Obama Subsidizes Dirty Chinese Coal Power

The Obama administration has done something I would call odd, if odd weren’t the norm in this White House. The administration is worried about global warming. It also is worried about the American economy, particularly manufacturing, and international competition, particularly from China. The administration’s response, as you might expect, has been to enact new regulations that will increase greenhouse-gas emissions worldwide, cripple one U.S. industry and increase costs for practically all others, discourage domestic manufacturing, and subsidize manufacturing abroad, particularly in China. It takes a kind of perverted genius to do that much wrong in one move, as though the Marquis de Sade had been reincarnated as an economist advising the president.

I refer, of course, to new EPA regulations that will in effect ban the construction of new coal-fired power plants in the United States. And that is not all it will do: Power-plant operators have already said that they will be forced to shut down some 300 facilities producing a total of 42 gigawatts, or nearly 4 percent of the nation’s total generating capacity.

There are many laws that are not amendable by EPA fiat or by acts of Congress. Among them are the laws of China and the law of supply and demand. This inconvenient fact makes the administration’s move particularly bone-headed.

What happens is this: With new coal-fired plants off the table, future U.S. demand for coal is reduced. Lowered demand reduces the price. Demand for coal is still very strong in the rest of the world; India and China in particular are full of people who will want to consume more energy and energy-intensive goods as they continue to lift themselves out of poverty, and lower coal prices will encourage and enable them to do so. Energy-intensive industries, such as heavy manufacturing, also will benefit from cheaper coal, unless those businesses have the misfortune of being located in the United States, where they will be denied that benefit.

Reducing U.S. consumption of coal will not reduce world consumption of coal; it will shift consumption from the United States to other countries — including countries with electricity-generation infrastructure that is relatively old and unsophisticated compared to that of the United States. Coal will be redirected from relatively clean U.S. plants to relatively dirty Asian plants.

By way of illustration, here is a Chinese coal ship, demonstrating China’s famous environmental sensitivity by tearing a two-mile hole in the Great Barrier Reef and dumping fuel oil in it:

China, to be fair, is building a lot of greener, high-tech coal-fired plants. It’s also building a lot of old-fashioned ones. And the plants equipped with the green tech do not always use it, because it is expensive and cumbrous to do so.

If you are worried about global warming — and let’s just grant the entirety of the anthropogenic thesis for the sake of argument here — then what you have to worry about is not emissions from the United States but emissions from the globe, global warming being a notoriously global phenomenon.

Coal at its very best is environmentally problematic, to be sure. There are no pretty coal mines. But burning coal, like fracking for gas, presents environmental problems that are manageable, unless your idea of management is imposing arbitrary and counterproductive rules that achieve the opposite of everything you had hoped to achieve, in which case you might want to think about a career in politics.

The United States may be the first country in history to colonize itself, reducing the world’s most advanced and complex economy to a raw-materials supplier for sophisticated manufacturing economies abroad. Worse, we may not even be able to do that: One of the few U.S. firms that stand to benefit from increased Chinese coal consumption, SSA Marine, is having a terrible time trying to build a new West Coast coal terminal, called Gateway Pacific, to enable it to better serve our competitors abroad. Everybody from the EPA to the Whatcom County (really) municipal government is standing in the way of the project, and the main impetus behind the opposition is not local environmental concerns but ideological opposition to the world’s use of coal, period. Given the rarity of hearing something coherent from somebody affiliated with the Chamber of Commerce, it’s worth hearing at length from the chamber’s man in Whatcom:

These opponents wish to end the world’s use of coal and they intend to make a point by derailing the Gateway Pacific Terminal.

Stopping the terminal will not stop China from using coal; the world has plenty. It will only stop China from using our cleaner coal, which has less mercury, sulfur, and nitrogen oxides. Opponents say the coal China uses affects our air quality. So if they use our coal, our air will actually be cleaner.

Stopping this terminal will not even stop U.S. coal exports. The U.S. has at least 10 coal-export terminals and will export more. British Columbia has three coal-export terminals, and all are capable of expansion. If opponents succeed in stopping Gateway Pacific, the coal trains will continue to run right past us up to Canada, which will get the jobs and tax revenue.

Frankly, what we should be concentrating on is taking care of our local environment. The project is starting an exhaustive environmental review under the oversight of federal, state and local agencies. Let’s allow these agencies — and SSA Marine — to do their jobs instead of arbitrarily opposing something without all the facts.

As with opposition to fracking, most of the opposition to Gateway Pacific is really about opposition to the use of the commodity per se. It may be that the Obama administration is cowed by the malignant antihumanistic environmentalists who play an outsized role in Democratic affairs, particularly in campaign financing. It may be that the administration really believes its risible rhetoric about the so-called green-energy economy that’s always right around the corner (waiting for a federal handout). But a policy cannot be judged by the intentions of the men behind it; it must be judged by its actual results, which in this case means subsidizing dirty Chinese coal at the expense of the U.S. economy.

Most Popular


George Packer Gets Mugged by Reality

Few journalists are as respected by, and respectable to, liberals as The Atlantic’s George Packer. The author of The Assassin's Gate (2005), The Unwinding (2013), and a recently published biography of Richard Holbrooke, Our Man, Packer has written for bastions of liberal thought from the New York Times Magazine ... Read More
Politics & Policy

CNN: Everything but the News

For a while, we thought MSNBC had temporarily usurped CNN as the font of fake news — although both networks had tied for the most negative coverage (93 percent of all their news reports) of President Trump’s first 100 days in office. A cynic would argue that CNN had deliberately given Trump undue coverage ... Read More