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Here's Why US Coal Companies Can't Tap Asian Markets

With coal consumption declining in the United States, the industry has set its sights on Asia — But the trouble is how to get the coal there.
Photo by Nati Harnik/AP

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Loyd Drain wants to sell more of America's coal to Asia.

He says that Wyoming produces around 400 million tons of coal every year — an amount that might vastly increase because the Obama Administration is allowing mining companies to extract over 10 billion tons of coal buried under federal lands in Wyoming.


But first, the state needs strong markets in which to sell the coal — and a way to get it there.

"We're head and shoulders above everybody else," when it comes to coal, Drain told VICE News. He touts the low sulfur and low mercury content of the state's coal, which means it produces less particulate matter, and says the overwhelming amount of the coal produced domestically is also consumed domestically.

But he'd like that to change.

"We definitely want to increase our exports to foreign markets, and we have foreign markets that are interested. But in order to do that, there has to be additional port capacity constructed," he said.

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Currently, most coal exports go through Canada, but more port capacity in the Pacific Northwest — or even in California would allow more coal to be exported. Drain says they're eyeing Japan, South Korea, and Taiwan as markets that might be hungry for America's black gold.

"We're sitting in the middle of the United States," he said. "Washington is definitely the best option, economically-speaking."

For the struggling coal industry, two sites in Washington represent possible gateways to Asia. One is in Longview, which lies along the Columbia River, and the other is outside of Bellingham. Both proposals are working their way through the permitting process.


From the coal industry's point of view, the best possible scenario goes like this: If the terminals were opened, operated at full capacity, and coal prices and Asian markets improved, then Wyoming could eventually boost its coal production from 400 million tons a year to 500 million, estimates Robert Godby, the director of the Center for Energy Economics and Public Policy at the University of Wyoming. That could represent over $1 billion for Wyoming, he said. But he concedes that the estimates are no sure thing. "There's definitely uncertainty," he told VICE News.

So although Obama opened the door to a huge increase in coal production in the United States — which could reverse the progress made by his administration on reducing greenhouse gas emissions — that coal might remain in the ground if the coal sector is unable to ship it abroad.

Related: It's been a very bad year so far for the US coal industry

But where Drain sees opportunity, Clark Williams-Derry, deputy director of the Sightline Institute in Seattle, sees a desperate attempt on behalf of the coal industry to turn its fortunes around.

"The coal industry really is in dire straits," Williams-Derry told VICE News. That's because of new federal regulations on power plant emissions; cheap, readily available natural gas; plummeting global coal prices; and stiff competition in Asia from coal producers in Australia and Indonesia. In the US, coal production dropped to under a billion short tons in 2013, the first time that's happened in 20 years, according to the US Energy Information Association.


Williams-Derry called the coal sector's attempt to increase export capacity a kind of "Hail Mary pass." Right now, he said, most American coal is shipped through the Westshore Terminal in Canada — about eight millions tons a year, mostly from two Montana mines.

"From my point of view," Williams-Derry said, the export terminals "represent travesty after travesty, mostly to prop up an industry that is already in decline."

For KC Golden, a senior policy adviser at Climate Solutions in Seattle, there are both local and global reasons to be concerned about shipping coal to Asia. One is the long, slow-moving, heavy coal trains that would travel through populated areas, bringing with them dust, noise, and strain on rail infrastructure. The bigger issue, however, is the global one — which he called "an unmitigated and un-mitigatable climate disaster."

Given the rate of warming around the world and in the oceans, locking in years — decades, even — of continued coal burning represents "a clear and present danger to the habitability of the planet and the climate," Golden said.

"That's the mistake we no longer can afford to make."

Motherboard: The 10 billion tons of coal that could erase Obama's progress on climate change

Follow Rob Verger on Twitter: @robverger