Washington, D.C. — On the heels of a setback yesterday for the coal industry’s plans to build a new export facility near Boardman, Oregon, the Center for American Progress released an analysis finding that proposed coal-export projects on the West Coast of the United States would—if approved—cause an increase in carbon pollution equivalent to 35 million additional cars on the road.
The coal planned for export from proposed West Coast terminals is primarily federally owned coal from the Powder River Basin, or PRB, in Montana and Wyoming, which is the source of approximately 40 percent of all U.S. coal and approximately 13 percent of all U.S. greenhouse gas emissions.
“For decades, the federal coal program in the PRB has sought to maximize coal production without regard for pollution costs or for the fair return that is owed to taxpayers,” said Matt Lee-Ashley, a Senior Fellow and Director of the Public Lands Project at the Center. “The prospect of shipping massive amounts of U.S. taxpayer-owned coal to be burned in China defies common sense, risks undercutting U.S. climate goals, and is fiscally indefensible.”
As a result of outdated policies from the Department of the Interior’s Bureau of Land Management, or BLM, coal from the PRB is mined and sold at the below-market price of $13 per ton, or around one-fifth of the price of coal produced in the Appalachian region and one-10th of the price of coal being purchased in southeastern China. The BLM’s leasing program has been the subject of investigation and criticism by both the U.S. Government Accountability Office and the Interior Department’s Inspector General.
“With the federal coal program in the PRB facilitating maximum production for minimal return to taxpayers, the coal industry is working to build the export capacity needed to compete with all fuels for large and growing overseas markets,” said Michael Madowitz, an Economist at the Center. “And while shipping PRB coal from the United States’ West Coast to Asia is more costly than shipping from eastern hemisphere producers, the mine-mouth price of PRB coal is so much lower than both domestic and international alternatives that it more than makes up for the difference.”
Because federal policies help keep PRB prices low, the coal can be delivered to China and other Asian markets at more than 40 percent less than current Chinese prices. Today’s report finds that, taking into account transportation costs and other fees and charges, the mine-mouth price of PRB coal could rise to as much as $53.93 per ton, a fourfold increase from the current price, while still remaining competitive with benchmark delivery prices in China and various other Asian markets.
Although yesterday’s decision by the Oregon Department of State Lands was a blow to Australian-based Ambre Energy’s plan to add approximately 9 million tons of shipping capacity for coal at the Port of Morrow in Boardman, Oregon, two additional proposed coal ports are still under review at Longview and Cherry Point in Washington state. Together, the two Washington terminals would add approximately 120 tons of additional coal-shipping capacity per year.
Additional resources: Federal Coal Leasing in the Powder River Basin: A Bad Deal for Taxpayers by Nidhi Thakar and Michael Madowitz
Fact Sheet: Five Things You Should Know About Powder River Basin Coal Exports by Nathan Joo, Matt Lee-Ashley and Michael Madowitz
For more information on this topic, contact Tom Caiazza at 202.481.7141 or gro.ssergorpnacirema@azzaiact.