U.S. Coal Exports Growing Thanks to New Restrictions

by Greg Pollowitz


U.S. Coal Finds Warm Embrace Overseas

On 67 acres here along the James River, almost 800,000 tons of coal tower in two-story-high stacks, ready to go overseas. The shipping terminal is so busy that this past Christmas Day, workers volunteered for lucrative overtime to load a bulk carrier.

Coal-terminal operator Dominion Terminal Associates, owned by three big mining firms and one of the biggest coal exporters in the U.S., stands at the center of a surprising boom.

For all the troubles of the U.S. coal industry at home, its business with the rest of the world is brisk. Last year, the U.S. set a record for coal exports, with the final tally estimated to top 120 million tons, double what it exported as recently as 2009.

The boom isn’t about feeding the voracious appetites of China and India—not yet. Instead, American coal mined in the eastern U.S. and shipped overseas goes overwhelmingly to Europe, especially the U.K., the Netherlands and Italy.

The U.S. is sending coal to Newcastle, and other English cities where the lights go on thanks to power plants fired by the American imports. British coal consumption for electricity rose about 50% in the third quarter of 2012 compared with 2011, as power producers there found coal cheaper than natural gas..

“The gas plant has simply been pushed off the grid by coal plant [in Europe], and that’s most marked in the U.K.,” said Nigel Yaxley, the managing director of the Association of U.K. Coal Importers, a trade group.

The rise in American coal exports is yet another side effect of the shale-gas revolution in the U.S., itself a result of advances in drilling techniques.

The glut of cheap natural gas has knocked coal off its dominant perch as a source of fuel for U.S. power plants. Tougher environmental rules are also squeezing coal mining in the U.S., and President Barack Obama’s inaugural address hinted at more greenhouse-gas regulation to come.

U.S. coal is finding a ready market in countries where natural gas is three to five times more expensive.

So President Obama’s attempt to “green” America is making Europe dirtier? The rest here.

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