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Coal exports: There could be a twist on the global warming argument

Guest Opinion: If you look at one study, the easy assumptions that exporting coal will harm the climate could prove backward. Two Stanford researchers raise a point worth looking at.
A coal-powered generating plant in China.

A coal-powered generating plant in China. Klineolive/Wikimedia Commons

It seemed like such a safe assumption, that exporting U.S. coal to China will be an environmental catastrophe. China burns huge amounts of coal to power its massive industry. The burning of coal is the largest contributor of heat-trapping carbon to the atmosphere, so shipping unburned coal from the United States to be burned in China will add billions of tons of carbon to the atmosphere that otherwise would stay safely in the ground. And global warming will be that much worse, and so much harder to stop.

Given that prospect, it only makes sense to fight plans to ship Montana and Wyoming coal to Asia through ports in Washington and Oregon. That fight is well underway, and intensifying.

We’ve got it backward, say two Stanford University economists. Exporting coal to China will be good for the environment, and reduce, not increase the rise in atmospheric carbon. Every economic action has a reaction. You must consider economic motives, patterns in energy use and sources, and how coal exports affect them.

Frank Wolak and Richard Morse study issues at Stanford’s Program on Energy and Sustainable Development. In 2010 they published an op-ed in The Guardian with the headline: “Environmentalists who want to ban China’s coal imports are 100 percent wrong. Driving up the price of coal cuts carbon emissions.”

China will be burning a lot of coal regardless of where it comes from. It has built coal-fired power plants by the dozen. It has large coal reserves of its own. In 2009 it shifted from exporting coal to importing large quantities, primarily because importing coal was cheaper. At the same time, a revolution in drilling technology made the United States the world’s leading producer of natural gas, which subsequently lowered the price of gas relative to coal. Power producers switched from coal to gas for purely economic reasons, but burning gas produces half as much carbon per kilowatt. Carbon emissions in the United States have fallen because burning gas is economically attractive, and it is attractive because of its price relative to coal. Coal recently produced more than half of the United States’ electricity. Now it produces a third.

China will burn the same amount of coal whether they import it or not, the economists say. They have no alternative. Export coal to China and supplies tighten. The price stays up relative to gas. Less coal will be burned in the United States and Europe, with a net environmental benefit. Stifle exports, and the price of coal falls, and burning gas is less attractive. More coal will be burned in the United States and Europe, with a net environmental degradation.

Burning coal spews a ton of carbon for every megawatt hour produced, they said. “If 5 percent of these megawatt hours were produced using natural gas instead of coal due to China raising the international coal price, a 175-million ton drop in CO2 emissions is the result,” they said in The Guardian piece. “This is the equivalent of taking 32 million cars off the road in the U.S. and Europe.”

Speaking at a recent Stanford conference, Wolak said if coal export facilities are built on the West Coast, in places like Bellingham and Longview, the result will be beneficial economically and environmentally. “Perhaps counterintuitively, the United States selling coal to China, and Asia generally, likely will reduce greenhouse gas emissions globally,” he said.

Environmentalists won’t buy the reasoning. It will be nearly impossible to convince people that exporting coal is good. There are the local environmental issues to be concerned about, including the effects of mile-long coal trains passing by day after day.

Environmentally, blocking commerce is always more attractive than letting it go. That’s what they will earnestly try to do with coal exports, and they may be 100 percent wrong.

This article originally appeared in the Wenatchee World and is reprinted with permission.

Tracy Warner is editor of the editorial page of the Wenatchee World. He can be reached at warner@wenworld.com


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Comments:

Posted Tue, Jan 29, 7:52 a.m. Inappropriate

The environmentalists did not like
1. A dam - so they stopped it with the snail darter
2. Logging - so they all but stopped it with the spotted owl

It appears they get what they want. So no coal to China and we keep switching power production to gas. What do we do when gas runs out?

I fail to comprehend why the environmentalists are not attacking the individual auto and home heating appliances. There are no regulations and near meaningless requirements after they are sold. Yet repeatedly the auto is identified as our greatest source of pollution. I do not have any numbers but I expect home heating is a close second to the auto.

leitmotif

Posted Tue, Jan 29, 11:09 a.m. Inappropriate

Autos and home heating have already been addressed: cars sold in the U.S. are going to get much more energy-efficient over the next decade and a half; heating has gotten, and will continue to get, more energy-efficient. The U.S. uses very little heating oil now, because almost all new homes use natural gas for heat, instead of oil. The trend towards more and more efficient, and cleaner, home heating has been going on in the U.S. for many years.

Lincoln

Posted Tue, Jan 29, 2:59 p.m. Inappropriate

China has its own coal supplies that it does not mine. We do not need the enviromental destruction of the coal mining, and we do not need to have our natural resources looted by China, or multi-national/foreign corporations.

The contention of these Stanford "economists" is garbage.

jhande

Posted Tue, Jan 29, 9:45 a.m. Inappropriate

The Frank Wolak and Richard Morse conclusions are based on a fundamental error in understanding the global climate issue.

Our greenhouse gas emissions have zoomed past the level where the kind of incremental or differential market economics thinking they try to apply is relevant.

In fact, we need to leave 50-80% of the world's known fossil fuel reserves in the ground to have a plausible chance of avoid catastrophe. Market-driven tweaks in the price of coal, dubious or not, are not in the right order of magnitude to do the job we need to get done.

See the IEA World Energy Outlook 2011, or:
http://www.carbontracker.org/unburnable-carbon

Posted Tue, Jan 29, 11:06 a.m. Inappropriate

Your comment is based on a fundamental error in understanding the global economic issue. China is not going to stop burning coal, just because you or the IEA think they should. The only questions are where is China going to get that coal, and how much are they going to pay for it?

You are living in a fantasy world. Nobody is going to willingly lower their standard of living to prevent or reduce global warming. So, you need to find ways of reducing greenhuse gases without putting hundreds of millions of people into poverty. The Chinese are a lot more worried about making ends meet than global warming. India likewise. They don't give a damn what you or the IEA thinks about anything.

Lincoln

Posted Tue, Jan 29, 3:01 p.m. Inappropriate

China, and India need to mine their own coal reserves.

jhande

Posted Tue, Jan 29, 11:14 a.m. Inappropriate

I’ll need to read the original report, but this Crosscut article offers some notions uninformed by basic economic marginal analysis.

“Export coal to China and supplies tighten.” Exporting coal is expanding supplies available in the Asian market and would push prices down. Keeping it in the ground or, at the least, removing suppliers’ current preferred-alternative is only going to increase the costs of supplying coal, thereby pushing prices up. North American coal-consumption may go up, but I’ll bet good money that this would be less than exporting to China. Though, there may be significant efficiency differences in energy outputs and CO2e emissions per kwh of output.

“China will burn the same amount of coal whether they import it or not”. This is fallacious and commonly suggested in discussions about many issues. Who are these economists? China will not burn the same amount of coal regardless of available supply or the price. Keeping North American coal out of the Asian market can only reduce consumption, even if only a little.
“Less coal will be burned in the United States and Europe, with a net environmental benefit.” Let’s be clear that the only environmental benefit will be to our local particulate air quality.

Like I said, I’ll need to read the original article at another time.

Posted Tue, Jan 29, 12:29 p.m. Inappropriate

"Stifle exports, and the price of coal falls, and burning gas is less attractive. More coal will be burned in the United States and Europe, with a net environmental degradation."

That is false. Coal is dirt cheap in the U.S., but burning it is on the decrease. The market assumptions from 2010 aren't playing out as they predicted.

Next story, looking at atomic blasts may actually be healthy for you?
Or Mutual of Omaha's Wild Kingdom, "we're blowing up the beaver dam to help the beaver so they will have more water down stream". People have floated some crazy theories, just sayin'.

Posted Tue, Jan 29, 3:01 p.m. Inappropriate

If you don't export it and you don't burn it at home (and the use of coal in the U.S. is already declining steeply), then the world supply goes down, prices go up, and the Chinese get a little more motivation to move to something safer.

DannyK

Posted Tue, Jan 29, 4:19 p.m. Inappropriate

I'm not sure I buy this either, for the reasons mentioned above: the analysis assumes that Chinese coal demand is fixed regardless of market conditions. Considering that China is a leading investor in clean energy technology, I would doubt this.

But, as an additional counterpoint, lower quality reserves tend to be even worse from an emissions standpoint. There could be a further setback if the net effect of blocking exports is to force the Chinese to burn a lower quality coal.

I think the main issue is the murky nature of indirect solutions to problems. If the goal is to reduce carbon dioxide emissions, the direct solution is to put a tax on said emissions. We can keep playing around with energy subsidies and efficiency standards--all of which are good policies on their own--but the problem won't really be solved until there is a carbon tax or an equivalent.

Posted Wed, Jan 30, 3:08 p.m. Inappropriate

If consumers in North America, chiefly the U.S., Europe, China, and India demand the goods and services, producers will continually seek out a way to service those consumers, at price points where the consumer will part with their money. They will find the lowest cost energy source to meet consumer demand at a price point that gets consumers to spend, and at which they can make a profit. The energy will be acquired at the price required, to meet the price point that induces consumers to consume. So the Coal, Natural Gas, Oil won't stay in the ground.

Those same consumers also vote, not just with their finite dollars, for the optimal levels of goods and services they can get for those dollars, but at the ballot box. So don't count on government laws to reduce that consumption.

So the end result is odd things like the European public overwhelmingly inducing their politicians to support Kyoto. You also see those countries coming close to those targets. But the do it by consuming the same, or increased, levels of goods and services. The more energy intensive and dirty production of those goods and services then gets off-shored to China and India, and imported back into Europe (and the U.S.). The European countries lower their carbon emissions, by exporting those emissions to off-shore producers that continue to supply their populations unchanged consumption. Globally carbon emissions grow.

The real problem here is not that there are no viable options to leaving fossil fuels in the ground. It is that those optiions are not cost competitive. Wind and solar are some of the most expensive, per kwh, sources of electricity and have environmental consequences of thier own.

Consumers want it both ways. Increasing levels of consumption, at ever cheaper prices, AND a better environment. As other posters have suggested, we aren't willing to suffer the decline in living standard, levels of unemployment, and economic carnage and disruption that wouldbe required. The current recession would be a picinic by comparison.

The answer, if there is one, is going to be some radically transformative group of technological solutions that allow current behavior at the same price points, but at radically lower levels of carbon penalty to secure the required energy.

Posted Sun, Feb 3, 3:26 a.m. Inappropriate

At least in the United States, citizens were against NAFTA, Most Favored Nation for China, and Global Economy Free Trade Agreements. Citizens were overwhelmingly against these. They were issues in the 1992 presidential election. Clinton campaigned as being against NAFTA, and against MFN for China. Perot campaigned against these as well. Bush was for them. Clinton won.

All of the polls, including the presidential election polls, found the citizenry opposed these policies.

The Citizenry still overwhelmingly opposes these policies.

So, do not imply that Citizens, whom you reduce to the name "consumers", want these imported products, or that these policies are in place because of citizen demand.

These policies have been imposed. The imposition has been bi-partisan. Politicians, and their wealthy funders, want the global economy policies, not the citizenry. The citizenry sees how detrimental these policies are because the citizenry get the detriment. The wealthy, and the politicians, get only gain from the policies, and have no concern if they harm the citizenry.

It seems to have become conventional wisdom among some that "we outsource to China because the consumers demand cheap imports"; that is a lie. Take a look at the history, instead of believing some lie dispensed by politicians, and corporations.

jhande

Posted Sun, Feb 3, 3:29 a.m. Inappropriate

A carbon tax would be class warfare.

jhande

Posted Tue, Mar 12, 4:09 p.m. Inappropriate

Huh? You don't think we are experiencing class warfare now? We already had that war and the rich won. In terms of wealth inequality the U.S. is on par with many Third World nations, and heading in the wrong direction. Without a carbon tax.

Factoids: "400 Americans have more wealth than half of all Americans combined" Source: http://www.politifact.com/wisconsin/statements/2011/mar/10/michael-moore/michael-moore-says-400-americans-have-more-wealth-/ And: "the richest 0.5 percent of global adults hold well over a third of the world’s wealth." Source: Credit Suisse Research Institute, Global Wealth Report, October 2010. Also: http://www.gfmag.com/tools/global-database/economic-data/11944-wealth-distribution-income-inequality.html

louploup

Posted Wed, Jan 30, 3:59 p.m. Inappropriate

I suppose any conclusion is possible if you just look at spot markets and short term conditions.
And the globe is generating how much new fossil fuel each year in relation to how much we consume?
Seems to me we're just juggling which kind of fossil fuel we run out of first.

007

Posted Wed, Jan 30, 5:16 p.m. Inappropriate

The suggestion that exporting US coal to China could help global warming is wrong on three counts. The theory depends on the assumption that substituting natural gas for coal helps the climate. It does not. Natural gas leaks and gets vented during drilling, transportation and storage. Natural gas is nearly all methane, and methane warms the air 25 to 100 times more than carbon dioxide, so even tiny leaks make a huge difference. People say that natural gas burns cleaner, making less smog, soot, and carbon dioxide as coal. But the leaks and venting make it just as bad or worse for the climate than using coal or oil.
The economic argument that China has no alternative to the use of coal is also inaccurate. China’s clean energy industry is expanding rapidly. China is the leading exporter of solar panels and is becoming the wind turbine factory for the world. http://e360.yale.edu/content/feature.msp?id=2238 China plans to spend $27billion on energy efficiency and renewables.
http://www.guardian.co.uk/environment/2012/may/25/china-renewable-energy-carbon-emissions
The third error this argument makes is to discount the effects of the growing popular conviction that it is immoral to invest in future development of fossil fuels. The desire for the safety and financial advantages of a green energy economy is growing with new scientific findings of urgency.
According to a recent OECD report, “without new policies,...more disruptive climate change is likely to be locked in…. [T]he global average temperature increase is projected to be 3°C to 6°C higher by the end of the century, exceeding the internationally agreed goal of limiting it to 2°C above pre-industrial levels. Surpassing the 2°C threshold would alter precipitation patterns, increase glacier and permafrost melt, drive sea-level rise, and worsen the intensity and frequency of extreme weather events."
http://www.oecd.org/document/13/0,3746,en_2649_37465_49078989_1_1_1_37465,00.html

Posted Mon, Feb 4, 8:34 p.m. Inappropriate

The Chinese are expanding energy output as much and fast as they can. It is part of their way of pulling people out of poverty. They are mining for coal, drilling and fracking for oil and natural gas, they are building nuclear plants and they are trying wind and solar. In addition, they import what they can.

Green energy production is less than 10% of the total and will remain that way for the foreseeable future. Green energy is just too expensive and inconsistant to be more than that.

The Chinese know poverty and they want out.

And the climate sensitivity debate goes on.

http://wattsupwiththat.com/2013/02/04/the-revkin-gavin-debate-on-lower-climate-sensitivity/#more-78818

leon0112

Posted Tue, Feb 5, 3:37 p.m. Inappropriate

We are the United States. We are not supposed to be all concerned about communist China, which has nuclear missiles pointed at us. It is tiring to see the non-stop "how can we help China" BS at the same time our own nation is being sold out by politicians and corporations. To hell with China, let them mine their own damn coal.

jhande

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