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American ShipperShippingTrade and Compliance

Using military bases for coal exports ‘harebrained’

Washington Gov. Jay Inslee fired up over U.S. Secretary of Interior Ryan Zinke’s proposal.

   U.S. Secretary of Interior Ryan Zinke has floated the idea of using
military bases or other federal properties to develop export terminals
for coal or gas.
   The Associated Press reported Monday
that Zinke told it, “I respect the states of Washington and Oregon and
California, but also, it’s in our interest for national security and our
allies to make sure that they have access to affordable energy
commodities.” He added that may require the use of “some of our naval
facilities, some of our federal facilities on the West Coast.”
    AP said he identified one prospect, the former Adak Naval Air
Facility in the Aleutian islands, as a possible site for an export
terminal for natural gas produced in the North Slope of Alaska.
   According to the U.S. Energy Information Administration (EIA), coal exports from the United States to Asia more than doubled to 32.8 million short tons in 2017 from 15.7 million short tons in 2016.
  “Transportation costs also need to be low enough to make it
worthwhile for producers to ship U.S. coal to Asia. Approximately 61
percent of U.S. coal exports to Asia originate from Norfolk, Virginia,
and Baltimore, Maryland, a journey of up to 45 days,” EIA said.
   Coal companies want new terminals to be built on the West Coast, but
are being opposed by environmentalists and politicians who are concerned
about global warming and local pollution near proposed terminal sites.
   Washington State politicians denounced Zinke’s proposal.
   Gov. Jay Inslee blasted the idea in an online video.
There are five major naval stations on Puget Sound, but he called the
idea of using them for exports of coal a “harebrained scheme” and
“another bad idea from the Trump administration.”
   “Our sailors have a national security mission and they do a great
job. They should not have foisted upon them the responsibility of being
coal stevedores. They need to be United States Navy sailors, that’s
their job,” said Inslee.
 
“Second, the president needs to know he will not be able to subvert our
environmental laws. We are going to protect the clean water of Puget
Sound, we are going to protect our clean air, and he will not succeed in
ignoring our environmental laws. And third, it is more than
disappointing that a week after the United Nations scientific community
came together to warn the world that if we do not act against carbon
pollution and climate change in the next 10 or 12 years we are going to
suffer greatly. The Department of Defense has recognized climate change
is a national security threat. The admirals, the generals understand
what the real security threat is, and thats climate change.
   “We are going to fight this,” said Inslee. “I believe we will prevail.”
   U.S. Rep. Adam Smith, D-Wash, issued a similar statement, saying, “The
Trump administration is once again using national security as an excuse
to drive their short-sighted agenda. The reality that this
administration refuses to act on, however, is that climate change is one
of the gravest national security threats facing this country. In 2017, I
led my colleagues passing into law legislation that acknowledges
climate change is a national security threat.”
   Cesia Kearns, deputy campaign director for the Sierra Club’s Beyond
Coal campaign in the Western region, said “Once again, Ryan Zinke is
speaking on matters he does not understand nor does he have a say over.
Infrastructure for coal and gas are being rejected because of their harm
to clean water and direct threats to the public’s health — facts Zinke,
Trump and corporate polluters cannot disregard. Zinke and the rest of
the Trump administration can pontificate and attempt to circumvent
federal and state laws, but the facts and the rejection of these fossil
fuel terminals won’t change.”
    Inslee
and other state officials in Washington are being sued by a company
that wants to build a coal export terminal on the Columbia River
. Six states — Wyoming, Kansas,
Montana, Nebraska, South Dakota and Utah — have filed friend of the court briefs supporting Lighthouse Resources,
an integrated coal company that wants to build the terminal.
   Lighthouse said the Washington governor and other state officials
have “unreasonably delayed and denied a number of permits and approvals
for a port facility that would enable the export of coal to U.S. allies
and trading partners in Asia” and the states say Washington’s
“actions have both the intent and effect of discriminating against and
unduly burdening foreign and interstate commerce, in violation of the
U.S. Constitution’s dormant commerce clause, the ICCTA and the federal
Ports and Waterways Safety Act.”
   In another high-profile controversy, the city of Oakland,
Calif., is trying to prevent a proposed bulk products terminal on
its waterfront from handling coal. The terminal is planned on land owned
by the city and leased to a developer.
  The city passed an ordinance banning coal operations, saying they would be a substantial danger to the health of residents.
   But U.S. District Court Judge Vince Chhabria ruled in May that the
ordinance was invalid because the city had relied on information in
developing the law that was “riddled with inaccuracies, major
evidentiary gaps, erroneous assumptions and faulty analyses.” As a
result, he found applying the ordinance to the terminal was a breach of
the development agreement the city had signed.
   The city has appealed the ruling to the 9th Circuit Court of Appeals.
   Ironically, the site of the proposed terminal is the former Oakland Army Base.

   Total U.S. exports of coal in 2017 was 97 million short tons, a 61 percent increase from the 2016 level, according to
the U.S. Energy Information Administration. Fifty-seven percent of U.S. coal
exports are metallurgical coal and 43 percent are steam coal, according
to the EIA.
   EIA said steam coal, which is used to generate electricity, accounted
for most of the increase in 2017 coal exports. India, South Korea and
Japan were three of the top five recipients of U.S. steam coal exports
in 2017.
   India, the largest importer of steam coal from the United
States, imported 7.6 MMst of steam coal from the United States in
2017 — nearly three times as much as in 2016 — mainly to fuel growing
electricity capacity in the country, EIA said. “Coal-fired generating capacity in
India has more than doubled in recent years to meet growing electricity
demand. Although India produces enough coal to meet most of its domestic
needs, a large portion of India’s new coal-fired power plants require
coal with higher quality and energy content than the coal that is
typically produced in India, resulting in these power plants having to
import coal from elsewhere.
   EIA said demand in South Korea is growing primarily because of the
countrys plan to transition away from nuclear power, increasing its
reliance on electricity generated from coal-fired power plants.
   In Japan, following the 2011 Fukushima disaster, nuclear power plants
have been shut down and EIA said the country now “depends on imports
for more than 90 percent of its energy needs, and U.S. steam coal
exports to Japan were 2.7 MMst in 2017, up from 0.6 MMst in 2016.
   Supply disruptions can also affect the amount and destination of
U.S. coal exports. In 2017, disruptions to coal supply from Australia
and Indonesia — traditionally the main source of coal for many countries
in Asia — meant that many Asian countries turned to imports from the
United States to offset these disruptions, EIA reported. 

Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.

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