Less than 10 years after two Utah-based coal executives hit upon an idea to ship the world’s dirtiest fuel from Utah to Japan—via Oakland, California—a U.S. bankruptcy judge has put a final end to the fossil-friendly pipe dream.
“A long-shot proposal to send coal 700 miles overland from Utah to Oakland for transoceanic shipment to Asian markets is dead,” writes the Institute for Energy Economics and Financial Analysis (IEEFA). The death blow comes courtesy of a Kentucky bankruptcy judge, who recently “approved a plan by the proposed project’s major creditor, Autumn Wind Lending LLC, to take over a sublease at the Oakland Bulk and Oversized Terminal (OBOT) that was held by Utah-based Insight Terminal Solutions (ITS) LLC.”
Noting that the judge’s ruling “follows a refusal by the Utah Legislature in August to give ITS a US$20-million bailout,” IEEFA adds that “Autumn Wind Lending is a subsidiary of a private Los Angeles-based investment fund that has shown no intention of utilizing the terminal for coal exports.”
Those intentions are likely to hold fast, adds IEEFA, given that the City of Oakland was already suing to have its lease with OBOT invalidated, with public health concerns at the centre of its opposition to having coal enter the port. In taking on the sublease, Autumn Wind has pledged to “actively participate in settling all of the debtor’s regulatory issues with the City of Oakland.”
The project was “hobbled from the start by questionable assumptions around the future viability of the U.S. coal-export business,” notes IEEFA. “Even in the best of times, U.S. coal producers served as only swing suppliers to Asian markets, taking up marginal slack when Australian and Indonesian producers did not meet full demand.”
Citing a recent research assessment by IHS Markit, IEEFA adds that “distance and cost were problematic, and they remain so.”
Even beyond those headwinds, the project in itself was never anything more than pie-in-the-sky, writes IEEFA. Autumn Wind’s summation during the bankruptcy case in Kentucky notes that ITS does not “have a single dollar to fund the plan. They have no business operations. The plan relies on the remote possibility of obtaining funding at an unknown future date from four counties in the State of Utah for the purpose of building a port in Oakland, California, to export coal internationally. But the counties do not at present have the funds, either.”
IEEFA adds that while Asia was the putative target of the Utah coal, the transport-and-export plan tracked directly counter to a larger trend that shows developed nations on the continent moving away from coal.