LegiStorm

Summary:

The gap between available U.S. coal supply and demand may continue to widen as low cost natural gas becomes more attractive to electric power plants and uncertainties with emission regulations may inhibit new coal plant investments. Coal producers with excess supply will likely seek to expand their market abroad. Consequently, U.S. coal exports are forecast to continue to rise over the next decade and possibly longer. Growth potential in Asian markets seems large, but there are potential bottlenecks, such as infrastructure and potential rising costs of regulation, competition from other fuels, and transportation constraints that could slow export growth. The U.S. Energy Information Administration (EIA), in its 2013 Annual Energy Outlook Early Release reference case, projects net exports of coal to trend up through 2040, almost 50% from 2011 levels, with some fluctuations. The significance of this may have short- and long-term ramifications as well as positive and negative consequences. Increased net exports could improve the U.S. trade balance as well as add government revenue from production that may otherwise decline because of falling domestic consumption. Environmentally, exporting coal may run counter to the current Administration's domestic environmental policies and affect U.S. efforts to address global environmental issues. Depending upon the nature of the coal exports, certain parts of the country may benefit economically. Current and projected coal exports, the associated infrastructure, and the environmental consequences have prompted interest by Congress. The United States has been exporting coal since the late 1800s. From 2003 to 2012, U.S. coal exports have risen over 200%, mainly driven by competitive production costs, global demand, and lower prices, among other factors. Coal exports comprised 12% of U.S. coal production in 2012. In 2011, U.S. coal exports broke 100 million short tons (MST) for the first time since 1992 and in 2012 surpassed their peak of almost 113 MST in 1981. The value of U.S. coal exports has increased, rising from under $10 billion in 2010 to almost $16 billion in 2011, according to U.S. Energy Information Administration data. Many factors will influence how much coal will be exported from the United States. Enough projects have been proposed that by 2016 the United States could be exporting more than double its current coal exports. Projects in the Pacific Northwest have attracted much of the attention, even though the Northeast continues to be the source for most exports. Representatives from state and local agencies, particularly in Washington and Oregon, as well as industry, community, and environmental groups, along the potential coal transport corridor, have expressed outright support for or opposition to port terminal projects that would allow for increased export of Powder River Basin coal through the Pacific Northwest. Opponents have argued that increased train and barge traffic will have significant adverse impacts to the human, natural, and cultural environment. Project supporters have argued that the projects would create or maintain jobs in the construction, mining, and transportation industries and bring increased tax revenue to the states. Broadly, the National Environmental Policy Act (NEPA) requires federal agencies to consider the environmental impacts of their actions before a final decision is made regarding that action.