Two power plants scheduled to end their use of coal happen to be located near one of the rail corridors where Powder River Basin coal is now rolling by almost daily on its way toward export to Asia. Portland General Electric’s power plant southwest of Boardman, Ore., has faced a growing barrage of environmental criticism in recent years. In 2010, PGE announced it will be closing its Boardman coal-fired plant by 2020. Environmentalists also targeted TransAlta Corp.’s power plant at Centralia, Wash. This facility is already under a state mandate to switch from coal to cleaner-burning fuel by 2025, but opponents are lobbying to have it shut down by 2015.
The loss in trainloads of coal delivered to U.S. power plants is being somewhat offset by a rise in trainloads of coal headed for export. U.S. coal exports rose more than 31% in 2011 compared with 2010, the strongest increase coming from deliveries to Asia. But a lack of West Coast coal ports (RA, March 2012, pp. 17-18) has kept America’s contribution to the Asian market at a fraction of what other coal suppliers like Australia and Indonesia are doing. Rail shipments of PRB coal to ports on Canada’s west coast, and efforts to build new ports on the U.S. west coast, have become targets for environmental protest.
With an abundance of coal flooding the global market, and a number of domestic power plants giving up on coal in favor of lower-priced natural gas, stocks in some U.S. coal mining companies tumbled significantly in recent months. The resulting layoffs of hundreds of mine workers, especially in Appalachian states, reportedly played a role in the May 8 presidential primary in West Virginia, where 41% of the Democrat vote went to a convicted felon who managed to get on the ballot. Voters in coal country were said to be protesting what’s been described as an anti-coal White House. Having warned, during his 2008 campaign, that new regulations would “bankrupt” segments of the coal industry, President Obama has since taken a softer stance on coal. Within days of that narrow win in West Virginia, the Obama reelection campaign added support for “clean coal” to its website.
BNSF CEO Matt Rose has described the U.S. coal market as “traumatized,” so what might the next move be from Warren Buffett, BNSF’s primary stakeholder? Buffett’s determined pursuit of coal-based commerce and his support for the Obama administration are, if nothing else, illustrative of the delicate balance necessary to manage the growing gap between coal delivered within the U.S. and coal exported overseas.