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Energy Companies' Big Plans to Exploit the American West to Feed China's Insatiable Appetite for Coal

While the coal industry faces resistance at home, some in the fossil fuel business are maneuvering to capitalize on the growing demand for coal in China.

Coal production is becoming increasingly unpopular in the United States. Not a single coal plant has broken ground anywhere in the country in almost two full years. It's truly an unprecedented achievement for those seeking to put the breaks on global warming, a victory we all ought to be celebrating as coal incineration accounts for one-third of our country's entire CO2 emissions.

Nonetheless, while the coal industry faces resistance at home, some in the fossil fuel business are maneuvering to capitalize on the growing demand for coal in China, where coal-fired stations are being constructed at the rate of about two midsized power plants every single week.

In 2008, China topped 2.76 billion metric tons of coal output. That was over two times the production of the United States during the same time period. However, with this almost exponential surge is a silver lining of sorts -- China simply cannot continue to gobble up coal at such a pace unless it becomes the world's largest coal importer.

According to a report by the Energy Watch Group (EWG) released in 2007, the sleeping dragon does not have the recoverable reserves to keep pursuing coal energy indefinitely. EWG believes China may reach maximum production by 2015.

What exactly is China doing with all that coal? In large part the coat is burned to produce power to make steel, a product the United States does not manufacture much anymore. China is also harnessing coal power to make many of the products that Americans consume.

The International Energy Agency projects that energy needs in China will jump 75 percent by the year 2035, with coal leading the surge. If estimates are correct, and China's reserves begin to rapidly decline over the next couple of decades while energy needs continue to increase, the country will have to get its coal stockpile from elsewhere.

Indeed the China coal import boom is already being felt.

U.S. coal exports to Asia during the first six months of 2010 increased nearly 400 percent compared to the entire year of 2009. The problem for the coal industry here in the U.S., however, is stark: coal-capable ports along the West Coast are minimal. In fact, the majority of coal exports leave North America through a single facility in Vancouver, Canada.

In a matter of a couple years China went from an exporter of coal to one of the world's leading importers. Most of this coal has been coming from Australia, which shipped out 231 million metric tons of coal to other countries in 2006. As Ted Nace notes in his book, Climate Hope: On the Frontlines of the Fight Against Coal, "[Even] if Australia were to sell its exports exclusively to China, it would amount to less than 10 percent of China's annual coal appetite."

Based on the Natural Resource Council's estimates in 2005, the U.S. coal reserves were approximately 4,000 billion short tons. The coal-rich Powder River Basin, which straddles the Montana and Wyoming border, holds about 800 billion short tons of coal, or 20 percent of our nation's entire reserves. Coal from the area is highly desirable due to its low sulfur content, which often allows coal to be burned without exceeding air limits for sulfur emissions.

As such, companies in the U.S. are working fast to figure out the best way to ship Powder River Basin coal to Asia, and China in particular. It's just a short rail journey from Wyoming to the Pacific Northwest, where a new port is being eyed to become coal ready. These companies are also working hard to open up additional mines in the region, as most of the coal available in the Powder River Basin has yet to be tapped.

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