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Policy: Environment & Energy

Under assault from Big Green, coal is fighting back

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Opinion,Ron Arnold,Columnists,Energy and Environment,Coal

When Oregon regulators killed plans for Columbia River coal export docks Aug. 18, Big Green redirected its minions and money northward to the decisive battlefield: Cherry Point, Wash., and the proposed $600 million Pacific Gateway Terminal for shipping 48 million tons of Powder River Basin coal annually from Montana, Wyoming and North Dakota to Asia.

It will be a different fight.

Washington Gov. Jay Inslee early last year joined with Oregon Gov. John Kitzhaber in asking President Obama to review the climate-change consequences of “letting U.S. corporations feed China’s coal-burning power plants.” Obama ignored their request.

Both states then performed their own much-ballyhooed permit reviews that factored global climate impacts into a local decision, a move of questionable legality.

Where Kitzhaber bent the law to satisfy his base, Inslee is unlikely to follow suit despite predictable Big Green bullying. He has paid his dues with a global impact study and sees game changes sprouting left and right.

The biggest change in the war against coal? Coal is fighting back.

Big time.

The turnaround shows in financial-page events that don't make national headlines. While Oregon was saying “no” to coal last week, the Port of Long Beach, Calif., granted Oxbow Energy a 15-year lease extension to continue exporting coal. Canadian regulators approved a new coal shipping facility based in Surrey, near Vancouver, British Columbia. A few miles away in Delta, Westshore Terminals announced a huge expansion to accommodate growing Powder River Basin coal shipments.

If Inslee blocks Cherry Point’s Pacific Gateway Terminal, the coal (and revenue) goes away — to Asia by way of Long Beach or British Columbia.

That could be unwise: There is no clear-cut climate change impact from the exports, which “may not appreciably increase global greenhouse gas emissions and could even reduce them under certain assumptions,” according to a research paper presented in April at the 2014 Pacific Energy Forum in Seattle.

I spoke with the author, Mark Thurber, associate director of the Program on Energy and Sustainable Development at Stanford University, who made it clear that he is not an advocate, carefully hedging his findings with caveats and provisos – but his paper makes some firm predictions:

Asia’s energy demand will increase and coal will provide a substantial share of the supply. U.S. policy decisions will not appreciably curb that demand or stop coal coming in from elsewhere.

Also, Powder River Basin coal exports won’t necessarily be enough of a factor to affect Asia’s decision-making on investments in cleaner alternatives, and they won’t favor China. Thurber’s paper said China “seems unlikely to trust its energy security to U.S. supplies.”

But, his paper added, “Japanese planners look to coal as an attractive option for meeting supply needs in the face of idled nuclear capacity and expensive natural gas; they already appear to perceive coal as being available at good prices from reliable suppliers. Korea also values coal for its cost advantage over gas.”

We seem to forget Japan and South Korea, which lead the world in advanced coal technologies and are eager to work with U.S. suppliers — they would prefer not to buy from Russia.

Inslee knows that. But Big Green is desperate to kill Pacific Gateway and will create the usual distractions — if they can. What scares Big Green is labor.

Mike Elliott, spokesman for the Brotherhood of Locomotive Engineers and Trainmen’s Washington State Legislative Board, told me, “Labor support for the terminal has been consistently strong. Both the Pierce County Central Labor Council, and the larger Washington State Labor Council that includes the aerospace machinists and engineers unions, have issued resolutions.” Significantly, the national AFL-CIO has also passed a support resolution, Elliott said.

Labor versus environmentalists is a toxic split in Inslee’s base: both are urban demographics concentrated in “Puget City” — the Interstate 5 metroplex encompassing Olympia, Tacoma, Seattle, and Everett — which dominates state elections, including Inslee’s.

Inslee expected that. He didn’t expect this: On Nov. 18, 2013, the attorneys general of coal-exporting states Montana and North Dakota sent a letter to Washington state criticizing its Department of Ecology’s environmental scoping of the Pacific Gateway Terminal for including “speculative impacts” and requiring “impossible assessments of foreign environmental impacts” beyond their jurisdiction.

That, they warned, “appears to have been designed to hinder the development of that terminal,” infringing on the sovereignty of Montana and North Dakota and violating “well-established and well-understood principles of federal Constitutional law” under the Interstate Commerce Act.

Wyoming Gov. Matt Mead took the Army Corps of Engineers to school in a letter politely asserting, “An analysis of global environmental impact is not relevant and is outside of the influence of the project.”

Just to clarify things, the Wyoming State Legislature proposed a $500,000 legal fund in the state budget for possible litigation with Washington state for trade violations.

James Bacchus, former Democratic congressman and former chief appellate judge of the World Trade Organization, was commissioned by the National Association of Manufacturers to co-author a report titled “[Liquefied Natural Gas] and Coal: Unreasonable Delays in Approving Exports Likely Violate International Treaty Obligations.”

Bacchus believes Washington state's expanded environmental assessment would be in violation of WTO treaty rules. Asia is watching closely.

Inslee has paid his dues to Big Green ideologues. They wanted a coal war to kill Pacific Gateway, but instead gave him an incipient international trade war.

If that should go to tribunal, Inslee knows his trade-dependent state could lose.

Big time.

RON ARNOLD, a Washington Examiner columnist, is executive vice president of the Center for the Defense of Free Enterprise.
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