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How the U.S. Exports Global Warming

While Obama talks of putting America on the path to a clean, green future, we're flooding world markets with cheap, high carbon fuels

February 3, 2014 11:00 AM ET
How the U.S. Exports Global Warming
Illustration by Victor Juhasz

The greening of American energy is both real and profound. Since President Obama took office, the nation's solar capacity has increased more than tenfold. Wind power has more than doubled, to 60,000 megawatts – enough to power nearly 20 million homes. Thanks to aggressive new fuel-efficiency standards, the nation's drivers are burning nearly 5 billion fewer gallons of gasoline a year than in 2008. The boom in cheap natural gas, meanwhile, has disrupted the coal industry. Coal-power generation, though still the nation's top source of electricity, is off nearly 20 percent since 2008. More than 150 coal plants have already been shuttered, and the EPA is expected to issue regulations in June that will limit emissions from existing coal facilities. These rules should accelerate the shift to natural gas, which – fracking's risks to groundwater aside – generates half the greenhouse pollution of coal.

See the 10 Dumbest Things Ever Said About Global Warming

But there's a flip side to this American success story. Even as our nation is pivoting toward a more sustainable energy future, America's oil and coal corporations are racing to position the country as the planet's dirty-energy dealer – supplying the developing world with cut-rate, high-polluting, climate-damaging fuels. Much like tobacco companies did in the 1990s – when new taxes, regulations and rising consumer awareness undercut domestic demand – Big Carbon is turning to lucrative new markets in booming Asian economies where regulations are looser. Worse, the White House has quietly championed this dirty-energy trade.

"The Obama administration wants to be seen as a climate leader, but there is no source of fossil fuel that it is prepared to leave in the ground," says Lorne Stockman, research director for Oil Change International. "Coal, gas, refinery products – crude oil is the last frontier on this. You want it? We're going to export it."

When the winds kicked up over the Detroit river last spring, city residents confronted a new toxic hazard: swirling clouds of soot taking flight from a mysterious black dune piled high along the city's industrial waterfront. By fall, similar dark clouds were settling over Chicago's South Side – this time from heaping piles along the Calumet River. The pollution in both cities made national headlines – and created a dubious coming-out party for petroleum coke, or "petcoke," a filthy byproduct of refining gasoline and diesel from Canadian tar-sands crude. Despite the controversy over Keystone XL – the stalled pipeline project that would move diluted tar-sands bitumen to refineries on the Gulf Coast – the Canadian crude is already a large and growing part of our energy mix. American refineries, primarily in the Midwest, processed 1.65 million barrels a day in 2012 – up 40 percent from 2010.

Global Warming's Terrifying New Math

Converting tar-sands oil into usable fuels requires a huge amount of energy, and much of the black gunk that's refined out of the crude in this process ends up as petroleum coke. Petcoke is like concentrated coal – denser and dirtier than anything that comes out of a mine. It can be burned just like coal to produce power, but petcoke emits up to 15 percent more climate pollution. (It also contains up to 12 times as much sulfur, not to mention a slew of heavy metals.) In Canada, the stuff is largely treated like a waste product; the country has stockpiled nearly 80 million tons of it. Here in the U.S., petcoke is sometimes burned in coal plants, but it's so filthy that the EPA has stopped issuing any new licenses for its use as fuel. "Literally, in terms of climate change," says Stockman, "it's the dirtiest fuel on the planet."

With domestic petcoke consumption plummeting – by nearly half since Obama took office – American energy companies have seized on the substance as a coal alternative for export. The market price for petcoke is about one-third that of coal. According to a State Department analysis, that makes American-produced petcoke "less expensive, including the shipping, than China's coal." Petcoke exports have surged by one-third since 2008, to 33.4 million metric tons; China is now the top consumer, and demand is exploding. Through the first nine months of 2013, Chinese imports were running 50 percent higher than in 2012.

No surprise: The Koch brothers are in the middle of this market. Koch Carbon, a subsidiary of Koch Industries, was the owner of the Detroit dune, since sold off to an international buyer. But it's a third Koch brother, Billy, who is the petcoke king. William Koch is the CEO of Oxbow Carbon, which describes itself as "the worldwide leader in fuel-grade petcoke sourcing and sales" – trading 11 million tons per year.

Read Our Feature On the Arctic Ice Crisis

With dirty Canadian crude imports on the rise, U.S. refineries have been retooling to produce even more petcoke. A BP refinery on the outskirts of Chicago just tripled its coking capacity and is now the world's second-largest source of the black gunk. But the Promised Land of petcoke refining is on the Gulf Coast – which is part of why Big Oil is so hot to complete the Keystone XL pipeline. The Texas and Louisiana refineries that would process Keystone crude can produce a petcoke pile the size of the Great Pyramid of Giza every year, which, when burned, would produce more than 18 million tons of carbon pollution.

Despite the dangers of petcoke, the Obama administration has turned a blind eye to its proliferation. A 2011 State Department environmental-impact study of Keystone XL, commissioned under then-Secretary Hillary Clinton, treated petcoke as if it were an inert byproduct, and failed to consider its end use as a fuel when calculating the greenhouse impacts of the pipeline. According to the EPA, that decision led State to lowball the pipeline's associated emissions by as much as 30 percent.

In 2013, the post-Hillary State Department revised that assessment, conceding that petcoke "significantly increases" the emissions associated with tar sands. However, State punted on the big issue of climate pollution, maintaining that Keystone XL won't create a net increase because the Canadian crude would reach Gulf refineries with or without the pipeline.

A joint letter by Rep. Henry Waxman and Sen. Sheldon Whitehouse, chairs of the Bicameral Task Force on Climate Change, blasted State's conclusion as "fundamentally flawed" and "contrary to basic economics" – noting that it would take a new forest the size of West Virginia to fully offset the carbon emissions Keystone XL would bring to market.

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