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U.S. Coal Exports

Coal Is Still King in the Global Generating Sector


By —— Bio and Archives--September 24, 2018

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Coal Is Still King in the Global Generating Sector, U.S. Coal Exports
Globally, coal still generates more electricity than any other source. In 2017, coal generated 38 percent of the world’s electricity—64 percent more than natural gas, which ranked second in electricity generation worldwide. Coal’s share in 2017 was no smaller than its share two decades earlier. In that time, electricity consumption worldwide increased by 76 percent. While the global share of electricity from natural gas and from renewable energy each has grown since 1998, their generation has substituted for nuclear and petroleum generation in the world market, rather than for coal generation. Various countries have limited their nuclear generation since the tsunami hit Japan’s Fukushima Daiichi nuclear units in 2011, forcing nuclear decommissioning, and petroleum has been on the decline for a long time as a generating fuel.

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Countries mainly investing in coal are in Asia and Africa—many getting support from the Japanese as well as the Chinese, who are building coal-fired plants in other countries to support their coal industry as electricity growth has slowed. Even in Germany, states are pressuring Chancellor Angela Merkel to keep coal-fired power for as long as 30 years as Merkel’s administration is committed to shuttering about 120 lignite and hard-coal plants as the nation approaches a deadline for setting an exit date in October. As many as 65,000 direct and indirect German jobs are dependent on coal power generation and lignite mining.

Asian and African Coal Interests

Countries across Asia and Africa are expected to increase their use of coal for expanding power generation through 2040. Asian countries including India and Vietnam are planning major coal projects. In Asia, where the world’s largest coal reserves are located, China and India account for most of the growth in coal use while Vietnam plans a fivefold increase in its coal capacity through 2035.

Bangladesh plans to use coal to generate 50 percent of the country’s power by 2030, up from 2 percent today. Like many countries in the region, it is funding its expansion with loans and technological help from China and Japan. Toshiba Corp. and other partners are building a coal power plant and port on Matarbari Island in Bangladesh. The Bangladesh project will cost about $4 billion, with most of its financing coming from the Japan International Cooperation Agency.

In Nigeria, 54 percent of its 190 million citizens lack access to electricity. Nigeria currently generates its power from hydroelectric dams and natural gas, but frequent vandalism of its pipelines has caused power shortages. By 2030, Nigeria, Africa’s biggest economy, plans to add 30 gigawatts of power. To reach that goal, Nigeria will deploy a mix of solar and hydropower as well as coal, using domestic coal reserves. The project will cost about $3.5 billion a year during development. The World Bank approved a $350 million loan for solar mini-grids and other equipment to provide electricity in Nigeria. But the bank will no longer finance projects involving coal, despite the desperate need for basic electricity in Nigeria.

 

Some countries planning to expand coal generation are hoping the Trump administration will take a pro-coal approach to the 2016 Electrify Africa Act, which set aside funds for energy projects on the continent without specifying a preference for how power is generated. The program, known as Power Africa, is promoting an all-of-the-above energy development strategy for sub-Saharan Africa.

U.S. Coal Exports

While U.S. coal demand has been declining since 2013, U.S. coal exports increased 61 percent in 2017 to almost 97 million short tons, after having a poor year in 2016, according to the Energy Information Administration. That helped to increase U.S. coal production by 6 percent in 2017. Coal companies in the West have wanted to offset declining domestic coal consumption through exports to Pacific Rim countries. But West Coast cities and states have obstructed proposals for new coal-handling terminals as part of their climate change campaigns. Utah, however, is looking to ship its coal from Mexican ports.

The Utah Office of Energy Development signed a memorandum of understanding with economic development officials for the Mexican state of Baja California to establish “a close binational collaboration” aimed at connecting Utah energy resources with new markets abroad. It would build on existing bulk-handling facilities at the Port of Ensenada, which is 65 miles south of San Diego, and which may expand into Puerto El Sauzal. The agreement between Utah and Baja California seeks to “encourage cooperation across infrastructure development, trade opportunities among regulators and operators, in identifying potential global markets, and promoting visits by government, industry and other specialists.”

Conclusion

While many developed nations are looking to phase out their coal-fired power plants, many countries in Asia and Africa are looking to coal to provide a reliable source of power for their country. Many countries in the world are still not fully electrified and providing electricity to their residents will improve their quality of life and make economic development possible. The U.S. coal industry is looking to export coal to these countries and would benefit from a West coast export-handling terminal. Utah has signed a memorandum of understanding with officials from Mexico to possibly use their port in Ensenada to export coal to Pacific Rim countries.


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Institute for Energy Research -- Bio and Archives | Comments

The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.


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