Green City Invests in Coal

The Natural Resources Defense Council rated it the “greenest” small city in the United States.

In 2007, the city council voted unanimously to purchase 100 percent green power for all city-owned facilities.

They even have their own climate action plan, and for two years in a row, this city of 80,000 was the No. 1 EPA-certified Green Power Community.

For the most part, this is typically not the kind of place you’d expect to find a lot of support for the coal industry.

But with more than 1,000 potential jobs and $200 million in annual economic activity dangling like a juicy carrot in front of an empty-bellied mule… Bellingham, Washington, may soon find itself in bed with King Coal.

The Coal Gateway to Asia

China’s energy appetite is strong. This is not news.

It is why the Chinese moved rivers to create dams. It’s why they pony up billions to subsidize wind farms.

And it’s why — almost overnight — the Middle Kingdom went from coal exporter to coal importer.

Almost 15 percent of all globally-traded coal ends up in China. And that figure is expected to rise even further.

So as the world leader in coal reserves, it is not surprising that the United States wants to sell some of its enormous bounty to an energy-starved China…

And in just a few years, Bellingham, WA, could become the coal gateway to Asia.

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An 80 Percent Growth in Exports

At a cost of about a half billion dollars, a new marine terminal in Bellingham may soon be the destination for as many as 18 freight trains that run back and forth daily from Wyoming and Montana.

From there, tons of U.S. coal would make their way to Asia to feed not only China, but Korea, Taiwan, and Japan as well — three countries that currently import 140 million tons per year from Indonesia.

Peabody Energy (NYSE: BTU) estimates demand from the region will actually increase as much as 80 percent in just four years.

Of course, Peabody’s got some skin in this game, too. This major coal producer currently has a deal to ship 24 million metric tons annually from the new port. That alone would represent a 400 percent increase in U.S. sub-bituminous coal exports.

Choking on Progress

While job creation and the opportunity to improve the United States’ trade balance has garnered much support for the project, environmentalists aren’t sharing the same enthusiasm.

After all, whether that coal is burning in the United States or China, it’s still emitting carbon.

As well, mercury emissions from Chinese coal-fired power plants can hitch a ride on prevailing winds and then find a new home in the Pacific — where they poison a good portion of the fish that ends up on American plates. According to the USGS, about 40 percent of all human exposure to mercury is from tuna harvested in the Pacific Ocean.

But let’s face it: This isn’t going to stop the Chinese (or the U.S.) from burning coal.

And at the end of the day, one way or another, U.S. coal companies are going to get their product to Asia. The basic fundamentals of supply and demand will see to that.

And let’s be honest, coal is no longer king in the United States anyway…

Natural gas is booming and renewables are adding more and more market share by the day. In fact, the most recent EIA Monthly Energy Review showed that renewables accounted for 12.25 percent of U.S. energy production.

This isn’t to say coal-fired power in the U.S. will go gently into that good night; but rest assured, little by little it’s going to relinquish much of its dominance to natural gas and renewables.

So of course, we are investing accordingly.

To a new way of life and a new generation of wealth,

Jeff Siegel
Editor, Energy and Capital