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A tale of two coal economies, one post-industrial, one industrializing.
For those living near the Port of Baltimore, the transportation and storage of coal on its way from mines in the Appalachian Mountains to far-flung foreign kilns is “a mundane but ever-present imposition,” Chloe Ahmann, a Cornell University anthropologist, told me. Ahmann once worked as an elementary school teacher in Curtis Bay, a residential neighborhood adjacent to the working port, and wrote a book on the area’s post-industrial present.
“There are stories going back generation,” she said. “Coal dust covering everything in the neighborhood — bicycles, porches, windowsill. People wipe coal dust off their windows as a daily ritual.”
With the collapse of the Francis Scott Key Bridge and subsequent shutdown of the port, that coal now has nowhere to go for the foreseeable future. Baltimoreans don’t want it, but its intended recipients thousands of miles away in India most certainly do.
“The top recipient of U.S. steam coal shipped from Baltimore by far over the past five years has been India, where the brick manufacturing industry has been a major customer,” the U.S. Energy Information Administration said in a report on the impacts of the bridge disaster. In January alone, the Port of Baltimore exported almost a million tons of coal to India, up almost three-fold from January of last year, according to Argus, a commodity data provider. In total, 17 million tons of thermal coal — the type used in power plants and brick kilns — left the U.S. via Baltimore in 2023, S&P Global found by analyzing Census Bureau data.
India is the world’s second largest consumer of coal after China, and coal accounts for over 70% of India's emissions from burning fuel, according to the International Energy Agency. (In contrast, coal accounts for a fifth of the United States’ emissions from combustion.) About a quarter of India’s emissions come from industry, much of which uses coal in its processes, including steelmaking, and cement and, yes, brick manufacturing.
Brickmaking in India is often done on small scales by local producers, but even so, its energy consumption is “comparable to the organized construction industries such as cement and steel,” according to research published in Nature India. Many of those bricks are used to build homes, part and parcel of the country’s astounding economic growth. Along with its steel and cement industries, brickmaking has transformed India — whose inflation-adjusted per capita GDP of around $1,800 in 1990 would have made it one of the world's poorest countries today — into the third-largest carbon dioxide emitter in the world.
The same brick industry that produces the literal building blocks of India’s homebuilding sector is also responsible for immensely damaging particulate pollution. The combination of coal and biomass used to fire brick kilns is responsible for around 75 million tons of carbon dioxide emissions — comparable to the total emissions of Washington State, Arizona, or the 2021 California wildfires — and 100,000 tons of black carbon emissions, according to the Climate and Clean Air Coalition.
Air pollution in South Asia is one of the largest public health problems in the world. India, Pakistan, Nepal, and Bangladesh all ranked in the bottom 10 of 180 countries for air quality, according to the Yale University Environmental Performance Index. In 2019, air pollution was estimated to account for around 1.7 million premature deaths in India. “Brick kilns, involving the burning of low-grade coal, are one of the major sectors that contribute to air pollution in South Asia,” a World Bank report said, with the brick industry making up over 90% of particulate emissions in some South Asian cities and 15% of the most dangerous small particulate emissions in Delhi.
In a story that will be familiar to much of industrial and post-industrial America, these industrial processes are both an important economic engine and an obvious detriment to health locally and are contributing to the climatic changes that are already having devastating effects in South Asia. Efforts to regulate the brick industry have already run into complaints that efficiency requirements will be too expensive for cash-strapped businesses and will result in lower employment in the sector.
In the vertiginous world of globalized capitalism, different regions using the same resource — the Appalachian coal mines, the Baltimore port, and the Indian brick manufacturers — can all at the same time be at different stages of industrialization and post-industrialization, with differing attitudes toward the coal that powers and pollutes them. In South Baltimore, the people living with the dust from the coal pier no longer sees any positive relationship between industrial activity and their own well-being, Ahmann told me.
The Baltimore and Ohio railroad, which has been part of the rail conglomerate CSX since 1980, began construction in 1827 and has long shipped coal from West Virginia and other Appalachian states to the East Coast. Baltimore’s Curtis Bay neighborhood, where Ahmann lived, is adjacent to a coal pier operated by CSX. “It’s an iconic local scene, right by a local playground, stone throw from several elementary schools and homes,” Ahmann said, making the neighborhood both “heavily industrialized and very much a lived-in place.”
While the Maryland government trumpets direct and indirect employment at the port of around 15,000 people, that’s about half the number that worked there in 1970.
“It’s no longer the case that industry is a major employer in South Baltimore,” Ahmann said. “It’s not like it was 40 years ago, when everybody knew somebody whose livelihood was attached to industrial production in this place.” Instead, people in the area “cobble together lives from low-wage service jobs,” she said. Overall, manufacturing employment in Maryland has been roughly cut in half since 1990.
In late 2021, a CSX coal facility in Curtis Bay exploded, damaging nearby homes and spreading tremors for miles. Following the blast, a coalition of community groups and the Maryland Department of the Environment investigated particulate pollution in Curtis Bay and found coal dust “present throughout the community,” with coal dust coming from the terminal itself, as well as train and truck traffic.
“We should not have open air coal piers period, and certainly not in a residential area behind a playground,” Ahmann said.
Among the many fears locals are nursing as the Key Bridge lies in ruins is that the coal will simply pile up at the port as long as it remains blocked. “These piles are going to grow every day,” Ahmann told me, describing it as “stark visual evidence of the untenability of this situation.”
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And more of the week’s top news about renewable energy conflicts.
1. Nassau County, New York – Opponents of Equinor’s offshore Empire Wind project are now suing to stop construction after the Trump administration quietly lifted its stop-work order.
2. Somerset County, Maryland – A referendum campaign in rural Maryland seeks to restrict solar development on farmland.
3. Tazewell County, Virginia – An Energix solar project is still in the works in this rural county bordering West Virginia, despite a restrictive ordinance.
4. Allan County, Indiana – This county, which includes portions of Fort Wayne, will be holding a hearing next week on changing its current solar zoning rules.
5. Madison County, Indiana – Elsewhere in Indiana, Invenergy has abandoned the Lone Oak solar project amidst fervent opposition and mounting legal hurdles.
6. Adair County, Missouri – This county may soon be home to the largest solar farm in Missouri and is in talks for another project, despite having a high opposition intensity index in the Heatmap Pro database.
7. Newtown County, Arkansas – A fifth county in Arkansas has now banned wind projects.
8. Oklahoma County, Oklahoma – A data center fight is gaining steam as activists on the ground push to block the center on grounds it would result in new renewable energy projects.
9. Bell County, Texas – Fox News is back in our newsletter, this time for platforming the campaign against solar on land suitable for agriculture.
10. Monterey County, California – The Moss Landing battery fire story continues to develop, as PG&E struggles to restart the remaining battery storage facility remaining on site.
A conversation with Biao Gong of Morningstar
This week’s conversation is with Biao Gong, an analyst with Morningstar who this week published an analysis looking at the credit risks associated with offshore wind projects. Obviously I wanted to talk to him about the situation in the U.S., whether it’s still a place investors consider open for business, and if our country’s actions impact the behavior of others.
The following conversation has been lightly edited for clarity.
What led you to write this analysis?
What prompted me was our experience in assigning [private] ratings to offshore wind projects in Europe and wanted to figure out what was different [for rating] with onshore and offshore wind. It was the result of our recent work, which is private, but we’ve seen the trend – a lot of the big players in the offshore wind space are kind of trying to partner up with private equity firms to sell their interests, their operating offshore wind assets. But to raise that they’ll need credit ratings and we’ve seen those transactions. This is a growing area in Europe, because Europe has to rely on offshore wind to achieve its climate goals and secure their energy independence.
The report goes through risks in many ways, including challenging conditions for construction. Tell me about the challenges that offshore wind faces specifically as an investment risk.
The principle behind offshore wind is so different than onshore wind. You’re converting wind energy to electricity but obviously there are a bunch of areas where we believe it is riskier. That doesn’t mean you can’t fund those projects but you need additional mitigants.
This includes construction risk. It can take three to five years to complete an offshore wind project. The marine condition, the climate condition, you can’t do that [work] throughout the year and you need specialized vehicles, helicopters, crews that are so labor intensive. That’s versus onshore, which is pre-fabricated where you have a foundation and assemble it. Once you have an idea of the geotechnical conditions, the risk is just less.
There’s also the permitting process, which can be very challenging. How do you not interrupt the marine ecosystem? That’s something the regulators pay attention to. It’s definitely more than an onshore project, which means you need other mitigants for the lender to feel comfortable.
With respect to the permitting risk, how much of that is the risk of opposition from vacation towns, environmentalists, fisheries?
To be honest, we usually come in after all the critical permitting is in place, before money is given by a lender, but I also think that on the government’s side, in Europe at least, they probably have to encourage the development. And to put out an auction for an area you can build an offshore wind project, they must’ve gone through their own assessment, right? They can’t put out something that they also think may hurt an ecosystem, but that’s my speculation.
A country that did examine the impacts and offer lots of ocean floor for offshore is the U.S. What’s your take on offshore wind development in our country?
Once again, because we’re a rating agency, we don’t have much insight into early stage projects. But with that, our view is pretty gloomy. It’s like, if you haven’t started a project in the U.S., no one is going to buy it. There’s a bunch of projects already under construction, and there was the Empire Wind stop order that was lifted. I think that’s positive, but only to a degree, right? It just means this project under construction can probably go ahead. Those things will go ahead and have really strong developers with strong balance sheets. But they’re going to face additional headwinds, too, because of tariffs – that’s a different story.
We don’t see anything else going ahead.
Does the U.S. behaving this way impact the view you have for offshore wind in other countries, or is this an isolated thing?
It’s very isolated. Europe is just going full-steam ahead because the advantage here is you can build a wind farm that provides 2 or 3 gigawatts – that’s just massive. China, too. The U.S. is very different – and not just offshore. The entire renewables sector. We could revisit the U.S. four or five years from today, but [the U.S.] is going to be pretty difficult for the renewables sector.
What I’m hearing from developers and CEOs about the renewable energy industry after the Inflation Reduction Act
As the Senate deliberates gutting the Inflation Reduction Act’s clean electricity tax credits, renewable energy developers and industry insiders are split about how bad things might get for the sector. But the consensus is that things will undoubtedly get worse.
Almost everyone I talked to insisted that solar and wind projects further along in construction would be insulated from an IRA repeal. Some even argued that spiking energy demand and other macro tailwinds might buffer the wind and solar industries from the demolition of the law.
But between the lines, and beneath the talking points and hopium, executives are fretting that lots of future investments are in jeopardy. And the most pessimistic take: almost all projects will have their balance sheets and time-tables impacted in some way that’ll at minimum increase their budget costs.
“It’s hard to imagine, if the legislation passes in its current form, that it wouldn’t impact all projects,” said Rob Collier, CEO of renewable energy transaction platform LevelTen.
Even industry analysts with the gloomiest views of the repeal say there’s plenty of projects that will keep chugging along and might even become more valuable to investors if they’re close enough to construction or operation. This aligns with recent analysis from BloombergNEF, which found the House bill would diminish our nation’s renewables build-out – but not entirely end its pace.
“The more useful way to break down which project may be hit the hardest is where the projects are going to fall in their development life-cycle,” Collier said. “Projects that have either started construction or have the ability to start construction … are going to very likely rise in terms of their appeal and attractiveness and those projects will be at a premium, if they’re able to skate through the legislative risk and qualify for tax credits.”
There is a more optimistic industry view that believes increased project costs will just be passed along to consumers via higher electricity prices. The American people will in essence have to pick up the tab where the federal tax code left it. Optimists also cite the increased use of power purchase agreements, or PPAs, between renewables developers and entities who need a lot of electricity, like big tech companies. By signing these PPAs, buyers are subsidizing the construction of projects but also insulating themselves from the risk of rising electricity prices.
The most bullish perspective I heard was from Nick Cohen, the CEO of Doral Renewables, who told me deals like these combined with rising premiums for quick energy on the grid may obviate lost credits in a “zero-incentive environment.”
“It’s not the end of the world,” Cohen told me. “If you’re in construction or you’re going to be in construction very soon, you’re fine.”
But Collier called Cohen’s prediction an “experiment” in customers’ willingness to pay for new energy: “If we’re talking about 40%, 50%, 60% of a project’s capital stack now being at risk because of tax credits, those are pretty large price increases.”
I spoke to multiple companies that have been inking massive deals as this legislation has progressed — although many were not nearly as sanguine about the industry’s future prospects as Doral. Like rPlus Energies, which disclosed last week that it closed a commitment for more than $500 million in tax equity investments for a solar and storage project in Utah. rPlus CEO Luigi Resta told me that the legislation “certainly has posed concern from our investors and from the organization” but the project was so far along that the tax equity investment market wasn’t phased by the bill.
“Many people in my company, myself included, have been doing this for more than 20 years. We’ve seen the starts and stops related to ITC and PTC in solar and wind, in multiple cycles, and this feels like another cycle,” Resta told me. “When the IRA passed, everybody was exuberant. And now the runway looks like it may have a cliff. But for us, our mantra since the beginning of the year has been ‘proceed with caution, preserve and protect.’”
However, crucially, it is important to focus on how that caution looks: Resta told me the company has completely paused new contracting while the company is completing the projects it is currently developing.
One government affairs representative for a large and prominent U.S. renewables developer, who spoke on the condition of anonymity to preserve relationships, told me that “whatever rollback occurs will just result in higher electricity prices over time.” In the near term, the only language that would truly gut projects in progress today would be “foreign entity of concern” restrictions that would broadly impact any component even remotely connected to Chinese industries. Similar language all but kneecapped the entire IRA electric vehicle consumer credit.
“It included definitions of what it means to be a foreign company that were really vague,” the government affairs representative said. “Anyone who does any business with China essentially can’t benefit from the credit. That was a really challenging outcome from the House that hopefully the Senate is going to fix.” If this definition became law, this source said, it would be the final straw that “freezes investment” in renewable energy projects.
Ultimately, after speaking to CEO after CEO this week, I’ve been left with an impression that business activity in renewables hasn’t really subsided after the House bill passed, and that it’ll be the Senate bill that undoubtedly defines the future of renewable energy for years to come.
Whether that chamber remains the “cooling saucer” it once was will be the decider.