Forget about blood diamonds, uranium and coltan, the most politically charged mined commodity these days in North America is coal, which has emerged as a political football in the B.C. election set for May 9, drawing in U.S. and Alberta coal producers and the federal government in Ottawa.
In an April 26 open letter to Canadian Prime Minister Justin Trudeau and in her latest stump speeches, B.C. Premier and provincial Liberal Party Leader Christy Clark is proposing that the Canadian government impose a ban on U.S. thermal coal passing through B.C. ports.
About 6.6 million tonnes of thermal coal was exported through B.C. ports in 2016, with 94% coming from the U.S., mostly on its way to China. More specifically, 6.2 million tonnes of U.S. thermal coal was exported through the Port of Vancouver in 2016, and this figure had been set to rise as thermal coal demand rises in Asia and U.S. port capacity for thermal coal remains constrained.
This ban, says Clark, would be in retaliation for the Trump Administration’s Department of Commerce recently slapping a 20% duty on Canadian softwood lumber exports to the U.S., which will hit the B.C. lumber industry particularly hard.
Forestry employs 60,000 people in more than 140 communities in B.C., and the U.S. is B.C.’s biggest customer of softwood lumber, buying $4.6 billon last year.
Furthermore, Clark said that if the Canadian government refuses to act, her government will impose a carbon price on these coal shipments transiting through B.C. of $70 per tonne if re-elected on May 9.
“The levy would make thermal coal shipped through British Columbia utterly uncompetitive in the global market,” Clark said while campaigning in Merritt, B.C., according to Canadian Press. “Now is the right time to do it, the right time to send a strong message to the Trump administration and U.S. lumber barons that we will not back down in the face of their aggressive attacks on workers here in British Columbia.”
She added that U.S. thermal coal is among the dirtiest and most carbon-intense methods to generate power and heat.
In her letter to Trudeau, Christy noted that over the past five years, “every proposed coal export facility on the West Coast of the U.S. has been rejected or withdrawn, typically as a result of ecological or environmental concerns,” and that the state governments in Oregon, Washington and California have all made “significant commitments to eliminate the use of coal as a source of electricity for their citizens.” The most notable recent development was California Governor Jerry Brown’s signing of Bill 1279 that banned the provision of any state transportation funding for new coal export terminals.
Clark also suggested that any extra capacity at B.C. ports opened up by the U.S. thermal coal ban could be used for metallurgical coal exports. British Columbia is a large producer of metallurgical coal for export, with Vancouver-based Teck Resources being the dominant met coal producer.
At press time the polls in B.C. are very tight and the election is too close to call. Clark’s pro-business Liberals are neck and neck with the left-leaning New Democratic Party (NDP) led by John Horgan, who says Clark’s coal threats “ring hollow” and that she had until now been quiet on the softwood lumber issue, even though the special trade deal between Canada and the U.S. regarding softwood lumber had expired two years ago.
Alberta, which exports thermal coal through B.C., has been swept up in the ban proposal. Alberta’s NDP Premier Rachel Notley has said Clark’s proposed ban would be “bad news for Albertans” and that Clark doesn’t have the authority to impose a provincial $70 per tonne carbon tax.
Several economists taking the wider view believe ports in Seattle and Portland could handle all of B.C.’s share of U.S. thermal coal for export and that it would be counterproductive for Canadians to make it harder for U.S. customers to use B.C. ports, after such large investments in their development by government and industry over the past couple of decades.