{"id":349,"date":"2010-11-18T09:26:02","date_gmt":"2010-11-18T14:26:02","guid":{"rendered":"http:\/\/blogs.law.columbia.edu\/climatechange\/?p=349"},"modified":"2012-01-31T15:24:29","modified_gmt":"2012-01-31T20:24:29","slug":"carbon-offshoring-indian-and-china-are-buying-u-s-coal-mines-shale-gas-fields-lng-terminals","status":"publish","type":"post","link":"https:\/\/blogs.law.columbia.edu\/climatechange\/2010\/11\/18\/carbon-offshoring-indian-and-china-are-buying-u-s-coal-mines-shale-gas-fields-lng-terminals\/","title":{"rendered":"Carbon Offshoring: India, China buying U.S. coal mines, shale gas fields, LNG terminals"},"content":{"rendered":"
<\/div>

Daniel M. Firger
\nAssociate Director<\/p>\n

Foreign companies are buying up U.S. coal mines.<\/p>\n

In a statement<\/a> on November 12, the chairman of Coal India Ltd.<\/a>, a state-controlled entity and the world\u2019s largest coal producer, with a near-monopoly on Indian coal mining, confirmed that the firm was in talks with several U.S. coal companies to buy stakes<\/a> in mines throughout the continental U.S.\u00a0 According to the Associated Press, Coal India has budgeted $1.2bn<\/a> this year alone to buy American, Australian, and Indonesian coal mines.\u00a0 Facing voracious energy demands and a yawning gap between domestic supplies of coal and projected needs, the company is going on a global buying spree.<\/p>\n

It is not alone. Reliance Industries, also of India, bought<\/a> a $3.4bn stake in three U.S. shale gas companies earlier this year. In March, India\u2019s Essar Group acquired<\/a> Trinity Coal for $600mn; the company has active mines in Kentucky and West Virginia. China’s ENN Energy Trading, a subsidiary of one of China\u2019s largest natural gas companies, signed<\/a> a preliminary purchase agreement in early November with Cheniere Energy for 20 years of processing capacity at Cheniere\u2019s Sabine Pass LNG terminal, located on the border of Louisiana and Texas. And China National Offshore Oil Corporation Ltd. (CNOOC) agreed<\/a> in October to pay up to $2.16bn for a 33.3 percent stake in Chesapeake Energy\u2019s interest in the Eagle Ford shale play. The deal, if concluded, would represent the largest Chinese investment ever in the US energy sector.<\/p>\n

These developments may cheer those economists, including members of the Obama administration\u2019s Council of Economic Advisors, who hope<\/a> export-led growth will propel the U.S. economy out of its current doldrums.\u00a0 But they ought to send a chill down the spine of anyone hoping for a thoughtful approach to climate change policy from the White House (which contrary to what pundits say is still possible, even in the absence of federal cap-and-trade legislation).\u00a0 As any seventh grader can tell you, it doesn\u2019t matter much where greenhouse gasses are emitted; aggregate global emissions are what counts.\u00a0 While the problem of \u201ccarbon leakage\u201d resulting from the regulation of domestic emissions is well understood (and was dealt with<\/a> in Waxman-Markey and other proposed climate bills), the issue of \u201ccarbon offshoring\u201d is not.<\/p>\n

Dirty fossil fuel exports have been relatively unexamined<\/a> by U.S. environmentalists and policymakers. And the acquisition by foreigners of U.S. fossil fuel resources, such as coal mines, is such a new phenomenon that practically no one in the climate world has anything to say on the matter.\u00a0 But as energy-hungry Chinese and Indian firms take fuller advantage of the strong U.S. desire to boost exports and reduce the current account deficit, there is a real danger that climate integrity will get thrown under the bus.<\/p>\n

What can be done? For starters, the Committee on Foreign Investment in the United States (CFIUS<\/a>) might think about blocking dirty energy deals that result in carbon offshoring, perhaps on national security grounds.\u00a0 This may be less far-fetched than it sounds, since the Pentagon\u2019s most recent Quadrennial Defense Review<\/a> highlighted climate change as a threat to national security.<\/p>\n

When the issue is exports rather than outright foreign acquisition of U.S. assets, however, things can get tricky.\u00a0 Export quotas violate<\/a> international trade law, and can be challenged before the WTO as a breach of U.S. obligations under Article XI<\/a> of the Global Agreement on Tariffs and Trade (GATT).\u00a0 Although there may be some room to maneuver under the GATT’s relatively narrow exceptions<\/a> for environmental measures, a quota on U.S. exports of coal would likely generate significant controversy both internationally and, of course, in states like West Virginia, where nearly 20 percent<\/a> of the coal produced last year was sold overseas.\u00a0 Export taxes, though not illegal under international trade law, are perhaps more problematic, as the imposition of taxes or tariffs on exports violates Article I, Section 9, Clause 5 (the \u201cexport clause\u201d<\/a>) of the U.S. Constitution.<\/p>\n

The Columbia Center for Climate Change Law is currently examining this issue in greater depth, and welcomes others to do the same.<\/p>\n","protected":false},"excerpt":{"rendered":"

Daniel M. Firger Associate Director Foreign companies are buying up U.S. coal mines. In a statement on November 12, the chairman of Coal India Ltd., a state-controlled entity and the world\u2019s largest coal producer, with a near-monopoly on Indian coal mining, confirmed that the firm was in talks with several U.S. coal companies to buy […]<\/p>\n","protected":false},"author":580,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[5680,5671],"tags":[5424],"class_list":{"0":"post-349","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-clean-energy","7":"category-international","8":"tag-international-trade","9":"czr-hentry"},"yoast_head":"\nCarbon Offshoring: India, China buying U.S. coal mines, shale gas fields, LNG terminals - Climate Law Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/blogs.law.columbia.edu\/climatechange\/2010\/11\/18\/carbon-offshoring-indian-and-china-are-buying-u-s-coal-mines-shale-gas-fields-lng-terminals\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Carbon Offshoring: India, China buying U.S. coal mines, shale gas fields, LNG terminals - Climate Law Blog\" \/>\n<meta property=\"og:description\" content=\"Daniel M. Firger Associate Director Foreign companies are buying up U.S. coal mines. In a statement on November 12, the chairman of Coal India Ltd., a state-controlled entity and the world\u2019s largest coal producer, with a near-monopoly on Indian coal mining, confirmed that the firm was in talks with several U.S. coal companies to buy […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/blogs.law.columbia.edu\/climatechange\/2010\/11\/18\/carbon-offshoring-indian-and-china-are-buying-u-s-coal-mines-shale-gas-fields-lng-terminals\/\" \/>\n<meta property=\"og:site_name\" content=\"Climate Law Blog\" \/>\n<meta property=\"article:published_time\" content=\"2010-11-18T14:26:02+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2012-01-31T20:24:29+00:00\" \/>\n<meta name=\"author\" content=\"Daniel Firger\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@sabincenter\" \/>\n<meta name=\"twitter:site\" content=\"@sabincenter\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Daniel Firger\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/blogs.law.columbia.edu\\\/climatechange\\\/2010\\\/11\\\/18\\\/carbon-offshoring-indian-and-china-are-buying-u-s-coal-mines-shale-gas-fields-lng-terminals\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/blogs.law.columbia.edu\\\/climatechange\\\/2010\\\/11\\\/18\\\/carbon-offshoring-indian-and-china-are-buying-u-s-coal-mines-shale-gas-fields-lng-terminals\\\/\"},\"author\":{\"name\":\"Daniel Firger\",\"@id\":\"https:\\\/\\\/blogs.law.columbia.edu\\\/climatechange\\\/#\\\/schema\\\/person\\\/c8ae1fcab1bafe39a4a76017696d6db7\"},\"headline\":\"Carbon Offshoring: India, China buying U.S. coal mines, shale gas fields, LNG terminals\",\"datePublished\":\"2010-11-18T14:26:02+00:00\",\"dateModified\":\"2012-01-31T20:24:29+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/blogs.law.columbia.edu\\\/climatechange\\\/2010\\\/11\\\/18\\\/carbon-offshoring-indian-and-china-are-buying-u-s-coal-mines-shale-gas-fields-lng-terminals\\\/\"},\"wordCount\":700,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/blogs.law.columbia.edu\\\/climatechange\\\/#organization\"},\"keywords\":[\"International Trade\"],\"articleSection\":[\"Clean Energy\",\"International\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/blogs.law.columbia.edu\\\/climatechange\\\/2010\\\/11\\\/18\\\/carbon-offshoring-indian-and-china-are-buying-u-s-coal-mines-shale-gas-fields-lng-terminals\\\/\",\"url\":\"https:\\\/\\\/blogs.law.columbia.edu\\\/climatechange\\\/2010\\\/11\\\/18\\\/carbon-offshoring-indian-and-china-are-buying-u-s-coal-mines-shale-gas-fields-lng-terminals\\\/\",\"name\":\"Carbon Offshoring: India, China buying U.S. coal mines, shale gas fields, LNG terminals - 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