In a much-anticipated move, the EPA has called in the Army Corps of Engineers to review plans for West Coast coal ports. Finally, alarmed environmentalists and frightened local residents are getting help from the federal government.
In December 2010, I first heard about a proposed coal port in Longview, Ore., and was so outraged that I wrote an article for CSRHub.com. It was a shocking idea for the Pacific Northwest, a place that prides itself on clean energy leadership -- where just months later, amidst great celebration, Washington state announced it will close its last remaining coal plant.
The environmental arguments against the Longview coal terminal seem indisputable: The coal that would have been shipped from the Powder River Basin in Wyoming and Montana was the lowest grade, a grade outlawed in the U.S. because it is so toxic. The trains carrying the coal would go through the Columbia River Gorge and other environmentally sensitive areas, spreading adjacent land and communities with coal dust.
And when the coal finally got to China, the resulting clouds of black soot could have resulted in pollution so thick as to reduce visibility in West Coast communities, a "myth" that I witnessed several years ago in San Francisco.
The Longview port proposal was withdrawn in the face of consumer opposition and a state review. But as I just found out, a new plan was submitted in late 2011 that "dwarfs the size of the original." The $600 million project would create a port that exports a staggering 44 million tons of coal per year, making it twice as big as the largest coal port on the West Coast, which is located in metro Vancouver.
The strange thing is that even moderate voices in the coal industry question the viability of new coal ports. David Gambrel, coal consultant with many years working in coal companies, cautioned developers in Coal Age to take a lesson from the past. In the 1980s, the Port of Los Angeles responded to the same frenzied level of Asian demand for coal, then from Japan and India. The port hosted a $150-$200 million consortium to build LATX for coal exports and in the early '90s opened a world-class facility. It exceeded environmental requirements. Even tough union problems were overcome.
But several years later, the demand from Asian markets failed to meet LATX's minimum annual guarantee requirements and the project was shut down.
The Port of Portland went through a similar saga, investing $25 million in its own export terminal only to find Asian markets to be unstable and unreliable.
And yet, here we are again. This time, coal prices are sky high and many more determined coal port developers are jumping in, including SSA Marine in Cherry Point, Wash.; the Longview facility which is co-owned by Ambre Energy of Australia and the U.S.'s Arch Coal; Rail America's coal terminal at Grays Harbor, Wash.; and three smaller ports in Oregon, including the Port of Morrow's proposed development soon to be under review by the Corps of Army Engineers.
Even if Asian demand for coal does stay strong, there are many other uncertainties that make investments risky, including increased competition from Alaska and South America when the Panama Canal widening is complete in 2014, the arrival of larger new Panamax vessels which cut shipping costs but require deeper harbors, and the ability of railways to handle heavy loads and trains longer than 100 cars.
But the most frightening risk of all to the coal port developers is the environmentalists. As David Gambrel writes in Coal Age:
Finding a site that meets all the physical requirements will be but a small part of the job. Global warming, climate change, and a host of other scare phrases will be used by people who now genuinely believe the Chinese will burn high sulfur coal and send their unclean stack emissions back to us. In many cases their fear is so great they will do everything in their power to stop any new development.