Expanding Coal Exports Through La., Even As Demand Drops
A proposal to build a new coal export terminal in Plaquemines Parish has drawn criticism from environmental groups and the public, who say it presents a public health threat. It has been so contentious that the state Department of Natural Resources has faced lawsuits and is currently reviewing its approval of the project after taking input from the public.
The RAM terminal proposal, put forward by Armstrong Coal of Kentucky, is one of two expansions along the Mississippi River. Two others were canceled last year.
Eric Smith, associate director of the Tulane Energy Institute, discusses the future of the industry.
Wendland: President Obama’s clean energy policies have decreased the demand for coal in the U.S., and there’s been a drop in production as well, so demand is coming from countries like China and South Korea. But with some of those now countries considering ways to limit greenhouse gas emissions, is this really a sustainable industry moving forward?
Smith: I think it’s certainly an industry that faces its challenges, but remember it’s going to take years for us to reduce our consumption of coal. What you’re starting to see are some of the least efficient coal mines shutting down or going bankrupt, but we still generate a lot of power using coal — particularly in the Midwestern states. It’s not so much in Louisiana, where we actually use primarily natural gas. Other states, including Texas, burn a lot of coal.
Wendland: But is international demand expected to drop in the future?
Smith: The future is a long time. What we’re seeing right now is some reduction in demand. We’re not real sure how much of that’s because of an economic downturn and how much of that is because people have switched to other fuel sources. I suspect, personally, that some of it is, predominately, a result of reduced economic activity.
Wendland: In recent years — according to the U.S. Energy Information Administration — the amount of coal exported from Louisiana actually dropped. There’s been a 46 percent drop this year compared to last. So why would a company like RAM Terminals find building a new terminal lucrative?
Smith: I think that there is some reduction going on, predominantly in the U.S. The difficulty is that a lot of the developing countries don’t have a lot of choice, and those are the countries that have tended to use a lot of coal in the past. I suspect that, yes, there are going to be some reductions in exports, but the first act in this play is going to be us using less coal as we convert to natural gas and nuclear, and other countries using a little more coal until they follow up with conversions of their own or set up import terminals for LNG or any of these other sorts of fuel sources we see people talking about.
Wendland: Do you have a projection in terms of a timeline here? And with the energy market uncertain, how can you gauge demand anymore?
Smith: Well, if you take the EPA at its word, they’re thinking that by 2022 you might start to see some effect in the United States. The idea is and the plan is — in the Clean Power Plan that’s being promulgated — is reduce as much as you can, shut down the old, inefficient plants, and then switch as many of the newer coal plants over to an alternate fuel, primarily natural gas. But it’s going to take a long time.
Wendland: Coal export companies have met a lot of resistance from environmental advocates and citizens in the Pacific Northwest, and some of them may be turning to the Gulf South due to our friendlier policies. Kinder Morgan, for example, had to drop plans for terminals in Oregon and Washington but have since expanded their export facilities here, and the RAM proposal is also facing a lot of opposition. Is this indicative of a changing climate here in Louisiana?
Smith: I think there’s some change, but I think the other thing that’s been on people’s minds, particularly in the case of the coal terminals that we have at the mouth of the river, is there’s been plans to put in a new rail line to deliver coal. And typically, the way these trains run is they load up with coal out in Wyoming. They’ll have 115 cars and four engines, and these trains then run non-stop from their source to the export terminal. People don’t want to see those trains, they don’t want to see the dust, they have health concerns, and those concerns outweigh the economic benefits — at least perceived economic benefits — of the population. So you do see people objecting, perhaps to a lesser degree in Plaquemines Parish and a greater degree in the parishes around it, like Jefferson, et cetera, because they don’t want these trains being installed. They don’t want the tracks put in so that the trains can get down to Myrtle Grove. Heretofore all of the coal arriving in these terminals has come down by barge on the river.
Wendland: In your opinion this is more of an isolated incident in Louisiana because of the rail component?
Smith: I think that’s my analysis. If this was just an expansion of the existing Myrtle Grove facilities and modus operandi, you wouldn’t be hearing all of these complaints.
Wendland: So you anticipate continued interest in these types of export terminals in Louisiana going forward?
Smith: I don’t think it’s going to be a boomtown for coal terminals, but I do think there’s a lot of industrial interest in maintaining some sort of coal export capability. Even the refineries, which have nothing to do with coal, produce petroleum coke and that petroleum coke goes out through the same terminals. So there will be an industrial campaign, if you will, that says "We need the terminals, you might want to put some industrial restrictions on them to improve the health and make them play by the rules that they’ve committed to." But I don’t see Louisiana as a state outlawing coal terminals anytime soon.
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