Friday, July 25, 2014

U.S. Dept of Transportation Proposes New Oil Tank Car Rules

The U.S. Department of Transportation (DOT) is proposing to phase out thousands of railroad tank cars that carry crude oil within two years once it adopts proposed rules to upgrade safety for trains carrying flammable liquids.  Tens of thousands of these older tank cars, known as DOT-111s, will have to be replaced or retrofitted under the proposed rules.

The proposals come after a string of explosive derailments involving trains filled with oil from the Bakken Shale and will change how flammable liquids are transported in North America.  The rapidly growing amount of crude oil moving on the nation's railroads has sparked protest and concerns by local fire chiefs, who worry they aren't prepared for a catastrophic crash.  Railroads, oil companies and railcar owners have been expecting new U.S. regulations meant to improve the safety of oil shipments in the wake of several fiery train accidents. A year ago, a train full of oil from North Dakota exploded in a rural Quebec town, killing 47 people.  The federal government has also reported that crude oil from North Dakota's Bakken Shale is volatile and contains large levels of combustible gases.

Crude-carrying tank cars would need to upgraded by 2017. The proposed regulations would also give the ethanol industry until 2018 to improve or replace tank cars that carry that fuel. The deadline for cars used to transport other flammable liquids that typically pose less of a hazard than oil or ethanol would extend to 2020.
Other new requirements proposed include a 40-mile-per-hour speed limit until sturdier tank cars can be built or existing railcars can be strengthened, as well as other rules that cover tank-car design, routing, brakes and testing of hazardous liquids.

The proposed rules must be posted for 60 days to give the public, rail industry and other parties a chance to comment. The final rule is expected to become effective early next year. The rules also call for the rail industry to design routes based on safety and security factors.

The proposed requirements would apply to any train with 20 or more tank cars of oil, ethanol or a comparable fuel to be categorized as a "high-hazard flammable train" and subject to the new rules. It has become common for dedicated oil trains consisting of 100 or more railcars filled with crude to operate as a pipeline on wheels.

DOT will ask for comment from industry and emergency-response officials on railcar design. The rules lay out several options, including improved brakes and thicker, 9/16th-inch steel walls on tank cars. The new design would cover all cars built after October 2015. Existing cars would need to be retrofitted, retired or used to carry less flammable liquids.

There are about 80,000 DOT-111 railcars built before 2011 that transport oil, ethanol and other flammable liquids and another 23,000 built in recent years with more crash-resistant features, according to the Railway Supply Institute's latest estimate.

The proposed rules leave open whether the 40-mph limit for high-hazard trains would only apply in certain urban areas. Trains with upgraded tank cars would be allowed to travel at 50 mph. Some experts had advocated for limiting oil trains to speeds of 30 mph or lower, but rail executives warned such a move could snarl the entire country's freight system.  (WSJ, 7/23/2-014)

EDF and Google To Map Natural Gas Leaks

The Environmental Defense Fund and Google's Earth Outreach program are going to map natural gas leaks in Boston, Indianapolis and New York's State Island. The interactive maps are the first step of a pilot project to use Google's Street View cars to measure environmental indicators. EDF says it worked with utilities to validate the findings.

The American Gas Association (AGA) notes that only a small fraction of natural gas leaks come from local utility pipelines.  AGA also notes that utilities have lowered emissions by 22% since 1990. AGA says that  in their attempt to raise the awareness of natural gas emissions, the EDF campaign understates that utilities are working with state and local policymakers to effectively reduce emissions by adopting innovative rate mechanisms to upgrade, replace and modernize natural gas distribution pipelines for safety and economic reasons.  (Frank Maisano)

Wednesday, July 16, 2014

Life Cycle GHG Effects of Exporting LNG

"Life Cycle Greenhouse Gas Perspective on Exporting Liquefied Natural Gas from the United States"

May 29, 2014

This analysis calculates the life cycle greenhouse gas (GHG) emissions for regional coal and imported natural gas power in Europe and Asia. The primary research questions are as follows:

• How does exported liquefied natural gas (LNG) from the U.S. compare with regional coal (or other LNG sources) for electric power generation in Europe and Asia, from a life cycle greenhouse gas (GHG) perspective?

• How do those results compare with natural gas sourced from Russia and delivered to the same European and Asian markets via pipeline?

This analysis has determined that the use of U.S. LNG exports for power production in European and Asian markets will not increase GHG emissions, on a life cycle perspective, when compared to regional coal extraction and consumption for power production.  (U.S. DOE, National Energy Technology Laboratory, Office of Fossil Energy.

Monday, June 30, 2014

Flaring Fracking Gas

Some oil companies are flaring gas and using diesel to fuel the pumps.

Excess natural gas is burned off at a Bakken Shale site.
Minneapolis Star Tribune/Zuma

Thousands of wells in the Bakken Shale area dot the landscape and are producing gas as a byproduct of hydraulic fracturing and horizontal drilling for oil.   Because North Dakota lacks adequate infrastructure, drillers are forced to burn off whatever they can't capture and ship to market. In April alone, such wells burned 10.3 billion cubic feet of natural gas, according to the state, valued at nearly $50 million.

North Dakota's regulations have struggled to keep pace with the drilling and flaring.  Burning off natural gas degrades air quality. And it is being reported that some producers aren't paying all the royalties and taxes owed on the gas that is flared. Energy companies lose out on gas revenue, too, but that is offset by what they generate from Bakken crude oil.

Stung by criticism that it has allowed oil producers to flare wells indefinitely, the North Dakota Industrial Commission on June 1 adopted rules requiring that gas-capture plans be submitted for companies to get a new drilling permits. The rules require producers to identify gas-processing plants and proposed connection points for gas lines but don't affect permits that already had been issued. The commission, which promotes as well as regulates the drilling industry, on Tuesday is expected to announce measures to limit flaring of existing wells. The federal government also is considering new limits on flaring.

In the past five years, North Dakota has climbed from the country's sixth-largest oil producer to the only state after Texas to produce more than a million barrels of oil a day. That has brought investment and job growth to a state economy once largely dependent on agriculture. While Texas captures all but 1% of the natural gas produced, North Dakota burns 30% of its output. Oil companies can ship crude, which fetches 20 times more than gas per barrel of oil equivalent, in tanker trucks to pipelines or rail terminals. Transporting natural gas requires a pipeline connection at the source, however, and North Dakota has far fewer of such pipes and less processing capacity than other oil-producing states.  (WSJ, 6/30/2014)

Monday, June 23, 2014

Supreme Court Puts Minor Limit on Obama EPA Global Warming Rule

The Supreme Court on today placed a limit on one part of the Obama administration's global warming proposals.  Though narrowing one Clean Air Act program (the "prevention of significant deterioration" permit program), the Court confirmed that the permit program does limit carbon emissions from the biggest polluters. The justices said that the Environmental Protection Agency lacks authority in some cases to force companies to evaluate ways to reduce carbon dioxide emissions. This rule applies when a company needs a permit to expand facilities or build new ones that would increase overall pollution.

The decision does not affect EPA proposals for first-time national standards for new and existing power plants. The most recent proposal aims at a 30 percent reduction in greenhouse gas emissions by 2030, but won’t take effect for at least another two years.
The outcome also preserves EPA’s authority over facilities that already emit pollutants that the agency regulates other than greenhouse gases.  Carbon dioxide is the chief gas linked to global warming.

The Clean Air Act's "prevention of significant deterioration" permit program requires that new and modified major stationary polluters such as power plants and factories use the best available technology to control their air pollution. Industry and its allies filed lawsuits seeking to exempt carbon pollution from this safeguard. While today's Supreme Court ruling does excuse some pollution sources from this requirement, the requirement will remain in effect for the worst carbon polluters, which account for roughly 83 percent of U.S. stationary source greenhouse gas emissions.

The U.S. Supreme Court upheld the Environmental Protection Agency’s (EPA) authority to limit carbon pollution.  Of crucial importance, the Court also left undisturbed other key Clean Air Act provisions authorizing EPA to issue "performance standards" limiting carbon pollution from sources such as power plants, refineries and cement kilns. Also preserved is the EPA's authority to set limits on carbon pollution from cars and trucks, including the limits EPA has already set in 2010 and subsequent years.

In 2007, the Supreme Court ruled that carbon dioxide and other greenhouse gases are pollutants under the Clean Air Act. The EPA officially determined in 2009 that carbon pollution endangers public health and welfare, contributing (among other impacts) to heat waves that worsen smog and sea-level rise that threatens coastal communities. In 2010, the EPA issued the first-ever federal carbon pollution standards for cars and trucks, and in 2012, a federal court of appeals upheld these standards against industry challenge.

The Supreme Court's action leaves in place key portions of the 2012 decision, as well as the following:
  • The EPA's 2009 finding that carbon pollution endangers public health and communities;
  • Emission standards the EPA issued in 2010 (and subsequent years) limiting carbon pollution from cars and trucks;
  • The EPA's authority under the Clean Air Act to adopt emission standards ("performance standards") for power plants and other stationary sources of carbon pollution; and
  • Key portions of the EPA's regulations (under the "prevention of significant deterioration" permit program) requiring major new and modified pollution sources such as power plants and factories to use the best available technology to limit carbon emissions.
History Of Supreme Court's Rulings Confirming EPA's Authority To Regulate Carbon Pollution

In a 2007 case about motor vehicle emissions, the Supreme Court ruled that carbon pollution and other greenhouse gases are air pollutants under the Clean Air Act, and that the EPA must limit carbon pollution if such pollution contributes to climate change. Massachusetts v. EPA, 549 U.S. 497 (2007).

In 2011, the Supreme Court confirmed EPA's authority under the Clean Air Act to issue "performance standards" limiting carbon pollution from stationary sources such as electric power plants. American Elec. Power Co. v. Connecticut, 131 S. Ct. 2527 (2011).

In the case decided today, the Supreme Court vindicated the EPA's endangerment finding and the agency's ground-breaking limits on carbon pollution from cars and trucks when the Court declined to take up challenges to those critically important actions. The Court also left undisturbed EPA's authority to set "performance standards" for power plants and other carbon emitters, and in addition confirmed that a separate Clean Air Act safeguard (the "prevention of significant deterioration" permit program) requires use of the best available technology to limit carbon pollution from the worst polluters. (EarthjusticeWash Post, AP, 6/23/2014)

Tuesday, June 17, 2014

Railroads Provide Majority of Coal To Utility Plants

graph of coal shipments to the electric power sector by transit mode and year, as explained in the article text
Source: U.S. Energy Information Administration, Form EIA-923, Power Plant Operations Report
Note: Sum of components may not equal 100% because of independent rounding. Other includes Pipeline, Other Waterway, Great Lakes Barge, Tidewater Pier, and Coastal Ports. Data for 2013 are preliminary.
Note: Intermodal transit uses multiple modes of delivery. Intermodal rail includes some movement over railways, while intermodal nonrail signifies multiple modes that do not include railway.

In 2013, electric power generators consumed 858 million tons of coal, accounting for 93% of all coal consumed in the United States and 39% of electric power generation.

Two-thirds of the coal (67%) was shipped either completely or in part by rail. The balance was moved by river barge (especially over the Mississippi and Ohio rivers and their tributaries), truck, and—for power plants located at the coal mine—by conveyor.
The coal transportation network is most densely concentrated in the eastern portion of the United States. This area contains many relatively small coal mines, most of the country's coal-fired power plants, and also rail infrastructure and suitable waterways. In the western United States, coal mines are often large, and a small number of routes handle large amounts of coal.

To better comprehend the amount of coal that a power plant consumes, consider that the largest coal-fired plants in the country receive 1 or 2 unit trains of coal each day. Each train has approximately 115 cars, and each car carries an average of 116 tons of coal. Some plants receive more than 26,000 tons of coal in a single day.

The primary mode by which a power plant receives its coal is largely determined by its location and access to the rail system. River barge is the most cost-effective method of transporting large quantities of coal over long distances, but the option is limited to plants located on a suitable river. Transporting coal by rail is more expensive, but two related facts result in its dominant market share of transportation: first, the United States is covered by an extensive railway network; and second, coal is produced in a relatively few parts of the country—predominantly in the Powder River Basin (Wyoming and Montana), the Illinois Basin, and Central and Northern Appalachia—while it is consumed by power plants in 46 of the 48 contiguous states.

After rail and river barge, the third most common method of receiving coal is by truck. This method, however, is typically employed only by plants that are located relatively close to a coal mine because of the higher cost on a per-ton-mile basis. Those plants that are located directly at or very near a mine can also have their coal delivered by conveyor, but, taken together, truck, barge, and conveyor movements make up less than 30% of the coal shipments in the country.
Although coal consumption in the electric power sector decreased by 18% from 2008 to 2013, and the number of coal-fired generators dropped from 1,445 to 1,285 units during that same period, the share of shipments made either exclusively by rail or with rail as the primary mode has remained effectively unchanged.

Between 2008 and 2013, the share of coal shipments made by river barge increased from 7% to 12%. In contrast, truck shipments fell from 12% to 10%, and shipments made by other modes (i.e., nonriver barge waterways, pipeline, tidewater piers, and coastal ports), fell from 7% to 1%. These changes occurred because many of the plants that received their coal by one of the other modes in 2008 either retired or shifted to another mode.  (DOE-EIA)

Tuesday, June 10, 2014

Energy Boom Stimulating Oil & Gas Tanker Construction & Use

Shipping operators and investors are pouring billions of dollars into building oceangoing crude-oil tankers because of the North American energy boom.  New drilling and extraction technology has unlocked vast reservoirs of crude oil and natural gas in the U.S. and Canada. 

The U.S. has recently said it is considering lifting a long-standing oil-export ban. Removing the ban would be controversial and likely years down the line. The American energy company Dominion hopes to begin an expansion worth billions of dollars at its Cove Point complex on Chesapeake Bay later this year.      
The Hoegh LNG gas vessel Independence during her sea trial earlier this year.
The 1,300 ft ship is longer than the largest aircraft carrier. Associated Press
Many operators are also considering building new tankers. Orders for new very large crude carriers (VLCCs), jumped from just three in 2011 to 47 last year. So far, ship operators have ordered 18 in the first quarter of this year. Used tanker prices have risen by about 15%, after four years of falling prices.
The Liberian LNG tanker Al Hamra at a port in Yokohama,
 southwest of Tokyo. Soon crude carriers will get even bigger. Associated Press
Apart from any boost from possible U.S. exports, low shipbuilding prices are driving demand. The global economic crisis sent ship orders plummeting, reducing the cost of building ships at underutilized yards. Now demand is coming back, and ship operators are hopping back into the market, trying to get in before prices rise significantly.

But prices are already moving up.  High demand for VLCCs, in particular, has prompted shipyards to raise prices by more than 10% since the middle of 2013. A new VLCC, which can carry around two million barrels of oil, now costs in excess of $100 million.

The U.S. energy boom has already translated into booming oil-products refining capacity and exports. U.S. based firms in the Gulf of Mexico have nearly doubled exports since 2010, according to data from the Energy Information Administration. Accordingly, orders for new product tankers—typically smaller than many crude carriers—jumped from 71 ships in 2011 to 188 vessels in 2013. (WSJ, 6/10/2014)

Thursday, June 05, 2014

Concentrating Solar Power

Solar  provided record-breaking growth and reached a total of more than 4,700 megawatts of new installed capacity in 2013 and 2014 will mark a major milestone for a different form of solar energy: concentrating solar power (CSP).

CSP technology uses mirrors to focus and concentrate sunlight onto a receiver from which a heat transfer fluid carries the thermal energy to a power block to generate electricity. The technology can generate energy even when the sun isn’t shining, helping to provide clean power at times of peak demand.

The Energy Department’s new report, 2014: The Year of Concentrating Solar Power,  focuses on five of the most innovative CSP plants in the world. All of these projects are expected to be switched on in the southwestern United States by the end of the year as a result of sustained, long-term investments by the Department and committed solar industry partners.

These five new utility-scale CSP plants will have the capacity to generate power for more than 350,000 average American homes.

Loan guarantees are an instrumental way the Energy Department helps technologies like CSP get the financing they historically have trouble accessing for their first few commercial projects. Through successful public-private partnerships, it is being proven that CSP is a commercially viable energy source in the U.S.

The five CSP plants:
  • Solana near Gila Bend, Arizona, was developed by Abengoa Solar, Inc., and opened in October 2013. The plant can dispatch energy to customers as needed during cloudy periods and after sunset. As the first power plant in the U.S. to use molten salt thermal energy storage, Solana generates electricity well into the evening to help meet the summer peak demand for air conditioning.
  • Genesis in Blythe, California, was developed by NextEra Energy Sources, LLC, and opened in April. Genesis expects to produce renewable electricity annually from more than 500,000 parabolic mirrors to power 60,000 average American homes.
  • Ivanpah Solar Electric Generating System in Ivanpah Dry Lake, California, was developed by BrightSource Energy and opened in February. The system uses over 300,000 software-controlled mirrors to track the sun across the sky and reflect the sunlight onto three towers. Ivanpah has the capacity to produce 392 megawatts of power and is expected to serve nearly 100,000 average American homes.
  • Crescent Dunes in Tonopah, Nevada, is being developed by SolarReserve and is expected to open by the end of the year. When completed, approximately 10,000 heliostats will be installed, and Crescent Dunes will be the nation’s first commercial-scale solar power tower facility with energy storage.
  • Mojave Solar One near Barstow, California, is being developed by Abengoa Solar and is expected to open later this year. The plant is expected to produce 250 megawatts of power and is one of the largest projects of its kind in the world.
Read the 2014: The Year of Concentrating Solar Power report to learn more about each of these plants and find out how the SunShot Initiative is advancing CSP technologies through six new energy storage projects. (DOE)

Monday, June 02, 2014

EPA Proposes CO2 Regulations For Existing Power Plants

Proposed Rule

Today the U.S. Environmental Protection Agency released the Clean Power Plan proposal, which for the first time cuts carbon pollution from existing power plants, the single largest source of carbon pollution in the United States. Today’s proposal will protect public health, move the United States toward a cleaner environment and fight climate change while supplying Americans with reliable and affordable power.

Power plants account for roughly one-third of all domestic greenhouse gas emissions in the United States. While there are limits in place for the level of arsenic, mercury, sulfur dioxide, nitrogen oxides, and particle pollution that power plants can emit, there are currently no national limits on carbon pollution levels.
With the Clean Power Plan, EPA is proposing guidelines that build on trends already underway in states and the power sector to cut carbon pollution from existing power plants, making them more efficient and less polluting. This proposal follows through on the common-sense steps laid out in President Obama’s Climate Action Plan and the June 2013 Presidential Memorandum.
By 2030, the steady and responsible steps EPA is taking will:
  • Cut carbon emission from the power sector by 30 percent nationwide below 2005 levels, which is equal to the emissions from powering more than half the homes in the United States for one year;
  • Cut particle pollution, nitrogen oxides, and sulfur dioxide by more than 25 percent as a co-benefit;
  • Avoid up to 6,600 premature deaths, up to 150,000 asthma attacks in children, and up to 490,000 missed work or school days—providing up to $93 billion in climate and public health benefits; and
  • Shrink electricity bills roughly 8 percent by increasing energy efficiency and reducing demand in the electricity system.

The Clean Power Plan will be implemented through a state-federal partnership under which states identify a path forward using either current or new electricity production and pollution control policies to meet the goals of the proposed program. The proposal provides guidelines for states to develop plans to meet state-specific goals to reduce carbon pollution and gives them the flexibility to design a program that makes the most sense for their unique situation. States can choose the right mix of generation using diverse fuels, energy efficiency and demand-side management to meet the goals and their own needs. It allows them to work alone to develop individual plans or to work together with other states to develop multi-state plans.

Also included in today’s proposal is a flexible timeline for states to follow for submitting plans to the agency—with plans due in June 2016, with the option to use a two-step process for submitting final plans if more time is needed. States that have already invested in energy efficiency programs will be able to build on these programs during the compliance period to help make progress toward meeting their goal.

Since last summer, EPA has directly engaged with state, tribal, and local governments, industry and labor leaders, non-profits, and others. The data, information and feedback provided during this effort helped guide the development of the proposal and further confirmed that states have been leading the way for years in saving families and businesses money through improving efficiency, while cleaning up pollution from power plants. To date, 47 states have utilities that run demand-side energy efficiency programs, 38 have renewable portfolio standards or goals, and 10 have market-based greenhouse gas emissions programs. Together, the agency believes that these programs represent a proven, common-sense approach to cutting carbon pollution—one in which electricity is generated and used as efficiently as possible and which promotes a greater reliance on lower-carbon power sources.

Today’s announcement marks the beginning of the second phase of the agency’s outreach efforts. EPA will accept comment on the proposal for 120 days after publication in the Federal Register and will hold four public hearings on the proposed Clean Power Plan during the week of July 28 in the following cities: Denver, Atlanta, Washington, DC and Pittsburgh. Based on this input, EPA will finalize standards next June following the schedule laid out in the June 2013 Presidential Memorandum.

In 2009, EPA determined that greenhouse gas pollution threatens Americans' health and welfare by leading to long lasting changes in our climate that can have a range of negative effects on human health and the environment. Taking steady, responsible steps to cut carbon pollution from existing power plants will protect children’s health and will move our nation toward a cleaner, more stable environment for future generations, while supplying the reliable, affordable power needed for economic growth.  (EPA)
Fact sheets and details about the proposed rule   

More information on President Obama’s Climate Action Plan

Friday, May 30, 2014

Center Supports Cove Point LNG Export Proposal

The Center has a long history of supporting liquefied natural gas (LNG) import facilities.  The Center supports LNG exports too.  We believe it is unreasonable to oppose the use of fossil fuels (hydrocarbon fuels).  Global warming mitigation is the most serious environmental issue facing the world today, but there are more practical ways to reduce greenhouse gas emissions than prohibiting the use of fossil fuels.  The Center is promoting two programs to do this: Energy Defense Reservations (EDR) and Defense Energy Reservations (DER).  The American economy and global commerce use and will continue to use hydrocarbon fuels.  We should use those fuels just as efficiently as possible.

The Center supports the Cove Point LNG export terminal proposal.  Cove Point is an import facility for liquefied natural gas. The market for bringing LNG into the country has dwindled as fracking fueled a natural gas boom in the U.S. The project would enable Dominion to export roughly 5.75 million metric tons of LNG each year.

Cove Point LNG Facility
The Dominion Resources LNG facility proposal is currently undergoing a National Environmental Policy Act (NEPA) environmental impact statement process. On May 15, 2014, the Federal Energy Regulatory Commission (FERC) issued an environmental assessment that found the natural gas export project proposed for Dominion existing Cove Point LNG facility in southern Maryland can be built and operated safely with no significant impact to the environment.

The Environmental Assessment examined the potential impacts of the proposed project, including a thorough evaluation of the project's impact on public safety, air quality, water resources, geology, soils, wildlife and vegetation, threatened and endangered species, land and visual resources, cultural resources, noise, cumulative impacts and reasonable alternatives.

Cove Point is the fourth liquefied natural gas export project to receive an environmental document from the FERC. The cooperating agencies that participated in the FERC Environmental Assessment for the Cove Point export project were: the Department of Energy; the Army Corps of Engineers; the Department of Transportation, including the Pipeline and Hazardous Materials Safety Administration; the Coast Guard; and the Maryland Department of Natural Resources.

The project will need Department of Energy approval to ship LNG to nontrade agreement countries, will need Maryland Public Service Commission approval to build a 130 megawatt power plant to provide the energy needed to liquefy the natural gas and various other federal (RCRA) and state permits (Clean Air Act, Clean Water Act) in order to begin operation.

The Department of Energy’s approval of a license allowing Dominion Power to expand its Cove Point facility to export liquefied natural gas (LNG) to nations that aren’t party to U.S. free-trade agreements was approved on September 11, 2013.

Political support for the project is mixed with Maryland's two senators, Barbara Mikulski and Ben Cardin opposing the project and Congressman Steny Hoyer supporting the project. 

There are estimates that expanding Dominion's Calvert County complex to allow exporting would cost as much as $4 billion. The company would pay an additional $40 million in annual property taxes for five years, then receive a tax break of 42 percent for nine years.

The Calvert County Board of County Commissioners estimated that if the Dominion Cove Point LNG facility in Lusby, Maryland is approved, it is expected to bring 3,000 jobs to Maryland at the peak of construction and promises to be one of the largest construction projects in Maryland’s history.

Dominion has hired IHI/Kiewit Cove Point, a joint venture of IHI E&C and Kiewit Energy Company, as its engineering, procurement and construction (EPC) contractor. IHI/Kiewit Cove Point will be responsible for the EPC of the new facility. IHI/Kiewit will be providing many opportunities to local, diverse and/or small businesses in the region.

IHI/Kiewit has created a website for suppliers, subcontractors, construction product retailers and local businesses that would like the opportunity to work with IHI/Kiewit on the project. It also includes information about the status of the project and contract awards. (Calvert County,

Additional Information On the Project

Environmental Assessment for the Cove Point Liquefaction Project (May 2014)


Dominion Cove Post Hearing Brief (on 130 megawatt power plant), VanNess Feldman

DOE To End Conditional Approvals of LNG Export Facilities

The U.S. Department of Energy (DOE) will no longer issue conditional approvals for proposed LNG export terminals and will make final decisions only after companies complete the extensive — and costly — environmental reviews required by the National Environmental Policy Act.

Fueled by the surge in domestic shale gas production, more than 30 companies have asked the Energy Department for permits, and about two dozen are still waiting. Though the department has not turned down any project, many oil and gas industry officials have been pressing for faster approvals.

The NEPA reviews are part of a separate application process that gas exporters must complete at the Federal Energy Regulatory Commission; that process can cost as much as $100 million. Filing for conditional approval at the Energy Department is much less expensive, and obtaining it before going to FERC can reassure financiers.

DOE believes the change will ensure our process is efficient by prioritizing resources on the more commercially advanced projects.   Most of the long line of projects awaiting conditional approvals may never be built because of market conditions or financing obstacles. DOE is seeking to focus scarce time and resources on applications that have a real chance of being viable.

DOE's approval is required for exports to countries that do not have free-trade agreements with the United States. Those countries include China and Japan, major customers for LNG. The department so far has given preliminary approval to seven projects and has not rejected any. One project, Cheniere Energy’s Sabine Pass terminal, has also received final approval after going through the FERC process.

DOE is also studying the economic impact of exporting between 12 billion and 20 billion cubic feet of LNG a day. An earlier study by NERA looked at how the export of 6 billion to 12 billion cubic feet of gas a day might increase domestic gas prices.

The projects approved so far would send 9.27 billion cubic feet of gas abroad, which some consumer groups and domestic manufacturers — notably petrochemical firms like Dow Chemical — say would drive up U.S. prices and undermine the international competitive advantage that U.S. shale gas drilling has created. (Wash Post, 5/30/2014)

Thursday, May 29, 2014

President Obama West Point Speech Includes Global Warming

President Obama at West Point May 28

The Center has been encouraging the Obama administration to utilize the Defense Department (DoD) to assist in mitigating global warming.  Such DoD participation would be part of a public/private partnership to utilize wind, solar and nuclear power to provide emission free electricity and convert carbon dioxide into a transportation fuel.

You can click on the links to get more infomation about our Energy Defense Reservation Program and Defense Energy Reservation Program.

He is the excerpt that includes President Obama's comment about global warming being a national security crisis:
Keep in mind, not all international norms relate directly to armed conflict. We have a serious problem with cyber-attacks, which is why we’re working to shape and enforce rules of the road to secure our networks and our citizens. In the Asia Pacific, we’re supporting Southeast Asian nations as they negotiate a code of conduct with China on maritime disputes in the South China Sea. And we’re working to resolve these disputes through international law. That spirit of cooperation needs to energize the global effort to combat climate change -- a creeping national security crisis that will help shape your time in uniform, as we are called on to respond to refugee flows and natural disasters and conflicts over water and food, which is why next year I intend to make sure America is out front in putting together a global framework to preserve our planet.

(The White House)

Friday, May 23, 2014

U.S. Wood Pellet Exports Double in 2013 in Response to Growing European Demand

graph of U.S. wood pellet exports by destination, as explained in the article text
Source: U.S. Energy Information Administration, based on U.S. International Trade Commission data

Wood pellet exports from the United States nearly doubled last year, from 1.6 million short tons (approximately 22 trillion Btu) in 2012 to 3.2 million short tons in 2013. More than 98% of these exports were delivered to Europe, and 99% originated from ports in the southeastern and lower Mid-Atlantic regions of the country.

Wood pellets are traditionally manufactured from wood waste (including sawdust, shavings, and wood chips) that results from wood processing activities, but they can also be produced from unprocessed harvested wood (generally at a higher cost). Wood pellets are primarily used as a residential heating fuel in the United States, but wood pellets can also be used for commercial heating and power generation applications. As recently as 2008, the U.S. Forest Service estimated that approximately 80% of U.S. wood pellet production was consumed domestically. However, because of strong demand growth in Europe, wood pellet exports have been the driving factor in the growth of domestic wood pellet production in recent years.

Growth of U.S. wood pellet exports has been concentrated in southeastern states, which have advantages in terms of abundant material supply and relatively low shipping costs to Europe. Transportation cost is a large part of the total cost of wood pellets; for example, according to Bloomberg New Energy Finance, transportation accounted for a quarter of the delivered price of wood pellets from the Southeast to the Netherlands in mid-2013. Shipping costs generally increase with distance, so the proximity of the United States to Europe compared to wood pellet manufacturers in Brazil and western Canada provides a pricing advantage for U.S. wood pellet exporters.

European countries, particularly the United Kingdom, are using wood pellets to replace coal for electricity generation and space heating. A principal driver in market activity is the European Commission's 2020 climate and energy package, binding legislation enacted in 2009 that implements the European Union's 20-20-20 targets. The 20-20-20 targets have three individual goals for 2020: to reduce EU greenhouse gas emissions by 20% from 1990 levels, to increase the renewable portion of EU energy consumption by 20%, and to improve EU energy efficiency by 20%.

In 2013, the top five importing countries of U.S. wood pellets exports were all European: the United Kingdom, Belgium, Denmark, the Netherlands, and Italy. The United Kingdom accounted for the majority (59%) of U.S. wood pellet exports, and more than tripled its imports from the United States between 2012 and 2013.

graph of United Kingdom wood pellet imports by source, as explained in the article text
Source: U.S. Energy Information Administration, based on Eurostat data

The United Kingdom's wood pellet imports from all sources have grown from near zero in 2009 to more than 3.5 million short tons in 2013. Because of the United Kingdom's Renewables Obligation program, the operators of several large coal-fired power plants have either retrofitted existing units to cofire biomass wood pellets with coal or have converted to 100% biomass. The Drax power plant—rated at nearly 4,000 megawatts and the largest coal-fired power plant in the United Kingdom—is in the process of implementing plans to convert half of its six generating units to run solely on wood pellets. The first of these three units entered service in 2013, while the remaining two conversions are planned for completion in 2015. According to Eurostat, the United Kingdom is also a major importer of wood pellets from Canada and, to a lesser extent, from other European sources. Until 2013, Canada was the primary source of the United Kingdom's import supply.  (DOE-EIA)

Nuclear Power Reactor Decommissioning & Spent Fuel Storage Status

Vermont Yankee
In the last year, the owners of five nuclear power reactors have confirmed their early closure. Kewaunee, Crystal River 3, San Onofre (SONGS) 2 & 3 and Vermont Yankee will join the list of nine nuclear power plants already holding either a DECON or SAFSTOR license in the USA. With Kewaunee and Vermont Yankee shutting down prematurely due to an unfavourable economic climate based on low gas prices, it’s widely believed that further plant closures may follow. Despite ten nuclear power plants having already been decommissioned in the USA, much of the original knowledge has been lost through retirements, plus external events such as Fukushima and 9/11 have had a huge impact on security and emergency planning that NPP plant closures in the 90s and before didn’t have to deal with.

Couple this unprecedented level of attention towards nuclear decommissioning with the multitude of questions surrounding what will happen to spent fuel once a nuclear power plant has completely shut down, and it’s clear that the backend of the nuclear life cycle is here to stay. As a result, Nuclear Energy Insider has put together an exclusive decommissioning and spent fuel storage map to help you mark out where and when major decommissioning, demolition and Independent spent fuel storage installation (ISFSI) construction will be taking place.  (Nuclear Energy Insider)

Wednesday, May 21, 2014

Industrial Onsite Electricity Concentrated in Chemicals, Oil, and Paper Manufacturing

graph of annual U.S. industrial nameplate capacity and generation, as explained in the article text

Source: U.S. Energy Information Administration, Power Plant Operations Report and Electric Power Annual

Onsite industrial generation represents approximately 3% of current U.S. generating capacity and approximately 4% of total megawatthours (MWh) of electricity generated in 2012, the latest year for which final data are available. More than 90% of the industrial generation capacity is concentrated in five industries. Of these industries, the chemicals, paper, and petroleum and coal industries account for more than 80% of onsite industrial generation, with the primary metals and food industries representing the remaining 20%.

Combined heat and power (CHP) facilities tend to be built in conjunction with certain industries that have heat or steam demands that directly affect their economic potential and profitability. Continuous operations with fairly constant heat or steam demands, coupled with meeting partial electricity demands, bolster the technical potential and likelihood of adoption of an industrial CHP, or cogeneration, facility and also may result in greater use of these facilities.

Power plants configured to produce both electricity and steam for other uses have a long history in the industrial sector. In the early 1900s, onsite generation was commonplace and also accounted for the majority of U.S. units because of the need for industrial heat, combined with the poor reliability and high cost of contemporary network-delivered electrical service. Subsequent improvements in electric grids throughout the nation led to a substantial decline in industrial cogeneration, with most electricity used at industrial facilities now coming from the grid rather than from onsite sources.

While the technical potential of CHP—the amount of industrial CHP possible to meet both heat and partial electric demands without taking into account measures of its cost-effectiveness—spans the entire industrial sector, the economic potential—the amount of industrial CHP that could be adopted because of its economic feasibility—helps to concentrate such potential in a few industries.

There is significant technical potential for more industrial cogeneration, which offers the potential for energy savings and cost reductions compared to the separate production of electricity and heat. Multiple policies at the federal, state, and local levels aim to promote CHP. However, even though expenditures for purchasing electricity are a significant cost for energy-intensive manufacturing facilities, the number of manufacturing facilities with and without active cogeneration suggest that CHP still faces significant challenges.

In addition to the direct sensitivities to the future cost of electricity and input fuels prices, there are other notable concerns particular to CHP investments identified by industry:
  • High or higher back-up changes or stand-by rates offered to industrial plants that want to pursue cogeneration while still maintaining a connection to the electric grid
  • Possible changes in CHP-related tax issues
  • State environmental policies
  • State siting and permitting requirements
  • Various federal standards

Obama Establishes Organ Mountains-Desert Peaks National Monument

Today,Wednesday, May 21, President Obama will sign a proclamation establishing the Organ Mountains-Desert Peaks National Monument in south-central New Mexico. By establishing the monument, the President will permanently protect nearly 500,000 acres to preserve the prehistoric, historic, and scientific values of the area for the benefit of all Americans. A recent independent study found that a new national monument could generate $7.4 million in new economic activity annually from new visitors and business opportunities, while preserving access for sportsmen, ranchers, and recreational users. (The White House)

Monday, May 19, 2014

EPA Finalizes 316 (b)

Standards to Protect Fish, Aquatic Life from Cooling Water Intakes 

The U.S. Environmental Protection Agency (EPA) today finalized standards to protect billions of fish and other aquatic life drawn each year into cooling water systems at large power plants and factories.

 This final rule is required by the Clean Water Act to address site-specific challenges, and establishes a common sense framework, putting a premium on public input and flexibility for facilities to comply.

There are three components to the final regulation.
  • Existing facilities that withdraw at least 25 percent of their water from an adjacent waterbody exclusively for cooling purposes and have a design intake flow of greater than 2 million gallons per day are required to reduce fish impingement. To ensure flexibility, the owner or operator of the facility will be able to choose one of seven options (see p. 89 of rule) for meeting best technology available requirements for reducing impingement.
  • Facilities that withdraw very large amounts of water – at least 125 million gallons per day – are required to conduct studies to help the permitting authority determine what site-specific entrainment mortality controls, if any, will be required. This process will include public input.
  • New units at an existing facility that are built to increase the generating capacity of the facility are be required to reduce the intake flow to a level similar to a closed cycle, recirculation system. Closed cycle systems are the most effective at reducing entrainment. This can be done by incorporating a closed-cycle system into the design of the new unit, or by making other design changes equivalent to the reductions associated with closed-cycle cooling.

An estimated 2.1 billion fish, crabs, and shrimp are killed annually by being pinned against cooling water intake structures (impingement) or being drawn into cooling water systems and affected by heat, chemicals, or physical stress (entrainment). To protect threatened and endangered species and critical habitat, the expertise of the Fish & Wildlife Service and National Marine Fisheries Service is available to inform decisions about control technologies at individual facilities.

The national requirements, which will be implemented through National Pollutant Discharge Elimination System (NPDES) permits, are applicable to the location, design, construction, and capacity of cooling water intake structures at these facilities and are based on the best technology available for minimizing environmental impact. The rule establishes a strong baseline level of protection and then allows additional safeguards for aquatic life to be developed through site-specific analysis, an approach that ensures the best technology available is used. It puts implementation analysis in the hands of the permit writers so requirements can be tailored to the particular facility. (EPA)

The final rule establishes requirements under the Clean Water Act for all existing power generating facilities and existing manufacturing and industrial facilities that withdraw more than 2 million gallons per day of water from waters of the U.S. and use at least 25 percent of the water they withdraw exclusively for cooling purposes. This rule covers roughly 1,065 existing facilities –521 of these facilities are factories, and the other 544 are power plants. The technologies required under the rule are well-understood, have been in use for several decades, and are in use at over 40 percent of facilities.

Final Rule (Prepublication)

More information

Saturday, May 17, 2014

Maryland Governor O'Malley Vetoes Bill That Delayed Offshore Wind Farm

Maryland Gov. Martin O’Malley (D), left, on Friday vetoed a bill that would have delayed a proposed wind farm in Somerset County.  The bill passed the General Assembly with a strong, veto-proof majority. The delay was also backed by U.S. Sens. Barbara A. Mikulski (D-Md.) and Benjamin L. Cardin (D-Md.).

U.S. House Minority Whip Steny H. Hoyer (D-Md.) opposes the wind project believing it would compromise radar that tests the stealth capabilities of fighter jets at Patuxent River Naval Air Station, just across the Chesapeake Bay.

In the final days of Maryland’s annual legislative session, at the urging of Hoyer and lawmakers from Southern Maryland, the General Assembly voted to delay wind projects within 56 miles of the base until June 2015 — effectively killing plans for the Great Bay Wind Center.  The vote was 31 to 16 in the Senate and 112 to 22 in the House.  (Wash Post, 5/16/2014)

Friday, May 16, 2014

China Produces and Uses As Much Coal As the Rest of the World Combined

graph of Chinese coal consumption, as explained in the article text
Source: U.S. Energy Information Administration, International Energy Statistics
Note: For countries whose 2012 data was unavailable, 2011 data were extrapolated forward one year. These countries comprised about 3% of both total consumption and total production.

Chinese production and consumption of coal increased for the 13th consecutive year in 2012. China is by far the world's largest producer and consumer of coal, accounting for 46% of global coal production and 49% of global coal consumption—almost as much as the rest of the world combined. As a manufacturing country that has large electric power requirements, China's coal consumption fuels its economic growth. China's gross domestic product (GDP) grew 7.7% in 2012, following an average GDP growth rate of 10% per year from 2000 to 2011.

The top 10 coal-producing countries supplied 90% of the world's coal in 2012. China produced nearly four times as much coal as the second largest producer, the United States, which had a 12% share of global production. China has accounted for 69% of the 3.2 billion ton increase in global coal production over the past 10 years.

The top 10 coal-consuming countries consumed 85% of the world's coal in 2012. Eight of the 10 largest producers are among the top 10 consumers. China is the largest coal consumer, accounting for 49% of the world's total coal. The next largest, the United States, consumed 11% of the world's total. China's coal consumption increased by more than 2.3 billion tons over the past 10 years, accounting for 83% of the global increase in coal consumption.

Coal accounts for most of China's energy consumption, and coal has maintained an approximate 70% share of Chinese consumption (on a Btu basis) since at least 1980, the starting date for EIA's global coal data. By way of comparison, coal was 18% of U.S. energy use and 28% of global energy use in 2012.  (DOE-EIA)

Remarks by the President on American Energy

Mountain View, California
9:48 A.M. PDT



And so today, here at Walmart, I want to announce a few more steps that we’re taking that are going to be good for job growth and good for our economy, and that we don't have to wait for Congress to do.

Number one, we know that making buildings more energy efficient is one of the easiest, cheapest ways to create jobs, save money, and cut down on harmful pollution that causes climate change. It could save our businesses tens of billions of dollars a year on their energy bills -- and they can then use that money to grow and hire more folks. It would put construction workers back to work installing new systems and technologies.

So that’s why, three years ago, I announced what we called the Better Buildings Initiative. It's an ambitious plan to improve the energy efficiency of America’s commercial buildings by 20 percent by the year 2020. And already we've got 190 businesses and organizations that have signed on. On average, they’re on track to meet their goal -- cutting energy use by 2.5 percent every single year. Together, they’ve already saved $300 million in energy costs.

Two years ago, I ordered $2 billion in energy upgrades to federal buildings. Today, I’m ordering an additional $2 billion in upgrades over the next three years. And these upgrades will create tens of thousands of construction jobs and save taxpayers billions of dollars.

The Department of Energy is putting a new efficiency standard -- set of efficiency standards in place that could save businesses billions of dollars in energy costs and cut carbon pollution -- and it's the equivalent of taking about 80 million cars off the road.

 Earlier this week, I issued -- or we issued a report that was years in the making called the National Climate Assessment. Hundreds of scientists, experts and businesses, not-for-profits, local communities all contributed over the course of four years. What they found was unequivocally that climate change is not some far-off problem in the future. It’s happening now. It’s causing hardship now. It’s affecting every sector of our economy and our society -- more severe floods, more violent wildfires. It’s already costing cities and states and families and businesses money.

Thursday, May 15, 2014

Grow America Act

The GROW AMERICA Act, or Generating Renewal, Opportunity, and Work with Accelerated Mobility, Efficiency, and Rebuilding of Infrastructure and Communities throughout America, will:
  • Support millions of American jobs repairing and modernizing our roads, bridges, railways, and transit systems;
  • Help ensure that American businesses can compete effectively in the global economy and grow; and
  • Pave the way forward by increasing access to the ladders of opportunity that help Americans get ahead.
  • Address the shortfall in the Highway Trust Fund and provide $87 billion to address the nation’s backlog of deficient bridges and aging transit systems;
  • Create millions of new jobs to ensure America’s future competitiveness;
  • Increase safety across all modes of surface transportation, including increasing the civil penalties the National Highway Traffic Safety Administration (NHTSA) can levy against automakers who fail to act quickly on vehicle recalls;
  • Provide certainty to state and local governments that must engage in long-term planning;
  • Reduce project approval and permitting timelines while delivering better outcomes for communities and the environment;
  • Bolster efficient and reliable freight networks to support trade and economic growth; and
  • Create incentives to better align planning and investment decisions to comprehensively address regional economic needs while strengthening local decision-making.

Monday, May 12, 2014

Courts Give Obama Administration 3rd Victory: Soot, Smog & Mercury

The Obama administration had its third big environmental legal victory in a month.

1) Soot: The U.S. Court of Appeals for the D.C. Circuit ruled against the National Association of Manufacturerson Friday stating that the EPA acted properly in 2012 when it further restricted allowable soot emissions. The 11-page decision rejected industry complaints and found that the EPA had acted reasonably and within its bounds when it adopted stricter nationwide standards for fine particulate matter. The soot emitted by power plants, diesel trucks, refineries and factories lodge deep in the lungs when inhaled and are linked to heart and lung disease, respiratory illnesses and premature deaths.  The EPA tightened annual limits on fine particle pollution from 15 micrograms per cubic meter to 12 micrograms per cubic meter and set new requirements for dozens of major cities to install air quality monitors to test for the pollutants near busy roadways.

2) Smog: This follows the previous week’s big Supreme Court ruling that the EPA acted properly when it restricted the amount of smog-causing pollution that can drift from coal-fired power plants in Midwestern states to East Coast states.

3) Mercury: Nearly a month ago, the U.S. Court of Appeals for the D.C. Circuit rejected industry’s legal challenges to EPA restrictions on the amount of mercury and other toxic pollution pumped out by coal power plants. (Grist, 5/12/2014)

Friday, May 09, 2014

Natural Gas Liquids Pricing Out Natural Gas.

In recent years, high levels of natural gas production have pushed prices down. The Henry Hub spot price averaged $3.73 per million British thermal units (MMBtu) in 2013. In 2012, the average annual Henry Hub price was $2.75/MMBtu, which reduced profit margins for many natural gs producers.  The relatively high value of natural gas liquids (NGL) has led producers to target wet gas. NGL prices have traditionally been linked to crude oil, resulting in a significant price premium over pipeline-quality dry natural gas. More recently, the natural gas plantliquids composite spot price  (which approximates a value of NGL produced at natural gas processing plants) has hovered roughly halfway between West Texas Intermediate (WTI) crude oil and natural gas spot prices.

The result of this liquids price premium is that wet natural gas production is increasing at a faster rate than dry natural gas production. Liquids extracted from wet natural gas at natural gas processing plants accounted for 5.2% of the volume of marketed production in 2013, up from a low of 4.5% in 2008. September 2013 represents the highest liquids share of monthly production on record, at 5.5%.

When wet natural gas first comes out of the ground, it contains both methane (which is the primary ingredient of natural gas) and NGL. NGL (ethane, propane, butanes, and natural gasoline) are a subset of hydrocarbon gas liquids (HGL) as they do not include olefins. Between 2008 and 2013, volumes of liquids produced from wet natural gas grew at an average of 7% annually, with increases concentrated in the Gulf Coast. Production in the Marcellus region is still relatively small, but is growing rapidly.

Increased liquids production has driven NGL prices down, particularly of ethane and propane. Ethane, which is currently priced below natural gas, is being left in the dry gas stream in large volumes by gas processors and sold as natural gas, a phenomenon known as ethane rejection. Were ethane production more economical for processors, ethane production volumes would be higher, and ethane would occupy a larger share of total NGL production. As new ethane-consuming petrochemical plants continue to become operational, and as ethane demand is supported by new export projects, ethane prices will rise, and production volumes will begin to grow. Estimates of ethane rejection volumes range between 200 and 400 Mbbl/d.

Refineries also produce NGL, predominantly propane, but their rate of production growth has not been keeping pace with increases in production from the wet natural gas stream. Refinery production of finished products is closely tied to crude oil inputs, which have not increased in recent years. With production at natural gas processing plants growing and refinery production flat, refinery NGL has accounted for a progressively smaller share of total NGL production. In 2013, refinery output of NGL accounted for about 12% of total NGL production, down from 19% in 2008.  (DOE-EIA)


Hydrocarbons which contain only single bonds are called alkanes. They are called saturated hydrocarbons because there is a hydrogen in every possible location. This gives them a general formula CnH2n+2.

The first four alkanes are methane, ethane, propane, and butane with the Lewis symbols shown below.

Past this number of carbons, the -ane suffix is retained and the number prefixes penta-, hexa-, hept-, oct-, non-, dec-, etc are used. Alkyl groups are used as substituents, and alkane derivatives have many applications.

The alkanes are highly combustible and are valuable as clean fuels, burning to form water and carbon dioxide. Methane, ethane, propane and butane are gases and used directly as fuels. Alkanes from pentane up to around C17H36 are liquids. Gasoline is a mixture of alkanes from pentane up to about decane. Kerosene contains alkanes from about n=10 to n=16. Above n=17 they are solids at room temperature. Alkanes with higher values of n are found in diesel fuel, fuel oil, petroleum jelly, paraffin wax, motor oils, and for the highest values of n, asphalt.

Alkane derivatives are used in hundreds of products such as plastics, paints, drugs, cosmetics, detergents, insedticides, etc., so the fossil fuel resource from which we obtain the alkanes is much too valuable to burn it all as a motor fuel.  (Hyperphysics)

All About LNG Tankers

EPA Seeks Comments On Fracking Chemicals

EPA announced today that it will seek public comment on what information could be reported and disclosed for hydraulic fracturing chemicals and mixtures and the approaches for obtaining this information, including non-regulatory approaches. EPA is also soliciting input on incentives and recognition programs that could support the development and use of safer chemicals in hydraulic fracturing. A public process through an Advance Notice of Proposed Rulemaking (ANPR) will help inform EPA’s efforts to promote the transparency and safety of unconventional oil and gas activities while strengthening protection of our air, water, land and communities.
EPA wants to hear from the public and stakeholders about public disclosure of chemicals used during hydraulic fracturing, and we will continue working with our federal, state, local, and tribal partners to ensure that we complement but not duplicate existing reporting requirements.

EPA’s ANPR includes a list of questions for stakeholders and the public to consider as they develop their comments. Following the 90-day comment period, the agency will evaluate the submitted comments as it considers appropriate next steps. Advance Notice of Proposed Rulemakings are intended to engage the public and solicit comments and/or information from the public for EPA’s consideration in addressing a particular issue, including information that EPA could consider in developing non-regulatory approaches or a proposed rule.  (EPA)

Read EPA’s ANPR:

Wednesday, May 07, 2014

President Obama Brings In The Weathermen on Global Warming

NBC’s Al Roker, and other television meteorologists, met with the White House on climate change on Tuesday. More than 100 national and local television weather forecasters met with the president and his advisers with the administration hoping the broadcasters’ popular appeal would help sell the public on the need to take action on global warming.

Tuesday, May 06, 2014

Coal Exports

Coal now generates about 39% of electric power in the U.S., off from 55% in 1990.

Low domestic demand has renewed the focus on U.S. exports, which are on track for a record-setting third straight year of more than 100 million tons.

The 28-nation EU imported 47.2 million tons of U.S. coal last year, up from 13.6 million tons in 2003.

Exports to the U.K. alone are up tenfold in the same period. The U.S. ranked second only to Russia in supplying Europe with coal last year, and the U.S. could further increase its market share if recent political tensions with Moscow disrupt Russian shipments.

Germany's decision to phase out of nuclear power after the 2011 Fukushima nuclear disaster in Japan has also made it a significant buyer of U.S. coal, mostly because the commodity is so inexpensive. Since 2003, German imports of U.S. coal have risen to more than 15 million tons from under a million tons.
The big gainer—accounting for roughly one-third of U.S. exports, up from almost nothing 10 years ago—has been high-sulfur coal taken from thick coal seams in Illinois and Indiana. It is loaded onto barges and shipped 800 miles down the Mississippi River to a terminal on the Gulf of Mexico. From there, it heads across the Atlantic.  Illinois and Indiana coal, shunned in some places in the U.S. because of its high sulfur content, offers a less-expensive alternative than coal from nearby European mines—even including transportation costs.                                     
The Illinois Basin—located in Illinois, Indiana and parts of Kentucky—possesses some of the world's richest coal seams, but high sulfur and ash content caused the coal to be shunned after the passage of the Clean Air Act in 1970. By 2002, mining in Illinois reached its lowest levels since the Great Depression. That is when a handful of companies, led largely by two private operators, Chris Cline and Robert Murray, snapped up mines on the cheap. The acquirers, bet—correctly, it turned out—on scrubbing technology that can remove almost all the sulfur. They also counted on the coal appetite of export markets such as the U.K.

Mr. Cline's Foresight Energy—Drax's top U.S. supplier—last year offered its coal for as little as $65 a ton in Europe, including freight, compared with $80 a ton from U.K. mines near the Drax power plant. Appalachian coal typically sells for 20% more than Illinois Basin coal.

EU officials are aware of the rise in high-sulfur Illinois Basin coal imports and are concerned. Many EU countries are in violation of the bloc's emissions rules, and 19 have been subject to formal complaints from the European Commission.  (WSJ, 5/5/2014)