Energy Exports Impact on Manufacturing Ross Eisenberg Vice President, Energy & Resources Policy

1. Energy Exports Impact on Manufacturing Ross Eisenberg Vice President, Energy & Resources Policy National Association of Manufacturers reisenberg@nam.org May 2015

2. NAM Position on Energy Exports • The NAM fundamentally supports principles of free trade and open markets • The NAM opposes bans or similar market-distorting barriers to exports of energy or any other commodity

3. Legal and regulatory barriers confront virtually all types of energy exports • Coal (NEPA, state “little NEPAs”) • Natural Gas/LNG (DOE national interest, NEPA) • Crude oil (DoC national interest, Presidential finding, etc.) • Nuclear (DOE/NRC regulations) • New/Advanced energy technologies

4. Coal Exports: The Basics • U.S. has enough recoverable coal reserves to last another 250 years. Total in-place U.S. coal resources constitute a 10,000-year supply at current consumption levels. • Over the past two decades, 4 to 10 percent of the coal produced annually in the United States has been exported. • Coal has been exported through ports in more than 20 states, including Virginia, Louisiana, Maryland, Alabama, Washington, Ohio, New York and California. • International Energy Agency: • Global coal demand to grow by 2.3 percent annually through 2018. • China will account for nearly 60 percent of global coal demand growth over the next five years. • Coal use in Japan will grow by 1.3 percent per year; coal use in Korea will grow by 3 percent per year.

5. Coal Exports: Economic Impact • Manufacturing jobs support coal exports in the United States. • These jobs include mining and support activities for coal mining; construction; railroad transportation; transport by water and truck; port operations and cargo handling; and all the manufacturing supply chain jobs that support these activities. • National Mining Association/Ernst & Young report: • In 2011, there were 39,350 people whose employment was directly tied to coal exports. • Tens of thousands of indirect and induced jobs from coal exports, ranging from retail, wholesale and logistics to hotels and restaurants to the manufacturing supply chain. • Overall, coal exports added $16.5 billion in gross value to the U.S. economy.

6. The Projects • Gateway Pacific Terminal • Deepwater multimodal terminal for the import and export of dry bulk commodities in the Cherry Point industrial area of Whatcom County, Washington. • Capacity to export and import approximately 54 million metric tons per year of dry bulk commodities, including, but not limited to, coal, grain products, potash and calcined petroleum coke. • Millennium Bulk Terminals • State-of-the-art storage and loading facility in Cowlitz County, Washington. • The project would reinvest in an underutilized 416-acre site, upgrade the existing import/export bulk facility and construct a coal receiving, storage and shipping terminal. • Morrow Pacific Project • Would transport coal from Intermountain states to the Port of Morrow near Boardman, Oregon, then to Port of St. Helens’ Port Westward Industrial Park, then onto Panamax ships. • Initially, one four-barge tow per day will move down the Columbia River, shipping 3.5 million metric tons of coal per year to trade allies such as Japan, South Korea and Taiwan. At full capacity, barge tows will increase to two per day, with expected shipment of 8 million metric tons per year.

8. NEPA, SEPA and Potential Precedent The Real Impact: • Proponents of a “cumulative, programmatic” EIS likely hope to suffocate each project with years of studies until the project’s sponsors become frustrated with continued delays and walk away. • Millennium Bulk Terminal has been waiting over 3 years for a permit; Gateway pacific is at 2 years, 9 months. • A cradle-to-grave, lifecycle impact analysis that includes the environmental impact of the cargo and all similar cargo transported through the region would create a very dangerous precedent that could be used to block exports. • The agencies involved could be laying the foundation for similar exercises for virtually every infrastructure project within the United States that would transport and export cargo of any kind. • Already we are seeing this expanded view of environmental reviews leak into other federal projects (Keystone) and other state projects in Washington (crude by rail). Potentially could cascade into other states. • Raises significant commerce clause, WTO issues.

9. Former WTO Chairman: LNG, Coal Export Permitting Delays May Run Afoul of U.S. Treaty Obligations Bacchus: • Unreasonable delays by DOE to issue licenses to export LNG to foreign countries constitutes, in and of itself, a violation of our international obligations under the WTO. • Efforts by state and local authorities in the Pacific Northwest to broaden unduly the scope of the environmental review process for planned coal export terminals beyond the federal scope, and the resulting delay, constitutes a violation of our international obligations under the WTO.