Control fossil fuel exports: part 1

“Global warming is fueled by oil, coal, and natural gas exports. The World Trade Organization, the proposed Trans Pacific trade agreement and international investment agreements are designed to protect “free trade” in dirty energy products. It’s time we got the corporate trade lawyers out of the business of making climate policy.” –Erich Pica, President, Friends of the Earth

Fred Felleman, a whale biologist, leads Friends of the Earth’s campaign in the Pacific Northwest to reduce pollution and destruction of marine life caused by the shipping industry in Puget Sound and the connecting waters of the Salish Sea. Fred is deeply concerned about proposals to build the largest coal export terminal in North America near Bellingham, Washington, and the herring spawning grounds of the Cherry Point Aquatic Reserve. He’s also one of the few following Kinder Morgan’s plans to triple their export of Alberta oil out of the nearby Port of Vancouver, BC.

The Bellingham proposal calls for 54 million tons of coal to be exported from the new terminal every year. This would involve 974 annual transits of gigantic bulk coal-carrying ships through the biologically diverse transboundary waterways, home to endangered orca and salmon populations. Millions of tons of coal dust spewed from the Bellingham terminal would be the “nail in the coffin” for the Cherry Point Pacific herring, according to Fred, and would endanger animals higher up on the food chain such as Chinook salmon, migratory seabirds and orcas.

In addition to the local impact on marine life and coastlines in the Northwest, building the Bellingham coal terminal and others like it would provide access to the vast Asian market for big coal companies in the U.S. that are losing domestic market share to cleaner-burning natural gas and green energy. The terminal at Bellingham alone would result, every year, in the burning of 54 million tons of the dirtiest fossil fuel, significantly contributing to catastrophic global warming. 

Fred and other activists in the Northwest are determined to block coal exports from Bellingham and other proposed coal export terminals in the region. Although successfully halting this huge coal export scheme would be a major victory, it would not, by itself, hold back the rising tide of international trade in fossil fuels that is encouraged by U.S. energy policy and international trade law. In order to enact change on that magnitude, new controls and regulations on exports of coal, oil and natural gas should be adopted at the local, national, and international levels.

For example, suggestions have arisen in Congress for the U.S. to impose an export ban on Keystone XL tar sands oil and tighten existing controls in the natural gas export permitting process. Some scholars have offered up the idea of establishing an international system of coal export restrictions. In addition, fossil fuel exports can be controlled indirectly through local decisions on whether to permit coal, liquefied natural gas or oil export terminals, among other measures.

In response to campaigns launched by climate activists to impose regulations and  controls on U.S. exports of coal, liquefied natural gas and oil, corporate trade lawyers and dirty energy apologists are insisting that government controls on fossil fuel exports are illegal under international trade and investment law.  As an illustration of this, consider what Marlo Lewis, an advocate for fossil fuel trade who works at the Competitive Enterpise Institute, has to say. Lewis argues that dirty energy export bans are “a form of legal plunder” and a violation of “U.S. treaty obligations under the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA).”

All that said, theoretical international trade law violations abound in the statute books, and legislators should not be deterred from addressing the climate crisis through fossil fuel export restrictions based on hypothetical claims. Bills can be cleverly drafted to sidestep potential conflicts with international trade law. And, if conflict is unavoidable, lawmakers and regulators must consider that relatively few cases are actually litigated, and penalties in the form of retaliatory trade sanctions are subject to negotiation. WTO and NAFTA tribunals cannot issue injunctions ordering the U.S. Congress, for example, to conform to its judgments or to desist from enacting climate measures.

The immediate threat in the United States is that dirty energy lobbyists will effectively use hypothetical arguments of WTO or NAFTA illegality to chill congressional action and provide cover for U.S. legislators who are indebted to Big Oil, Big Coal and the LNG lobby for campaign contributions, even though international trade law is not incorporated into U.S. domestic law and violations cannot be enforced in U.S. domestic courts. It’s time that Congress stood up to the dirty energy companies and their handmaidens, the World Trade Organization and World Bank investment tribunals. 

Dirty energy apologists are ignoring the economic and scientific data that call out for regulation and control of U.S. fossil fuel exports. Coal exports from the United States in 2012 are, according to the U.S. Department of Energy, “on a record pace,” amounting to 67 million tons in the first half of the year alone. As a result of environmentally-destructive hydraulic “fracking” and other new technologies, the fastest-growing natural gas and oil producer on the planet is now the United States. The International Energy Agency reports that the U.S. will become the largest oil producer in the world around the year 2020.  

As the U.S. dependence on coal slackens, the industry is attempting to export it abroad. Energy companies are also seeking new liquefied natural gas terminals for export to global markets where they can demand higher prices for LNG — a far more potent contributor to global warming than ordinary natural gas. Meanwhile, Canada wants to transport tar sands oil through the Keystone XL pipeline to refineries in Texas and then ship it overseas, where it can sold far more profitably than in the United States.[1]  

All of this is terrible news for an overheated planet. The ongoing expansion of international trade in fossil fuels promises to sharply increase greenhouse gas emissions, potentially pushing global warming to a catastrophic tipping point. “Swift and strong climate action is necessary to mitigate the worst impacts of climate change and adapt to the new reality of rising seas and melting ice, superstorms and crippling drought,” says Erich Pica, the President of Friends of the Earth. 

Thank goodness environmental activists like Fred Felleman are fighting back, opposing plans for massive coal export facilities, seeking to block new LNG export terminals, and attempting to scuttle Keystone XL and TransMountain tar sands oil pipeline expansions. The campaign must now be ramped up to impose new regulations and legal controls on dirty energy exports. Corporate threats of international trade law violations be damned.

This is the first of four blog posts on fossil fuel exports and international trade law.

[1] While public attention has focused on the Obama Administration’s decision on whether to allow Keystone to go forward, Kinder Morgan has been quietly seeking permission to expand their export of tar sands-derived oil from 300,000 bbls/day -750,000 bbls/day by twinning the existing Trans Mountain pipeline to Vancouver, BC. This suggests the need for more local action in Canada and eventually an international regime of fossil fuel export controls.