The Sierra Club against Oakland coal port bill

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Utah bill SB246, introduced in the final days of the legislative session, would provide $53 million, from Utah funds, to go toward the building of a coal port, along with accompanying infrastructure, in Oakland, California, so that Utah coal, other fossil fuels, and other products can be shipped to California, then on to foreign markets. This would help prop up Utah’s struggling coal industry, but would lead to more irreparable damage to Utah’s wild lands and eco-systems.

 

Many thanks to Lindsay Beebe – the Organizing Representative, in Salt Lake City, of the Sierra Club’s “Beyond Coal” campaign for sending their Fact Sheet on SB246, as well as this link to their on-line message to send to your Utah representative.

 

To sign and send the Sierra Club’s message opposing the SB246 bill, click here.

 

The Sierra Club Fact Sheet on SB246:

SB 246: GAMBLING WITH TAXPAYER MONEY ON A RISKY BET

  1. Because the coal export market is disappearing, SB 246 is a bad gamble for Utah taxpayers.
  • This $53 million loan is a bad investment that instead of producing good jobs for the people of Utah, could end up leaving taxpayers holding the bag as the bankruptcies and the contraction of the international coal market continue. A July 2013 analysis by Goldman Sachs specifically labeled coal export terminals “a bad investment.”
  • A Goldman Sachs 2015 analysis said, “Peak coal is here.” The analysis predicted a continuing decline in coal prices and that they will never recover. “The industry does not require new investment given the ability of existing assets to satisfy flat demand, so prices will remain under pressure as the deflationary cycle continues.”
  • More recently, Andy Roberts, a mining engineer and an expert on the economics of coal, released an analysis February 10 (aimed primarily at port projects in Washington state) concluding that U.S. coal ports have gone from “vital to irrelevant” given the precipitous drop in demand from Asia. Western coal producers can’t compete with Indonesian producers on price in what is a disappearing market.
  • The U.S. Energy Information Agency recently reported that U.S. coal exports fell 22% in the first three quarters of 2015 compared to the same period in 2014.
  • China announced last week that it is closing more than 1,000 coal mines due to a “price-sapping supply glut” and the government has suspended the approval of new coal mines to clean up dangerous air pollution across the country. Given the supply glut, Chinese imports are likely to continue their steep decline.
  • The American coal industry is in deep trouble. Among the companies declaring bankruptcy are Arch Coal, the nation’s second largest coal company, and 50 other coal-mining companies. Any state that is counting on coal for future jobs and a strong economy is making a risky gamble. Bowie Resources, which owns a coal mine whose potential exports SB 246 is intended to subsidize, recently idled its Colorado mine due to “deteriorating market conditions.”
  • Although Governor Herbert has been quoted as saying “This is an investment …. You invest $50 million and you’re going to get back three or four times your investment,” such a rosy outcome is extremely unlikely. If this loan would guarantee 300% to 400% return, coal companies or private capital would be lined up to invest in the terminal. The lack of private investment suggests that this project is highly risky, and one that only could be accomplished by tapping taxpayers’ wallets. Tapping public funds to support a private development that can’t attract private funding is simply a subsidy, not the “free market” at work.
  • Coal export facilities are generally a speculative and risky gamble. In recent decades, coal export terminals have gone bust in Los Angeles and Portland, leaving taxpayers and investors on the hook for tens of millions of dollars.
  • Governor Herbert’s own strategic plan for energy concluded in 2014 that there Utah had only 10 years of proven coal reserves at current production rates.

 

  1. SB 246 will likely not cure the illegal transfer of funds from the Community Impact Board for an out-of-state construction project.
  • The purpose of the bill is to move $53 million from the CIB, and spend $53 million on the coal terminal in California. This is a transparent ploy to launder CIB funds to pay for a construction project in California that has nothing to do with mitigating the impacts of fossil fuel development in impacted counties in Utah. As such, this bill has likely violated the same federal laws as the CIB’s April 2015 loan approval that has been stalled for months as it is reviewed by Utah’s attorney general. Those laws require CIB funds to be spent in Utah counties on public projects that mitigate the impacts of federal fossil fuel leasing. Subsidizing construction of an export facility in California, however those funds are laundered, violates those laws.
  • If the Attorney General’s review concluded that the April 2015 CIB loan is legal, why is this bill necessary? The Attorney General should release his review before this bill is considered so the public can understand whether the loan is illegal.

 

  1. Opposition in California means there is significant political risk to any Utah loan.
  • The Oakland City Council is considering legislation restricting coal exports through Oakland. There is likely to be a vote on that legislation this Spring. Such an outcome could render worthless Utah’s investment.
  • The California legislature also has before it four bills that would restrict coal exports through Oakland and California, further raising the political risk that Utah will see no return on any investment in the terminal.
  • 76 percent of Oakland voters oppose building the coal terminal at the port.
  • Beyond environmental groups and public health organizations, even some faith groups have united to oppose construction of the port project.
  • The Port of Oakland rejected a proposal for a coal terminal in 2014; concerns about the terminal have only increased since then.

 

  1. The public deserves a chance to fully consider this complex proposal, rather than have it rammed through at the end of the legislative session with little consideration.
  • The introduction of this bill so late in the session gives the public little or no opportunity to raise legitimate questions on the appropriateness of giving a $53 million loan of taxpayers’ money to an ill-considered California project. It appears to be an attempt to sneak through a controversial scheme at the last minute.
  • Additional consideration of the bill is warranted because its convoluted funding mechanism makes it difficult to tell how it will impact transportation and other funding across the state.

 

3/2/2016

 

 

Photo: Sharon St Joan

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