Tuesday, July 29, 2014

Exporting more U.S. Coal can lower global emissions?

Is America ready to focus on Canada's main dirty energy export to the rest of the world?

Will coal exports abroad offset hard-won carbon reductions at home? | Energy Institute at HAAS
...Stanford economist and Energy Institute affiliate Frank Wolak puts forward a different view. Frank and co-authors have been analyzing the likely emissions impacts of expanding U.S. coal exports to Asia using an economic model of global coal markets. This research is finding that increasing domestic coal exports to China could reduce GHG emissions. The basic argument is as follows. Because China has very little natural gas-fired generation and highly inelastic demand for coal, U.S. exports of coal to China will substitute for other coal. Selling U.S. coal to China could raise coal prices in the U.S. and Europe (a major importer of U.S. coal). In both of these regions there is flexible natural gas fired capacity capable of substituting for coal in the production of electricity. This fuel switching would reduce greenhouse gas emissions.
Ahhhh ... what?

This is amongst the worst articles I've read at the usually excellent Energy Institute at HAAS blog.

I'll make the following remarks in the context of the entire article:
Image shown in Lindsay Wilson article
  • electricity is a little more emitting sector than transportation in the US, but only a little, and I'd argue President Obama's main initiative impacting emissions is "grinding up the corporate average fuel economy (CAFE) standards."
  • cheap exports of U.S. coal to Europe have almost certainly driven up the "dark spread" to encourage displacing natural gas generation with coal-fired power in Europe
  • China imports coal, with the majority of its imports coming from Australia and Indonesia - countries which would probably be able to find other markets to export to.
Andrew Revkin has a related post that picked up on the same reports of US emissions savings in moving away from coal in generating electricity being cancelled out by increased exports of coal: U.S. Coal Exports Eroding Domestic Greenhouse Gains. Revkin's article quotes from AP's NOT IN MY BACKYARD: US SENDING DIRTY COAL ABROAD, which in turn builds on the March "research note"US Coal Exports Erode All CO2 Savings from Shale Gas. "The Bottom-line" of that article:
Once we account for the CO2 emissions generated from the US coal consumed outside its border, it becomes clear that there is not much left to rejoice about the CO2 savings from the displacement of coal by natural gas in the US. The emissions from the exported US coal exceeds the savings from fuel switching in the US by more than 60 million tons over a five year period from 2007-12.
It's unsettling that prominent academic economists see fit to entertain the notion that US exports of coal might be a good thing because ... well, because it's American coal.

The HAAS article I cite in this post also has a section titled, "The Bottom-line":
Many are hoping that the current U.S. commitment to reducing domestic emissions will provide the moral authority needed to negotiate international commitments...
Moral authority?

The U.S. signed the KYOTO protocol after it's Senate had unanimously passed the Byrd-Hagel resolution - of course it was never ratified.

The HAAS article begins with, "When President Barack Obama took office in 2009, he set a goal of cutting U.S. greenhouse gas emissions by 17 percent of 2005 levels by 2020." A footnote acknowledges it's not clear what exactly “In the range of 17%, in conformity with anticipated U.S. energy and climate legislation” means - but that's the U.S. commitment from Copenhagen (non-binding/no penalty) - with the vague wording referencing legislation that clearly won't pass anytime soon.

What moral authority?

The path to lower emissions is likely the path to make alternatives to coal affordable relative to coal.
I think that's unlikely to be accomplished by increasing the supply of coal, but I'm not a professor of economics.

I began this post with a question, so I'll end with an answer.

Canada's energy exports to countries other than the U.S. are in uranium, and coal. Most of the coal mined in Canada for export is metallurgical coal. Coal for generating electricity is exported from B.C., but most of that stuff is U.S. coal being shipped out of Canada.


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