Tuesday, May 25, 2010

AAR: Coal’s importance is critical

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Affordable coal-based electricity has helped ensure America’s position as a global economic superpower, and freight railroads are a big reason for that, Association of American Railroads (AAR) President and CEO Edward R. Hamberger said Tuesday, addressing the Congressional Coal Caucus.

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Railroads deliver 70% of all coal shipments to their final destinations, and the cost-effectiveness of freight rail has made it themode of choice for moving coal, Hamberger noted, adding that today twice as much coal can be shipped for roughly what it cost 30 years ago.
 
“Policy makers should take steps to ensure the continued use of our nation’saffordable domestic coal resources,” said Hamberger (pictured at left), adding support for development of carbon-capture-storage (CCS) technologies and aligning carbon reduction timetables with its commercial availability. “Investing in CCS will ensure America can produce affordable electricity from coal, promote energy independence, and protect our environment.”
 
Coal is the single largest customer segment for railroads, representing roughly 25% of total revenue for the nation’s major Class I railroads. One in every five railroad jobs is related to the movement of coal.
 
“Without coal, the U.S. rail network would face a need for vast restructuringwith greatly reduced capacity to invest in the nation’s rail networkinfrastructure,” Hamberger said.aar_logo.jpg

With various climate change proposals before Congress threatening to curb coal consumption, railroads are urging lawmakers to consider enacting contingent allowances in legislation. Specifically, contingent allowances would be made available to railroads that see a decrease in coal revenue as a direct resultof federal climate change law. If coal markets go unaffected, the contingent allowances would not take effect.  However if coal use falls, contingent allowances would help railroad businesses cope with the loss of billions of dollars in unique coal-related assets and revenues decimated from the change in law.
 
“The loss of these coal-related assets and revenue would significantly impede railroads’ ability to meet the transportation needs of businesses all across the country that rely on rail to get to the global marketplace,” Hamberger said. “If railroads cannot afford to renew and expand their capacity, more rail passengers and freight will move by less efficient, less environmentally sound ways across overcrowded highways.”