Decision In Japan Shows Continued Uncertainty For Potential Wyoming Coal Exports

Jul 15, 2020

In early July, reports surfaced that Japan could shutter up to 100 of its oldest coal plants. Shortly after, Trade Minister Hiroshi Kajiyama confirmed that the country was in the process of developing a "concrete framework" for closing down inefficient plants — though he didn't mention a specific number.

The potential closures are a big deal in a nation where 32 percent of all energy is derived from coal. Some have interpreted the announcement as a sign that Japan is moving toward renewable power and natural gas. Others see a move to maintain the coal industry with fewer emissions and greater efficiency.

Either scenario would bear weight for Wyoming, a state with hopes to target the Asian coal market. Policymakers have been adamant that while coal may be declining domestically, opportunity lies abroad.

In February, Secretary of Energy Dan Brouillette said there was "very, very strong demand for coal" in Asia and he was "committed to finding export opportunities." Wyoming legislators have echoed his sentiment, introducing a bill earlier this year that would provide tax breaks for companies exporting coal via Mexico and Canada.

Hurdles have been significant. Cloud Peak Energy had big hopes for the export market, but it went bankrupt in 2019 — in no small part due to a steep drop in prices overseas. The company operated in Wyoming and Montana. In the last few years, west coast states have blocked coal from leaving their ports. Even with tax breaks, transporting the resource to Canadian ports is costly.

Energy economist Rob Godby said that Japan's announcement underscores the riskiness of relying on foreign markets to preserve the industry. "The Japanese are recognizing, like the US generation sector, that there are other alternatives to coal," said Godby.

Wyoming Gov. Mark Gordon called the news disappointing. "We were trying to get our coal shipped to Japan, because Powder River coal burns so much cleaner. But obviously, Japan has made a different choice."

Not everyone sees the closures as a sure sign of coal's decline in Japan. Travis Deti, executive director of the Wyoming Mining Association, said that in the near future, the country may look to Powder River Basin coal for its comparatively low emissions, ash, and sulfur content.

"We believe there is going to be a market for Wyoming coal," Deti said, "It's just a matter of getting it to them."

There is some evidence to suggest that Japan is interested not in moving away from coal, but in a "cleaner" approach to the resource. In February, the New York Times reported that Japan had plans to build 22 new, high-efficiency coal-fired power plants. Just last month, the country's leading coal company announced efforts to develop carbon capture technologies — in partnership with a Wyoming research center.

Environmental groups have criticized Japan's continued reliance on coal and their commitment to reduce greenhouse gas emissions by only 26 percent below 2013 levels by 2030. On Tuesday, the country's own environment ministry warned that it would not meet those climate targets if new coal plants are built.

While the future of Japan's coal fleet remains murky for now, more detailed plans are expected to be released in the coming months.