Canada's Prime Minister Justin Trudeau recently spoke about fightingclimate change through policy at the United Nations climate summit in Glasgow, Scotland. One measure Canada’s government is considering is a ban on coal exports, which could hurt Montana mines.
Yellowstone Public Radio’s Kayla Desroches spoke with energy finance analyst Clark Williams-Derry, who wrote about the possible ban for the Institute for Energy Economic & Financial Analysis.
This interview has been edited for length and clarity.
Kayla Desroches: Canada's government a few years ago announced it would phase out traditional coal-fired electricity by 2030 to help address climate change, and an August press release says that plan includes a ban on coal exports. What role does Canada currently play in the shipment of U.S. coal to other countries?
Clark Williams-Derry: On the East Coast, there's not much role at all, but western coal, most of the western coal that gets shipped overseas is shipped through a terminal in British Columbia, just over the Washington State border. It's a terminal called Westshore, and it handles mostly metallurgical coal from Canada, but also about 10 to 13 million tons per year of thermal coal. That's coal that’s used in power plants. And most of that is from the United States, mostly from mines in Montana.
What does a ban on coal exports from Canada mean for Montana?
For the most part, Montana coal is used in the U.S. so a ban on coal exports from Canada isn't going to have much of an impact on U.S. sales, but on the margins, it will affect a couple of mines in Montana, in particular, the Signal Peak mine and the Spring Creek mine. Signal Peak is just outside the Powder River Basin and Spring Creek is within the Powder River Basin.
Both of those Montana mines ship coal mostly to Asia through the Westshore terminal.
What would it mean for Canadian exports of coal and what would a no-coal future look like for Canada?
This ban, as far as I can understand, wouldn't have any effect on metallurgical coal sales or production in Canada, but Canada has been working to phase out thermal coal — that's coal used in power plants.
A ban on coal exports, on thermal coal exports, goes hand in hand with Canada's efforts to get coal out of its own electricity system. Canada has moved to, at least, what we see, is the beginnings of a policy. It was a campaign promise by the governing Liberal Party in Canada.
You know, there's a long way between a campaign promise and an actual policy that is having effects on the ground. We don't know exactly what the timetable is going to be, but it's just something to be on notice for.
Canada's government, kind of like the Biden administration, has made it a priority to tackle climate change. What kind of climate impact would a ban on coal exports have?
It's hard to say with precision, but when you add a little bit more coal to the Seaborne coal market, you wind up reducing prices a little bit, and when you reduce prices, you wind up encouraging a little more consumption in other countries.
So, when I’ve run the numbers, it looks to me as if a ban on thermal coal exports from Canada would probably have about the same impact as removing between 1 and 3 million cars from the road permanently. That is, every year the emissions that you can attribute to thermal coal exports from the U.S. through Canada in particular - that has the impact of about 1 to 3 million cars being driven at sort of a typical rate.
The big picture here is that Canada is taking climate change more seriously, and it is starting to make moves that will have some impact on the U.S. But at the same time, the real story in coal in the U.S., it hasn’t been so much climate policy, it’s been economics. That coal has been struggling not because of direct pressure from climate policy, it’s been struggling to compete with cheap gas, for example.
We saw even during the last administration, which was fairly supportive of the coal industry, that coal consumption in the U.S. just kept falling. And there are a bunch of reasons for that, but principal among them are that gas is very cheap and for the last five years it’s been so cheap that it’s been outcompeting coal in the marketplace. And meanwhile, the cost of renewables keeps falling, and the combination of inexpensive renewables and inexpensive gas — that has what has been causing the major problems for the coal industry in the United States.
