cut acid rain emissions, but as with
all coal, carbon dioxide emissions remain a major problem.
John
Eaves, chief executive officer of St. Louis, Missouri-based Arch Coal,
which saw the bulk of its exports last year go to South Korea, told
investors last month that the company would be proactive in working to
gain greater port capacity. Despite the low price currently fetched for
coal overseas, Eaves said the company expects the international market
to improve even as domestic demand for coal recedes. "As we look to the
U.S. over the next three to five years, let's face it, demand's going to
be pretty flat," he said. "We see exports as a long-term development
opportunity." (Related Interactive: "World Electricity Mix")
This story is part of a special series that explores energy issues. For more, visit The Great Energy Challenge.
Source:http://news.nationalgeographic.com/news/energy/2013/03/130315-us-coal-exports/
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