Cloud Peak is in the best position among Powder River Basin coal companies to make money on coal exports due to lower transport costs but it made more money last quarter on derivatives that shorted coal ($2.8 million) than it did on coal itself ($200,000). Sightline Institute anticipates that Cloud Peak’s export division will be in the red in the third quarter and cautions, “if that happens, it should set off warning bells for every Wall Street investor considering putting money into coal export terminals on the West Coast.”
Coal dust myopia
In an interview with the New York Times, Cloud Peak Energy CEO Colin Marshall stated: “If history means anything, the world in a few years will need more commodities, both metals and energy including coal.”
And there’s the coal industry’s myopia in a nut shell: history doesn’t mean anything for our energy future. We need to jump away from the blocks and into our best sprint away from those historical energy sources to avoid the doom of dangerous climate impacts.
We have to leave fossil fuels in the ground, states the IPCC, Bloomberg News, the Australian Climate Commission, the International Energy Agency, HSBC, and experts such as scientist James Hansen and economist Lord Stern. Only by keeping most of the known carbon reserves in the ground can we prevent unthinkable disasters that will last for thousands of generations.
The "avoid disaster" carbon budget won’t include expanding coal burning, known as “the dirtiest fossil fuel” because it emits more carbon dioxide per joule of energy at burning than any other source. According the International Energy Agency, a safe climate (two degrees warming/450ppm) scenario would allow only 20 per cent of today’s coal reserves can be developed and consumed. There’s ample existing infrastructure for this limited amount of coal.
The most likely implementation of a carbon budget is a price on carbon, called for this week by , the IMF, the World Bank and the OCED. It seems inevitable that this would drastically diminish or eliminate all coal exports. The Guardian calls Australia’s coal industry “a speculative bubble ripe for financial implosion."
According to the IEA, B.C. and U.S. industries occupy an even more marginal market position because they have some of the highest-priced coal in the world. As coal declines, the highest priced suppliers go bankrupt first. That includes much of B.C. and U.S. coal.
The U.S. is already abandoning coal, which is why the coal industry is in a desperate search for export markets. The U.S. and B.C. produce some of the world’s most expensive coal. As major markets like China strive to reduce imports, scenarios that increase coal exports out of B.C. become ever more unrealistic.
Why would the Port gamble on coal?
The Port may not have jurisdiction over federal export policy but it has the responsibility to operate the Port “with broad public support in the best interests of Canadians.” So why would it gamble its limited space on infrastructure proposals like coal terminals, at a time when world economists are warning against stranded infrastructure related to coal investments?
One possibility would be the cozy relationships that have developed over the decades during which coal has been the number one bulk commodity exported from Port Metro Vancouver.
A recent Access to Information request by VTACC shows lots of hand holding between the Port and the Coal Alliance, which seems to be a creation of its PR firm, National Public Relations.
Via email, they warned each other of protests, exchanged reports about protests and even sent pictures taken of protesters.