As the demand for coal has lessened in the U.S., the coal industry has looked to China to take its coal surplus off its hands by proposing export terminals in the NW Pacific U.S. to ship coal across the Pacific for use in Asia. The export terminals depended on demand in China. Now that it looks like China will have slower growth and possibly even decompress economically, the Chinese demand for coal is drying up.
But overseas demand for thermal coal — the kind used in power plants — has been overestimated. New investments in thermal coal infrastructure, unless they come online quickly, will miss a rapidly closing window for profitability. In coming years, there won’t be enough demand growth to justify such investments.China has accounted for 72 percent of global coal burn and that has driven it to global economic dominance. But the party's over as China's environment is imploding.
That’s the explosive conclusion of a report recently issued by analysts at Goldman Sachs. (It’s not public, so I can’t link to it.) The implication for coal-export projects in the Pacific Northwest is clear: They are bum investments. You don’t need to share concerns over climate change to see it. Just economics.
But it looks like China’s growth boom is over and, with it, the boom in thermal coal. China is spending billions to control air pollution, banning imports of low-grade coal, launching carbon-trading markets, exploring shale gas, getting more efficient, and building the crap out of renewables. And remember, it has its own coal mines. They just couldn’t keep up with the boom. Now that things are leveling off, domestic Chinese coal will get cheaper, they’ll buy more of it at home, and there will be less market for imports.A move away from dirty coal is a win for all involved, especially our planet.