Sunday, March 23, 2008

The Rising Price of Coal

A recent article in the NY Times (here) shows that coal prices are rising and that the U.S. is increasingly becoming an exporter of coal. As we all know the U.S. has the largest reserves of coal in the world and we use coal to produce about 50% of our electricity. Because of concerns about climate change and air pollution, many states are fighting proposed coal plants. This does not appear to be a big problem for coal producing regions as the world now wants to import U.S. coal. This will likely have a number of implications. First, it makes mining jobs more secure, which will hopefully help reduce union opposition to climate change legislation. Second, this will be one of many factors that will continue to push prices for electricity higher. Third, the huge environmental impacts of coal mining itself will continue. Mountain top mining and other large impact mining operations are going to be hard to reduce so long as politicians have to spend political capital on climate change legislation and the price of coal is increasing. Finally, this will create yet another case of the U.S. literally exporting pollution. (note, I'm sure there are many other implications of higher coal prices and increasing U.S. coal exports)

As the U.S. dollar continues to collapse the world is going to demand more commodities from the U.S. and obviously coal is one of these commodities. While I fully support reducing our balance of trade deficit, I'm not sure this is how we want to go about accomplishing this. If the U.S. is going to become serious about tackling climate change we and the world are going to have to burn less coal or find effective ways to sequester the CO2 it generates.

No comments: