WJ Editorial
WJ Editorial

China Restarts Coal Plants

Sen. John Barrasso of Wyoming has made reform of the Clean Water Act a top priority. In this week’s issue of The Waterways Journal, you will read about a hearing he is holding on the topic. Barrasso says on his website, “The Clean Water Act, particularly Section 401, is designed to allow states to protect the water quality. It is not a tool to erect a trade barrier based on political whims or parochial politics.”

Barrasso’s state has lots of reserves of coal it would very much like to export to Asia, especially China. It is lower-sulfur and cleaner than coal that China and other Asian countries would otherwise burn.

But the port facilities that states like Wyoming would use on the West Coast have been tied up and bogged down for years by anti-carbon activists using any and every tactic to stop them. They have found that state and local agencies are easier to influence than federal agencies, and they have spent millions of dollars on lawyers and delaying tactics. Proposed coal terminal projects in Bellingham, Wash.; Longview, Wash., Boardman, Ore.; and Oakland, Calif., have all been delayed and derailed, perhaps permanently.

The domestic U.S. thermal coal market is trending down and likely beyond resuscitation. But internationally, the situation is quite different.

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This week, we read that China is restarting coal-fired power plants it had put in temporary hiatus in 2016, citing concerns about pollution. That was then. Now, after a bruising trade fight with the U.S., China is looking for ways to boost employment and infrastructure spending again.

The coal plants China is intending to restart–according to Global Energy Monitor, a nonprofit group that monitors coal plants–provide 148 gigawatts of output. The entire European Union coal fleet provides only 149 gigawatts. Ted Nace, the head of Global Energy Monitor, said, “What is being built in China is single-handedly turning what would be the beginning of the decline of coal into the continued growth of coal.”

Where will China get this coal? It has supplies of its own and has also opened new coal mines. But will that be enough? We recently read about the Chapter 11 bankruptcy proceedings of leading coal producer Murray Energy, which made a big bet on coal exports, including to Asia, over the past several years. It is continuing to operate while restructuring. In Murray’s case, that coal would be metallurgical or met coal from Appalachian deposits used for steel production, moved by barge to the Gulf. As the world’s leading steel producer, China uses roughly half of its coal for steel production. Of course, whether China buys U.S. coal again, and how much, depends on progress in the trade talks. But the scale of its build-out means the demand will be urgent.

Murray was undone by its huge debt load. But that doesn’t mean its coal export bet was wrong.