Coal news and updates

A lobbying group pressing the U.S. government to speed approval of U.S. natural gas and coal export proposals released a report on Tuesday contending that long delays in the approval process may violate global trade rules.

 

The National Association of Manufacturers commissioned James Bacchus, a former Democratic Congressman and World Trade Organization judge, to pen the report, which it says sends a message to the Obama administration and Congress that they should accelerate the approval process and lift regulatory barriers.

 

"This report confirms manufacturers' view that principles of open markets and free trade should govern whether projects are approved on U.S. soil, and that all permits deserve up-or-down approval in a timely manner," said NAM President Jay Timmons.

 

While NAM and the energy industry have been pressing for speedy approval of the exports, many lawmakers in Congress and other companies especially in the petrochemical sector, have urged the administration to go slow. Dow Chemical Co is a leading opponent of speedy export approval, citing worries that expanding exports too quickly could make natural gas and coal less affordable domestically.

 

The NAM asked Bacchus to consider whether delays by the Department of Energy in issuing licenses to export liquefied natural gas to certain countries violate obligations under World Trade Organization rules.

 

A similar test was proposed on the question of whether expanding state-level environmental reviews for coal export terminals was "beyond the federal scope."

 

In the report Bacchus concluded that both actions violate the General Agreement on Tariffs and Trade, which forbids export restrictions.

 

"The United States has always been a strong advocate of rules that forbid export restrictions and has been forceful in challenging export restrictions imposed by other countries," said Bacchus, warning that "the tables may be turned on the United States directly in the WTO."

 

On a call with reporters he said Japan was found in violation of the GATT in 1988 when a panel determined that Japan had delayed the issuing of licenses for semi-conductors by up to three months.

 

By comparison, the Obama administration has a backlog of natural gas export projects awaiting approval that in some cases have been languishing for years.

 

The DOE has approved three new gas export permits and one expanded permit in 2013, following a pause of nearly two years in its review.

 

Bacchus said he thinks challenges have not yet arisen to the LNG and coal export delays because the focus of trade challenges in more recent years has been on import restrictions rather than exports.

 

EXPORT ADVOCATES

 

Some lawmakers and companies fear unfettered exports of LNG could drive up currently cheap prices of natural gas that have helped give a boost to manufacturing in the United States.

 

But Aric Newhouse, NAM's senior vice president of policy and government relations, said the organization does not think exports at levels currently envisaged will drive up natural gas prices in a destructive way.

 

"The invisible hand of market place has to be allowed to work," Newhouse said.

 

A recent report by the Bipartisan Policy Center, a think tank, said increased exports of natural gas will have a negligible impact on domestic gas prices. "The price of U.S. natural gas will influence LNG export levels far more than LNG exports will influence domestic prices," the report said.

 

The American Petroleum Institute, which lobbies for the U.S. oil industry, has also done a legal analysis that would highlight potential WTO violations of export delays, according to recent media reports.

 

On Nov. 15 API urged U.S. Energy Secretary Ernest Moniz to speed up the approval process for LNG.

 

"The shale revolution - sparked by U.S. innovations in hydraulic fracturing - has positioned America to play a leading role in the global energy trade, and we must work fast to secure a competitive position," said API director of upstream and industry operations Erik Milito.

 

Source: Reuters