Now Playing:

News

Environment | Energy

Coal Industry’s Not Doing So Hot. Here’s What That Means For Pacific Northwest


A coal mine operation in Wyoming.

A coal mine operation in Wyoming.

Katie Campbell, KCTS9/EarthFix

The coal industry has been having a hard time lately.
 
Coal usage in the U.S. has been declining for years. That’s prompted coal companies in the West to try to export their coal to Asia via ports in Washington, Oregon and California.
 
But with the global price of coal dropping, that’s not looking like such a good bet for the coal industry anymore, according to new analysis from WoodMackenzie that was recently featured in The Seattle Times.
 
 
Coal may be having its problems, but there are still two coal export terminals on the table in the Northwest, right?
 
Right - but not too long ago there were six proposed terminals in Washington and Oregon. One by one they’ve been scrapped. So now we only have the two largest ones still in the environmental review in Washington - one at Cherry Point in northern Washington, the other near the mouth of the Columbia in Longview, Washington.

Why have companies been walking away from those projects?
 
Politics and Economics. The Obama administration’s campaign to reduce domestic coal consumption is for real. Despite the recent U.S. Supreme Court decision to temporarily halt the enforcement of the Clean Power Plan, it isn’t completely dead yet and it would require cutbacks of carbon dioxide emissions from coal plants.

The Department of the Interior, headed by Seattlite and former REI CEO Sally Jewell, recently issued a moratorium on any new leases of coal on federal land. The coal that would be moving through the export terminals here is mostly mined in Wyoming and Montana on leased federal land so that signals a pretty dim future. Just this week 17 governors announced an accord to foster more clean energy on the grid - which basically means less coal on the grid.
 
And then, there are the economics:  Back in 2011, when a lot of these Northwest coal export terminal proposals first surfaced, the price of coal was more than $100 per ton. Now it’s less than $10 a ton in the Powder River Basin in Wyoming and Montana. That means the coal is worth less than the cost of putting it on a train and shipping it to Asia. 40 percent of the coal mined in the Powder River Basin is being mined by companies that are close to or have already filed for bankruptcy. Some of those companies - CloudPeak, Arch Coal and Peabody Coal - are backing the two remaining terminals here in Washington.
 
Where does environmental opposition to these terminals fit into this “death of coal” picture?
 
The environmental community has been working with tribes in the region to form what they call “the thin green line” of opposition to all these proposals - both oil terminals and coal - and that opposition has been heard. We’ve seen local politicians getting elected or put out of office based in part on their position on coal exports. That’s been the case for county commission races up in Whatcom County where the Gateway Pacific Terminal is proposed. We’ve seen lengthy and in some cases extended environmental review periods for the remaining coal terminals.

EXPLORE: EarthFix’s Coal Scorecard

And as anyone in the business world knows, time is the enemy of all deals. So while it’s impossible to say, specifically, that environmental opposition was key in triggering this death spiral for the coal industry, it certainly gummed up the process for those companies.
 
So what’s the outlook for the two remaining coal terminal proposals?
 
With every new bankruptcy declared I wonder the same thing. It’s like not having any money in your bank account and still buying that new suit in the hopes that it will get you your next gig - the export terminals are sort of like that new suit for the coal industry. I’m wondering how long until they have to return it.

According to the Alliance for Northwest Jobs and Exports, though, the coal industry isn’t ready to call uncle yet:

“Despite the lengthy delay in reviewing their applications, and the disconcerting signal it sends to other outside investors looking at Washington as a place to do business, there’s plenty of interest as well as a high-level of confidence in the need for these projects; whether it be markets overseas or here at home.”
 

More News

More OPB