Rising demand, but increased regulations for coal industry

It was a split message Monday, the first day of this year’s Eastern Coal Council conference: The U.S. coal industry faces a great opportunity with rising global demand, but onerous federal regulations threaten the industry’s ability to operate.

The theme of the conference, aimed toward the positive side, was “Coal: An American Energy Renaissance.”

Mark Bower, vice president of export and metallurgical coal marketing for Norfolk Southern, said the market is the strongest he’s seen in the 20 years he’s been exporting.

As China industrializes, he said, people are moving into the cities – and those who once aspired to own a bicycle now aspire to own a car. There’s a tremendous demand for coal to produce steel to make all of these goods there and also in India, he said.

U.S. coal reserves have also become somewhat globalized because of the demand, he said, with overseas buyers snapping up the nation’s coal properties to ensure they’ll have a supply of metallurgical coal, which is turned into coke that’s used to make steel.

Among them was United Coal, based for many years in the Tri-Cities region, which was purchased by a Ukrainian company called Metinvest.

Bower said the trend in the U.S. mirrors the global market.

“As steel production is on the rise we’re seeing capacity go up,” he said. “We’re seeing blast furnaces come back online, and recovery in steel production is in full swing.”

Rob Weaver, general manager of SunCoke Energy Jewell Operations, said his company’s process of producing coke is the only one that meets the Environmental Protection Agency’s new standards.

“We have one under construction at Middletown, Ohio, and another one on the drawing board for Ohio or Kentucky,” he said of plants that use the technology, which is also used at the company’s Buchanan County facility.

 The new plants, he said, also capture the heat they generate and use it to produce power.

“I believe that our steel industry has the will and the competence and commitment to be a key factor not only in the rebound of the U.S. economy, but also in expanding the global economy,” he said. “Our industry is on the brink of a new and exciting and vital era.”

But the statement came with a caveat: “You can’t mine coal and iron ore without a permit, so if we want to continue to be prosperous as a nation it’s time to loosen up the reins a little more on the permitting process.”

Ross Eisenberg, environmental and energy counsel for the U.S. Chamber of Commerce, said permitting for all types of projects – from coal mines to shopping centers – has become problematic.

He said the coal industry in particular faces “a multi-front war being waged against the coal industry by environmental groups and other nonprofit organizations.”

But, he said, permitting challenges are also facing wind, solar and nuclear power projects, as well as transmission lines and natural gas production.

When national leaders started talking about “shovel-ready jobs” during the debate over whether to pass an economic stimulus package, he said, “We said, ‘You guys are out of your mind. There are no shovel-ready jobs. You have to get a permit first.’”

To illustrate the point, the U.S. Chamber of Commerce put together a website showing just how hard it is to get a permit: projectnoproject.com. The site features a map of more than 300 projects that have been stopped through a lengthy permit appeals process.

Declares a headline at the top of the page, “If our great nation is going to begin creating jobs at a faster rate, we must get back in the business of building things.”

Of the 333 projects currently on the map, 140 are renewable energy projects, 111 are coal projects, 38 are gas projects, 21 are transmission lines and 22 are nuclear plants, Eisenberg said.

“There actually have been more renewable projects that have been challenged and stopped in the past six or seven years than coal projects,” he said. “It doesn’t matter what the tactic is to block it [or which group is opposing the project], at the end of the day the goal is pretty much the same -- it’s to throw as much as you can against the wall and just try to delay it as long as possible, until the financing dries up.”

If just a few of the projects instead moved forward, he said – perhaps because of new rules that could shorten the lengthy permitting process – it could bring billions of dollars of investment into the economy and create tens of thousands of jobs.

If all of them were built, he said, the figure would be hundreds of billions of dollars – and hundreds of thousands of jobs.

But that investment isn’t happening right now, and those jobs are not being created, according to Eisenberg. And the federal regulatory climate makes it unclear what – if anything – will be able to get a permit in even the near future.

He said the coal industry faces the most pronounced permitting problems. And going forward, “It’s going to get worse, not better.”

Barbara Altizer, executive director of the Eastern Coal Council, said in an interview that ultimately what happens to the coal industry in America is in the hands of Congress. Without action from Congress, she said, the EPA will impose tough regulations – and, if not here, coal will be mined somewhere else, with other countries reaping the benefits of the boom.

“If Congress could pass sensible energy legislation for the good of the country, then we’d be all right,” she said, “but Congress has got to step up to the plate.”