Oregon’s big coal opportunity

Fred Thompson
Oregon Economics Blog>

Coal-fired power plants are a major source of greenhouse gases, carbon monoxide, nitrogen oxides, sulfur dioxide, and particulate matter. Compared to burning coal, burning natural gas is cleaner and, in the US, cheaper.
Increased reliance on natural gas in the US has led to substantial reductions in domestic coal prices, making US coal more attractive to European importers and potentially more attractive to East Asian importers as well. Nevertheless, despite steep cuts in US coal prices, once transportation costs are taken into account, the price of US coal, especially cleaner coal from the Great Basin, is often higher than the price of locally mined coal in Europe and East Asia. Evidently the reason that US coal is preferred in Europe and East Asia to local coal is that it is cleaner. Compared to the lignite mined in Europe and China, burning western coal from the US generates 50 percent less CO2, Carbon monoxide, and nitrogen oxides per unit of energy, 30-60 percent less sulfur dioxide and particulate matter, and one-tenth the oxides of mercury. Burning imported cleaner coal in European coal-fired power plants has, therefore, likely reduced global greenhouse emissions, plus most other kinds of air pollution, although it may have slowed the transition to alternative, cleaner energy sources. Burning cleaner imported coal in Chinese power plants should have an even greater effect, both because the Chinese burn more dirty coal than the Europeans and because they do not now anticipate an early transition away from coal.
Most US coal exports flow through US Atlantic and Gulf ports, like Newport News VA and New Orleans LA, which are a long way from markets in East Asia. Consequently, Canada is beefing up its Pacific Coast coal-handling facilities to take advantage of East Asian opportunities and ports up and down the West Coast of the US are contemplating expansion.
However, the most attractive Pacific Coast option in the US would probably involve diverting the coal now being shipped to a PGE power plant in Boardman OR, which is planned for closure by 2020, to East Asia. This option is attractive because the infrastructure needed to move coal from the pit to Boardman, which is on the upper Columbia River, is already in place and currently in use.
The only major question associated with this option has to do with getting the coal from Boardman to the sea. Here, there are two main alternatives: off-loading the coal trains to barges at Boardman and moving the barges to a deep-sea port on the lower Columbia River, where the coal would be loaded onto freighters for transport across the Pacific, or sending the coal trains on through the Columbia Gorge and the Portland-Vancouver metropolitan complex to a deep-sea port.
Under most circumstances, it might be hard to say which of these alternatives would be better without additional study. The former involves twice the freight handling costs; the latter entails higher transportation, environmental, and aesthetic costs and probably significantly greater traffic disruption, roadway and grade crossing improvements, and safety problems. Given the unusually high levels of unemployment currently obtaining on both the upper and lower Columbia rivers, however, it seems reasonable to discount the freight-handling costs associated with first alternative, since, in its absence most of the labor used would be unemployed, thereby adding to the net socio-economic gains associated with this project.
Shipping cleaner coal from the Great Basin to East Asia via the lower Columbia entails tradeoffs, as do all activities. But its net economic benefits are clear. It even appears, on balance, that its environmental benefits could easily outweigh any environmental costs, although not necessarily the local ones, which under the first alternative are likely to be small.

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